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Supreme Court Scrutinizes Yet Another Federal Regulatory Abuse

Posted on Monday, December 11, 2023
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by Outside Contributor
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10 Comments
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“Judge, jury and executioner.”  

That familiar, ominous idiom instantly signals the sort of unchecked, centralized authority that threatens individual freedom and violates our Constitution’s system of limited government and separation of powers.  

In recent years, it particularly captures the growing menace of the nation’s federal regulatory state.  

Unable to enact extremist agenda items such as “Net Neutrality” or the “Green New Deal” via the democratic representative process, the political left that populates our sprawling administrative agencies instead seeks to impose its will through regulation.  

That egregiously violates our constitutional system. Our executive branch and its federal agencies exist to execute our nation’s laws, not create them or abusively interpret them.  

Fortunately, in recent years the United States Supreme Court has undertaken a concerted effort to interrupt the regulatory state’s overreach, including the monumental West Virginia v. EPA rebuke in 2022:  

Capping carbon dioxide emissions at a level that will force a nationwide transition away from the use of coal to generate electricity may be a sensible “solution to the crisis of the day.” But it is not plausible that Congress gave EPA the authority to adopt on its own such a regulatory scheme in Section 111(d). A decision of such magnitude and consequent rests with Congress itself, or an agency acting pursuant to a clear delegation from that representative body.  

This term, the Court will address a similarly defective Security and Exchange Commission (SEC) procedure empowering itself to serve as the proverbial judge, jury and executioner in its proceedings.  

At issue in SEC v. Jarkesy is a commission enforcement procedure created in the wake of the 2010 Dodd-Frank Act, which has earned myriad other judicial rebukes.  Specifically, the SEC created a system by which it could prosecute alleged securities law violations through its own internal administrative hearings before its own judges rather than court jury trials, which defendant George Jarkesy claims violates his Seventh Amendment right to a jury trial.  

The Fifth Circuit Court of Appeals agreed on all counts, and it’s easy to understand why.  

Most egregiously, the administrative law judges who conduct in-house hearings are appointed by the very same SEC commissioners who authorize those prosecutions.  As defendant Jarkesy’s brief notes, “SEC prosecutors and ALJs, who presumably have lunch together in the cafeteria at the SEC, cannot both prosecute and adjudicate the fact of liability in a case like that of respondents, regardless of the criteria for making that supposed choice.”  

Aggravating the unfairness, internal trials allow wider use of hearsay and documentary evidence that wouldn’t be admitted into evidence in court trials, and defendants’ right to discovery is much more limited. It’s therefore no wonder that at the time of Mr. Jarkesy’s trial, the SEC maintained a 100% victory rate on internal hearings, as opposed to its 61% success rate in judicial branch trials.  

Moreover, as Jarkesy’s brief further notes, an SEC data breach allowed its enforcement officers to obtain privileged legal memos in his case and multiple others, deepening the flagrant unfairness and lack of due process.  

After the SEC predictably ruled against Jarkesy, the Fifth Circuit vacated that decision on all counts because of its constitutionally defective structure:  

It often acts as both prosecutor and judge, and its decisions have broad consequences for personal liberty and property.  But the Constitution constrains the SEC’s powers by protecting individual rights and the prerogatives of the other branches of government. …  

In sum, we agree with Petitioners that the SEC proceedings below were unconstitutional. The SEC’s judgment should be vacated for at least two reasons:  (1)  Petitioners were deprived of their Seventh Amendment right to a civil jury;  and (2)  Congress unconstitutionally delegated legislative power to the SEC by failing to give the SEC an intelligible principle by which to exercise the delegated power.  

That assessment characterizes all too many contemporary federal agency abuses, and the Supreme Court should affirm the Fifth Circuit’s ruling and further reclaim Americans’ constitutional freedoms against regulatory overreach.  

In the Declaration of Independence, after all, our Founding Fathers specifically listed Britain’s denial of “the benefits of trial by jury” as a motivating grievance. That protection of individual freedom remains as important today as it was then, and its denial is no less outrageous today than it was then.  

In a better political environment, our nation’s public agencies wouldn’t subject citizens to such fundamental violations of due process. We can at least remain grateful, however, that a Supreme Court featuring a majority of originalists continues to provide a bulwark against such abuses.  

Reprinted with permission from The Center for Individual Freedom by Timothy H. Lee.

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Rob citizenship
Rob citizenship
2 months ago

Very good that you brought attention to this matter Mr. Lee. And the mention of the Declaration of Independence helps to put the issue in perspective. This article is important as it helps in defending basic rights and helps in dealing with the federal regulatory state. It provides encouragement with the reminder that the Supreme Court is comprised of a majority of originalists.

.

Peter Schwartz
Peter Schwartz
2 months ago

I had entered a case against the SEC for the judicial review of the Unconstitutionally Vague FINRA Rule 2010. The SEC is prohibited by the Fifth Amendment to effectuate policy which would usurp due process rights. I removed the case without prejudice due to an employment contract.
.Nevertheless it is sadly ironic the very Government the founding fathers shed blood to create now usurps the freedoms which they died for.

John Bass
John Bass
2 months ago

Watch “Fall of the Republic” on YouTube. You’ll see where we were sold down the drain during the Obama administration and how it continues to this day.

America is doomed unless the public wakes up and demands we go by, and strictly follow the US Constitution.

God save the USA.

David Millikan
David Millikan
2 months ago

Here’s more of Federal Regulatory Abuse..Dictator Beijing biden is making secret deals with Communist China to get Natural Gas delivered to them from Louisiana. NO BS.
He shuts down our production of Natural Gas for OUR ENERGY in the United States buts has Louisiana produce Natural Gas to sell to Communist China. Remember he SOLD our Oil from our National Oil Strategic Reserves to Communist China (Act of Espionage and Treason) and to this day, 12-12-23, he has NEVER FILLED it back up.
That is intentional corruption, abuse of office, Threat to National Security, espionage and treason.
As usual, Dictator Beijing biden puts his Communist China buddies first and the United States last.
Remember he had San Francisco cleaned up just for his Communist buddy while pelosi Never did anything to clean up San Francisco.
They do NOT have the best interest for the United States at all. Otherwise, we would still be ENERGY INDEPENDENT like we were with President Trump who put the United States FIRST.
To top it off..President Trump got rid most of those draconian regulations by Obama and Clinton.
How many times does your house have to burn down before you WAKE UP AMERICA?

Rik
Rik
2 months ago

Cut the BS, Comrade, most Conservatives DON’T agree with you!

Stephen Russell
Stephen Russell
2 months ago

NO Carbon Capture, useless Tech

Robert Zuccaro
Robert Zuccaro
2 months ago

And while “all eyes are on Iowa” somebody needs to talk about the multibillion dollar taxpayer funded CO2 soil injection system being laid out across fields and pastures of the state. Sounds like another “California bullet train” to me. They’ll complain about fracking to get oil out but CO2 us okay to inject, huh?

Robert Zuccaro
Robert Zuccaro
2 months ago

Right after every hostile country you love instead of this one lays down their arms.

Sharon McNatt
Sharon McNatt
2 months ago

Our SCOTUS need to always be constitutionalists and stick within the confines of US Constitution. We cannot allow term limits for them. And as voters seemingly cannot do their job our congress does need term limits and ethics rules as they provoke the distrust of the people and partake in criminal activity.

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