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ALJs and the Appointments Clause

In my last post, I discussed two basic approaches to the separation of powers concerning agency adjudication: the New Deal hands-off approach and the possible originalist approach that would render most agency adjudication unconstitutional. Here I want to explore the existing law approach, which places limited separation of powers restrictions on agencies and allows the administrative state significant freedom.

There are three potential separation of powers problems with administrative law judges (ALJs). A key issue for at least two of these problems is whether ALJs constitute officers of the United States under the Constitution’s Appointments Clause. First, if ALJs are officers of the United States, then the Appointments Clause allows Congress to vest their appointment only (1) in the President with the advice and consent of the Senate, (2) in the President alone, (3) in the Head of a Department, or (4) in a Court of Law.

There has been a split in the circuits over whether ALJs are officers of the United States. In my opinion, the view that ALJs are not officers of the United States is pretty close to being absurd. In the typical situation, ALJs exercise pretty substantial authority (1) presiding over the taking of evidence at agency hearings and acting as a finder of fact (including ruling on admissibility of evidence and enforcing compliance orders) and (2) making or recommending an initial determination about the resolution of a dispute. While these decisions are subject to review by the agency heads, that merely suggests they are not superior officers, not that they are not officers. In my view, the main motivation for concluding that ALJs are not officers is that it might interfere with the existing procedures governing agencies.

If ALJs are officers, then the existing arrangements in some agencies for their appointment is problematic. While some ALJs are appointed by the head of the department, in other agencies they are appointed by others. For example, the Security and Exchange Commission ALJs involved in the Lucia case were not appointed by the Commission, but selected by SEC staff from a pool of candidates identified by the Office of Personnel Management.

Yet, holding the ALJs have to be appointed by the head of the department would be no big deal. It would be simple enough to have the department heads do the appointing. So the Court might actually conclude that the ALJ appointments are unconstitutional.

The second problem also involves the Appointments Clause. Under existing law, ALJs are normally appointed from the top three candidates identified according to a test. There is a serious question under the Clause whether Congress can limit the appointment to three candidates. Yet, an early Attorney General opinion from 1871 suggested that limitations of this kind would be constitutional.

I have a tentative view about the matter. In my view, I believe that Congress can impose general qualifications for an office as part of its power to define the office. But it cannot limit the people who can be appointed to the office (other than through those general qualifications). Consequently, limiting ALJs to the top three candidates is unconstitutional. But limiting ALJs to people who pass a test is (probably) constitutional.

While I believe the current provision is unconstitutional, I don’t expect the Supreme Court to strike it down. I think it would be too radical a step for them. I would expect them to allow the limitation to three persons for inferior officers based on a variety of arguments, including practice.

In the future, I will address the third potential problem with ALJs: the double for cause removal problem.

Reader Discussion

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on March 01, 2018 at 10:55:48 am

Mike,
Thanks for the thoughtful post. The ALJ problem at SEC is slightly different than stated. There is a second path for appointment outside OPM's three-candidate process that you describe. If someone is already an ALJ at another agency (usually the Social Security Administration since they have the most ALJs), and that person has been an ALJ for a year, the Chief ALJ of SEC may request that the ALJ transfer to SEC. It appears that three of the five ALJs currently at SEC were selected in this fashion. The other two were apparently selected via the OPM process you describe. It is also worth noting that the test OPM gives is not a subject-matter specific test. So someone can become an SEC ALJ without having any securities law background whatsoever. Any expertise they may have is acquired after they start judging cases. You can read more about these topics in an amicus brief filed by the New Civil Liberties Alliance yesterday (2/28/18) in the Lucia v. SEC case at the U.S. Supreme Court. Here is a link to the brief: https://www.supremecourt.gov/DocketPDF/17/17-130/37036/20180228145918749_17-130%20Lucia%20Amicus%20Brief.pdf
Thanks,
-Mark

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Mark Chenoweth
on March 01, 2018 at 15:21:22 pm

Rappaport would do well to remember that the vast majority of ALJs are employed by the Social Security Administration, that SSA ALJs evolved from hearing officers and that the purpose of making them ALJs was to add an opinion that was not directly controlled by the agency.

In SSA's scheme of things, the ALJs are only the third of seven levels of review that end in the Supreme Court.

SEC ALJs are somewhat different as the SEC's general counsel is empowered to defend the decision of the SEC's ALJs directly in the District Court in civil matters.

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EK
on March 01, 2018 at 22:36:16 pm

I made the argument that the double layer removal of ALJs is unconstitutional in my Lucia brief: https://object.cato.org/sites/cato.org/files/pubs/pdf/lucia-dc-cir.pdf

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Devin Watkins

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