On Thursday morning, the Supreme Court handed down a case that poses an existential threat to federal regulatory agencies’ ability to do their work in an efficient and effective fashion. In SEC v. Jarkesy, the six-justice conservative supermajority ruled that when the Securities and Exchange Commission seeks civil penalties against a defendant for securities fraud, the Seventh Amendment entitles that defendant to a jury trial in federal court. It sounds pretty abstract, but in reality, the decision seriously threatens federal enforcement at the SEC and myriad other federal agencies. It also represents, as Justice Sonia Sotomayor warned in dissent, an unconstitutional “power grab” by the federal judiciary.
On Thursday’s bonus episode of Amicus, Lisa Heinzerling—a professor at the Georgetown University Law Center who served in the EPA—joined Dahlia Lithwick and Mark Joseph Stern to explain why the case represents another foundational shift in how the government gets things done. Their conversation has been edited and condensed for clarity.
Dahlia Lithwick: Jarkesy feels like a perfect encapsulation of this phenomenon we’ve been describing, which is how this court kneecaps the administrative state without the public realizing it. Before we get into the details of the case, Lisa, can you give me your best argument for why people should care about this?
Lisa Heinzerling: Well, people care when their drinking water is contaminated with lead. They care if their medicines aren’t safe and effective, or if somebody takes all the money out of their investment accounts. Those things don’t make people happy. Yet it’s administrative agencies that are guarding against that and protecting their rights. So when the Supreme Court starts to dismantle important features of these agencies, it matters because it’s destabilizing a really important part of government. But it happens so often and so naturally at this point that I’m not sure people notice, when really they should be outraged.
Mark Joseph Stern: Can I just spell something out that’s implicit in what Lisa just said? The Supreme Court targets the functioning of these agencies because it understands that most Americans won’t realize what it’s doing and what the impact is. I think if the court struck down some law that criminalizes fraud, it would provoke mass outrage. But when the Supreme Court hobbles a federal agency’s ability to police against fraud, most people just don’t pay attention. Nobody understands that the court has ground the wheels of justice to a halt. And what’s so insidious to me about Jarkesy is that it’s dressed in legalese that’s difficult for normal people to grok. But everyone should pay attention, because our rights are implicated, our ability to get justice is imperiled, and we need to connect the dots straight back to SCOTUS.
Lithwick: Lisa, tell us what the court did here.
Heinzerling: The majority ruled that when the SEC seeks civil penalties for fraud under the Securities Act, the defendant has a right to take the case to federal court and demand a jury trial under the Seventh Amendment. That completely upends the process that Congress chose here—and as Justice Sonia Sotomayor pointed out in dissent, there are at least 200 laws that have similar structures. There are two dozen agencies, at least, that have the power to do what the SEC did here, which is adjudicate the case in-house, before an administrative law judge, who has a lot of expertise and a significant measure of independence.
Stern: I think it’s important to note that Congress gave the SEC this power in the Dodd–Frank Act after the Great Recession, because the previous system wasn’t working to Congress’ satisfaction. When you have to go to federal court and adjudicate every single civil penalty before a jury, that takes way more time and resources and personnel than doing it before an administrative law judge. Personnel and resources that these agencies just don’t have. So it feels to me like another value judgment against Dodd–Frank. And how many strikes has the court had against Dodd–Frank. Like, “Oh, Congress, you thought that you could protect us from another recession? Well, we know better than you.”
Heinzerling: Exactly. The Supreme Court is always saying that if Congress doesn’t like its decisions, it can enact a new statute. Well, this is a new statute! Enacted after a significant national crisis! And the majority almost makes fun of how young Dodd–Frank is, and makes it seem like the statute is worthless because of its young age.
Lithwick: I think that’s so critical here, because the majority isn’t just hobbling agencies that are trying to come up with creative solutions to real problems in real time. It’s also hobbling Congress itself, arrogating more and more power to the court. That’s what’s so frightening.
Stern: And the Supreme Court long recognized the government’s ability to do what the SEC did here—to vindicate its sovereign interests to protect the public against injustice, and do it in a way that’s not subject to the Seventh Amendment. I mean, Congress built up much of the modern administrative state on the basis of the Supreme Court’s promise that it could do this kind of thing. The Supreme Court greenlighted in-house adjudication and said civil enforcement action doesn’t have to go through the federal judiciary in the 1970s. Since then, Congress has created a bunch more agencies and given this power to agencies. It’s built up protections for citizens, for consumers, for workers, on the grounds that the Supreme Court said this was OK. And now the Supreme Court just comes in and pulls the rug out from under everybody. Not just Congress, but the executive branch too.
Heinzerling: And that problem is compounded by the court’s refusal to acknowledge that it’s changing things. It acts as though Jarkesy is in line with all precedent, that there’s nothing new here, it’s just one little case out of Texas involving one new law. But the principle goes much further than that. It would be more honest and satisfying if the court acknowledged the damage it was doing.
Lithwick: For those who are struggling to understand these abstractions, can you talk about what’s going to change? What other agencies are affected, and how? This seems like a massive shift in how agencies do business. And that fact doesn’t seem super visible to the majority.
Heinzerling: There’s a long list of statutes and agencies affected—everything from the EPA to the Food and Drug Administration to the Federal Energy Regulatory Commission and on down the line. Congress, with the Supreme Court’s approval, allowed these agencies to adjudicate civil penalties in-house. So the scope of this decision is almost as big as the scope of the whole administrative state.
Stern: There are already challenges bubbling up in the lower courts, too. The 5th Circuit has declared itself to be a clearinghouse for these case, but even in other circuits, we’ve got Seventh Amendment challenges to the FDIC, the NLRB, the FTC, the FCC, and Department of Labor—and if you don’t know what those letters mean, you should, because there’s a good chance they’re protecting your rights at this moment, and they may soon be deprived of the ability to do so.
It seems wildly unlikely to me that Congress will give those agencies and the Department of Justice the massive infusion of money and personnel that they’d need to try all these cases before a jury. If every single time you want to bring a civil penalty, you have to call DOJ and ask to borrow some lawyers for a few years, you’re just going to drop the action instead. This decision won’t just have a direct impact on cases that are going through the agencies right now; it’ll have a chilling effect on the agencies’ ability and willingness to bring new enforcement against wrongdoers.
Heinzerling: And I think the chaos is the point. One way to deconstruct the administrative state is to make it impossible for it to function. Inject so much legal uncertainty into the system that an agency can’t do what it’s always done.
Lithwick: This feels very much of a piece with Project 2025, the conservative activists’ vision for a second Trump term that will effectively implode the administrative state.
Heinzerling: Yes. The Supreme Court is taking on the way we appoint agency personnel, the way we remove agency personnel, the way statutes can be interpreted and enforced, the way that agencies explain themselves—really, it’s making agencies work harder in every way. And so it doesn’t take a genius really to connect the dots. I see two ways of connecting them: One is that this is a highly anti-regulatory court, and indeed it’s veering into an anti-government court. It’s just breaking stuff, long-standing structures and understandings about what the law allows.
But there’s also a real fondness for billionaires here. Billionaires are the actual real parties and interests in a lot of the cases in front of the Supreme Court. We know some of the justices enjoy the company of billionaires. And who benefits when civil penalties are harder to impose? The ultra-wealthy, who have the power to hurt a lot of people at once.
This is part of Opinionpalooza, Slate’s coverage of the major decisions from the Supreme Court this June. Alongside Amicus, we kicked things off this year by explaining How Originalism Ate the Law. The best way to support our work is by joining Slate Plus. (If you are already a member, consider a donation or merch!)