NARRATOR: Thanks for joining this episode of the No. 86 lecture series, which continues the conversation in the 85 Federalist Papers about the proper role of the judiciary. Today’s episode features Professor Jennifer Mascott, who recorded these lectures when she was an Assistant Professor of Law at the Antonin Scalia Law School at George Mason University. She writes and teaches in the areas of administrative and constitutional law. As always, the Federalist Society takes no position on particular legal or public policy issues; all expressions of opinion are those of the speaker. PUBLIUS: What are Administrative Law Judges - and why are they sometimes controversial? Today we’re speaking with attorney Jennifer Mascott, who explains what Administrative Law judges or ALJ’s are, as well as how they’re appointed and removed. To what extent should ALJs be treated like Article III judges? JENNIFER MASCOTT: An Administrative Law Judge or ALJ presides over a formal process of adjudication within administrative agencies. And so administrative agencies formulate regulations and in carrying out these regulations or determining whether someone has violated the regulation there might be a proceeding before an administrative law judge. So those proceedings often look very formal like we might think of a trial in a federal court, there might be evidence presented, there might be witnesses come in and testify and so an Administrative Law Judge would be making the determinations about whether the evidence comes in, kind of regulating the course of how the witnesses testify and then at the end of the day, reaching a decision in the matter of the adjudication. You know perhaps imposing civil penalties on people or companies that have violated a regulation. Penalties that might be hundreds of thousands of dollars or more. In some cases, Administrative Law Judges through legislation by congress have been given power to also impose certain sanctions. For example in Lucia versus the Securities and Exchange Commission, that case started off in the early stages with an Administrative Law Judge imposing a very large fine on an individual and his company and then also determining that that individual, Mr. Lucia would no longer be able to practice in the Securities related industry that he had been participating in. So there was this consequence of having a lifetime bar from practicing in that profession and that decision initially was imposed by an Administrative Law Judge and then eventually approved by the Securities and Exchange Commission itself. But the Administrative Law Judge conducted the initial trial and would have issued the first initial decision in that case. PUBLIUS: Can you tell us more about Administrative Law judges? Who are they and how many of them are there across the country? JENNIFER MASCOTT: So Administrative Law Judges look at a range of issues. There are hundreds of Administrative Law Judges in our governmental system and Administrative Law Judges exist in a range of agencies. Ranging from the Securities and Exchange Commission to the FCC, you know all really across the board within administrative agencies. Administrative agencies engage in two major types of action. One is rule making which is when agencies formulate regulations that establish new kind of rules or principles that govern behavior. So perhaps limiting pollution or creating certain regulations governing the work place. And then those regulations are applied to people who are supposed to follow them. So the Administrative Law Judge is overseeing the adjudication side of administrative agencies. Where administrative agencies evaluate whether an individual or a company has violated a administrative regulation and if so, what kind of penalty or fine or consequence should be imposed. So Administrative Law Judges have authority to oversee formal hearings within administrative agencies and so within those formal hearings they would be regulating the process of the hearing itself and then at the end of the day, they would be reaching the decision about whether the regulation was violated and what the proper penalty or consequence should be. After that point then the administrative agency itself, so for example in the case of the Securities and Exchange Commission, the commissioners would need to decide whether to approve and put the final stamp of approval on the Administrative Law Judge decision. Different agencies have different rules about how much deference or how close of a review an Administrative Law Judges decision should receive. In the Securities and Exchange Commission for example, the Securities and Exchange Commissioners don't actually have to give any weight necessarily to the Administrative Law Judges decision, the commission could just decide to do the opposite in a particular case. However, that is not all that frequent that that necessarily happen. It's also possible for an Administrative Law Judges decision to basically be given a rubber stamp of approval, a final stamp of approval by the Securities and Exchange Commission and permitted to go out the door as it was put together by the Administrative Law Judge but in the authority or the name of the Securities and Exchange Commission. So again, the range can be the Securities and Exchange Commission stamping approval on the ALJ's decision itself or completely undoing and reversing that decision and reaching another outcome in a case. PUBLIUS: How does someone get to be an administrative law judge? What is the hiring process like? How about the opposite - what is the removal process like for administrative law judges? JENNIFER MASCOTT: Typically Administrative Law Judges have been hired through a merit based hiring system. So a panel or set of decision makers would evaluate Administrative Law Judges based on a certain set of objective criteria that might be thought to reflect criteria that we would want in an Administrative Law Judge. Typically, how it happens to have been done in the past is that often when Administrative Law Judges are first hired, they often serve within the Social Security Administration which happens to be an agency that requires a lot of judges because there are a lot of decisions trying to figure out whether someone has earned social security benefits or should be getting social security benefits. So a lot of times Administrative Law Judges are first hired based on merit based criteria and will serve in the Social Security Administration and then at later stages of their career be transferred to other agencies, if another agency needs an Administrative Law Judge. Certain agencies don't actually have enough formal adjudication procedures to need a large group of full time Administrative Law Judges so there's also a certain mechanism in place sometimes between various agencies where they can maybe share an Administrative Law Judge or one Administrative Law Judge can be detailed from one agency to another. So, sometimes Administrative Law Judges will be called on to reach decisions in cases that are not necessarily in their permanent area of expertise within one particular agency. Within each agency there might be a difference based on how the statute or the law governing that agency is written but as to how much review an Administrative Law Judges decision should receive. In some agencies the commissioner or the head of the agency can change the decision