The Government and the Appointments Clause—Just the Facts

by Jennifer Mascott — Monday, Apr. 23, 2018@jennmascott

Today the Supreme Court will hear argument in Lucia v. SEC about whether Securities and Exchange Commission administrative law judges (ALJs) exercise “significant authority” and thus are subject to the Constitution’s Appointments Clause requirements. The straightforward arguments from the government and the petitioner, showing how ALJs are “officers” under Supreme Court precedent, history, and the constitutional text must be striking a chord. As we’ve headed closer to oral argument, aspects of the commentary from those holding a different view have become increasingly sharp—at times teetering on the edge of impugning personal motives and lodging accusations of impropriety.

All attacks aside, it’s worth taking a moment to reflect on the core issue before the Court in Lucia. The core question is whether an ALJ’s finding that Mr. Lucia committed securities violations worthy of $300,000 in civil penalties and a lifetime bar from his profession is an exercise of “significant authority.” If so, under 40-year-old Supreme Court precedent, the ALJ is an “officer.”

There is a bit of cognitive dissonance in the legal arguments from those who contend, please don’t let it be so. On one hand, the argument is that ALJs play such an important role that their independence must be preserved—like one might try to preserve the independence of an Article III judge. At the same time, the argument for non-officer status also depends on the contention that what ALJs do is so unimportant they cannot possibly be “officers” like the record-keeping clerks, cadet engineers, assistant surgeons, and special trial judges, all deemed “officers” by the Supreme Court over the decades. [See Tenth Circuit opinion in Bandimere v. SEC.]

Much of the most heated opposition in the case arises in response to the government’s arguments related to removal in Lucia. The attacks suggest these arguments somehow are new, when in fact they bring symmetry to positions the government has already taken in the CFPB case—heard by the en banc D.C. Circuit last spring. (See the government’s brief in PHH v. CFPB.) Rather than just relying on characterizations of these arguments by those opposed to them, here are the actual removal points raised by the SG in Lucia:

1. The Solicitor General is requesting that the Court interpret a narrow statutory provision, 5 U.S.C. § 7521, that relates only to removal of administrative law judges. The provision does not address civil servants in general, all agency adjudicators more broadly, or Special Counsel Mueller—as some of the more far-flung analysis in the case has attempted to suggest.

2. The Solicitor General has suggested that the Court keep in place both the good-cause removal limitations on ALJs as well as the Merit Systems Protection Board’s role in establishing factual support for that removal.

3. The two interpretive clarifications that the Solicitor General has requested simply are (i) that the Court clarify that “good cause” includes an “ALJ’s misconduct or failure to follow lawful directives or to perform adequately” & that (ii) the MSPB’s role in evaluating “good cause” should be limited to establishing a factual basis for the removal charge. The brief explicitly clarifies that its suggested interpretation of “good cause” “would not permit removal of an ALJ for a legally prohibited reason, or to direct the result in a particular case.” (See pp. 12-13 of the SG’s brief.)

As I have pointed out previously, the removal clarifications requested by the SG in Lucia are modest. (See Revisiting the Record on Removal.) Professor Cary Coglianese at the University of Pennsylvania Law School also recently pointed out that some observers’ characterizations of the SG’s removal arguments in Lucia seem overly broad.

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

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About Jennifer Mascott

Jennifer Mascott is an Assistant Professor of Law at George Mason's Antonin Scalia Law School where she teaches and writes in the areas of administrative law, constitutional law, and the separation of powers. She is a public member of the Administrative Conference of the United States. Previously she served as a law clerk to Justice Clarence Thomas and to D.C. Circuit Judge Brett Kavanaugh. Follow her on Twitter @jennmascott. Her scholarship is here: http://ssrn.com/author=2653151.

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