Presidential Removal and Administrative Law Judges

I have been blogging about the constitutionality of administrative law judges (ALJs). The essential problem in these cases is a conflict between two basic facts: (1) ALJs are a central part of how modern administrative law attempts to provide what its defenders see as a legitimate form of government and (2) the possibility that the ALJ system is inconsistent with the Constitution’s separation of powers — in particular, the President’s removal power.

Under existing administrative law, ALJs are an attempt to introduce an element of impartiality into the system. Formal agency adjudication typically occurs before an ALJ, who is not removable by the agency. Instead, the ALJ is removable only for cause (such as wrongdoing) by the Merit Systems Protection Board, which itself is an independent agency whose board members are only removable for cause. Thus, ALJs allow a private party before the agency to be subject to adjudication by an independent official rather than by the arguably politically biased agency.

The problem is that ALJs might be unconstitutional under the separation of powers — on the ground that they should be subject to presidentially controlled removal. Under the Constitution, the President as the chief executive is thought to have significant authority to supervise executive officials. A substantial number of originalist scholars believe that the President possesses constitutional authority to control all executive officials. While precedents under existing law allow many executive officials to be made independent of executive control (such as Humphrey’s Executor and Morrison v. Olson), the Supreme Court still places limits on such independence.

The most important such limit on agency independence in this context was announced in the case of Free Enterprise Fund v. Public Company Accounting Oversight Board. That case held that while Congress could establish an independent agency (in some contexts), it could not establish a double for cause removal provision – that is, an official who is removable for cause cannot be subject to removal only by another official who is removable for cause. In Free Enterprise Fund, the SEC was an independent agency, whose commissioners could only be removed for cause. The Public Company Accounting Oversight Board (PCAOB) was another entity, whose members could only be removed for cause by the SEC. The Supreme Court said the arrangement was unconstitutional. While it was constitutional to have one level of for cause removal protection, having two was unconstitutional. Thus, the PCAOB had to be subject to removal without cause by the SEC.

While ALJs serve in an adjudicative role, they are normally thought of as executive officials. And as executive officials, the constitution imposes some limits on the degree to which they can be insulated from presidentially controlled removal. Under the existing regime, ALJs can only be removed if the Merit System Protection Board, which is removable only for cause, concludes that the ALJs committed an infraction that provides cause for removing them. This appears to be a double for cause removal provision and thus to conflict with the holding of the majority opinion of Free Enterprise. Thus, there is a strong argument that ALJs are unconstitutional under Supreme Court precedent.

But the majority in Free Enterprise Fund said it was not reaching the question of the constitutionality of the removal provisions of ALJs and I am skeptical that the Court will strike them down. In my view, it would require too much of a departure from existing practices – seeming to eliminate the independence of ALJs.

Instead, I believe the Supreme Court will conclude that the removal protections of ALJs are constitutional. I predict the Court will pursue one of several alternatives that would save ALJs, such as concluding that quasi judicial inferior officers like ALJs can be subject to removal restrictions. This would be consistent with the overall approach of modern separation of powers law – imposing limited restrictions on government that do not require significant departures from existing practices.

Unfortunately, I don’t believe this is the optimal approach. The conflict between executive power and adjudicative impartiality is a significant one that existing administrative institutions cannot solve. But there is a superior way: As I argue in this paper, one can have both independent adjudication and executive supervision of agencies by establishing Article III Administrative Judges who would be independent of executive control, but who would have expertise to adjudicate administrative cases.