and do something totally different from scratch or decide the case in place of an ALJ. At certain times some ALJs’ decisions might get a little bit of deference or thumb on the scale in favor of some of the ALJ's determinations. But typically at the end of the day, the head of the agency has to at least sign off on the ALJ decision that it was correct before it becomes the final decision of the agency, in most cases. Even after that, typically a party can if they don't like the way that the agency decided their case can then challenge that decision within a federal court. The question becomes if you go to a federal court, a lot of times federal courts under the law are supposed to give a lot of deference or weight to what the administrative agencies already determined on the facts and so, or on policy decisions and so a litigant is not necessarily getting a determination of their issues from scratch within the federal court even through there is certainly review in the federal courts. In the past, within each agency there might have been a different mechanism for how an Administrative Law Judge is hired. Typically what's been the case is that they've been hired under a merit based system where they have to show that they're qualified among a certain set of criteria and if they seem to be qualified then they are hired as an Administrative Law Judge but within the Securities and Exchange Commission, then the final decision about who signed on the dotted line to appoint or hire a particular Administrative Law Judge, that would have been done at the staff level, perhaps by the Chief Administrative Law Judge, now after the Supreme Court reached its decision in Lucia versus SEC, the Supreme Court has said Administrative Law Judges are officers of the United States. So, at a minimum, the final sign off for their hiring needs to be at least by a department head which in the case of the FCC would be the commissioners themselves in order for that appointment to comply with Article Two of the Constitution. If an administrative law judge is thought to be not performing in the way that he or she needs to perform, essentially, there's a statute by Congress that says an administrative law judge can only be removed or fired for cause. The head of the agency would have to determine or suggest that there has been some kind of cause to fire or to discipline in some way the administrative law judge. And then that determination by statute has to be approved by a separate entity, a separate agency called the Merit Systems Protection Board. So even if a commissioner or an agency had thought that there was cause to remove an administrative law judge, the Merit Systems Protection Board has to step in and agree that cause existed to remove an administrative law judge under by statute right now. . . . PUBLIUS: Why might it be important for ALJs to have a certain amount of independence? Article III judges have independence from the executive branch. Is there a problem with treating Administrative law judges too much like Article III judges? JENNIFER MASCOTT: There have been questions raised by some scholars about whether the appointment of ALJs by the president or a department head, or eventually the removal of ALJs by department heads, whether that would do something that's referred to as weakening the administrative law judges' independence. And part of where that's coming from is the idea that administrative law judges in adjudicating important rights need to be independent and impartial, and almost wanting to kind of make administrative law judges look more like ArticleIII judges. And if one looks at the original meaning of the Constitution, there are some questions about whether that's even the right way to think about what administrative law judges are doing. Well Administrative Law Judges will not be considered Article IIIjudges you know for one because they have not been selected in compliance with how an Article III judge would have to be selected. So for a federal judge who's, what we see as very impartial and independent, you know that individual has been appointed by the President with the consent of the Senate, they have lifetime tenure, and can only be fired through the mode of impeachment and the reason that the Constitution has those protections in place is to make sure that there are independent decision makers who are in charge of reaching decisions that could result in the loss of rights or property or liberty for the American public. Also within Article III courts, there sometimes is the protection of a jury trial and some of those protections just do not exist within the ALJ system. ALJ's are not appointed by the President with Senate consent right now and obviously there's no jury trial within administrative agency proceedings and so there's just not the full set of protection for individual rights with the ALJ proceeding that we have within Article III courts. So some have questions whether that maybe means that ALJ shouldn't always be reaching decisions in every case that an Article III court can reach a decision in because there just are not the protections for individual rights there. At the same time, if you look historically there certainly seems to be a role for administrative and executive adjudication to do something. The question comes in you know, what issues can be before a non-Article III decision maker, whether it's an Administrative Law Judge or a tax court judge or a bankruptcy judge. PUBLIUS: So if ALJs are not like Article III judges, how do we define their office and function? Why does it matter? JENNIFER MASCOTT: If administrative law judges are really just executive officials engaged in executive adjudication, under the Constitution, they would not be required to be, and in fact, could not be subject to the same independence protections that we give to Article III judges. They would instead be subject to the accountability provisions within Article II. And those accountability provisions are quite different and distinct, and they are all connected back to the electoral accountability of the president. And this idea that Article II executive power is held accountable to the public through election of the executive, and therefore, everybody executing or carrying out that kind of power, has to be in some way subordinate to the supervision of the president, whatever that looks like. Whether that means selected by him or his department heads, whether it means removed, whether it means told what to do, that's all an open question. But in some way, that the president needs to oversee that branch of government. And so if one holds that view about administrative law judges being executive officers, the idea would be that the accountability comes in the clarity of having a department head appoint that person, and therefore, if that individual is not following the law or doing the job that he or she should do, it's up to the person who appointed them and who supervises them to step in and take action. And that person instead is accountable in a chain of accountability all the way back up to the president, who can then be voted in or out of office based on how well he or she supervises the power being engaged in below by the administrative law judges. At the end of the day, the idea of accountability, how we know that an administrative law judge, any executive officer is going to be properly