Supreme Court Hints at New Limits on Authority of Federal Agencies

November 8, 2022 by Tom Ramstack
Supreme Court Hints at New Limits on Authority of Federal Agencies
(Photo by Dan McCue)

WASHINGTON — U.S. Supreme Court justices implied Monday they are likely to make it easier to challenge the authority of regulatory agencies in disputes with the Securities and Exchange Commission and the Federal Trade Commission.

The key issue in Axon Enterprise v. Federal Trade Commission was whether people and companies must wait for agencies’ administrative rulings or whether they can take their claims straight to federal court.

Under current case law, federal agencies have some discretion to set their own procedures to challenge their orders, fines or actions. The breadth of the Supreme Court ruling in the Axon case is likely to spread far beyond the FTC, according to legal experts.

“The court’s holding could potentially open the door to constitutional challenges to any federal agency’s administrative hearing procedures,” Tom Johnson, a partner at Washington, D.C.’s Wiley Law, told The Well News.


The issue is reaching the Supreme Court now because “these agencies have become increasingly aggressive in their regulatory efforts, in part because of their unaccountable structure,” said Johnson, who is a former general counsel for the Federal Communications Commission.

Axon, an Arizona company that makes police body cameras, argued that Article III of the Constitution gives federal courts “original jurisdiction of all civil actions arising under the Constitution.”

As a result, it should be able to bypass the delays that could come from an agency’s administrative procedures.

The Federal Trade Commission was investigating Axon to determine whether its $13 million acquisition of a competitor would violate antitrust laws.

When Axon protested, the FTC required that it argue its complaint in an agency hearing and await its ruling.

“Rather than resign itself to the ongoing unconstitutional injuries inflicted by the FTC’s process, [Axon] filed suit in district court seeking to enjoin the unconstitutional FTC proceedings,” Axon’s petition to the Supreme Court says.

The FTC said its authority was derived from the jurisdiction Congress gave it when the agency was established. Its attorneys argued they properly followed federal law under the Administrative Procedure Act.

The FTC filed a “cease and desist” order with the U.S. District Court, which the court upheld. The Ninth Circuit Court of Appeals agreed with the district court, which prompted Axon’s appeal to the Supreme Court.

The Axon dispute was one of two cases the Supreme Court heard Monday to define the limits of agency authority.


The other dealt with a similar issue when Texas accountant Michelle Cochran was accused of misconduct in the case of Securities and Exchange Commission v. Cochran. Cochran argued she should be allowed to take her complaint to federal court rather than be subjected to SEC agency procedures.

The Fifth Circuit Court of Appeals agreed with her, which led the SEC to appeal to the Supreme Court.

Her attorney, Gregory G. Garre, implied the SEC has a conflict of interest in first sanctioning Cochran and then ruling on her appeal.

“The SEC acts as prosecutor, judge and, in effect, executioner in its own proceedings, all of which give it an extraordinary home court advantage,” Garre said.

Justice Samuel A. Alito seemed to agree when he asked, “What sense does it make for a claim that goes to the very structure of the agency having to go through the administrative process?”

Chief Justice John G. Roberts Jr. mentioned that government agencies have lost several recent cases that opposed their administrative hearing procedures.

“Doesn’t that underscore the need for a direct proceeding to raise the constitutional claim rather than waiting however many years before the agency?” Roberts asked.

Several recent Supreme Court decisions have cut back on federal agency authority.

In April, the Supreme Court said the FTC could no longer get court orders forcing companies to return illegal profits.

In June, the Supreme Court ruled the Environmental Protection Agency exceeded its regulatory authority on limiting greenhouse gas emissions.

In 2017, the Supreme Court restricted the SEC’s ability to win back money for investors from misbehaving corporations.


The Supreme Court is scheduled to release rulings in June in the cases of Axon Enterprise Inc. v. FTC, case number 21-86, and SEC v. Cochran, case number 21-1239.

Tom can be reached at [email protected] and @TomRamstack

A+
a-

In The News

Health

Voting

Regulation

December 7, 2022
by Tom Ramstack
Firefighters Seek Contempt Citation Against DC for Ban on Beards

WASHINGTON — Washington, D.C., firefighters are asking a federal judge for a contempt citation against the city for its ban... Read More

WASHINGTON — Washington, D.C., firefighters are asking a federal judge for a contempt citation against the city for its ban on beards. Firefighters argue the ban violates the freedom of religion of their Muslim and Jewish members. The District of Columbia says the ban helps to... Read More

Speedier Drug Approvals Hit Slowdown as FDA Faces Scrutiny

WASHINGTON (AP) — Expedited drug approvals slowed this year as the Food and Drug Administration's controversial accelerated pathway came under... Read More

WASHINGTON (AP) — Expedited drug approvals slowed this year as the Food and Drug Administration's controversial accelerated pathway came under new scrutiny from Congress, government watchdogs and some of the agency’s own leaders. With less than a month remaining in the year, the FDA’s drug center... Read More

Biden's Efforts to Protect Abortion Access Hit Roadblocks

WASHINGTON (AP) — The Biden administration is still actively searching for ways to safeguard abortion access for millions of women,... Read More

WASHINGTON (AP) — The Biden administration is still actively searching for ways to safeguard abortion access for millions of women, even as it bumps up against a complex web of strict new state laws enacted in the months after the Supreme Court stripped the constitutional right. Looking to... Read More

December 1, 2022
by Tom Ramstack
Senate Says FTX Cryptocurrency Collapse Shows Need for Government Regulation

WASHINGTON — A Senate committee on Thursday nearly eliminated uncertainties about whether the government will regulate the cryptocurrency industry soon... Read More

WASHINGTON — A Senate committee on Thursday nearly eliminated uncertainties about whether the government will regulate the cryptocurrency industry soon as lawmakers reviewed the collapse of digital financial firm FTX. FTX’s cryptocurrency exchange held assets of more than 1 million users worth about $32 billion at... Read More

November 17, 2022
by Dan McCue
FDA Conditionally Approves First Drug to Manage Acute Pancreatitis in Dogs

WASHINGTON — The Food and Drug Administration has conditionally approved Panoquell-CA1 for the management of clinical signs associated with acute... Read More

WASHINGTON — The Food and Drug Administration has conditionally approved Panoquell-CA1 for the management of clinical signs associated with acute onset of pancreatitis in dogs.  Panoquell-CA1 is an injectable drug intended for use while the dog is hospitalized for treatment of the disease.   Pancreatitis is a... Read More

November 14, 2022
by Dan McCue
NRC Publishes Annual Report to Congress on Nuke Security Inspections

WASHINGTON — The Nuclear Regulatory Commission has released an unclassified version of its annual report to Congress detailing the prior... Read More

WASHINGTON — The Nuclear Regulatory Commission has released an unclassified version of its annual report to Congress detailing the prior year’s security inspection program.  The report, required under the Energy Policy Act of 2005, provides information to Congress and the public regarding the overall security and... Read More

News From The Well
scroll top