Tuesday, November 28, 2023

"SEC's in-house enforcement powers at risk in US Supreme Court case"

If they are doing the job that Congress or the Courts are supposed to be doing they should be at risk.

The whole issue comes down to the vast amount of power that has been abandoned to the executive branch. If interested see April 2023's:

 "Is the Securities and Exchange Commission Unconstitutional?"

And a slightly different case from 2016: "Appeals Court Holds That SEC Administrative Law Judges Are Unconstitutional"

From Reuters, November 28:

A challenge to the U.S. Securities and Exchange Commission's powers to protect investors from fraud comes before the Supreme Court on Wednesday in another in a series of legal attacks against federal agencies that regulate financial markets.

The justices are due to hear arguments in an appeal by President Joe Biden's administration of a lower court's ruling restricting the SEC's power to enforce securities laws through the agency's longstanding in-house tribunal system. The case involves hedge fund manager George Jarkesy, who the SEC fined and barred from the industry after determining he had committed securities fraud.

Critics of the agency have argued that its in-house system gives it the unfair advantage of prosecuting cases before its own judges rather than before a jury in federal court.

The New Orleans-based 5th U.S. Circuit Court of Appeals in 2022 ruled in favor of a legal challenge brought by Jarkesy. The 5th Circuit decided that the SEC's power to seek penalties through in-house enforcement proceedings violates the U.S. Constitution's Seventh Amendment right to a jury trial and infringes on presidential and congressional powers....

....MUCH MORE

Related:

May 2023
"How a group of herring fishermen may get the Supreme Court to reel in government power" 

April 2023
"E.P.A. Is Said to Propose Rules Meant to Drive Up Electric Car Sales Tenfold"

And on the broader issues:

July 3, 2022:
Background On The Supreme Court's EPA/CO2 Ruling: The Administrative State

As part of  our look at what the Court actually decided in the decision released on June 30 we will be diving into the nuts and bolts of government bureaucracy, AKA the Administrative State, AKA The Swamp.

First though, a recapitulation of the introduction to last Thursday's "Supreme Court curbs EPA climate authority":

The headline is a bit of a mischaracterization. The Court ruled the EPA did not have the authority it claimed to have, a different situation from reining in an existing authority, and that the EPA could not simply adopt the Affordable Clean Energy rule; that the agency had exceeded its mandate under the Clean Air Act with the proposal  and that if Congress wanted the outcome of the Rule under CAA it would have to legislate same rather than have the administrative state simply write rules.

However, as the Washington Post quoted a proponent of the EPA's action:

Richard Lazarus, a Harvard environmental law professor, said in a statement that by insisting that an agency “can promulgate an important and significant climate rule only by showing ‘clear congressional authorization’ at a time when the Court knows that Congress is effectively dysfunctional, the Court threatens to upend the national government’s ability to safeguard the public health and welfare at the very moment when the United States, and all nations, are facing our greatest environmental challenge of all: climate change.”

It is not the Court's place to solve the problem of Congress being dysfunctional.

From Energy & Environment News' Greenwire, June 30:....

And the headliner from The American Academy of Arts & Sciences journal, Dædalus, Summer 2021 issue:

Shortly after the 2016 election, presidential advisor Stephen Bannon vowed to pursue the “deconstruction of the administrative state,” signaling the new administration’s view that parts of government itself had stolen power from the American people. But while the administrative state may have been a new term for many Americans, debates around this so-called fourth branch of government have persisted since its origins in the late nineteenth century: Is the administrative state constitutional? Who controls it? What limits should it face? And is it time for significant change?

The Summer 2021 issue of Dædalus explores the future of the modern administrative state—the more than two million civilian employees working largely in government agencies and institutions. Three options emerge: deconstruction via regulation and control by the legislature; tweaking, which would modify existing doctrine without making significant changes; and reconstruction, which might involve adopting ever more flexible modes of regulation, including direct citizen participation in making and enforcing regulation.

https://www.amacad.org/sites/default/files/styles/daedalus_past_issue_2x/public/media/images/Daed_Su21_Chaplin-w.jpg?itok=bIs9j2pN

Charlie Chaplin and Chester Conklin struggle to repair the giant machinery of an idle 
factory in the 1936 silent film “Modern Times.” Film distributed by the United Artists 
Corporation; image held by the Bettman Archive, courtesy of Getty Images.

