Fallout from Lucia—The Unconstitutionality of the Environmental Appeals Board and Interior Board of Land Appeals, by William Funk

by Guest Blogger — Friday, Jan. 18, 2019

In Lucia v. SEC, 138 S.Ct. 2044 (2018), the Supreme Court held that administrative law judges (ALJs) are officers of the United States, not employees. Therefore, their appointment must accord with the Appointments Clause of the Constitution. Article II, Section 2, clause 2. No one suggested they were principal officers, who must be appointed by the President with the advice and consent of the Senate. As inferior officers, however, they also must be appointed by the President with the advice and consent of the Senate, unless Congress by law provides for their appointment by the President alone, the courts of law, or the heads of departments. Inasmuch as the SEC had not appointed its ALJs, the Court concluded that they were unconstitutionally appointed and their actions were void. Subsequently, agencies across government scrambled to comply with this decision by having the head of the agency (or the agency in the case of multi-member boards and commissions) appoint the agency’s ALJs.

Nevertheless, Lucia left a number of unanswered questions in its wake. Or one might say it left a number of unquestioned assumptions open to question. One of these is the constitutionality of the Environmental Protection Agency’s Environmental Appeals Board (EAB) and the Department of Interior’s Interior Board of Land Appeals (IBLA). Both of these boards serve similar functions in their agencies. They are the entities within the agency to which a person may appeal the agency’s ALJ decisions. Both have delegated authority from the head of the agency to make final decisions on behalf of the agency. Neither, however, is staffed with ALJs. Rather the members of the boards are characterized as Administrative Judges (AJs), but like ALJs today, the head of the agency appoints them.

However, if these AJs are officers, their appointments are not consistent with the Appointments Clause. True, they have been appointed by the head of the agency, but the Appointments Clause requires that inferior officers be appointed by the President with the advice and consent of the Senate, unless Congress by law provides for their appointment by the President alone, the courts of law, or the heads of departments. Unlike ALJs, whose appointment by their agencies is provided by law, 5 U.S.C. § 3105, Congress did not create either the EAB or IBLA; nor did it provide for the appointment of these board members. The boards and the method of appointment of their members were created by regulation. Thus, if the members of these boards are officers, even inferior officers, the President must appoint them with the advice and consent of the Senate. Congress could, of course, provide for their appointment by the heads of their agencies, but until Congress so acts, it seems inescapable that, if the members of the EAB and IBLA are officers, they have not been constitutionally appointed. So the critical question is whether they are officers or mere employees.

Because the members of these boards may be removed at will by the head of the agency, one may safely conclude that are not principal officers of the United States. The question then is whether they are inferior officers or employees. Since Buckley v. Valeo, 424 U.S. 1 (1976), in order to answer this question the Court has asked—does the person exercise “significant authority” under the laws of the United States? In Lucia, the Court relied upon its earlier decision in Freytag v. Commissioner, 501 U.S. 868 (1991), to determine that ALJs exercise significant authority. In Freytag, the Court concluded that special trial judges of the United States Tax Court exercised significant authority because they “take testimony, conduct trials, rule on the admissibility of evidence, and have the power to enforce compliance with discovery orders.” In addition, in carrying out these powers, the Court said the special trial judges exercised significant discretion. Consequently, they were officers, not employees. Inasmuch as ALJs as trial judges exercise essentially the same powers and discretion as the Tax Court’s special trial judges, the Court said that ALJs are also officers, not employees.

The AJs who make up the EAB and IBLA are not trial judges; they act as appellate judges. As a result, the analysis the Court used in Lucia is inapposite to answering whether they exercise significant authority. Nevertheless, it seems relatively clear that they cannot be mere employees. First, these boards render decisions that are the final decision for the agency; their decisions are not subject to review by the head of the agency. In Freytag, as the Court recognized in Lucia, 138 S.Ct. at 2053 n. 4, the Court had offered an alternative basis for its conclusion that the special trial judges were officers, not employees. The alternative basis was the fact that in some cases the special trial judges could render final decisions for the agency. 501 U.S., at 878. Thus, under the Court’s precedents, the AJs who make up the EAB and IBLA must also be officers, not employees. Second, these boards review the decisions made by ALJs, who are themselves inferior officers. Were the AJs of the EAB and IBLA mere employees, their ability to review and reverse the decisions of ALJs, who themselves are officers, would be passing strange. Therefore, it would seem that the members of these boards must be at least inferior officers. As noted above, however, their appointments do not conform to the requirements of the Appointments Clause. As a result, the EAB and IBLA are unconstitutionally structured.

 

William Funk is the Lewis & Clark Distinguished Professor of Law, Emeritus, at Lewis & Clark Law School.

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

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2 thoughts on “Fallout from Lucia—The Unconstitutionality of the Environmental Appeals Board and Interior Board of Land Appeals, by William Funk

  1. Peter L Strauss

    The Court is just uninformed about the complexity of government, and the SG’s office is responsible for not flagging issues like this. Departments and agencies frequently enjoy reorganization authorities, the exercise of which must have created hundreds of offices whose heads — officials in the SES — Congress will not have identified. Is anyone in the SES not an “inferior officer” on the officer/employee test, especially if they run a departmental element?

    And then there is the line in Article II the Court has not reached yet, perhaps never will, that “He … shall Commission all the Officers of the United States.” I know who signed my commission as General Counsel of the NRC decades ago, and it was not the President. I doubt any officer of an independent regulatory commission holds a presidential commission, nor likely do thousands of “inferior officers” in the Departments. Second lieutenants, apparently, do receive a presidential commission; but the Department of Agriculture, say, is not that kind of agency, and whether the Secretary in appointing inferior officers (and the logic of Freytag, strangely and unfortunately resuscitated in Lucia, suggests it must be the Secretary herself, not a delegate) sees to it they get a presidential commission seems rather unlikely to me.

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  2. william yeatman

    Post & comment are fantastic.

    My far inferior contribution is to merely echo those who observe that if ALJs can be summarily fired–i.e., if they cannot be insulated w/ for cause dismissal in line w/ Free Enterprise Fund–then administrative adjudications at the boundaries of permissible constitutional conduct could become even more constitutionally suspect. Here, I’m thinking of SEC/FERC/CFTC administrative adjudications that assess civil penalties worth scores (even hundreds) of millions of dollars essentially based on allegations of fraud. If the Commission gained to authority to fire ALJs as a management tool, then that would stack the deck further in favor of the agency (in addition to the Commission’s management of one-sided investigations preceding the prosecution before the administrative courts. Presumably Congress could legislative around this, by giving the authority to appoint (and presumably to fire(?)) ALJs.

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