The Supreme Court issued two rulings last week, both of which will have a likely impact on government procurement rules.  In the first case, SEC v. Jarkesy, the Court ruled that a defendant subject to fines by federal agencies has a right to a jury trial, per the 7^th amendment to the Constitution.  This has substantial implications for contractors subject to fines by the Department of Labor, OSHA, EPA, or other agencies.  Although the subject matter of the case was specifically about the Securities and Exchange Commission, many, including the three justices who voted in the minority, believe that the Court’s ruling could make it more difficult for the administrative state to perform its duties.  “The constitutionality of hundreds of statutes may now be in peril, and dozens of agencies could be stripped of their power to enforce laws enacted by Congress,” wrote justice Sonya Sotomayor.  as part of her dissent. 

The Court followed up on Friday with its ruling in Loper Enterprises, et. al. v. Romano overruling previous precedent known as the Chevron doctrine.  A theory which held that courts should defer to an agency’s interpretation of whether Congress granted them authority to issue a specific rule, if the agency’s interpretation was reasonable.  This deference had become a backdoor through which rules successively broadened agency reach in many areas well beyond what Congress had originally intended.  Chief Justice John Roberts, writing for the 6-2 majority (one justice abstained) said that Chevron “was a judicial invention that required judges to disregard their statutory duties.”   He added “…under the APA (courts) may not defer to an agency interpretation of the law simply because a statute is ambiguous,”

The Court’s two decisions may have a significant impact on how government procurement rules are promulgated. The FAR Council will almost certainly be among the bodies that consider the impact of the Court’s decisions on future rulemakings.  In addition, rules that appear to go beyond underlying statute or Executive Order may be more easily challenged in court.  Any contractor currently facing penalties from trying to comply with myriad rules, or one concerned that a new rule went too far, should check with counsel on whether and how the Supreme Court’s rulings could help them have a true “day in court”.