Back to the Supreme Court of the 1930s

The conservative Supreme Court poses a challenge to the administrative state not seen for a century.

The United States Supreme Court, 1930. (Photo by FPG/Archive Photos/Getty Images)

Paul Verkuil is a distinguished administrative law scholar and former head of the Administrative Conference of the US. In this article he reviews the intellectual origins of two Supreme Court decisions issued at the end in June. The first, Loper Bright v. Raimondo, was a long-expected decision that overturned a 40-year old precedent, Chevron deference. Much less attention has been paid to another decision, SEC v. Jarkesy, which will severely limit the ability of government agencies to sanction wrongdoers. Together with the Heritage Foundation’s Project 2025, these cases are part of a larger conservative agenda aimed at dismantling the federal bureaucracy. 

You can watch an interview with Paul Verkuil on the Frankly Fukuyama YouTube channel here.

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President Biden’s recent call to restructure the Supreme Court through a constitutional amendment, while unlikely to pass as a practical matter, raises real concerns about the Court’s legitimacy that have not been voiced as strongly since the New Deal in the 1930s. Today’s Supreme Court majority is really living in the past. It enjoys reversing long-held precedents, most famously the Dobbs decision which overruled the fifty-year-old precedent in Roe v. Wade providing a right to abortion, and thereby took away constitutional protections from more than half of the American population. Yet Dobbs is only one example of how this Court is looking to the past for precedents to reverse. This term it went back almost 100 years to upset established precedents. Let me explain. 

When the modern administrative state was being created during the early Franklin Roosevelt years, the Supreme Court famously stood in the way. Wielding the due process clause of the Fourteenth Amendment, it used the concept of liberty of contract to strike down regulatory legislation. But the Court’s real target was the administrative state more broadly. Led by “The Four Horsemen,” as they were known, conservative justices stood firm against the New Deal agencies. They were inspired by Oxford Professor A.V. Dicey’s charge of “administrative absolutism” as directed at the regulatory state in England. How could administrative agencies take cases away from the common law courts, Dicey argued, without creating a despotic regime? 

This question was raised by legal scholar Roscoe Pound in the United States and influenced the conservative members of the Court. Both Dicey and Pound decried the inability of  administrative officials to provide jury trials, a core function of the common law courts. It wasn’t until the Court reached a compromise in the 1930s, by creating a “public rights” doctrine to distinguish common law cases that would require jury trials under the Seventh Amendment, that the issue settled down. And it took several more years before the Court ceased to use due process and nondelegation challenges to hold New Deal legislation unconstitutional. In 1937, the Court did a “switch in time that saved nine” when Justice Owen Roberts moved to the majority in West Coast Hotel v. Parrish and upheld state minimum wage laws. Pound had also pushed legislation that would have subjected agency decisions to de novo review by the courts, which would have allowed the courts to second guess factual as well as legal decisions and vastly increased the reversal rate of agency adjudications. Roosevelt vetoed the bill on the eve of World War II.

After the war, Congress overwhelmingly passed the Administrative Procedure Act which reached a compromise by retaining the ability of agencies to judge cases without jury trials, while adding due process protections for administrative adjudication. The APA created Administrative Law Judges (ALJs) to hear such cases, who were insulated from direct agency control and protected from removal except “For Good Cause.” 

Justice Robert Jackson, who had served earlier as FDR’s Attorney General, observed in the case upholding the APA that the fight over administrative legitimacy was finally over. He was right for the next 75 years or so, but no longer. This term the Court revived old arguments and again undermined the administrative state, thereby creating a modern version of the Four Horsemen. Indeed, we may now have Five or Six Horsemen.

In Loper Bright Enterprises v. Raimondo, the Court overruled the Chevron case, a forty-year-old precedent that created a regime of mandatory judicial deference to agency decisions. While Chevron’s demise was long anticipated, its actual arrival could well upset the agency/court relationship. The question now is what form of agency deference will replace it, or, indeed, whether some courts will defer at all. While the Court majority did not intend a return to Pound’s idea of de novo review, there are Federal district judges and even one Circuit court (the notorious Fifth) who are eager to end the administrative state. Their decisions will be problematic unless the Supreme Court reins them in—no easy task.

These are, for sure, not small matters, but less significant than the second case on administrative law, Jarkesy v. SEC. This case revived the Seventh Amendment’s right to a jury trial in place of adjudication within agencies. By minimizing the “public rights” doctrine and extolling the virtues of the common law jury, the Court majority held unconstitutional Congress’ recent grant of power to the Securities and Exchange Commission to adjudicate cases before its ALJs, freeing the financier Jarkesy from civil penalties for his fraudulent conduct.

This is a case that only The Four Horsemen, Dicey, and Pound could love. Justice Gorsuch’s concurrence makes this connection clear. He references Pound directly and Dicey’s beloved English common law (the latter in excruciating detail). For his part, Justice Thomas raises a further question as to whether civil penalties are ever appropriate in administrative adjudications—an even bigger deal. In her dissent, Justice Sotomayor noted that there are over 200 statutes conferring civil penalty power on administrative agencies (citing a study I co-wrote for the Administrative Conference of the United States). If Thomas’ view becomes law, the enforcement power of the agencies will be eviscerated and the regulatory state greatly diminished. Courtesy of the new Horsemen, we are back to the 1930s.

Much of the intellectual force behind these moves by some on the Court has been provided by The New Civil Liberties Alliance. NCLA has an acronym similar to the ACLU, but its goals are quite different. While the ACLU protects the First Amendment, NCLA’s overriding purpose, inspired by the work of conservative legal scholar Phillip Hamburger, is to end the administrative state. The “old” civil liberties alliance—led by organizations like Public Citizen—used to worry about welfare recipients and others whom the administrative state overlooked or abused. The “new” one worries about the welfare of corporations and of miscreants like the financier Jarkesy.  The Supreme Court that concerned itself with protecting the beneficiaries of federal programs is long gone. Today’s Court is on a path that we have not seen since the 1930s. But while the New Deal Court eventually backed off, it is questionable whether today’s Court will do the same, even in the face of legitimacy charges and political pushback from President Biden.  These Horsemen are younger and even more righteous, after all.

As a lifetime admirer of the Supreme Court, I do not criticize it lightly and I realize that “legitimacy” is sometimes in the eye of the beholder. I have signed briefs to and taught cases from the Warren, Burger, Rehnquist, and Roberts Courts. Not until now has the word legitimacy carried much purchase for me. But I fear that several Justices on this Court have a “damn the torpedoes” view of how to decide cases. They have hidden behind doctrines like originalism and issued formalistic decisions that ignore real world effects. How else could Dobbs or Jarkesy have been decided? They long for a past that is passed.

Formalism is often contrasted to pragmatism as a doctrine of judicial restraint. It reflects choices that most in today’s America do not share. Supreme Court judging has powerful, even terrible, consequences. Justices need a degree of humility and political awareness in deciding important cases. Robert Jackson is the ideal role model, someone who took into consideration consequences as well as doctrinal consistency. At some level, and with due respect to some great legal historians, who cares what the common law of England really held at the time of the Founding? Pragmatic justices like Breyer, O’Connor, and Holmes understood that consequences must be part of the equation. As the conservative judge Richard Posner once said, originalism and other legal theories should be a judge’s tools, not his or her masters. Maybe there should be a Hippocratic Oath for judges: “Do No Harm.” In my view, this is what legitimacy requires.

Paul Verkuil is President Emeritus of William & Mary and former Dean of the Tulane and Cardozo Law Schools. He was Chairman of the Administrative Conference of the United States from 2010-2015.

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