Supreme Court News - Spring 2023

Looks Like It Will Be a Busy June

As of April 14, 2022, the Supreme Court had published 28 merits opinions on its website. As of that date in 2023, it had published 14. This small data set can be interpreted in two ways. It could be that the Court is reducing the number of opinions it publishes by mid-April by 14 opinions per year, which would yield negative numbers by 2025. It is also possible that the Court is attempting to resolve Zeno’s Paradox once and for all, halving the number of opinions it publishes by mid-April each year to see how long it takes to get to zero.

The handful of opinions published so far this term have not had a great deal to say about administrative law—but just you wait! Big administrative law cases still in the hopper include: Sackett v. Environmental Protection Agency, No. 21-454 (argued Oct. 3), which addresses the scope of “waters of the United States” under the Clean Water Act; United States v. Texas, 22-58 (argued Nov. 29), which raises difficult questions of state standing as well as the possibility that courts have wildly misunderstood their authority to “set aside” agency actions for many decades; and, of course, Biden v. Nebraska, No. 22-506, and Dept. of Education v. Brown, No. 22-535 (both argued Feb. 28), which, in addition to raising sticky standing problems, also presented the Court with a chance to apply its new, super-charged Major Questions Doctrine to the Biden Administration’s student-debt forgiveness program. The summer issue of ALRN’s case summary should therefore be, as the saying goes, lit.

As if that were not enticing enough, on May 1, just as we were wrapping up this little column, the Supreme Court signaled a potential admin-law earthquake to come in the next Term. In Loper Bright Enterprises v. Raimondo, No. 22-451, the Court signaled its plan to revisit the viability of the Chevron doctrine when it denied cert. on a question specific to interpretation of the Magnuson-Stevens Act but granted review on the broader question of “[w]hether the Court should overrule Chevron or at least clarify that statutory silence concerning controversial powers expressly but narrowly granted elsewhere in the statute does not constitute an ambiguity requiring deference to the agency.”

Fortunately for this column, there is some administrative law news to share from the published opinions released so far this Term. Most of it can be found in Axon Enterprises, Inc. v. FTC, 143 S. Ct. 890 (2023). As discussed below, in Axon, the Court opened the door wider for plaintiffs to bring constitutional challenges to agency structures in district court rather than requiring them to follow statutory review schemes that channel claims first to agency adjudication and then to the courts of appeals.

Also of some note:

In Arellano v. McDonough, 143 S. Ct. 543 (2023), a unanimous opinion that Justice Barrett authored, the Court held that equitable tolling did not apply to the time limit set forth in 38 U.S.C. § 5110(b)(1), which provides that the eligibility date for veterans’ disability benefits is the day after discharge so long as the veteran’s application is received within one year of discharge. Section 5110(b)(1) creates an exception to the general rule that the effective date of an award “shall not be earlier than the date of receipt of application therefor.” 38 U.S.C. § 5110(a)(1). Congress has created fifteen other exceptions to this general rule, which suggests that Congress did not intend for the courts to create more exceptions via equitable tolling.

In Bittner v. United States, 143 S. Ct. 713 (2023), the Court held that penalties for nonwillful violations of a provision of the Bank Secrecy Act that requires annual reporting regarding foreign bank accounts should accrue on a per-report rather than per-account basis. Along the way to this conclusion, the Court noted that the government had, contrary to its current stance that penalties should accrue per-account, issued guidance documents indicating that they should accrue per-report. The Court then cited Skidmore v. Swift & Co., 323 U.S. 134 (1944), for the proposition this inconsistency “surely … counts as one more reason yet to question whether its current position represents the best view of the law.” 143 S. Ct. at 722.

In Luna Perez v. Sturgis Public Schools, 143 S. Ct. 859 (2023), the Court held that an exhaustion provision of the Individuals with Disabilities Education Act (IDEA), 20 U.S.C. § 1415(l), did not require the plaintiff to exhaust administrative procedures under the IDEA before suing for compensatory damages under the American with Disabilities Act (ADA). In a brief unanimous opinion that Justice Gorsuch authored, the Court explained that § 1415(l) required plaintiffs suing under other federal laws to exhaust IDEA administrative procedures only when “seeking relief that is also available under this subchapter.” 143 S. Ct. at 863. The Court agreed with Perez’s reading that this provision required exhaustion “only to the extent [the plaintiff] pursues a suit under another federal law for remedies IDEA also provides.” Id. (italics in original). As the IDEA does not provide a remedy of compensatory damages, § 1415(l) did not block Perez’s ADA suit.

