Drawing Two Lines

by Aaron Nielson — Tuesday, Apr. 3, 2018@Aaron_L_Nielson

Let me begin with a confession: I’m not an expert on the meaning of the Appointments Clause. Of course, because I teach administrative law, I know the basics — I’ve read the leading cases and even some law review articles. Even so, I approach this symposium as a layman, not an expert.

Yet even as a layman, it strikes me that the D.C. Circuit’s test from Raymond J. Lucia Companies, Inc. v. SEC needs more explanation. After all, focusing on whether an ALJ has final authority (as the D.C. Circuit panel did) may conflate the line between employee and inferior officer (the question in Lucia) with the line between inferior officer and principal officer (a higher standard). To be sure, perhaps the tests can be reconciled. But it is important to recall that there are two lines and to identify how the tests for those two lines interact with and, indeed, differ from each other.

Start with the text of the Constitution. The Appointments Clause states:

[The President] shall nominate, and by and with the Advice and Consent of the Senate, shall appoint Ambassadors, other public Ministers and Consuls, Judges of the supreme Court, and all other Officers of the United States, whose Appointments are not herein otherwise provided for, and which shall be established by Law: but the Congress may by Law vest the Appointment of such inferior Officers, as they think proper, in the President alone, in the Courts of Law, or in the Heads of Departments.

Reading that text, there are at least two categories: “inferior officers” and other sorts of “officers.” Because the appointment process is more onerous for those other sorts of officers, and because the less onerous test for “inferior officers” is set out as an exception from the general rule, it seems safe to conclude that those other officers must be more important than “inferior officers.” The Supreme Court calls them “principal officers” and that seems right to me. Hence, we know that there must be a dividing line between “principal” and “inferior” officers. That’s one line. Lucia, however, is about another line. The Appointments Clause does not discuss a category of government workers less important than “inferior officer.” Assuming that there is such a category (and again, the Supreme Court has held that there is), then there must be a line between that category (let’s call them “employees”) and “inferior officers.” So we’re looking for two lines — the line between principal and inferior officers and the line between inferior officers and employees.

What are those lines?

In Lucia, the panel — bound by another D.C. Circuit case called Landry v. FDIC — held that “the Commission’s ALJs neither have been delegated sovereign authority to act independently of the Commission nor, by other means established by Congress, do they have the power to bind third parties, or the government itself, for the public benefit.” Landry, in turn, concluded that FDIC ALJs are not “officers” because, among other considerations, they have no “power of final decision.” The Landry Court announced that test based on its reading of Freytag v. Commissioner of Internal Revenue, in which the Supreme Court concluded that a special trial judge (for taxes) was an inferior officer. The Landry Court concluded that “the STJs’ power of final decision in certain classes of cases was critical to the Court’s decision.” Thus, according to the D.C. Circuit, the line between inferior officers and employees turns at least in part on whether the person has “power of final decision.” (Under the D.C. Circuit’s test, the person must also resolve significant issues and have some discretion in doing so.)

But can that test be the right one for the line between inferior officers and employees? After all, the Supreme Court stated in Edmond v. United States that:

Generally speaking, the term “inferior officer” connotes a relationship with some higher ranking officer or officers below the President: Whether one is an “inferior” officer depends on whether he has a superior. It is not enough that other officers may be identified who formally maintain a higher rank, or possess responsibilities of a greater magnitude. If that were the intention, the Constitution might have used the phrase “lesser officer.” Rather, in the context of a Clause designed to preserve political accountability relative to important Government assignments, we think it evident that “inferior officers” are officers whose work is directed and supervised at some level by others who were appointed by Presidential nomination with the advice and consent of the Senate.

In other words, the line between principal and inferior officers is whether one has a supervisor, presumably with regard to the significant decision at issue.

Perhaps there is daylight between someone with “power of final decision” (Landry’s test for inferior officer) and someone whose “work is [not] directed and supervised” by a principal officer (Edmond’s test for principal officers). But applying Edmond, if an actor really has “final” authority, perhaps the actor should be considered a principal officer, subject to presidential nomination and Senate confirmation. To be sure, maybe there is some other way to thread the needle. For instance, perhaps “direction” and “supervision” have a specialized meaning; maybe, for instance, someone can “supervise” and even “direct” by means of having the power to fire at will or something like that, without having actual control over the work product itself. But if so, that itself merits clarification.

In the D.C. Circuit’s defense, the Supreme Court in Freytag discussed final decisions. Yet rereading Freytag, there is a good argument that the D.C. Circuit misunderstood what the Supreme Court was saying. Quoting from Judge Randolph’s dissent in Landry (the alterations are his), here is the relevant discussion from Freytag:

The Commissioner reasons that special trial judges may be deemed employees in subsection (b)(4) cases because they lack authority to enter a final decision. But this argument ignores the significance of the duties and discretion that special trial judges possess. The office of special trial judge is “established by Law,” Art. II, § 2, cl. 2, and the duties, salary, and means of appointment for that office are specified by statute. See Burnap v. United States, 252 U.S. 512, 516-517 (1920); United States v. Germaine, 99 U.S. 508, 511-512 (1879). These characteristics distinguish special trial judges from special masters, who are hired by Article III courts on a temporary, episodic basis, whose positions are not established by law, and whose duties and functions are not delineated in a statute. Furthermore, special trial judges perform more than ministerial tasks. They take testimony, conduct trials, rule on the admissibility of evidence, and have the power to enforce compliance with discovery orders. In the course of carrying out these important functions, the special trial judges exercise significant discretion.

Even if the duties of special trial judges [just described] were not as significant as we and the two courts have found them to be, our conclusion would be unchanged [because they may be assigned to conduct other types of proceedings and render independent judgments]…. Special trial judges are not inferior officers for purposes of some of their duties … but mere employees with respect to other responsibilities.

Although the Supreme Court could have been clearer, it strikes me that Judge Randolph makes a good point that the “Even if” signifies an alternative holding, especially given that the Court stated its “conclusion would be unchanged.” As Randolph put it, “What ‘conclusion’ did the Court have in mind? The conclusion it had reached in the preceding paragraphs — namely, that although special trial judges may not render final decisions, they are nevertheless inferior officers of the United States within the meaning of Article II, § 2, cl. 2.”*

(For what it is worth, the Tenth Circuit in Bandimere v. SEC agreed with Randolph, prompting the circuit split the Supreme Court will now resolve. As I’ve documented elsewhere, the Fifth Circuit has likewise chimed in, also disagreeing with the D.C. Circuit.)

Hence, my non-expert conclusion: Whatever the Supreme Court ends up deciding in Lucia, I hope that it explains how both lines should be drawn and, importantly, how the two lines relate to each other. After all, there is not just one line to draw — there are two.

* The alternative holding is interesting. What precisely does it mean? I’ll leave that question for the experts.

This post is part of a symposium on Lucia v. SEC. All of the posts can be read here.

Cite As: Author Name, Title, 36 Yale J. on Reg.: Notice & Comment (date), URL.

About Aaron Nielson

Professor Nielson is an associate professor at Brigham Young University Law School. Before joining the academy, Professor Nielson was a partner in the Washington, D.C. office of Kirkland & Ellis LLP (where he remains of counsel). He also has served as a law clerk to Justice Samuel A. Alito, Jr. of the U.S. Supreme Court, Judge Janice Rogers Brown of the U.S. Court of Appeals for the D.C. Circuit, and Judge Jerry E. Smith of the U.S. Court of Appeals for the Fifth Circuit. All views expressed are the author's alone. Follow him on Twitter @Aaron_L_Nielson.

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