Resolve the “ALJ Quandary”: Let the D.C. Circuit Appoint and Remove ALJs, by Kent Barnett

by Guest Blogger — Monday, Jan. 2, 2017

kent-barnettAs Aaron Nielson discussed last week, the Tenth Circuit held that the SEC’s ALJs were “inferior officers” and, as such, were not appointed correctly under the Constitution’s Appointments Clause. The SEC Commissioners improperly delegated the appointment to other SEC officials. The Commissioners, as “Heads of Departments,” can easily cure the defect by appointing the ALJs themselves and can likely address fallout from other similar pending cases relatively easily. (ALJs appointed by agencies that do not qualify as “departments,” like FERC, lack an easy remedy.)

But if ALJs are “inferior officers,” as I think they are, more significant constitutional problems concerning presidential supervision and impartiality arise, creating the troubling “ALJ quandary.” Typical remedies will not help. Instead, creative remediation—like the D.C. Circuit’s interbranch appointment of ALJs—is necessary.

Stay with me.

Aside from being properly appointed, inferior officers must be sufficiently subject to the President’s supervision. In Free Enterprise Fund v. PCAOB, the Supreme Court held that cocooning inferior officers within two levels of protection from the President’s at-will removal violated the President’s constitutional obligation to supervise executive officers. ALJs’ similar cocooning appears to violate Free Enterprise Fund. As for the first level of protection, their agencies can remove ALJs only for “good cause.” As for the second, ALJs’ removal requires the consent of the Merit Systems Protection Board (MSPB), another agency whose members the President cannot remove at will.

To be sure, the Court in a footnote suggested an exception for ALJs based on their adjudicatory nature. But, as Justice Breyer argued in dissent, the inferior officers at issue in Free Enterprise Fund also adjudicated matters, rendering any adjudication-based exception difficult to cabin. Likewise, I have argued that Free Enterprise Fund should not present a problem for ALJs—based on the decision’s reasoning or the particular provisions that protect ALJs. But it’s far from clear that the Court would agree.

If ALJs’ protections from at-will removal are unconstitutional, there’s no easy fix.

In Free Enterprise Fund, the Court cured the defect by severing the provision that directly protected the inferior officers at issue from at-will removal. But applying that remedy to ALJs means that agencies, which are often parties in litigation before ALJs, could remove purported neutral adjudicators. Permitting agencies to do so would only create another constitutional problem: striking impartiality concerns for ALJs under the Due Process Clause. Indeed, Free Enterprise Fund itself recognized that “one who holds his office only during the pleasure of another, cannot be depended upon to maintain an attitude of independence against the latter’s will.”

Severing the MSPB’s for-cause protection is even more problematic. The President would be able to remove agency officials whose only purpose is to protect the civil service—ALJs and hundreds of thousands of rank-and-file agency employees—from political firings. That would effectively end civil-service protections. Moreover, other longstanding proposals concerning ALJs, such as creating an ALJ Corps, fail to address one or more of the potential problems: appointment, removal, or impartiality.

So what then? In prior work, I advocated an unorthodox but elegant solution: have the D.C. Circuit appoint and remove ALJs. Congress’s unexplored power to bestow interbranch appointments—where one branch appoints inferior officers in another branch—is made for problematic separation-of-powers problems like the ones that ALJs present.

Here’s the gist of my proposal. First, the D.C. Circuit would appoint ALJs with the help of the Office of Personnel Management, which currently scores and limits the ALJ candidates that agencies can hire. Second, the court could discipline or remove ALJs upon the request of the ALJs’ agencies or other interested parties.

This proposal mitigates existing concerns.

First, it cures an Appointments Clause problem for ALJs. Congress may permit “Heads of Departments,” such as the SEC, to appoint inferior officers. But, as mentioned above, not all agencies qualify as departments. The Appointments Clause, however, allows Congress to permit “courts of law,” such as the D.C. Circuit, to appoint inferior officers. The Court has yet to invalidate any interbranch appointment despite longstanding use and legal challenges. Indeed, Article III courts already regularly make interbranch appointments by appointing Article I bankruptcy judges.