Introduction: The Pasts & Futures of the Administrative State

To understand contemporary arguments about deconstructing and reconstructing the modern administrative state, we have to understand where that state came from, and what its futures might be. This introductory essay describes the traditional account of the modern administrative state’s origins in the Progressive era and more recent revisionist accounts that give it a longer history. The competing accounts have different implications for our thinking about the administrative state’s constitutional status, the former raising some questions about constitutionality, the latter alleviating such concerns. This introduction then draws upon the essays in this issue to describe three options for the future. Deconstructing the administrative state without adopting a program of across-the-board deregulation would entail more regulation by the legislature itself and would insist that Congress give clear instructions to administrative agencies. Tweaking would modify existing doctrine around the edges without making large changes. Reconstruction might involve adopting ever more flexible modes of regulation, including direct citizen participation in making and enforcing regulation.

How the Administrative State Got to This Challenging Place

Written for a dispersed agrarian population using hand tools in a local economy, our Constitution now controls an American government orders of magnitude larger that has had to respond to profound changes in transportation, communication, technology, economy, and scientific understanding. How did our government get to this place? The agencies Congress has created to meet these changes now face profound new challenges: transition from the paper to the digital age; the increasing centralization in an opaque, political presidency of decisions that Congress has assigned to diverse, relatively expert and transparent bodies; the thickening, as well, of the political layer within agencies themselves; and the increasing judicial use of analytic techniques invoking the expectations of those who wrote the Constitution so long ago and in such different circumstances. Never easy, finding the appropriate balance between law and politics presents major challenges today.

Milestones in the Evolution of the Administrative State

The modern administrative state, as measured by the number of agencies, their budgets and staffing, and the number of regulations they issue, has grown significantly over the last hundred years. This essay reviews the origins of the administrative state and identifies four milestone efforts to hold it accountable to the American people: passage of the Administrative Procedure Act in 1946, the economic deregulation of the 1970s and 1980s, requirements for ex ante regulatory impact analysis, and the establishment of White House review. These milestones reflect bipartisan consensus on appropriate constraints on executive rulemaking, but they have not succeeded in stemming the debate over the proper role for administrative agencies and the regulations they issue. New milestones may include judicial interpretations, legislative actions, and extensions to executive oversight.

Legislative Capacity & Administrative Power Under Divided Polarization

Conventional wisdom holds that party polarization leads to legislative gridlock, which in turn disables congressional oversight of agencies and thus erodes their constitutional legitimacy and democratic accountability. At the root of this argument is an empirical claim that higher levels of polarization materially reduce legislative productivity as measured by the number of laws passed or the number of issues on the legislative agenda addressed by those laws, both of which are negatively associated with party polarization. By focusing on the content of statutes passed rather than their number, this essay shows that in the era of party polarization and divided government, Congress has actually 1) enacted an ever growing volume of significant regulatory policy (packaged into fewer laws); 2) increasingly employed implementation designs intended to limit bureaucratic and presidential power; and 3) legislated regulatory policy substance in greater detail (reducing bureaucratic discretion) when relying on litigation and courts as a supplement or alternative to bureaucracy. This essay thereby complicates, both empirically and normatively, the relationship between Congress and administrative power in the era of party polarization and divided government.

Author Sean Farhang

Is the Failed Pandemic Response a Symptom of a Diseased Administrative State?

The U.S. national government’s poor pandemic response raises unsettling questions about the overall health of the administrative state: that is, the agencies, people, and processes of the executive branch of the federal government. First, are the administrative weaknesses revealed over the last year symptomatic of widespread problems beyond the public health bureaucracy? Second, are the weaknesses attributable to the Trump administration or do they reveal a deeper malady, something that afflicted earlier Democratic and Republican administrations? In summer 2020, my colleagues and I conducted a survey of thousands of federal executives to help shed light on these questions. These executives reported a low opinion of the then-current administration, the White House, and the president’s political appointees. Yet they also reported long-standing issues of low investment and problems of capacity that extend back into other Democratic and Republican administrations. Years of neglect have culminated in vulnerabilities manifesting themselves in increasingly regular and severe administrative failures. These failures put all of us at risk.

....MUCH MORE, including the abstracts (as above) of nine more papers. The abstract  headline links take you to the individual papers. 

Quite an impressive accomplishment for Dædalus and for the AAAS