SCOTUS strikes down student debt cancellation plan, takes up case on agency enforcement authority

The Checks and Balances Letter delivers news and information from Ballotpedia’s Administrative State Project, including pivotal actions at the federal and state levels related to the separation of powers, due process, and the rule of law.

This edition: 

In this month’s edition of Checks and Balances, we review the U.S. Supreme Court’s decision striking down the Biden administration’s student debt cancellation plan and the court’s grant of certiorari in a case challenging the scope of the Federal Trade Commission’s (FTC) enforcement authority; recent changes to the authority of administrative law judges at the FTC; and votes in the U.S. House of Representatives to approve the Regulations from the Executive in Need of Scrutiny (REINS) Act and to end Chevron deference.

At the state level, we take a look at an Illinois law that limits the state courts in which citizens can file constitutional challenges to state laws, administrative rules, and executive orders; and calls for Arizona Governor Katie Hobbs (D) to rescind executive orders that state lawmakers and county attorneys argue exceed her authority.

We also highlight a recent Harvard symposium on administrative law in the states. We wrap up with our Regulatory Tally, which features information about the 160 proposed rules and 280 final rules added to the Federal Register in June and OIRA’s regulatory review activity.

In Washington

SCOTUS strikes down student debt cancellation plan, takes up case on agency enforcement authority

What’s the story?

The U.S. Supreme Court on June 30, 2023, held 6-3 in Biden v. Nebraska that the Biden administration’s student debt cancellation plan exceeded the secretary of education’s statutory authority under the national emergency provisions of the Higher Education Relief Opportunities for Students Act of 2003 (HEROES Act).

Chief Justice John Roberts wrote in the opinion, “We hold today that the Act allows the Secretary to ‘waive or modify’ existing statutory or regulatory provisions applicable to financial assistance programs under the Education Act, not to rewrite that statute from the ground up.”

That same day, the court agreed to hear Securities and Exchange Commission (SEC) v. Jarkesy—a case that could affect the scope of federal agency enforcement authority.

A three-judge panel of the U.S. Court of Appeals for the Fifth Circuit in May 2022 found in Jarkesy that enforcement proceedings at the SEC demonstrated the following constitutional deficits: the SEC administrative law judges’ (ALJs) two layers of removal protections unconstitutionally insulate them from presidential oversight; the agency’s adjudication proceedings violate the Seventh Amendment right to a jury trial; and Congress unconstitutionally delegated legislative power to the SEC by failing to provide the agency with an intelligible principle to guide its enforcement actions. The full Fifth Circuit denied a rehearing en banc in October 2022.

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FTC limits ALJ authority

What’s the story?

On the heels of the U.S. Supreme Court’s April 14, 2023, decision in Axon Enterprise Inc. v. Federal Trade Commission (FTC)—in which the court unanimously ruled in part that federal courts have jurisdiction to hear constitutional challenges to the FTC’s double for-cause removal protections afforded to its administrative law judges (ALJs)—the commission on July 5 published a final rule implementing changes to its adjudication proceedings that limit the authority of its administrative law judges to issue final orders.

The final rule, effective July 5, limits ALJs to issuing recommended decisions in adjudication proceedings that are automatically reviewed by the FTC commissioners. The commissioners may then determine whether to affirm the ALJ’s recommendation, reject the recommendation, or issue their own decision. Prior to the change, the FTC’s ALJs issued initial decisions that became final orders unless appealed to or reviewed by the full commission.

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House passes REINS Act, votes to end Chevron deference

What’s the story?

The U.S. House of Representatives in June passed two bills aimed at increasing congressional oversight of agency rulemaking and eliminating Chevron deference, respectively.

The House on June 14, 2023, voted 221-210 to pass the Regulations from the Executive in Need of Scrutiny (REINS) Act, which would require congressional approval of major agency regulations before the rules could take effect. The REINS Act defines major agency regulations as those that have financial impacts on the U.S. economy of $100 million or more, increase consumer prices, or have significant harmful effects on the economy. Democratic Representative Jared Golden (Maine) joined Republican members in support of the measure.

House lawmakers later voted 220-211 on June 15, 2023, to pass the Separation of Powers Restoration Act, which proposes to end Chevron deference (a legal doctrine that compels judges to defer to an agency’s reasonable interpretation of a statute the agency administers, rather than interpret the law themselves). The U.S. Supreme Court, meanwhile, is expected to weigh in on applications of Chevron deference in Loper Bright Enterprises v. Raimondo during its upcoming term.

President Joe Biden stated his intent to veto both bills. The U.S. Senate, according to E&E News, is not expected to advance either bill to a vote.