Second, transferring the appointment of ALJs to the D.C. Circuit has another significant benefit: the removal power follows the appointment power, according to the Supreme Court. The D.C. Circuit would, by default and properly by congressional assignment, have the power to remove ALJs. This is significant because it gets rid of Free Enterprise Fund’s dual-for-cause problem. The removal process (like impeachment) operates outside the executive branch, and only one level of protection from removal exists.

Third, limiting agency supervision and increasing judicial oversight improve ALJs’ appearance of impartiality and mitigate due process concerns.

But, you may ask, wouldn’t the D.C. Circuit be overwhelmed with ALJ appointments? No. The D.C. Circuit, expert in administrative law, has by far the smallest docket of any circuit. It could appoint ALJs in three-judge panels, reducing the demands of appointing likely 60 or so ALJs each year. These appointments, even if treated like judicial decisions for purposes of measuring judicial business, would still render the D.C. Circuit the least busy circuit in the nation.

Wouldn’t the executive branch suffer by being completely shut out from appointing or removing ALJs? No, the D.C. Circuit would be required to appoint ALJs and consider disciplining them upon agencies’ request. And, perhaps more importantly, agencies continue to have the ability to reverse ALJs as to both fact and law, allowing agencies to control all policy matters. Indeed, ALJs’ improved appearance of impartiality would be an antidote for recent concerns over the fairness of administrative adjudication and help to legitimize executive action.

There’s much more to my proposal and various considerations in Resolving the ALJ Quandary, 66 Vanderbilt Law Review 797 (2013). With any luck, the Tenth Circuit’s decision will lead policymakers, after years of disinterest, to remedy the “ALJ quandary” and address other problems with administrative adjudication.

 

Kent Barnett is an Associate Professor of Law at the University of Georgia School of Law. Follow him on Twitter: @ProfKentBarnett.

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One thought on “Resolve the “ALJ Quandary”: Let the D.C. Circuit Appoint and Remove ALJs, by Kent Barnett

  1. Jim Kennedy

    Man…I confess I only scanned the Tenth Circuit case and was appalled by its shallow reasoning. It equated a prior case involving Article I judges appointed by the President with ALJs who are appointed under 5 USC §3105. The logic escaped me but I haven’t tried to do a scholarly analysis. But that case was a comparing cats to dogs. No ALJ I know of ever thought we were Art. I judges. Art. I judges are appointed for a term of years: e.g. Tax Court judges.

    I spent 35 years as an ALJ with the NLRB, retiring in 2011. My independence was guaranteed by the fact that the Agency had no power to discharge me for my decisions or otherwise influence me; it could only fire me for good cause. Otherwise the appointment was to last long as I didn’t offend the “good behavior” provision. I, and all of my fellow ALJs, were appointed after passing a civil service examination and selected by the agency heads, sitting as as a body and taking an oath of office. This article suggests that the SEC ALJs were not appointed by the Agency sitting as a body, but had somehow delegated those appointments to a lesser official (the Chief ALJ?). I am unaware of that practice. In any event, so long as OPM has certified the judge prior to the appointment and he takes the oath, I’m not sure what the real issue is insofar as constitutionality is concerned. If the SEC improperly hired certified judges, how is that a constitutional question? Isn’t simply an APA issue? The Agency can cure the appointments by ratifying those appointments and they can do so nunc pro tunc. Plus, the Agency can revisit their decisions. The NLRB did that after Noel Canning held that certain Board members themselves had been appointed in violation of the recess appointments clause. The properly appointed members later took the cases from scratch, and I don’t think they changed the outcome or the reasoning of any.

    The real resolution is to place the SEC case into an en banc rehearing where the silly analogy between Article I judges and APA ALJs drawn by the split panel can be exposed. The Tenth Circuit panel reached for a constitutional question to decide when it only needed to look at the appropriate statutes and Noel Canning. Clearly contrary to decisional principles.

    Your remedy giving the DC Circuit power to appoint is an overreach and entirely unnecessary. I think you know that (“Bear with me,” I think you said). Of more concern is the danger to the civil service system if ALJs become subject to the whims of the Executive. I still can’t fathom how that court concluded that ALJs are (the same as) Article I judges. OPM doesn’t think so, nor does the Supreme Court. It is true that ALJs, like their agencies and departments, are part of the Executive Branch, but with carefully carved out duties and protections. The Supreme Court in Butz v. Economou, though saying ALJs are “judges,” does not suggest that they are Article I judges.

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