Petitions for certiorari from the Supreme Court typically raise legal questions that are all too familiar, as cert ordinarily is available only to resolve circuit splits. Now and then, however, a case is “cert-worthy” precisely because it turns on something novel—even astonishing. Such is Monex v. Commodity Futures Trading Commission, in which the CFTC has been relying on ambiguity about the type of ambiguity that justifies its enforcement actions.
Ambiguity is a justification, according to the Supreme Court, for judicial deference to agency interpretations with which agencies essentially make law. Rather than one deference doctrine, however, there is a veritable menagerie. Statutory ambiguity is said to require judicial deference to agency interpretation of statutes—this being Chevron deference. And if the statutory ambiguity allows the agency to use interpretation to increase its own jurisdiction, the interpretation gets City of Arlington deference. Ambiguities in rules lead to Auer-Kisor deference to agency interpretations of the rules. And in the background is a more generic Mead-Skidmore deference—unctuously described as “respect.”
The CFTC’s enforcement action is for Monex’s alleged violation of . . . well, it’s not clear. The CFTC’s position is that Monex violated not a statute or other law, nor an agency rule, but a policy evident from an unrelated prior case in which the CFTC, in the course of litigation, presented its interpretation—one diametrically opposite to its prior interpretations. This surprise reversal of interpretation is scandalous enough, and this covert mode of announcing it is worse, but there is more, because the CFTC has deliberately left ambiguous what ambiguity it is interpreting.
Is its interpretation—the foundation of its charges against Monex—an interpretation of an ambiguity in a statute? Or of an ambiguity in one of its own rules? Rather than clarify this, the CFTC has played hide the ball.
Put in terms of Supreme Court doctrine, although its position seems to rely on City of Arlington and, underlying that, Chevron, it has not placed complete reliance on these sorts of deference to interpretations of statutes, thus leaving open the possibility that it is instead relying on Auer-Kisor deference to its interpretation of its rules or even on Mead-Skidmore. For example, in the district court below, CFTC relied on Auer, Chevron, and possibly City of Arlington. And in holding against Monex, the Ninth Circuit speculatively alluded to Skidmore deference, without resting its opinion on it.
These precedents cannot be considered merely alternative litigating positions or alternative judicial justifications, as they demarcate the very basis for the CFTC’s regulatory position and authority in bringing its enforcement action. In relying on Auer or Chevron, for example, the CFTC leaves open whether its regulatory position rests on the ambiguity of the statute or of the rule. The two are very different, and the CFTC’s ambiguity about the ambiguity that underlies its regulatory position has denied the petitioners their due process right to know the legal basis of the charges against them.
The Due Process Clause does not allow the government—whether in the Justice Department or CFTC—to play such games. When proceeding against Americans, whether for a parking ticket or the alleged $290 million offense at issue here, the government must identify the legal foundation of its proceedings. Nonetheless, the government refuses to clarify which deference doctrine it is relying on.
This ambiguity about the relevant ambiguity leaves the petitioners in the perilous position of having to defend themselves from a $290 million enforcement action without knowing the exact legal foundation of the government’s proceeding against them.
This is all the more sobering because this “civil” enforcement action is criminal in nature. One of the dangerous trends in contemporary American law is the government’s use of “civil enforcement” actions to evade the burden of bringing criminal prosecutions. By this means, the government increasingly sidesteps the Constitution’s protections for criminal defendants.
A “civil enforcement” proceeding is thus already close to an oxymoron, as it recategorizes as “civil” what traditionally would have been a criminal prosecution. In this case, the CFTC is seeking $290 million, including “civil monetary penalties.” The substantial amount sought by the government and its candid demand for “penalties” confirm that the case is, in reality, criminal in nature.
The CFTC’s smoke and mirrors about the legal foundation for its enforcement action would already be a due process problem if the case were really civil. It is all the worse because in reality it is criminal in nature.
Ambiguity is no foundation for lawful governance. It is bad enough that ambiguity has, in effect become an excuse for agency lawmaking. It is worse that judges defer to agency interpretations of ambiguous statutes and rules, thereby being systematically biased in their cases.
But these are only the familiar problems of ambiguity in the Administrative State. Unless the Supreme Court grants cert in Monex, the government will essentially be allowed to prosecute Americans on the basis of an ambiguity while remaining ambiguous about which ambiguity. Go figure.
Philip Hamburger is the Maurice and Hilda Friedman Professor of Law and President of the New Civil Liberties Alliance, which filed an amicus brief in Monex v. CFTC in support of a grant of certiorari.