featured image 96 How 3 big Supreme Court cases could derail the government

On Wednesday, the Supreme Court is hearing a case challenging the authority of federal agencies.

It’s one of three major cases that could upend the way the government works.

The cases could have major implications for consumers, like making it harder to get federal benefits.

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Three major Supreme Court cases could upend the way the government works — and put Americans’ federal benefits and consumer protections at risk.

On November 29, the nation’s high court is hearing oral arguments in the case SEC v. Jarkesy, which challenges how federal agencies can regulate the industries they oversee.

In this case, administrative law judges at the Securities and Exchange Commission found that two hedge funds managed by conservative commentator George Jarkesy committed securities fraud, barring him from participating in the securities industry.

However, the 5th Circuit Court of Appeals reversed the SEC’s decision in May 2022, declaring the SEC’s administrative law judges unconstitutional and stating that Congress does not have the authority to allow the SEC to adjudicate securities fraud cases and that they instead need to go through traditional courts.


“Federal courts have dealt with actions under the securities statutes for many decades, and there is no reason to believe that such courts are suddenly incapable of continuing that work just because an agency may now share some of the workload,” the 5th Circuit’s decision said.

The SEC and several other federal agencies have used in-house adjudication systems for years, and Jarkesy’s challenge to that process could upend the way Americans and businesses rely on that process to help with any concerns or challenges they might be dealing with.

Essentially, getting rid of administrative law judges would make it a lot harder for agencies to actually regulate industries, putting consumer protections at risk.

According to a brief from the think tank Center for American Progress, a ruling in favor of Jarkesy would make it harder for Social Security recipients to have their benefits claims adjudicated by the administrative law judges in the Social Security Administration.


“Such a ruling could result in 80 years of administrative law being overturned by removing ALJs’ independent decision-making within their agencies, either eliminating them or creating an appearance of bias in their rulings by putting them under the direction of agency management,” the brief said. “In turn, this would flood the federal courts with cases, causing both agencies and the courts to grind to a halt.”

This isn’t the only case that challenges how the government works — and poses major implications to consumers. These are the other big cases to follow on the Supreme Court’s docket.

A challenge to how a major consumer watchdog is funded

In October, the Supreme Court heard oral arguments in the case Consumer Financial Protection Bureau v. Community Financial Services Association of America Ltd., which argues the CFPB’s independent funding structure is unconstitutional.

Since the CFPB’s establishment in 2011, it has received funding from the Federal Reserve rather than relying on annual funding approval from Congress. The Fifth Circuit ruled in October, however, that the funding structure is unconstitutional and the consumer protection agency should not be allowed to receive funding without explicit annual congressional approval.


As Business Insider previously reported, an adverse ruling from the Supreme Court could put consumers at risk because it would threaten the CFPB’s ability to perform its oversight actions. For example, the CFPB has protected student-loan borrowers and returned money to them after being subjected to predatory lending, and changing the funding structure would limit the agency’s ability to continue those actions.

A ruling against the CFPB’s funding scheme could also threaten other federal programs that aren’t subject to the annual Congressional appropriations process.

Former chair of the Federal Deposit Insurance Corporation Sheila Bair also said in October “the opinion could lead to a sea change in how essential government agencies function — and to potential chaos every time Congress engages in brinkmanship over funding.”

“Essential government agencies and programs, including Social Security and Medicare, both of which are administered by independently funded bodies, would see their sources of independent funding vulnerable to challenge,” she said.


Changing how the federal government is allowed to make regulations

Another Supreme Court challenge has big implications for the way all federal agencies function. Loper Bright Enterprises v. Raimondo challenges how much authority federal agencies really have in establishing rules when Congress does not put forth specific language on the regulations in question.

Specifically, the case was brought on by a group of fisheries that are challenging the National Marine Fisheries Service’s interpretation of a law. The NMFS requires commercial fishing boats to allow federal agents to come on fishing expeditions to collect data, but it also said a statute would require some of the fisheries to pay or subsidize the salary of some of those agents.

The fisheries are challenging that idea, arguing against the NMFS’ interpretation of that statute. The key issue at play here is the Chevron doctrine, which gives federal agencies the power to interpret a relevant law as long as it doesn’t go against Congress’s language. That doctrine has allowed federal agencies to make regulations across many different industries, even if the original laws enabling those agencies left some details blank.

If the Supreme Court rules in favor of the fisheries, it would mean agencies with expertise on a law would not have the ability to make decisions on it — instead giving that authority to courts without the same knowledge.


The Supreme Court will likely issue final decisions on these cases by June.
Source and Read More: https://www.businessinsider.com/social-security-supreme-court-what-are-major-cases-administrative-state-2023-11