Imagine a federal agency has accused you of violating the law. Instead of prosecuting you in court, the agency initiates enforcement proceedings before an administrative law judge (“ALJ”) within the agency. For one or more reasons, you believe that the agency has no authority to prosecute you before an ALJ—indeed, you believe it’s unconstitutional. Should you be permitted to immediately file a lawsuit pressing your claim, or should you have to muddle through years of Kafkaesque agency adjudication before finally having your day in court?

In a 9-0 decision, the Supreme Court in Axon v. FTC (2023) resoundingly held that such individuals can immediately seek relief in federal court. Justice Elena Kagan explained that “[t]he answer appears from 30,000 feet not very hard.” Moreover, she wrote, “the 30,000-foot view of the issue before us ends up a good proxy for the more granular one” based on an application of the factors set out in Thunder Basin v. Reich (1994), which govern when a special statutory review scheme substitutes the review by an ALJ for the traditional review by a federal district court.

Although the analysis does not “necessarily extend to every claim concerning agency action,” the  legal challenges in Axon were “not to any specific substantive decision” by the agency, but rather “challenges … to the structure or very existence of the agency.” And while the FTC “knows a good deal about competition policy,” it knows “nothing special about the separation of powers” claims presented by respondents. In such circumstances, requiring respondents to exhaust their arguments in the administrative setting makes no sense. Moreover, the respondents in Axon alleged a “here-and-now injury” of “being subjected to unconstitutional agency authority”—an injury that would be “impossible to remedy once the proceeding is over.”

Axon will make it easier for individuals in agency enforcement proceedings to bring fundamental legal challenges to those proceedings in federal court. Notably, however, the Court did not address the merits of respondents’ constitutional challenges—i.e., that the ALJs are insufficiently accountable to the President and that the combination of prosecutorial and adjudicatory functions within a single agency is unconstitutional. “Our task today is not to resolve those challenges,” Justice Kagan noted, but rather “to decide where they may be heard.”

The next term of the Supreme Court promises to provide a good clue as to how the Court might decide those issues. Among several administrative law cases that the Court will decide is SEC v. Jarksey, which challenges the SEC’s dual authority to initiate and adjudicate enforcement proceedings and the for-cause removal protections for the SEC’s ALJs. Other administrative law cases include Loper Bright v. Raimondo, which asks the Court to reconsider the level of deference given to agency interpretations of their own statutory authority, and CFPB v. Community Financial Services Association of America, which asks whether the CFPB’s funding mechanism violates the Constitution’s Appropriations Clause.

In recent years, litigants have been fairly successful before the Supreme Court in bringing constitutional challenges to agency structure or authority. For example, in Selia Law v. CFPB (2020), the Supreme Court held that the agency’s single-head structure violated the separation of powers, and in United States v. Arthrex (2021), it held that the unreviewable authority vested in Administrative Patent Judges violated the Appointments Clause. The Supreme Court has also struck down the Biden Administration’s vaccine mandate and student loan forgiveness plan based on the “major questions” doctrine, under which courts presume that Congress has not delegated questions of economic and political significance to agency bureaucrats in the absence of a clear statement.

It seems likely that the Supreme Court will be favorably disposed to many of the legal challenges to agency action that it will hear this next term. Although the challengers may not win a clean sweep, we can expect them to notch some significant victories against the administrative state.