On April 10, 2017, Neil Gorsuch was sworn in as the Supreme Court’s 113th justice. While his experience on the Tenth Circuit Court of Appeals with cases involving financial regulation may be limited, certain of his decisions reflect an identifiable hostility towards executive agencies that, in his view, act in excess of the powers accorded them by statutory and constitutional law. These decisions suggest that the High Court’s newest justice will keep a close eye on how financial regulators go about their business.

In one such case, a penny stock brokerage firm and two of its employees challenged a Securities and Exchange Commission (“SEC”) administrative order finding that they had violated Financial Industry Regulatory Authority (“FINRA”) rules by failing to undertake measures to guard against unlawful trading of unregistered securities. See ACAP Financial, Inc. v. S.E.C., 783 F.3d 763 (10th Cir. 2015). The petitioners specifically took issue with the SEC’s determination that their conduct was “egregious” without finding that it was knowing or intentional. In his decision, Gorsuch rejected the petitioners’ challenge, concluding that the SEC did not act arbitrarily and capriciously in determining that conduct did not have to be knowing or intentional in order to be deemed egregious. However, his opinion alluded to other “meatier” arguments the petitioners could have made and that echoed concerns he has raised in other opinions and public comments regarding due process in the so-called administrative state. See id. at 767.

These concerns have primarily focused on the doctrine developed under Chevron, U.S.A., Inc. v. Natural Resources Defense Council, Inc., 467 U.S. 837 (1984), which generally requires that courts defer to an administrative agency’s interpretation of statutes they implement where the statutory language is ambiguous and the agency’s interpretation is reasonable. Subsequent expansions of the doctrine have established that administrative agencies can overrule judicial interpretations of the law in favor of their own under certain conditions. See National Cable & Telecommunications Association v. Brand X Internet Services, 545 U.S. 967 (2005). Specifically, Gorsuch has taken issue with agency action that might violate rights of due process, fair notice, and equal protection, conflict with powers statutorily vested in the courts under the Administrative Procedure Act, and infringe upon the constitutional separation of powers. See, e.g., Gutierrez-Brizuela v. Lynch, 834 F.3d 1142 (10th Cir. 2016) (Gorsuch, J., concurring).

In his Gutierrez-Brizuela opinion, Gorsuch determined that the Board of Immigration Appeals, an administrative agency, could not retroactively apply its interpretation of immigration law absent an express grant of authority from Congress. Gutierrez-Brizuela v. Lynch, 834 F.3d 1142 (10th Cir. 2016). Gorsuch found that no such grant occurred. This decision and its more wide-ranging and critical concurrence, also drafted by Gorsuch, are consistent with his apparent skepticism of the administrative agency’s actions in ACAP Financial in that they highlight the due process, fair notice, equal protection, statutory, and constitutional issues implicated by the expansive regulatory powers enabled by Chevron.

To be sure, given the relative dearth of financial regulation cases in the Tenth Circuit, Justice Gorsuch has not been presented with an opportunity to develop a more complete record in this area of the law. Nevertheless, these decisions suggest that he will not lightly countenance efforts by financial regulators to wield powers not explicitly afforded by Congress or the Constitution.

Another clue may lie in Gorsuch’s work in the private sector with respect to civil securities litigation. In a 2005 article, he launched a scathing attack on frivolous securities class actions and related circuit court precedent. This litigation, he argued, served as a “free ride to fast riches” for the securities class action bar, while draining the American economy as corporate fiduciaries settled “meritless suits to avoid the risk of financial oblivion.” See Neil M. Gorsuch & Paul B. Matey, No Loss, No Gain, Legal Times (Jan. 31, 2005). The article critiqued the Ninth Circuit’s decision in Broudo v. Dura Pharmaceuticals, Inc., 339 F.3d 933 (9th Cir. 2003) as benefitting plaintiffs in a manner that was “doctrinally inconsistent” with common law pleading requirements and “bad public policy.” Id. His criticism was eventually validated when the Supreme Court overturned the Ninth Circuit. See Dura Pharmaceuticals, Inc. v. Broudo, 544 U.S. 336 (2005).

But before brokerage firms, investment advisors, banks, and public companies break out the champagne, they should take note of Gorsuch’s tenure in the Justice Department. Among other things, he defended the extraordinary rendition of a detainee, lawsuits seeking disclosure of photographs of detainee abuses, and the issuance of a signing statement by President George W. Bush that many believed was designed to allow the President to bypass the Detainee Treatment Act’s ban on torture under his executive powers.

Gorsuch demonstrated a similar pro-prosecution bent in a 2013 decision in holding that the federal bank fraud statute does not require a showing of intent to defraud. United States v. Loughrin, 710 F.3d 1111 (10th Cir. 2013). These experiences suggest that when, in his opinion, the government acts within its delegated powers, Gorsuch has no issue with aggressive law enforcement.

Conclusion

During the confirmation process, Gorsuch was accurately characterized as a textualist and originalist. As such, and as suggested in the decisions discussed above, as a member of the Supreme Court, he will likely be skeptical of regulatory actions that lack a clear foundation in the text of the law, or are inconsistent with constitutional principles such as due process, equal protection, and the separation of powers. On the other hand, enforcement efforts that steer clear of overreach are not likely to draw the ire of the High Court’s newest member, and, in fact, may receive his blessing.