serving the needs of the public, is because they are accountable to the president, who's elected by the people. So this raises a lot of complicated questions of constitutional law that touch on not just where the accountability needs to be within Article Two, within the Executive Branch but also how does the Executive Branch interact with Article Three court or Federal trial courts. So those are complicated questions. The Administrative Law Judges, the first area of accountability is what we discussed earlier with the appointments' clause, the President of the department head, meaning they have the ability to select or to be able to remove perhaps for various reasons Administrative Law Judges or really anybody within the Executive Branch and how much authority does there need to be to supervise in that way. PUBLIUS: What kinds of decisions, then, do Administrative Law judges reach, compared to Article III judges? Why is the scope of authority controversial? JENNIFER MASCOTT: That's a very challenging question, it's a question that the Supreme Court has weighed in on quite a bit and sometimes not in as clear of a way perhaps as some people might hope that they do. But the general idea that the Supreme Court actually has talked about is this idea of public rights versus private rights and that there's certain topics where dealing with governmental issues that Administrative Law Judges or Non-Article Three judges can weigh in on and then there are certain issues, particularly between private parties that only Article Three judges can determine. Whether the court has got that dividing line right as a matter of original meaning of the Constitution is discussed quite a bit in different law review articles and has been researched quite a bit. There's some thought that under the original meaning of the Constitution that once an individual has what we would call a vested property right or liberty right, once we have property that perhaps that should only be able to be taken away…..subject to certain exceptions, by an Article Three judge as opposed to by an Administrative Law Judge but the Supreme Court has drawn that line quite differently at this point in time. So it's been pointed out even by Justice Scalia in an opinion several decades ago that really from the very beginning, executive agencies have engaged in what we call adjudication, if you just think of adjudication as being applying the law to a set of facts. From the very beginning, executive officials were deciding whether individuals had paid the right amount of taxes or given the revenue that they owe to the government and so if we're just talking about a simple executive issue of applying the law to the facts, there certainly is a grounding and a basis for there to be some type of executive adjudication. The question comes in when an Administrative Law Judges decision is strained beyond that area of just an executive matter of applying appropriately the law to the facts and when an ALJ has been empowered to take property or liberty away from an individual and whether that determination instead should be made within an Article Three court. The Supreme Court has allowed and said it's constitutional for quite a lot of adjudication to take place within administrative agencies. Some scholars think that the original meaning of what executive adjudication should have involved is quite narrower than that. PUBLIUS: Can you tell us more about Lucia v. SEC? Why is it such a significant case? What was at issue, and how did it end up before the Supreme Court? JENNIFER MASCOTT: In Lucia v. Securities and Exchange Commission, or Lucia v. SEC, at the earliest stages of the litigation, the SEC had an administrative law judge who found that Mr. Lucia had violated various investment related regulations in the view of the ALJ. And the ALJ imposed quite an extensive penalty, civil penalty, on Mr. Lucia in the range of hundreds of thousands of dollars. And also said that it would be appropriate for Mr. Lucia to have to face a lifetime ban from his investment-related industry. Mr. Lucia challenged that determination, but at the end of the day, after a couple of rounds of review, and back and forth within the agency, the Securities and Exchange Commissioner signed off on the penalty and the lifetime ban from industry imposed on Mr. Lucia. Mr. Lucia then challenged that decision by the ALJ approved by the SEC in federal court, specifically in the DC Circuit Court, a federal court of appeals in Washington DC. And one of the claims that ... The core claim that Mr. Lucia raised is that he said that the ALJ who had imposed this penalty and this lifetime ban was not constitutionally exercising power, because the administrative law judge was an officer of the United States who had not been appointed under the procedures of the Appointments Clause. The Appointments Clause in article 2 of the Constitution says that all officers of the United States need to be selected in one of four ways, either by the president with Senate consent, the president alone, a head of a department or a court of law. In the case of the SEC, the Supreme Court has suggested that the SEC commissioners themselves, sitting as a board at the top of the SEC, amount to the head of the department. And so, if an ALJ was an officer of the United States, the ALJ then would have needed to have been appointed by the president, or by the SEC commissioners themselves. Interestingly, Congress by statute had already given SEC commissioners the authority to appoint ALJs. But within the SEC, the SEC commissioners had decided on their own to delegate that power, to let that power be carried out by staff. And so it was really staff within the SEC who had signed on the dotted line of the ALJ's appointment. Mr. Lucia said that violated article 2 of the Constitution, therefore the ALJ was never appropriately exercising governmental power in the first place, and could not impose that penalty on Mr. Lucia. Mr. Lucia lost that case within the DC circuit. In the circuit courts, decisions are first reached by a panel of three judges. The DC circuit had its own precedent or cases on the books that said to be an officer of the United States, an official would have to handle significant issues, would have to have a lot of discretion or ability to be able to make up their own mind and decide what the right outcome was on those important issues. And that an individual, an official would have to have final decision making authority in order to constitute an officer of the United States. This was based on the DC circuit's interpretation of prior Supreme Court cases. And so in applying that standard to the ALJ, the DC circuit found that the ALJ reaches ... in the SCC, reaches what's called an initial decision. But that decision didn't actually take effect until the SCC commissioners approved it and ratified it, and said that was the final decision of the commission. So even if the commissioners didn't make any changes to the decision at all, the decision still technically had to be signed off on an issue as a decision of the commissioners. And so the DC circuit said that meant that the ALJ, despite the fact that it was really the ALJ's penalty and lifetime ban that Mr. Lucia was suffering from, that that still did not count as final decision making authority, and the ALJ was not an officer of the United States. Mr. Lucia's next