Although further developments will no doubt occur in this fast-moving case before this column reaches print, it also bears noting that, over in the shadow docket, in Danco Laboratories, LLC v. Alliance for Hippocratic Medicine, No. 22A901, the Court on April 21 stayed an April 7 order of the United States District Court for the Northern District of Texas that suspended the FDA’s decades-old approval of mifepristone. This case, to put the matter mildly, raises many administrative-law questions of standing and timing, and its merits are likely to reach the Supreme Court in short order. Justice Thomas would have denied the application for a stay but did not explain why. Justice Alito issued a dissent accusing critics of the Court’s recent use of its shadow docket of inconsistency, assailing the FDA for inequitable manipulation of district court injunctions, discounting the possibility of “regulatory chaos” if a stay were not granted, and declaring that there were “legitimate doubts” that the government would, in any event, obey an unfavorable court order. 2023 WL 3033177 (Mem) (Alito, J., dissenting from grant of application for stays).

Axon Enterprise, Inc. v. FTC, 143 S. Ct. 890 (2023): The Court Upholds District Court Jurisdiction over Challenges to Agency Structure

The Court recently decided two consolidated cases that raised the same issue under different statutes. In Axon Enterprises, Inc. v. FTC and Securities and Exchange Commission v. Cochran, the Court determined that the judicial review provisions of the Federal Trade Commission Act (FTC Act) and the Securities Act of 1934 (the 1934 Act), both of which channel judicial review of agency adjudications to federal circuit, rather than district, courts, did not preclude district court jurisdiction over structural constitutional challenges to agency adjudication procedures and ALJ removal protections.

In Axon Enterprises, the Ninth Circuit held that an action in federal district court challenging, inter alia, FTC ALJs’ double-for-cause removal protections on constitutional grounds lacked jurisdiction under the FTC Act. By contrast, in Cochran, the en banc Fifth Circuit held that the 1934 Act neither expressly nor implicitly precludes district court jurisdiction over challenges to the constitutionality of removal protections for agency officials. In a unanimous, consolidated opinion, the Supreme Court reversed the Ninth Circuit’s holding in Axon and affirmed the Fifth Circuit in Cochran.

The Court acknowledged that the judicial review provisions of the FTC Act and the 1934 Act “divest[] district courts of their ordinary jurisdiction over covered cases,” but went on to explain that this does not mean that the statutory provisions “necessarily extend to every claim concerning agency action.” It relied on the three factors articulated in Thunder Basin Coal Co. v. Reich, 510 U.S. 200 (1994), to determine whether particular claims regarding agency action are “of the type Congress intended to be reviewed within this statutory structure”? Id. at 212. First, could precluding district court jurisdiction “foreclose all meaningful judicial review” of the claim? Id. at 212–213. Second, is the claim “wholly collateral” to the statute’s review provisions? Id. at 212. And finally, is the claim “outside the agency’s expertise”? Id. at 212. The Court answered all three questions in the affirmative, concluding that the plaintiffs’ constitutional claims are not “of the type Congress intended to be reviewed” within the judicial review provisions of the FTC and 1934 Acts, which leaves the district courts free to exercise jurisdiction over these claims under their general federal question jurisdiction.

Applying the first Thunder Basin factor, the Court held that precluding district court review could foreclose all meaningful judicial review because Cochran and Axon allege a “‘here and now’ injury of subjection to an unconstitutionally structured decisionmaking process” that “is impossible to remedy once the proceeding is over.” Axon, 143 S. Ct. at 903-04 (2023). Under the second factor, the Court held that the constitutional challenges were “collateral” to the FTC and SEC statutory review provisions because the questions about constitutional structure “have nothing to do with the enforcement-related matters the Commissions ‘regularly adjudicate[],’” including the charges the agencies had leveled at Axon and Cochran themselves. Id. at 904-05. Finally, the Court held that the claims raised by Axon and Cochran in district court are outside of the agency’s expertise because they raise “‘standard questions of administrative’ and constitutional law, detached from ‘considerations of agency policy.’” Id. at 905.

Justice Thomas wrote a concurring opinion, in which he expressed his concern about the constitutionality of agency adjudication of private rights in general. In an opinion concurring in the judgment, Justice Gorsuch argued for abandoning the Thunder Basin factors in favor of the plain text of the federal question statute, which states that “district courts shall have original jurisdiction of all civil actions arising under the Constitution, laws, or treaties of the United States.” 28 U.S.C. § 1331.

The impact of the Court’s decision in Axon remains to be seen. It is not entirely clear, for instance, exactly which claims qualify as sufficiently structural to fall outside of existing statutory review mechanisms under Thunder Basin. It is also not clear whether the decision will substantially alter many parties’ approach to challenging agency action, although it certainly creates an incentive to bring pre-enforcement challenges in district court. The decision does confirm, however, the recent trend of at least some members of the Court toward revisiting the constitutional foundations of core issues of administrative law.