Two statues outside the Federal Trade Commission depict a muscle-bound man wrestling an equally muscular horse. Called Man Controlling Trade, the statuary dates back to the New Deal era when commerce (the horse) was seen as a dangerous force, and the government (the man) a powerful savior.
Were the statues commissioned today, the man would be more accurately represented as a bespectacled pencil-pusher. But make no mistake: That wonky bureaucrat is far more powerful than the strapping stone man of yesteryear. He’d have that rambunctious horse hog-tied with red tape in no time.
President Franklin D. Roosevelt could have only dreamed of wielding the kind of power possessed by today’s administrative state. It is able to write, enforce and interpret laws. So much for the separation of powers.
Much of the judiciary—those enrobed warriors tasked with smashing gavels on the fingers of those who would tear holes in the Constitution—has been asleep at their posts for years. Others have consciously let the bureaucrats go about their hole-tearing in the mistaken belief that an enlightened bureaucracy can surely run a country better than “the little people.”
But lo, some judges the Fifth Circuit Court of Appeals have awakened at last! They have vigorously thumped the Securities and Exchange Commission, the agency once monitored the financial markets for fraud and self-dealing, but it now fancies it also must force the wisdom of the “woke” on the economy.
In a case before Judges Jennifer Elrod and Andrew Oldham (and another judge, W. Eugene Davis, who remained asleep at his post), the SEC accused a man of fraud and then sued him in its in-house “court,” where the agency wins 90% of its cases. (Go figure!)
In the SEC’s home court, the accused have no right to a jury trial. So much for the Seventh Amendment right to a jury trial.
Thankfully, Judges Elrod and Oldham remembered that amendment. They even quoted Jefferson as saying that the jury is “the only anchor, ever yet imagined by man, by which a government can be held to the principles of its constitution.”
More importantly, they quoted the text of the Seventh Amendment that says the right to a jury trial applies to all suits “at common law.” Since fraud is a suit at common law, they ruled the SEC’s in-house enforcement action to be unconstitutional.
But Judges Elrod and Oldham didn’t stop there. Looking at the larger picture—the separation of powers—they ruled that it was unconstitutional for Congress to give the SEC the power to choose to sue people in its own kangaroo court.
How did they get here? Well, they noted that (1) “We the People,” are “the fountainhead of all government power,” that (2) we ceded to government some of that power to protect our rights and the common good, that (3) to ensure that the government uses that power wisely, we divided it among three branches, and that (4) more specifically, we gave “all legislative Powers” to Congress—not bureaucrats—because each member of Congress is “accountable to his or her constituents through regular popular elections”?
Citing a whole lot of history and Supreme Court cases, Judges Elrod and Oldham concluded that legislative power includes the power to “assign disputes to agency adjudication,” but, in this case, Congress gave the SEC that power without any “intelligible principle” that would limit it.
Put simply, that’s unconstitutional. And on that basis, the court proceeded to vacate the SEC’s enforcement action too.
The two judges further held that the job protections of the SEC’s in-house “administrative law judges” (not real judges, but they can punish you like one) were unconstitutional. They reasoned that when we the people gave Congress the power to make laws, we gave the president the power to faithfully execute those laws.
Of course, the president doesn’t personally execute all the laws. He has more than 2 million agency employees to do that for him. But what our original delegation to him means is that he must have some ability to control his lower officers—by firing them if they go off the rails. Otherwise, the judges wrote, the president “has lost the ability to take care that the laws are faithfully executed.”
In the case of the SEC’s administrative law judges, the president has virtually no ability to fire them. And so the SEC’s enforcement action was unconstitutional on that basis too.
What an absolute shellacking for the SEC, a triumph for the Constitution, and a gavel-smashing romp for Judges Elrod and Oldham. More of this, please!
This piece originally appeared in The Washington Times