step was to petition for something that we call en banc rehearing, which is when the entire circuit court, all the judges on the court, would rehear a case. And so instead of just the panel of three judges hearing his case, his Appointments Clause claim, he was able to convince the en banc court to hear his claim, which meant that 10 judges on the DC circuit then reheard the case. That's important, because it's only the en banc circuit court that could have decided that its past precedent was wrong. And so Mr. Lucia said, "Your past precedent is wrong. It's inconsistent with the Supreme Court case law. An official does not need to have final decision making authority to be an officer of the United States. Please interpret this provision more in line with the text of the Constitution and Supreme Court case law." Mr. Lucia faced then an evenly divided court. The en banc DC circuit court split 5-5 on the question of whether ALJs are officers of the United States. So they issued an equally divided judgment, which essentially had the impact of meaning that the old panel opinion finding that the ALJ was not an officer remained the governing decision in the case. Mr. Lucia, at that point, petitioned to the Supreme Court to hear his appeal. That can be a challenging process. The Supreme Court does not have to hear appeals from litigants. Unlike the circuit courts, the Supreme Court can decide, has discretion which cases it's going to take. At the same time that Mr. Lucia's case was being heard by the DC circuit around that time, another litigant had raised a very similar claim about SEC ALJs in another circuit court, the tenth circuit court of appeals. The tenth circuit court of appeals found that ALJs are officers of the United States. And so there was a direct conflict with one part of the country being under a decision by the tenth circuit finding that ALJs are officers, which meant that the ALJ was unconstitutionally exercising power, that conflicted with the DC circuit's conclusion that the ALJ was just fine, and didn't need to be selected under the Appointments Clause. That kind of conflict, what's known as a circuit split, tends to be the kind of case that the Supreme Court is willing to review. And so the Supreme Court granted review in Mr. Lucia's case and heard the issue of whether an administrative law judge is an officer of the United States. PUBLIUS: The Supreme Court, then, decided Lucia in June 2018, right? What did the Court find? JENNIFER MASCOTT: The Supreme Court ended up reaching what was arguably quite a narrow opinion in the case. The Supreme Court did not go back and come up with a new definition or a more clear definition of officer of the United States to govern all officials moving forward. What the Supreme Court did is look back at a 1991 decision that it had reached in a case called Freytag v. Commissioner. In that case, the Supreme Court had looked at whether individuals who are known as special trial judges within the tax court were officers of the United States. The Supreme Court had said, "These special trial judges exercise discretion on important matters of tax liability. And their positions are established by statute, their duties are established by statute, all of those factors make it really seem like these are officers of the United States." And so in this particular case with Lucia, the court was very clear, and it said, "We're not gonna tell lower courts or Congress that every official has to be able to do all of these same things to qualify as an officer of the United States. But the fact of the matter is that ALJs do 9 out of the 10 things that the special trial judges did. We said in Freytag special trial judges were officers, there's so much similarity and overlap between these positions. It seems clear to us that administrative law judges are officers of the United States under that same standard." And so, 6 justices supported that determination, and concluded that administrative law judges are officers of the United States under the Constitution. There was a seventh justice who also ruled in favor of Mr. Lucia, and found that the administrative law judge had not been appointed properly. That was Justice Breyer. But Justice Breyer's reasoning was different. Justice Breyer did not want to conclude that administrative law judges are Article II officers because of concerns that he has about what implications that might have for the removal of administrative law judges and other questions down the road. But Justice Breyer pointed out that it didn't seem like the Securities and Exchange Commission necessarily had the authority under statute to delegate its appointments authority to staff. So regardless of whether an administrative law judge under the Constitution needs to be appointed by a Securities and Exchange commissioner, Justice Breyer concluded that by statute, the SEC had to appoint ALJs, because it had not ... there was a statutory violation. So really, Mr. Lucia won by a vote of 7-2 at the Supreme Court. There were two additional opinions. One was an opinion by Justice Thomas, that was joined by Justice Gorsuch. Both of those justices signed on to Justice Kagan's 6 justice majority. But they wrote in a concurring opinion that they thought the Court should have gone farther. And instead of just finding that ALJs are so similar to special trial judges that they're officers of the United States, Justice Thomas and Gorsuch suggested that the Court perhaps should have given a more detailed comprehensive definition of officer of the United States to provide guidance to the country moving forward. They suggested that they would have been ready to adopt. . .what the evidence suggests is that the original meaning of the phrase officers of the United States, any federal official who's carrying out a statutory governmental duty, and so that position got two votes in the concurring opinion there. And then the dissent by Justice Sotomayor, Justice Sotomayor had reasoning that was a lot more similar to what the DC circuit had initially said, where her understanding, joined by Justice Ginsburg, is that the ALJ would have needed to have more authority to bind the government for them to rise to the level of importance of being officers of the United States and she would have interpreted the Freytag precedent differently to require final decision making authority in addition to the other characteristics that administrative law judges have. PUBLIUS: What are the implications for Lucia v SEC? Why does it matter? The Supreme Court reconfirmed that the Appointments Clause is an important mechanism for accountability within the executive branch. Administrative law judges who oversee formal hearings within administrative agencies are officers of the United States who need to be appointed by either the president, or a department head, or court of law, under the Appointments Clause, which gives accountability back to the people to know who put in place administrative law judges who are carrying out important decisions with great weight for members of the American public. NARRATOR: Thank you for listening to this episode of the No. 86 Lecture series: Continuing the Conversation in the 85 Federalist Papers about the proper structure of government. The spirit of debate of our Founding Fathers animates all of the No. 86 content, encouraging discussion and critical reflection relative