US Supreme Court empowers bids to curb authority of federal agencies

April 14 (Reuters) – The U.S. Supreme Court on Friday made it easier to challenge the regulatory power of federal agencies in two major rulings upholding the decision by Axon Enterprise Inc. (AXON.O) offer to sue the Federal Trade Commission and a Texas accountant’s complaint with the Securities and Exchange Commission.

A 9-0 ruling by the judges revived Axon’s lawsuit challenging the constitutionality of the FTC’s structure in an attempt to counter an antitrust action related to the Scottsdale, Arizona-based company’s acquisition of a rival. , overturning a lower court’s decision to dismiss the case.

The judges also unanimously upheld a lower court decision allowing accountant Michelle Cochran to sue the SEC, challenging the legality of its internal judges, after the agency criticized its audits of publicly traded companies.

At issue in both cases was whether the targets of an agency’s enforcement action can challenge its structure or processes in federal district court or whether they must first endure the agency’s administrative proceeding, which can be costly and time consuming.

Two laws, the Federal Trade Commission Act and the Securities Exchange Act, channel judicial review of adverse agency orders to federal appellate courts only after those orders become final.

“We now conclude that the review schemes set forth in the Exchange Act and the FTC Act do not displace jurisdiction from district courts over Axon and Cochran’s far-reaching constitutional claims,” ​​Liberal Justice Elena Kagan wrote in the failed.

The role of the FTC is to protect consumers against anti-competitive and fraudulent business practices. The SEC’s job is to keep markets fair and orderly and to enforce investor protection laws.

Reducing the regulatory authority of federal agencies, which can enforce laws and regulations in important areas such as energy, the environment, climate policy and workplace safety, has been a primary goal of many business groups and conservatives, who complain about what they call the “administrative state”.

Conservative Supreme Court justices have signaled their wariness of expansive federal regulatory power and the previously recognized duty of justices, under Supreme Court precedent, to defer to that authority.

This skepticism was reflected in separate concurring opinions issued Friday by Conservative Justices Clarence Thomas and Neil Gorsuch.

Federal agencies have had their powers restricted in recent Supreme Court rulings.

TO decision Last year he limited the authority of the Environmental Protection Agency to issue sweeping regulations to reduce carbon emissions from existing coal and gas power plants under the landmark Clean Air Act anti-pollution law. A 2021 ruling made it more difficult for the FTC to force scammers and companies that engage in deceptive business practices to return ill-gotten gains to consumers.

Axon sued the FTC in 2020 in Arizona federal court following an investigation by the agency into its 2018 acquisition of Vievu, a rival supplier of body cameras.

The company said the agency acts as “prosecutor, judge and jury” in violation of the guarantees of due process and equal protection under the Fifth Amendment law of the US Constitution, and that its judges in administrative law are illegally isolated from the power of the president to control the executive branch. officers under Article II of the Constitution.

In 2021, the San Francisco-based US Court of Appeals for the Ninth Circuit dismissed Axon’s case, ruling that under FTC Law, the company must bring its claims in administrative proceedings first.

In Cochran’s case, an SEC judge found she failed to meet auditing standards, fined her $22,500 and barred her from practicing as an accountant before the commission for five years. Cochran sued in 2019 to stop the enforcement action, like Axon challenging the SEC’s internal judges under Article II.

A federal judge in Texas dismissed Cochran’s challenge, but the New Orleans-based US Court of Appeals for the Fifth Circuit in 2021 revived the case.

Reporting by Andrew Chung in New York; Edited by Will Dunham

Our standards: The Thomson Reuters Trust Principles.