Agencies taking power Congress never gave them

There is no better time in recent history to be practicing constitutional law than now. And the best soil for that rewarding work is administrative law. For over eight decades, perhaps longer, we have witnessed the rise and rise of the Administrative State, as scholar Gary Lawson describes it, a fourth branch of government that has increasingly expanded beyond its constitutional guardrails to exert insidious, expansive, and largely unacknowledged power over the lives, livelihoods, prospects, economic freedom and civil liberties of Americans and their enterprises.  

Administrative adjudication

By the early 21st century, Americans were ten times more likely to be charged before an administrative law judge (ALJ) than a real court of law where the Constitution has alone assigned the judicial power. Administrative adjudication trapped and convicted thousands of Americans in its agency-favoring, due-process-less clutches for years, sometimes decades, in expensive, endless proceedings where the in-house "judicial" scheme is structurally designed to convict them.

But starting in 2018, the Supreme Court issued a series of landmark rulings that have allowed litigants to successfully challenge the constitutionality of these ALJ schemes. In 2018, Lucia v. SEC set aside dozens of SEC administrative proceedings for their ALJs' shocking lack of proper appointments. Later decisions further held that the Constitution forbade the multiple layers of removal protections that insulated ALJs or other agency officials from presidential control (Free Enterprise Fund v. PCAOB, Seila Law v. CFPB, Collins v. Yellen). And in 2023, the Court unanimously recognized district court jurisdiction to challenge the constitutionality of in-house adjudication (Axon Enterprise, Inc. v. FTC, SEC v. Cochran).

The effects of that last decision are best measured by what happened next. FTC dropped its wholly flawed case against Axon rather than have its ALJ scheme where the agency won 100% of its cases scrutinized in a real court of law. SEC outdid FTC and dismissed all 42 of its open in-house adjudications instead of risking even one adverse court decision that SEC's punishing scheme with an over 90% conviction rate was unconstitutional. To make matters worse, that shocking mass-dismissal incidentally allowed SEC to dodge discovery on its admitted practice that for years, enforcement staff had been unlawfully accessing the ALJ's files while the proceedings were ongoing in those kangaroo courts. So far, SEC has shockingly also stubbornly refused to comply with FOIA on this "control deficiency" for four years, fighting federal lawsuits and ongoing appeals.

The Supreme Court's 2024 SEC v. Jarkesy decision further drove a stake into the heart of this merciless administrative adjudication scheme by mandating federal district court jurisdiction before an impartial adjudicator--i.e. a real federal judge not employed by the prosecuting SEC--in government prosecutions that seek civil penalties, and that those trials be before juries where that right applies under the Seventh Amendment. Decades of biased, punitive prosecutions where SEC was prosecutor, judge, jury, sentencer and first court of appeal were now declared unconstitutional--as they had always been.

Deference to agencies

Not only had agencies combined the roles of prosecutor, judge, and final court of appeal, but far too often the role of legislator. The very "law" or regulation agencies charged Americans with violating was written or sometimes merely conjured up by them! Yes, through devices such as regulation by enforcement, settlement, guidance, and other depredations of administrative power, the agencies were manufacturing the rules and laws they were enforcing out of whole cloth. And courts, to their grave discredit, were conjuring up endless deference doctrines so complex, multi-faceted, fabricated, and even ridiculous (see Brand X), that agencies could regulate Americans in new fields, with new or self-assumed powers, under new theories, without any effective check on the long-recognized tendency of all power to expand beyond its lawful bounds.

In 2024, the New Civil Liberties Alliance persuaded the Supreme Court to end much of that injustice by overturning Chevron deference in Loper Bright Enterprises v. Raimondo and Relentless v. Department of Commerce. No longer could agencies prosecute regulated parties or industries for violations of rules or laws that had never been passed by Congress but that the agencies claimed bound them under vague and general grants of authority. As a result, agencies will probably pull back on the worst of their abuses, and at least some courts will do their duty to say what the law is, without deferring to the self-interested judgment of the most powerful litigant before it.