to how each subject is widely understood and taught in law schools and among law students. Subscribe to the No. 86 Lecture series on your favorite podcast platform to have each episode delivered the moment it’s released. You can also go to fedsoc.org/no86 for lectures and videos on Federalism, Separation of Powers, the Judiciary and more. Thanks for listening. See you in class! Transcript [for YouTube - no speaker names/verbatim] What are Administrative Law Judges - and why are they sometimes controversial? Today we’re speaking with attorney Jennifer Mascott, who explains what Administrative Law judges or ALJ’s are, as well as how they’re appointed and removed. To what extent should ALJs be treated like Article III judges? An Administrative Law Judge or ALJ presides over a formal process of adjudication within administrative agencies. And so administrative agencies formulate regulations and in carrying out these regulations or determining whether someone has violated the regulation there might be a proceeding before an administrative law judge. So those proceedings often look very formal like we might think of a trial in a federal court, there might be evidence presented, there might be witnesses come in and testify and so an Administrative Law Judge would be making the determinations about whether the evidence comes in, kind of regulating the course of how the witnesses testify and then at the end of the day, reaching a decision in the matter of the adjudication. You know perhaps imposing civil penalties on people or companies that have violated a regulation. Penalties that might be hundreds of thousands of dollars or more. In some cases, Administrative Law Judges through legislation by congress have been given power to also impose certain sanctions. For example in Lucia versus the Securities and Exchange Commission, that case started off in the early stages with an Administrative Law Judge imposing a very large fine on an individual and his company and then also determining that that individual, Mr. Lucia would no longer be able to practice in the Securities related industry that he had been participating in. So there was this consequence of having a lifetime bar from practicing in that profession and that decision initially was imposed by an Administrative Law Judge and then eventually approved by the Securities and Exchange Commission itself. But the Administrative Law Judge conducted the initial trial and would have issued the first initial decision in that case. Can you tell us more about Administrative Law judges? Who are they and how many of them are there across the country? So Administrative Law Judges look at a range of issues. There are hundreds of Administrative Law Judges in our governmental system and Administrative Law Judges exist in a range of agencies. Ranging from the Securities and Exchange Commission to the FCC, you know all really across the board within administrative agencies. Administrative agencies engage in two major types of action. One is rule making which is when agencies formulate regulations that establish new kind of rules or principles that govern behavior. So perhaps limiting pollution or creating certain regulations governing the work place. And then those regulations are applied to people who are supposed to follow them. So the Administrative Law Judge is overseeing the adjudication side of administrative agencies. Where administrative agencies evaluate whether an individual or a company has violated a administrative regulation and if so, what kind of penalty or fine or consequence should be imposed. So Administrative Law Judges have authority to oversee formal hearings within administrative agencies and so within those formal hearings they would be regulating the process of the hearing itself and then at the end of the day, they would be reaching the decision about whether the regulation was violated and what the proper penalty or consequence should be. After that point then the administrative agency itself, so for example in the case of the Securities and Exchange Commission, the commissioners would need to decide whether to approve and put the final stamp of approval on the Administrative Law Judge decision. Different agencies have different rules about how much deference or how close of a review an Administrative Law Judges decision should receive. In the Securities and Exchange Commission for example, the Securities and Exchange Commissioners don't actually have to give any weight necessarily to the Administrative Law Judges decision, the commission could just decide to do the opposite in a particular case. However, that is not all that frequent that that necessarily happen. It's also possible for an Administrative Law Judges decision to basically be given a rubber stamp of approval, a final stamp of approval by the Securities and Exchange Commission and permitted to go out the door as it was put together by the Administrative Law Judge but in the authority or the name of the Securities and Exchange Commission. So again, the range can be the Securities and Exchange Commission stamping approval on the ALJ's decision itself or completely undoing and reversing that decision and reaching another outcome in a case. How does someone get to be an administrative law judge? What is the hiring process like? How about the opposite - what is the removal process like for administrative law judges? Typically Administrative Law Judges have been hired through a merit based hiring system. So a panel or set of decision makers would evaluate Administrative Law Judges based on a certain set of objective criteria that might be thought to reflect criteria that we would want in an Administrative Law Judge. Typically, how it happens to have been done in the past is that often when Administrative Law Judges are first hired, they often serve within the Social Security Administration which happens to be an agency that requires a lot of judges because there are a lot of decisions trying to figure out whether someone has earned social security benefits or should be getting social security benefits. So a lot of times Administrative Law Judges are first hired based on merit based criteria and will serve in the Social Security Administration and then at later stages of their career be transferred to other agencies, if another agency needs an Administrative Law Judge. Certain agencies don't actually have enough formal adjudication procedures to need a large group of full time Administrative Law Judges so there's also a certain mechanism in place sometimes between various agencies where they can maybe share an Administrative Law Judge or one Administrative Law Judge can be detailed from one agency to another. So, sometimes Administrative Law Judges will be called on to reach decisions in cases that are not necessarily in their permanent area of expertise within one particular agency. Within each agency there might be a difference based on how the statute or the law governing that agency is written but as to how much review an Administrative Law Judges decision should receive. In some agencies the commissioner or the head of the agency can change the decision and do something totally different from scratch or decide the case in place of an ALJ. At certain times some ALJs’ decisions might get a little bit of deference or thumb on the scale in favor of some of the ALJ's determinations. But