Today, in SEC v. Jarkesy, the Supreme Court ruled that the defendants in a securities fraud case brought by the SEC were entitled to have the SEC's claims for civil penalties decided by a jury. The question now is how broadly the opinion will be applied. Because the court's jurisprudence in this area is complicated, not to say incomprehensible, there remains significant room for speculation.
In 1977, in Atlas Roofing v. OSHA, SCOTUS ruled that OSHA could impose civil penalties without having to bring its claims before an Article III jury. The Court's decision yesterday explicitly states that it did not need to decide whether Atlas Roofing has been or should be overruled.
As a result, EPA-watchers are left to wonder. Are claims under the various statutes pursuant to which EPA can impose administrative civil penalties more like the securities statutes or more like OSHA? And if they are more like OSHA, is it still safe for a lower court to rely on Atlas in support of EPA civil penalty authority?
If I were a betting man, my money would be on a finding that defendants to EPA civil enforcement claims seeking imposition of a penalty are entitled to a jury. And as rare as it might be, from a policy point of view, I find myself siding with the conservative wing of the Court on this issue. Justice Alito's concurrence in Sackett still rings true to me:
the combination of the uncertain reach of the Clean Water Act and the draconian penalties imposed for the sort of violations alleged in this case still leaves most property owners with little practical alternative but to dance to the EPA's tune.
Simply put, the government holds all the cards in adjudicatory proceedings. And the ultimate right of appeal to an Article III court is cold comfort to a defendant faced with years of litigation costs and uncertain prospects on appeal. I believe that the potentially draconian results undermine faith and confidence in government. Precisely because I do believe in the modern administrative state, I think that administrative agency civil penalty authority is a bad idea. Efficiency isn't everything, and it certainly isn't anything good when it convinces agencies that they are always in the right.
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Originally published 27 June 2024
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