Should Federal Agencies Run Their Own Court Systems?
NCFCA has chosen it’s 2015-2016 policy debate resolution: Resolved: That the United States Federal Court system should be significantly reformed.
NCFCA also offers an initial overview with pro and con paragraphs of the resolution.
Economists and economic historians look at legal systems through the lenses of incentives and information. What incentives do prosecutors and judges have, given the various rules and regulations? And what alternatives are there for people and firms looking to resolve disputes or respond when accused of violating federal rules and regulations?
U.S. federal government powers and operations have expanded significantly over the last one hundred years, and especially with the rise of federal regulatory agencies. One question to ask about “the United States Federal Court System” is whether it includes the many court systems now run by federal regulatory agencies.
Consider recent Wall Street Journal and New York Times articles “Crying Foul on Plans to Expand the S.E.C.’s In-House Court System.” (and in WSJ: “SEC Fights Challenges to Its In-House Courts“)
The Securities and Exchange Commission (SEC) has suffered many losses in federal courts recently. The SEC response is to establish and expand its own internal court system:
The initiative emerged almost two years ago when Andrew J. Ceresney, the S.E.C.’s enforcement director, outlined the agency’s plans to bring more regulatory lawsuits to its in-house judges. While the agency still brings a majority of its cases in federal courts — 63 percent so far this fiscal year, up from 57 percent the previous year — the S.E.C.’s promise to expand the use of its internal tribunals has generated intense opposition. Perhaps even more crucially, so has its filing of highly complex cases there.
The article quotes a response to this SEC initiative from a federal district judge:
“It is hard to find a better example of what is sometimes disparagingly called ‘administrative creep’ than this expansion of the S.E.C.’s internal enforcement power,” Jed S. Rakoff, a United States District Court judge, said in a speech last November.
The SEC claims their internal legal system is fair and impartial and has the advantage of judged better trained on securities regulations.
However the NYT article asks:
Given that administrative law judges are employees of the S.E.C., defendants wonder if they can be fair. And is it right for defendants to be investigated, prosecuted and judged by officials of the same agency?
Montesquieu Spirit of the Laws influenced the Framers to separate executive, legislative, and judicial powers into separately managed branches of government.
Montesquieu started from a rather gloomy view of human nature, in which he saw man as exhibiting a general tendency towards evil, a tendency that manifests itself in selfishness, pride, envy, and the seeking after power.5 Man, though a reasoning animal, is led by his desires into immoderate acts. Of the English, Montesquieu wrote that “A people like this, being always in ferment, are more easily conducted by their passions than by reason, which never produced any great effect in the mind of man.”6 In the realm of politics this is of the greatest consequence: “Constant experience shows us that every man invested with power is apt to abuse it, and to carry his authority as far as it will go.”7 However, this tendency towards the abuse of power can be moderated by the constitution of the government and by the laws, for, although by no means a starry-eyed utopian, Montesquieu, like the Greeks, believed that the nature of the State’s constitution is of the greatest consequence. …
However, federal regulatory agencies have developed their own internal judicial systems to adjudicate disputes over their many regulations. These internal federal judicial systems seem to violate the Constitution’s separation of powers.
In “The Rise of the fourth branch of government,” in the Washington Post (May 24, 2013), Jonathan Turley claims:
The growing dominance of the federal government over the states has obscured more fundamental changes within the federal government itself: It is not just bigger, it is dangerously off kilter. Our carefully constructed system of checks and balances is being negated by the rise of a fourth branch, an administrative state of sprawling departments and agencies that govern with increasing autonomy and decreasing transparency.
The rise of the fourth branch has been at the expense of Congress’s lawmaking authority. In fact, the vast majority of “laws” governing the United States are not passed by Congress but are issued as regulations, crafted largely by thousands of unnamed, unreachable bureaucrats. One study found that in 2007, Congress enacted 138 public laws, while federal agencies finalized 2,926 rules, including 61 major regulations.
The extent of judicial powers exercised by federal regulatory agencies continues to expand to nearly one million cases a year, ten times those tried by federal judges:
The judiciary, too, has seen its authority diminished by the rise of the fourth branch. Under Article III of the Constitution, citizens facing charges and fines are entitled to due process in our court system. As the number of federal regulations increased, however, Congress decided to relieve the judiciary of most regulatory cases and create administrative courts tied to individual agencies. The result is that a citizen is 10 times more likely to be tried by an agency than by an actual court. In a given year, federal judges conduct roughly 95,000 adjudicatory proceedings, including trials, while federal agencies complete more than 939,000.
These nearly one million federal regulatory court proceedings follow aggressive actions of expanding federal regulatory police. This 2011 Wall Street Journal article, “Federal Police Ranks Swell to Enforce a Widening Array of Criminal Laws” offers many examples. Here is one:
Agents from NOAA, in fact, along with the Fish and Wildlife Service, raided the Miami business of Morgan Mok in 2008, seeking evidence she had broken the Endangered Species Act trading in coral.
The agents had assault rifles with them, and the case documents indicated her house and business records had been under surveillance over a six-month period, says Ms. Mok. Under the 1973 law, the departments of Interior and Commerce (home to NOAA) must write regulations to define what is endangered and how it must be protected. One of those regulations specifies coral. …
Ms. Mok says she showed that her coral had been properly obtained. She paid a $500 fine and served one year of probation for failing to complete paperwork for an otherwise legal transaction.
How big an issue are these federal police forces and agency court systems? It is apparently hard to say…
It is hard to pin down precisely how many regulations could result in criminal penalties. Of dozens of federal agencies contacted by The Wall Street Journal, none could say how many of their regulations were connected to criminal statutes. Legal experts have put this number at anywhere between 10,000 and 300,000.
In 1970, the Code of Federal Regulations had 54,000 pages. Today it runs to 165,000 pages and takes 27 feet of shelf space when printed and bound.
The growing rule book has kept enforcement teams busy. Last year, criminal cases pursued chiefly by smaller government agencies led to 10,122 convictions, an 84% increase from 15 years ago. Also up sharply: the numbers of prosecutions and investigators.
A video interview with the author of One Nation Under Arrest is here. The 2010 book is here on Amazon. NCFCA debaters who researched the criminal justice topic will likely remember the book, and those who attended my Economic Thinking workshops watched the Stossel video.
For the federal court system topic, the key point is again the Constitution and Bill of Rights. The Framers of the U.S. Constitution, drawing from Montesquieu, separated the limited federal powers between legislative, executive, and judicial branches.
And the Sixth Amendment reads:
In all criminal prosecutions, the accused shall enjoy the right to a speedy and public trial, by an impartial jury of the state and district wherein the crime shall have been committed, which district shall have been previously ascertained by law, and to be informed of the nature and cause of the accusation; to be confronted with the witnesses against him; to have compulsory process for obtaining witnesses in his favor, and to have the assistance of counsel for his defense.
Federal regulatory agencies running their own court systems staffed by employees by nature involved incentive problems. Agency judges who rule against agency prosecutors won’t make their bosses happy. They know or will soon learn which side their bread is buttered on.
Juries are a valuable if not perfect protection for everyday people whose rights are infringed by federal regulatory agencies. For all the abuses students researched for the criminal justice debate topic, jury trials are mostly likely to protect everyday people from regulatory overreach.
The Green Police can arrest people and they would likely get conviction in internal Green Police courts. That’s why judicial proceedings should be in a separate branch of government, and the Bill of Rights should be remembered: “In all criminal prosecutions, the accused shall enjoy the right to a speedy and public trial, by an impartial jury of the state and district wherein the crime shall have been committed…”