Business Litigation / 2 min read
Challenges to Federal Administrative Agencies
Many cases have been filed by businesses or trade groups challenging the basic functioning of numerous federal administrative agencies. These cases haven't gotten much popular attention, given the number of other hot-button issues in and on their way up to the Supreme Court. However, they could have profound impacts on the functioning of how federal agencies work.
Securities and Exchange Commission v. Jarskesy
In Securities and Exchange Commission v. Jarskesy, the Court will decide whether administrative agencies are entitled to conduct hearings before an administrative law judge regarding penalties and fines to be assessed against the individual or business. The parties before the Court (as well as numerous other parties who have raised this issue in other cases and are waiting on this decision), contend that the agencies' ability to try them "in house" violates their due process rights and deprives them of a jury. If the Court rules in favor of the defendants before the agencies, the process of imposing penalties for violations of administrative rules will be upended.
Looper Bright Enterprises v. Raimondo
In Looper Bright Enterprises v. Raimondo, argued earlier this year, the Supreme Court may be poised to overturn the Chevron Doctrine. That doctrine was announced in a Supreme Court case decades ago finding that the decisions of federal agencies about interpreting federal law are entitled to some deference by the courts. The principal rests on the idea that federal agencies typically have greater expertise in areas they regulate than judges and are more likely to make strategic policy decisions. According to Court watchers, the current Supreme Court may be poised to overturn that deference, enabling every federal court to reconsider virtually every administrative rule or regulation. Whether you agree or disagree, this has the potential to cause a flood of litigation calling into question many existing administrative policies.
Decisions in both lawsuits are expected this term.
Associated General Contractors v. U.S. Department of Labor
Associated General Contractors v. U.S. Department of Labor is another case challenging the ability of a federal agency—the Department of Labor (DOL)—to expand the Davis-Bacon Act (DBA), which relates to wages of construction workers on federal projects. A federal court in Lubbock signed a nationwide injunction precluding an expansion of coverage of the DBA to truck drivers and material suppliers. The federal court was having none of the DOL's argument, stating:
Defendants [DOL] engaged in egregious violations of Article II, section 3 of the Constitution, because rather than taking care to faithfully execute the DBA, Defendants instead usurped Congress' law-making power and attempted substantive amendments to the DBA. Presidents and their agencies act ultra vires and do violence to the Constitution when they attempt to unilaterally amend Acts of Congress to suit their policy choices. Under Article I, section 1 of the Constitution, Presidents and their agencies cannot amend by executive fiat acts of Congress. Doing so violates the Constitution, and this preliminary injunction shall be issued to prevent this blatantly unlawful action.
More information on the Associated General Contractors case can be found here. Link - https://news.agc.org/labor-hr/agc-secures-nationwide-injunction-against-overreaching-provisions-of-davis-bacon-rule/
Implications for Administrative Rules and Regulations
If your company relies on consistency in administrative rules and regulations, 2024 may prove a bit frustrating to say the least. For those who embrace more limitations on federal power, this just may prove to be your year.