Presidential control over agency leadership and policies

President Trump's constitutional exercise of his removal power was affirmed by the Supreme Court's critical ruling in Trump v. Wilcox (NLRB) in 2025. Trump v. Cook (Federal Reserve) and Trump v. Slaughter (FTC) appear to be on the verge of overruling the reign of misrule set in place by Humphrey's Executor, bringing Executive Branch control back to ... the Executive. The promise offered by that restoration is only as good as the new appointees' willingness to ferret out the worst abuses of the agency to which they have been appointed, always a daunting task when layers of entrenched career employees are invested in the status quo. That's why they call it the Deep State.

Agency power may always be challenged

2024's Corner Post v. Federal Reserve Supreme Court ruling reinvigorated Americans' ability to challenge agency power, because one of the many administrative roadblocks to correcting agency abuse of power was that after a certain time--sometimes as little as 60 days(!) or up to six years--if agency power had not been successfully challenged, it was considered bulletproof. This silly, illogical, and self-favoring doctrine was shockingly successful for decades and agencies still stubbornly asserted it. No more. Corner Post sensibly held that a regulation initially unauthorized by statute cannot become authorized by the mere passage of time, or as the Supreme Court put it, a "federal regulation that makes it six years without being contested does not enter a promised land free from legal challenge." This renewed Americans' ability to maintain constitutional separations of powers, fight against agencies' seizing authority Congress never gave them, and stop their bureaucrats from violating the Bill of Rights with impunity. What a concept--your rights are remediable whenever they are violated! As the Constitution promised.

Major Questions Doctrine

In 2022, the Supreme Court reiterated the fundamental constitutional requirement that only Congress can decide major legislative questions--such as whether EPA has the power under the 1970 Clean Air Act to regulate where and whether whole sectors of the energy industry can operate. Agencies only have the powers expressly given to them by Congress, and their organic statutes are not an "open book to which the agency [may] add pages and change the plot line." See, Ernest Gellhorn and Paul Verkuil, Controlling Chevron-Based Delegations.

It is no exaggeration to say that these cases over the past six years breathe new life into the most vital aspects of the Constitution: its structural assignment of powers to separate branches of government and the fact that the Bill of Rights means what it says--not even Congress can deprive citizens of their rights to a jury trial, First, Fourth and Fifth Amendments rights, including rights to due process and access to the courts to redress constitutional injuries from unlawful search and seizure. Congress must enact the laws that govern us, and it is the duty of the courts to say what those laws mean. For some 80 years, unelected and unaccountable agencies have been laws unto themselves, asserting legislative, prosecutorial, adjudicatory, appellate, and final, unchallengeable authority over millions of Americans' lives.

Two cases in point

It is foolish to think that this sea change in Supreme Court administrative law will be implemented seamlessly or with full respect for the hierarchical nature of our court system. Courts are as human and politically influenced as any other unavoidably political institution and are far too invested in the old ways. Much ink has been and must still be spilled about entrenched judicial habits of deferring to agencies and decisions that range from recalcitrance, deafness, resentment and outright defiance of applying these precedents.

To illustrate, I offer up two cases, one of which challenges a shocking, illegal, and self-legislated power to strip Americans of their First Amendment rights that has been unchallenged for over five decades. The other fights a much more recent, just as shocking, massive power grab by the same agency that systematically violates the Fourth and Fifth Amendment rights of all investing Americans. Will these unconstitutional schemes continue under the newly restored vision of agency power, or, as in Jarkesy, be called out of bounds, as they have always been?

Powell v. SEC - SEC's 1973 Gag Rule

In 1973, in flagrant violation of law requiring that all rules that bind people outside an agency first be published for notice and comment before they can be lawfully promulgated, SEC deceitfully enacted a rule that all persons who settle with the agency must agree to be gagged for life and may never publicly question, or create even the impression that they question, any aspect of the agency's settled charges against them. Think about that for a moment. If you heard that any government anywhere could impose such a rule, would you believe you were in the United States of America?

On March 16, 2026, NCLA will be petitioning the Supreme Court to hear Powell v. SEC and overturn the Ninth Circuit Court of Appeals' three-judge ruling in the case, which found that this lifetime Gag Rule does not violate the First Amendment. The flaws of that decision are so myriad--including the court's erasure of the presence of two media organizations who want to report on both sides of SEC settlements but cannot because of the Rule--and judicial resistance to setting aside such a long-entrenched rule, that it illustrates the grave danger of court doctrines that refuse to address long-standing rules that abused SEC defendants who settle have failed to challenge for decades.

