Supreme Court Smacks Down Power-Grabbing Bureaucrats

Ruled that certain judges at SEC cannot be appointed by rank-and-file administrators…

NATELSON: How the NYTimes Distorts View of Supreme Court

PHOTO: Phil Roeder/Creative Commons

(Quin Hillyer, Liberty Headlines) Here in the United States, bureaucrats can’t just appoint judges in some willy-nilly fashion, without proper lines of authority.

That’s what the U.S. Supreme Court ruled in one of its lesser-noticed decisions last week, in what the Wall Street Journal editorial page called a “smackdown” against power-grasping bureaucrats.

The Journal made clear, though, that a smackdown in this one case is at least, but perhaps no more than, “a modest step toward enforcing more accountability on the ever-expanding administrative state.”

The case, Lucia v. SEC, involved administrative law judges (ALJs) at the Securities and Exchange Commission who were appointed neither by the president nor even by the SEC commissioners, but by lower-level administrators.

Yet they wield enough power to penalize individuals for alleged securities violations.

The Chief Deputy Whip of the U.S. House of Representatives, Republican Patrick McHenry of North Carolina, hailed the decision, saying “the SEC’s judges radically tipped the scales of justice, controlling what evidence was admissible, what procedural due process rights were provided, and the size of penalties that were imposed.  I am thankful that the Supreme Court sent a clear message to Washington bureaucrats that the agencies they run are subject to the same justice system as the American people.”

The court’s five more conservative justices all joined the 6-3 decision, but it was written by left-leaning justice Elena Kagan, often a supporter of the administrative state.

Kagan’s authorship of the ruling showed just how clearly the SEC’s practices had violated the separation of governmental powers that is such a key protector of American liberty.

The “accountability” at issue here is important. While the Supreme Court decision was still pending, in April, the Cato Institute’s Ilya Shapiro wrote at the blog of the Yale Journal on Regulationthat the case involved important “first principles: the Constitution created three branches of government. The legislative and executive branches are periodically checked by the electorate. To make that electoral check work for the executive branch, however, the one official actually accountable to voters, the president, is supposed to be able to supervise it…. The president also has a duty to see that the laws be faithfully executed. To do this he must be able to remove officers who fail in their duties. And yet the president lacks the ability to remove SEC administrative law judges (ALJs) who abuse their powers or fail to use their discretion to act intelligently or wisely. These ALJs are thus insulated from electoral control and accountability.”

Another usually liberal justice, Stephen Breyer, joined one part of Kagan’s decision on narrow grounds, but not other parts.

In the parts where he dissented, his concerns actually are music to conservative ears.

He said that cases like these risk “unraveling, step-by-step, the foundations of the federal government’s administrative adjudication system as it has existed for decades.”

To the extent that conservatives believe that administrative system leaves too little recourse for individuals to defend themselves from unjust bureaucracies, this would be a good thing, not the bad development Breyer fears.

**MORE COVERAGE OF THE SUPREME COURT at LibertyHeadlines.com**

As the Washington Post news story noted, the lawyer for the plaintiff in this case told the court that 150 ALJs across the federal government could be affected by this decision.

Reuters News Service noted one other aspect of this case, one showing what a difference a change in political administrations can make:

“The ruling provided a victory to Republican President Donald Trump, whose administration last November sided with Lucia in a reversal from the stance that had been taken by the administration of his Democratic predecessor, Barack Obama.”

Still, Kagan kept her decision relatively narrow (even if not as narrow as Breyer wanted), so, according to an analysis at the National Law Journal, “its broader implications remain unclear.”