Will Yeatman and Jennifer Schulp discuss the Supreme Court's Jarkesy decision shifting federal agency claims to traditional courts. They explore the impact on administrative adjudication practices, civil penalties, and due process in agency proceedings. The podcast also touches on recent Supreme Court rulings affecting administrative law.
Federal agencies have long operated using administrative adjudication, where they act as both prosecutor and judge, granting them significant authority over defendants. However, recent Supreme Court decisions like Jarkasy indicate a shift towards having these agency adjudications conducted in real courtrooms, undermining the agencies' self-appointed judicial roles.
Evolution of Civil Money Penalties in Agency Adjudication
The introduction of civil money penalties for fraud-like violations since 1970 marked a significant change in agency power, leading to over 188 penalty authorizations by Congress. Previously, agencies could only impose non-monetary penalties, but the shift to monetary penalties raised constitutional questions and resulted in substantial financial impacts on regulated entities.
Impact of SEC v. Jargosy on Due Process and Future Agency Practices
The SEC's ability to prosecute, judge, and enforce penalties within its in-house courts has raised concerns about due process and impartiality. While recent Supreme Court decisions have highlighted the importance of the Seventh Amendment right in civil penalty cases, due process deficiencies persist in agency adjudications for various types of cases beyond civil penalties, prompting calls for enhanced procedural fairness in administrative proceedings.
The Supreme Court's Jarkesy decision will mean more cases brought federal agencies will end up in court instead of the court-like rooms inside the agencies themselves. Will Yeatman of the Pacific Legal Foundation and Cato’s Jennifer Schulp explain the importance of the change.