typically at the end of the day, the head of the agency has to at least sign off on the ALJ decision that it was correct before it becomes the final decision of the agency, in most cases. Even after that, typically a party can if they don't like the way that the agency decided their case can then challenge that decision within a federal court. The question becomes if you go to a federal court, a lot of times federal courts under the law are supposed to give a lot of deference or weight to what the administrative agencies already determined on the facts and so, or on policy decisions and so a litigant is not necessarily getting a determination of their issues from scratch within the federal court even through there is certainly review in the federal courts. In the past, within each agency there might have been a different mechanism for how an Administrative Law Judge is hired. Typically what's been the case is that they've been hired under a merit based system where they have to show that they're qualified among a certain set of criteria and if they seem to be qualified then they are hired as an Administrative Law Judge but within the Securities and Exchange Commission, then the final decision about who signed on the dotted line to appoint or hire a particular Administrative Law Judge, that would have been done at the staff level, perhaps by the Chief Administrative Law Judge, now after the Supreme Court reached its decision in Lucia versus SEC, the Supreme Court has said Administrative Law Judges are officers of the United States. So, at a minimum, the final sign off for their hiring needs to be at least by a department head which in the case of the FCC would be the commissioners themselves in order for that appointment to comply with Article Two of the Constitution. If an administrative law judge is thought to be not performing in the way that he or she needs to perform, essentially, there's a statute by Congress that says an administrative law judge can only be removed or fired for cause. The head of the agency would have to determine or suggest that there has been some kind of cause to fire or to discipline in some way the administrative law judge. And then that determination by statute has to be approved by a separate entity, a separate agency called the Merit Systems Protection Board. So even if a commissioner or an agency had thought that there was cause to remove an administrative law judge, the Merit Systems Protection Board has to step in and agree that cause existed to remove an administrative law judge under by statute right now. . . . Why might it be important for ALJs to have a certain amount of independence? Article III judges have independence from the executive branch. Is there a problem with treating Administrative law judges too much like Article III judges? There have been questions raised by some scholars about whether the appointment of ALJs by the president or a department head, or eventually the removal of ALJs by department heads, whether that would do something that's referred to as weakening the administrative law judges' independence. And part of where that's coming from is the idea that administrative law judges in adjudicating important rights need to be independent and impartial, and almost wanting to kind of make administrative law judges look more like ArticleIII judges. And if one looks at the original meaning of the Constitution, there are some questions about whether that's even the right way to think about what administrative law judges are doing. Well Administrative Law Judges will not be considered Article IIIjudges you know for one because they have not been selected in compliance with how an Article III judge would have to be selected. So for a federal judge who's, what we see as very impartial and independent, you know that individual has been appointed by the President with the consent of the Senate, they have lifetime tenure, and can only be fired through the mode of impeachment and the reason that the Constitution has those protections in place is to make sure that there are independent decision makers who are in charge of reaching decisions that could result in the loss of rights or property or liberty for the American public. Also within Article III courts, there sometimes is the protection of a jury trial and some of those protections just do not exist within the ALJ system. ALJ's are not appointed by the President with Senate consent right now and obviously there's no jury trial within administrative agency proceedings and so there's just not the full set of protection for individual rights with the ALJ proceeding that we have within Article III courts. So some have questions whether that maybe means that ALJ shouldn't always be reaching decisions in every case that an Article III court can reach a decision in because there just are not the protections for individual rights there. At the same time, if you look historically there certainly seems to be a role for administrative and executive adjudication to do something. The question comes in you know, what issues can be before a non-Article III decision maker, whether it's an Administrative Law Judge or a tax court judge or a bankruptcy judge. So if ALJs are not like Article III judges, how do we define their office and function? Why does it matter? If administrative law judges are really just executive officials engaged in executive adjudication, under the Constitution, they would not be required to be, and in fact, could not be subject to the same independence protections that we give to Article III judges. They would instead be subject to the accountability provisions within Article II. And those accountability provisions are quite different and distinct, and they are all connected back to the electoral accountability of the president. And this idea that Article II executive power is held accountable to the public through election of the executive, and therefore, everybody executing or carrying out that kind of power, has to be in some way subordinate to the supervision of the president, whatever that looks like. Whether that means selected by him or his department heads, whether it means removed, whether it means told what to do, that's all an open question. But in some way, that the president needs to oversee that branch of government. And so if one holds that view about administrative law judges being executive officers, the idea would be that the accountability comes in the clarity of having a department head appoint that person, and therefore, if that individual is not following the law or doing the job that he or she should do, it's up to the person who appointed them and who supervises them to step in and take action. And that person instead is accountable in a chain of accountability all the way back up to the president, who can then be voted in or out of office based on how well he or she supervises the power being engaged in below by the administrative law judges. At the end of the day, the idea of accountability, how we know that an administrative law judge, any executive officer is going to be properly serving the needs of the public, is because they are accountable to the president, who's elected by the people. So this raises a lot of complicated questions of constitutional law that touch on not just where the accountability needs to be within Article Two, within the Executive