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In the states

Illinois law limits state courts that can hear constitutional challenges

What’s the story? 

Illinois Governor J.B. Pritzker (D) on June 6, 2023, signed legislation that limits the filing of constitutional challenges to state laws, administrative rules, or executive orders to courts in either Cook County (home to Chicago) or Sangamon County (home to the state capital, Springfield). The bill passed 69-35 in the state House and 37-16 in the state Senate with support from Democratic lawmakers.

Illinois Attorney General Kwame Raoul (D) spearheaded the legislative proposal in response to a rise in constitutional challenges to statewide policies, such as the coronavirus (COVID-19) mask mandate and a semiautomatic weapons ban. Democratic lawmakers argued that the challenges were filed in specific downstate courts in order to garner more favorable rulings—a practice referred to as venue shopping.

“There has been considerable judge shopping as a tactic that has been used by litigants to secure sweeping court orders blocking state policies by steering cases to judges perceived to be sympathetic to these causes,” argued the bill’s sponsor, state Representative Jay Hoffman (D).

Republican lawmakers opposed the measure, arguing that it constituted its own version of venue shopping by limiting constitutional challenges to courts in Cook and Sangamon counties. “They pass unconstitutional laws to make law-abiding citizens criminals and then they make those same citizens travel hundreds of miles to a kangaroo court that they control,” said state Representative Dan Caulkins (R).

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Arizona elected officials: Executive orders exceed governor’s authority

What’s the story? 

State lawmakers and county attorneys in Arizona have called on Governor Katie Hobbs (D) to rescind what they consider to be unlawful executive orders on conversion therapy and abortion.

Hobbs on June 22, 2023, issued an executive order that centralized all prosecutorial authority over abortion cases in the state attorney general’s office. A bipartisan group of 12 of Arizona’s 15 county attorneys argued in a July 3 letter that Hobbs’ order effectively prevents them from prosecuting violations of a state law penalizing certain abortions and that Hobbs overstepped her authority in directing attorneys not to prosecute such cases. 

Maricopa County Attorney Rachel Mitchell (R) argued in the letter that county attorneys’ prosecutorial discretion “has been status quo in Arizona“ since statehood and that it “is a substantial overreach to suggest the governor may strip away prosecutorial discretion from local, elected officials.” 

Hobbs responded in her own letter on July 7, defending the order as a “lawful exercise of gubernatorial discretion to ensure equal protection and equal access to reproductive healthcare statewide.” Attorney General Kris Mayes (D) has stated that she will not prosecute abortion-related cases.

Hobbs on June 27 issued a separate executive order that prohibits state or federal dollars from funding what the order describes as “any practice or treatment on minors known to be a form of ‘conversion therapy.’” House Speaker Ben Toma (R) on July 3 sent a letter to Hobbs urging her to rescind the order, which he argued in part “is very likely unconstitutional” because it exceeds the governor’s authority by engaging in lawmaking—a power reserved for the state legislature. Hobbs had not responded to the letter as of July 18.

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Harvard symposium highlights administrative law in the states

The Harvard Journal of Law and Public Policy in its Spring 2023 issue published a symposium on administrative law in the states featuring a series of papers from state supreme court justices examing the separation of powers, the nondelegation doctrine, judicial deference, and other administrative law concepts in the states. Administrative law scholar Adam White stated in his introduction to the symposium that the series aims to spur dialogue about state-level administrative practices:

States are learning from each other’s experiments, most recently in Ohio, where the state supreme court’s decision to recalibrate its deference to administrative agencies was informed by other states’ decisions. But federal judges can learn from the states, too. As Judge Sutton recently observed, “state and federal courts may borrow historical, practical, and other useful insights from each other,” particularly in “how best to construe generally phrased, sometimes implied, limitations on the powers of each branch.” 

In short, there is “plenty of opportunity for state-federal dialogue” in administrative law. Too often, that dialogue has been a one-way conversation, from federal courts to the states. We hope that this symposium helps to foster conversation in the other direction. We are grateful to Justices Hagedorn, Hart, Peterson, Stegall, and Wecht for reflecting on their own states’ respective experience, and to Judge Sutton for connecting these developments to federal law.

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Regulatory tally

Federal Register

Office of Information and Regulatory Affairs (OIRA)

OIRA’s June regulatory review activity included the following actions:

  • Review of 48 significant regulatory actions. 
  • Three rules approved without changes; recommended changes to 42 proposed rules; two rules withdrawn from the review process; one rule subject to a statutory or judicial deadline.
  • As of July 3, 2023, OIRA’s website listed 128 regulatory actions under review.
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