No Guardrails for (from) Regulators
The Supreme Court hears challenges to FTC and SEC abuses.
No Guardrails for Regulators
The Supreme Court hears challenges to FTC and SEC abuses.
By The Editorial BoardFollow Nov. 6, 2022
The U.S. Supreme Court is seen in the early morning hours of Nov. 4 in Washington
PHOTO: SAMUEL CORUM/GETTY IMAGES
As the Supreme Court’s originalists reinvigorate the separation of powers, federal agencies are fighting to dodge constitutional challenges to their political overreach. On Monday the Justices will consider in two cases whether to let them (Axon Enterprise v. FTC and SEC v. Cochran).
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OPINION: POTOMAC WATCH
A bedrock constitutional principle is that Congress writes the laws, the executive enforces them, and the judiciary interprets them. This vital separation safeguards individual liberty. But independent agencies—the so-called fourth branch of government—have grown to accumulate all three powers, and they too often seek to supersede Congress and the judiciary.
Consider police body camera maker Axon’s run-in with the Federal Trade Commission. Axon says the agency threatened to force it via an administrative proceeding to divest a small acquisition and stand up a competitor using its intellectual property. The FTC almost always wins the cases it brings in its own tribunal since it plays investigator, prosecutor and judge.
Axon sued in federal court, arguing that FTC administrative law judges are exercising unconstitutional power. They have dual-layer protections from presidential removal, and the agency’s combination of “investigatory, prosecutorial, adjudicative, and appellate functions” violates the separation of powers.
The agency, however, said Axon would have to wait until the FTC finished its administrative process and was slapped with a potentially ruinous judgment before bringing its constitutional challenge in federal court. In other words, only after the FTC crushes you can you challenge its power to do so. The FTC’s argument flouts law and Supreme Court precedent.
Congress expressly gave federal district courts “original jurisdiction of all civil actions arising under the Constitution, laws, or treaties of the United States.” While the FTC Act requires defendants to wait for the commission to render a final order before appealing in court, Congress didn’t restrict judicial review of constitutional challenges.
The High Court’s Free Enterprise Fund (2010) decision upheld federal court jurisdiction over a similar constitutional challenge to the Public Company Accounting Oversight Board. Chief Justice John Roberts wrote in the majority opinion that the government “offers no reason and cites no authority why” separation-of-powers challenges are different than other complaints of constitutional violations.
Now the FTC argues that Congress implicitly stripped federal district courts of jurisdiction by expressly providing appellate court review of final agency orders. In a separate case before the Supreme Court, the Securities and Exchange Commission makes the same argument concerning a constitutional challenge to removal restrictions for its administrative law judges.
But as the defendant in the SEC case argues, “proceedings frequently drag on for several years and take such an enormous personal, financial, and reputational toll on their targets that most—despite vigorously asserting their innocence—are forced to capitulate.” Preventing constitutional challenges until a punishment is rendered has the effect of denying plaintiffs the right to judicial review.
Administrative agencies are compounding their constitutional abuses by throwing up roadblocks for defendants to obtain relief. In doing so, they’re underscoring why courts need to keep them in check.
https://www.wsj.com/articles/no-guardrails-for-regulators-sec-ftc-axon-enterprise-cochran-supreme-court-federal-agencies-11667570529?mod=hp_opin_pos_3