The Gag Rule violates the whole hornbook of First Amendment law; it is a forbidden prior restraint that engages in government-favoring content- and viewpoint-based discrimination. It violates the Unconstitutional Conditions Doctrine. Indeed, the Supreme Court has long held that even convicted criminals have the right to speak freely about the process that convicted them, including questioning any and all aspects of their prosecution. The gag compels self-incriminating speech, violates due process of law by forbidding notice and any opportunity for a court hearing on the imposition of the gag, violates the Federal Rules of Civil Procedure, and shamefully makes the courts required to enforce such gags complicit in this wholesale betrayal of the First Amendment and due process.

Furthermore, it hollows out every sacred and inviolable aspect of the First Amendment by violating rights of speech, rights of the press to publish speech critical of government, and the right of both the public and settling parties to petition the government for reform of agency seizure of power by regulation, seizure ironically exemplified by its false delusion that the securities laws allow SEC to gag anyone. In fact, the First Amendment forbids SEC gags.

SEC's dangerous and unconstitutional Consolidated Audit Trail (CAT) - Davidson v. SEC

In 2012, SEC unilaterally made another rule setting up the outlines of a massive database that would collect all data on all trades made by all investing Americans without any cause or even suspicion of wrongdoing. It took the agency a decade to get this unwieldy, unappropriated, unauthorized and unconstitutional dragnet going. SEC laughably claims it had authority to do this under the 1934 Exchange Act, and amendments made in 1975 to make the stock exchanges work more efficiently. No plausible case can be made that either of these laws considered such an Orwellian all-seeing-eye over Americans' perfectly lawful securities trading. Any reasonably educated American knows that. Congress neither authorized the CAT nor appropriated any money to build this multi-billion-dollar monstrosity that represents a deadweight unlegislated tax on American investing. Worse, SEC absurdly claims that ordinary Americans had only 60 days to challenge this undeveloped scheme after it was announced in 2012, and any later challenge is too late! The monstrous CAT is safely nestled in the "promised land free from legal challenge," it argues, no matter what the Supreme Court has said in Corner Post.

An Op-ed by former U.S. Attorney General Bill Barr in The Wall Street Journal has correctly identified the CAT as a flagrant and massive Fourth Amendment violation that endangers the security of every American's investments each day by exposing them to hackers and theft. Not even Congress could set up this database precisely because the Fourth Amendment prohibits such searches and seizures. Heck, the CAT is so unconstitutional that it even reverses the Fourth Amendment's provisions, taking the power to seize all information on all trades from everybody first and then set its bots loose to search for incriminating material. The very recitation of that upside-down scheme (seize everything first, search later) should send shivers down Americans' spines.

In 2024, NCLA challenged the CAT before a district judge in Texas, who acknowledged in the first hearing that restoration of these core constitutional principles that important, pressing constitutional violations were taking place on a massive scale each day the CAT scheme was left in place. The court ordered prompt briefing and NCLA invoked many of the Supreme Court precedents set out above as requiring prompt federal court redress and injunctive relief. SEC countered by suggesting it might pull back on gathering certain personally identifiable information, a concession that does nothing to affect the scheme's rank lawlessness, unconstitutionality and grave risk to the security of all Americans' investments which are becoming easier targets for hacking and theft every day.

Nonetheless, inexplicably, and illogically, the district court has recently extended to the SEC what is now a one-year stay to perform a "comprehensive rethink" of the CAT scheme. But there is nothing the agency can do to authorize any of this, to fund it, or justify the huge scale of the ongoing Fourth Amendment violation. That is the whole thrust of the recent cases explained above. Meanwhile millions of investors' rights are stripped and their investments imperiled on an inconceivably vast scale each day.

Sadly, so far, SEC has been able to avoid court correction of either of these constitutional atrocities.

Judicial relief is essential to stop these ongoing, protracted and massive violations of the protections promised to Americans by their Constitution and its Bill of Rights. The restoration of these core constitutional principles in administrative law requires the gag to be untied, and the CAT put down.