Branch but also how does the Executive Branch interact with Article Three court or Federal trial courts. So those are complicated questions. The Administrative Law Judges, the first area of accountability is what we discussed earlier with the appointments' clause, the President of the department head, meaning they have the ability to select or to be able to remove perhaps for various reasons Administrative Law Judges or really anybody within the Executive Branch and how much authority does there need to be to supervise in that way. What kinds of decisions, then, do Administrative Law judges reach, compared to Article III judges? Why is the scope of authority controversial? That's a very challenging question, it's a question that the Supreme Court has weighed in on quite a bit and sometimes not in as clear of a way perhaps as some people might hope that they do. But the general idea that the Supreme Court actually has talked about is this idea of public rights versus private rights and that there's certain topics where dealing with governmental issues that Administrative Law Judges or Non-Article Three judges can weigh in on and then there are certain issues, particularly between private parties that only Article Three judges can determine. Whether the court has got that dividing line right as a matter of original meaning of the Constitution is discussed quite a bit in different law review articles and has been researched quite a bit. There's some thought that under the original meaning of the Constitution that once an individual has what we would call a vested property right or liberty right, once we have property that perhaps that should only be able to be taken away…..subject to certain exceptions, by an Article Three judge as opposed to by an Administrative Law Judge but the Supreme Court has drawn that line quite differently at this point in time. So it's been pointed out even by Justice Scalia in an opinion several decades ago that really from the very beginning, executive agencies have engaged in what we call adjudication, if you just think of adjudication as being applying the law to a set of facts. From the very beginning, executive officials were deciding whether individuals had paid the right amount of taxes or given the revenue that they owe to the government and so if we're just talking about a simple executive issue of applying the law to the facts, there certainly is a grounding and a basis for there to be some type of executive adjudication. The question comes in when an Administrative Law Judges decision is strained beyond that area of just an executive matter of applying appropriately the law to the facts and when an ALJ has been empowered to take property or liberty away from an individual and whether that determination instead should be made within an Article Three court. The Supreme Court has allowed and said it's constitutional for quite a lot of adjudication to take place within administrative agencies. Some scholars think that the original meaning of what executive adjudication should have involved is quite narrower than that. Can you tell us more about Lucia v. SEC? Why is it such a significant case? What was at issue, and how did it end up before the Supreme Court? In Lucia v. Securities and Exchange Commission, or Lucia v. SEC, at the earliest stages of the litigation, the SEC had an administrative law judge who found that Mr. Lucia had violated various investment related regulations in the view of the ALJ. And the ALJ imposed quite an extensive penalty, civil penalty, on Mr. Lucia in the range of hundreds of thousands of dollars. And also said that it would be appropriate for Mr. Lucia to have to face a lifetime ban from his investment-related industry. Mr. Lucia challenged that determination, but at the end of the day, after a couple of rounds of review, and back and forth within the agency, the Securities and Exchange Commissioner signed off on the penalty and the lifetime ban from industry imposed on Mr. Lucia. Mr. Lucia then challenged that decision by the ALJ approved by the SEC in federal court, specifically in the DC Circuit Court, a federal court of appeals in Washington DC. And one of the claims that ... The core claim that Mr. Lucia raised is that he said that the ALJ who had imposed this penalty and this lifetime ban was not constitutionally exercising power, because the administrative law judge was an officer of the United States who had not been appointed under the procedures of the Appointments Clause. The Appointments Clause in article 2 of the Constitution says that all officers of the United States need to be selected in one of four ways, either by the president with Senate consent, the president alone, a head of a department or a court of law. In the case of the SEC, the Supreme Court has suggested that the SEC commissioners themselves, sitting as a board at the top of the SEC, amount to the head of the department. And so, if an ALJ was an officer of the United States, the ALJ then would have needed to have been appointed by the president, or by the SEC commissioners themselves. Interestingly, Congress by statute had already given SEC commissioners the authority to appoint ALJs. But within the SEC, the SEC commissioners had decided on their own to delegate that power, to let that power be carried out by staff. And so it was really staff within the SEC who had signed on the dotted line of the ALJ's appointment. Mr. Lucia said that violated article 2 of the Constitution, therefore the ALJ was never appropriately exercising governmental power in the first place, and could not impose that penalty on Mr. Lucia. Mr. Lucia lost that case within the DC circuit. In the circuit courts, decisions are first reached by a panel of three judges. The DC circuit had its own precedent or cases on the books that said to be an officer of the United States, an official would have to handle significant issues, would have to have a lot of discretion or ability to be able to make up their own mind and decide what the right outcome was on those important issues. And that an individual, an official would have to have final decision making authority in order to constitute an officer of the United States. This was based on the DC circuit's interpretation of prior Supreme Court cases. And so in applying that standard to the ALJ, the DC circuit found that the ALJ reaches ... in the SCC, reaches what's called an initial decision. But that decision didn't actually take effect until the SCC commissioners approved it and ratified it, and said that was the final decision of the commission. So even if the commissioners didn't make any changes to the decision at all, the decision still technically had to be signed off on an issue as a decision of the commissioners. And so the DC circuit said that meant that the ALJ, despite the fact that it was really the ALJ's penalty and lifetime ban that Mr. Lucia was suffering from, that that still did not count as final decision making authority, and the ALJ was not an officer of the United States. Mr. Lucia's next step was to petition for something that we call en banc rehearing, which is when the entire circuit court, all the judges on the court, would rehear a case. And so instead of just the panel of three judges hearing his case, his Appointments Clause claim, he was able to convince the en banc court to hear his claim, which meant that 10 