A Formalist Response to Greve’s Functionalist Proposal

Michael Greve has proposed a radical shift in how we conduct administrative adjudications. His Liberty Forum essay proposes moving from the current system of administrative law judges (ALJ’s) and administrative judges (AJ’s), whose decisions are reviewable by agency heads, to a system of completely independent administrative courts. Now, this doesn’t sound too new to a formalist. For those of us who think that a lot of what modern administrative agencies adjudicate would have traditionally been heard by courts, this sounds like the usual call to increase the size of the federal judiciary and send administrative cases back where they belong.

But Greve’s solution is not that at all. His courts would be independent legislative courts, not Article III courts. The judges would be appointed for fixed terms, not life terms. Although these courts are not Article III courts, they nevertheless provide a key advantage over the current system of adjudications: “Unlike agency-appointed ALJ’s,” writes Greve, “institutionally independent judges would have no incentive to tailor their decisions to an agency’s mission or agenda, for they would not belong to, nor could they be reversed by, that or any other agency.” These courts would focus on “providing systematic, readily available protection against coercive and unlawful interference in the affairs of private citizens.”

Greve’s proposal poses something of a puzzle. Our Constitution, anyway, recognizes only three kinds of power: legislative, executive, and judicial. If what agencies have been doing all along by adjudicating cases is indeed the exercise of “executive power”—what it must be if the executive branch is to engage in these activities, and what our doctrine assumes it to be—then it’s not at all clear why we’d want a system of independent administrative courts unconcerned with an agency’s “mission or agenda.” If agency adjudications are all part of executing the law, then that’s a task for politically accountable executive officials—not independent judges.

If, on the other hand, what agencies have been doing all along, at least when adjudicating cases, is an exercise of judicial power, then it’s not clear why we’d want this new system of administrative courts to be less independent and provide less procedure than what is required by Article III. Indeed it’s not clear that any system of adjudication outside of Article III in these cases would be constitutional.

What Greve seems to be suggesting is that formalists make a functionalist move of a sort: recognize that there is a zone of private rights cases involving administrative statutes and regulations that traditionally used to be heard by courts, but of which there are simply too many today to expect Article III courts to be able to adjudicate. Thus he accepts that certain “core” private rights cases—those that result in life sentences or incarceration, for example—must still be heard by Article III courts. He also accepts that important classes of “public rights” cases—those like public benefits cases that truly involve only claims against the government, which has sovereign immunity and historically could refuse to permit suit in such cases altogether—can be adjudicated by agencies. These cases would not go to his new administrative courts, but rather would stay where they are within the existing administrative system of adjudication.

What Greve wants is to take the harder cases, those in which there are private rights at stake but those rights are intimately connected with an administrative statute, and assign those to the new system of administrative courts. Because these cases do involve private rights and deprivations of property—for example, the National Labor Relations Board can order an employer to pay back pay to an employee, or a workers’ compensation commission can order compensation for workplace injuries, all traditionally the stuff of common law adjudications—it would seem that such cases really ought to be heard by Article III courts.

The theory of why administrative agencies can adjudicate them has varied over time: the watershed case of Crowell v. Benson (1932) assumes that agencies are like adjuncts of the courts, but as Greve (and Adrian Vermeule) explain, once agencies serve in this role deference to their factual and legal determinations is pretty much inevitable (otherwise why have the agency adjudications at all?). Eventually the courts settled on a theory that administrative statutes involving statutorily created rights fall within the “public rights” exception to Article III adjudication. This is problematic, however, because the public rights exception is fundamentally rooted in sovereign immunity and involves only cases where a private party is seeking something from the government, and not the other way around.

So if we can’t give these cases back to the federal courts because we are unwilling to increase their numbers; if we can’t rely on agencies as adjuncts without entirely accepting the current and deferential scheme of things; and if we can’t justify their administrative adjudication on the public rights exception, then what’s left for the formalist to do? If no other option remains, then I suppose a system of administrative courts of the kind that Greve suggests would serve a useful function—and maybe even the best of us formalists should accept functionalism at least some of the time.

Before giving in, I would suggest two other formalist possibilities.

One would be to make these administrative courts Article III courts after all. (I take this to be Michael Rappaport’s position, though I await his response to Greve’s essay, in which he will speak for himself.) I’m not sure this would diminish the prestige of the federal judiciary. Yes, these judges would have life tenure and salary protection, but any federal judge of more limited federal jurisdiction would inherently be less prestigious than a federal judge of general federal jurisdiction. “John Smith is a federal administrative district court judge” just doesn’t have quite the same ring to it. These positions would rightfully be prestigious, but not so prestigious that the existing federal judiciary is likely to oppose it.

The other possibility is to make agencies true adjuncts of the district courts. Can agencies play a meaningful role unless courts defer to their judgments? Why, certainly, just as magistrate judges play a meaningful role. The system of administrative adjuncts could work the same way, by requiring the parties to lodge specific objections to findings of fact and conclusions of law, to be reviewed de novo by the district court. At the end of the day, parties rarely if ever lodge objections to every single factual finding or conclusion of law, and thus district judges can focus on the most contentious issues. If that’s what happens with magistrate judges, it’s not clear to me why a system of ALJ’s who submit reports and recommendations to federal district judges would be so much different.

In short, Michael Greve’s thought-provoking essay deals with an important problem in modern administrative law: what to do with a large class of private rights claims that are based in statute, and that are routinely adjudicated in agencies but historically should have been adjudicated by courts. Greve has given up on formalist solutions and proposes an important functionalist alternative. But before we give up on formalism, one of the formalist options may yet be worth trying.