judges on the DC circuit then reheard the case. That's important, because it's only the en banc circuit court that could have decided that its past precedent was wrong. And so Mr. Lucia said, "Your past precedent is wrong. It's inconsistent with the Supreme Court case law. An official does not need to have final decision making authority to be an officer of the United States. Please interpret this provision more in line with the text of the Constitution and Supreme Court case law." Mr. Lucia faced then an evenly divided court. The en banc DC circuit court split 5-5 on the question of whether ALJs are officers of the United States. So they issued an equally divided judgment, which essentially had the impact of meaning that the old panel opinion finding that the ALJ was not an officer remained the governing decision in the case. Mr. Lucia, at that point, petitioned to the Supreme Court to hear his appeal. That can be a challenging process. The Supreme Court does not have to hear appeals from litigants. Unlike the circuit courts, the Supreme Court can decide, has discretion which cases it's going to take. At the same time that Mr. Lucia's case was being heard by the DC circuit around that time, another litigant had raised a very similar claim about SEC ALJs in another circuit court, the tenth circuit court of appeals. The tenth circuit court of appeals found that ALJs are officers of the United States. And so there was a direct conflict with one part of the country being under a decision by the tenth circuit finding that ALJs are officers, which meant that the ALJ was unconstitutionally exercising power, that conflicted with the DC circuit's conclusion that the ALJ was just fine, and didn't need to be selected under the Appointments Clause. That kind of conflict, what's known as a circuit split, tends to be the kind of case that the Supreme Court is willing to review. And so the Supreme Court granted review in Mr. Lucia's case and heard the issue of whether an administrative law judge is an officer of the United States. The Supreme Court, then, decided Lucia in June 2018, right? What did the Court find? The Supreme Court ended up reaching what was arguably quite a narrow opinion in the case. The Supreme Court did not go back and come up with a new definition or a more clear definition of officer of the United States to govern all officials moving forward. What the Supreme Court did is look back at a 1991 decision that it had reached in a case called Freytag v. Commissioner. In that case, the Supreme Court had looked at whether individuals who are known as special trial judges within the tax court were officers of the United States. The Supreme Court had said, "These special trial judges exercise discretion on important matters of tax liability. And their positions are established by statute, their duties are established by statute, all of those factors make it really seem like these are officers of the United States." And so in this particular case with Lucia, the court was very clear, and it said, "We're not gonna tell lower courts or Congress that every official has to be able to do all of these same things to qualify as an officer of the United States. But the fact of the matter is that ALJs do 9 out of the 10 things that the special trial judges did. We said in Freytag special trial judges were officers, there's so much similarity and overlap between these positions. It seems clear to us that administrative law judges are officers of the United States under that same standard." And so, 6 justices supported that determination, and concluded that administrative law judges are officers of the United States under the Constitution. There was a seventh justice who also ruled in favor of Mr. Lucia, and found that the administrative law judge had not been appointed properly. That was Justice Breyer. But Justice Breyer's reasoning was different. Justice Breyer did not want to conclude that administrative law judges are Article II officers because of concerns that he has about what implications that might have for the removal of administrative law judges and other questions down the road. But Justice Breyer pointed out that it didn't seem like the Securities and Exchange Commission necessarily had the authority under statute to delegate its appointments authority to staff. So regardless of whether an administrative law judge under the Constitution needs to be appointed by a Securities and Exchange commissioner, Justice Breyer concluded that by statute, the SEC had to appoint ALJs, because it had not ... there was a statutory violation. So really, Mr. Lucia won by a vote of 7-2 at the Supreme Court. There were two additional opinions. One was an opinion by Justice Thomas, that was joined by Justice Gorsuch. Both of those justices signed on to Justice Kagan's 6 justice majority. But they wrote in a concurring opinion that they thought the Court should have gone farther. And instead of just finding that ALJs are so similar to special trial judges that they're officers of the United States, Justice Thomas and Gorsuch suggested that the Court perhaps should have given a more detailed comprehensive definition of officer of the United States to provide guidance to the country moving forward. They suggested that they would have been ready to adopt. . .what the evidence suggests is that the original meaning of the phrase officers of the United States, any federal official who's carrying out a statutory governmental duty, and so that position got two votes in the concurring opinion there. And then the dissent by Justice Sotomayor, Justice Sotomayor had reasoning that was a lot more similar to what the DC circuit had initially said, where her understanding, joined by Justice Ginsburg, is that the ALJ would have needed to have more authority to bind the government for them to rise to the level of importance of being officers of the United States and she would have interpreted the Freytag precedent differently to require final decision making authority in addition to the other characteristics that administrative law judges have. What are the implications for Lucia v SEC? Why does it matter? The Supreme Court reconfirmed that the Appointments Clause is an important mechanism for accountability within the executive branch. Administrative law judges who oversee formal hearings within administrative agencies are officers of the United States who need to be appointed by either the president, or a department head, or court of law, under the Appointments Clause, which gives accountability back to the people to know who put in place administrative law judges who are carrying out important decisions with great weight for members of the American public. Thank you for listening to this episode of the No. 86 Lecture series: Continuing the Conversation in the 85 Federalist Papers about the proper structure of government. The spirit of debate of our Founding Fathers animates all of the No. 86 content, encouraging discussion and critical reflection relative to how each subject is widely understood and taught in law schools and among law students. Subscribe to the No. 86 Lecture series on your favorite podcast platform to have each episode delivered the moment it’s released. You can also go to fedsoc.org/no86 for lectures and videos on Federalism, Separation of Powers, the Judiciary and more. Thanks for listening. See you in class!