Notice & Comment

D.C. Circuit Review – Reviewed: Ten Small Thoughts About Lucia

If you care about administrative law judges (and who doesn’t?*), you ought to follow Kent Barnett on Twitter (ugh). He knows more about ALJs — and their cousins, administrative judges — than anyone I know. And if you care about the Appointments Clause (and, again, who doesn’t?**), you ought to follow Jenn Mascott on Twitter. She is always being cited in Supreme Court opinions anymore, even in cases I wouldn’t have expected. And because of weeks like this one, you really ought to follow both. After all, the Supreme Court has now resolved Lucia v. SEC, which concerns an Appointments Clause challenge to ALJs.

I am not going to repeat the Lucia story here; suffice it to say, it’s been a big deal in the D.C. Circuit for some time now. Indeed, it equally divided the en banc D.C. Circuit, which doesn’t happen every day.

The Supreme Court has now held — in an opinion by Justice Kagan, joined by Chief Justice Roberts and Justices Kennedy, Thomas, Alito, and Gorsuch — that how the SEC appointed its ALJs was unconstitutional.

Justice Kagan’s opinion strikes me as correct, especially given Freytag v. Commissioner of Internal Revenue. It does, however, raise interesting questions. I’ll let others — including Kent and Jenn — offer big thoughts about Lucia; they are the experts. But after reading Lucia, I’d like to offer ten small thoughts.

(1) Why is “continuous” part of the “Officer” test?

Lucia addresses whether SEC ALJs are “officers” or “employees” for purposes of the Appointments Clause. Justice Kagan thus announced what looks like a two-part test:

Two decisions set out this Court’s basic framework for distinguishing between officers and employees. Germaine held that “civil surgeons” (doctors hired to perform various physical exams) were mere employees because their duties were “occasional or temporary” rather than “continuing and permanent.” Id., at 511–512. Stressing “ideas of tenure [and] duration,” the Court there made clear that an individual must occupy a “continuing” position established by law to qualify as an officer. Id., at 511. Buckley then set out another requirement, central to this case. It determined that members of a federal commission were officers only after finding that they “exercis[ed] significant authority pursuant to the laws of the United States.” 424 U.S., at 126. The inquiry thus focused on the extent of power an individual wields in carrying out his assigned functions.

This test matters because, in the words of Kagan, if someone is just an employee, “the Appointments Clause cares not a whit about who named them.”

This first part of this test seems odd. Is it really the case that someone can exercise significant authority and yet not be an officer for purposes of the Appointments Clause? Imagine that the en banc Court of Appeals for the Armed Forces is deadlocked on a significant issue. Congress decides to break the deadlock by passing a law declaring that for that one issue, Aditya Bamzai — on account of his powerful Supreme Court advocacy — should cast the deciding vote. In this hypothetical, the President did not appoint Aditya, nor did the Senate confirm him. And even if he were inferior to someone (though who would be his superior?), Congress did not “vest” his “Appointment … in the President alone, in the Courts of Law, or in the Heads of Departments.” Constitutional?

If you think congressional appointment is the problem, or that the Court of Appeals for the Armed Forces presents a unique context, imagine this hypothetical. The Administrator of the Environmental Agency Protection is recused for a particular decision of enormous significance — say, whether to finalize a regulation. Congress thus enacts a law saying, “for this one particular decision, the power to appoint someone who can exercise all the powers of the EPA Administrator will be vested in the EPA General Counsel.” It is not a “continuing” job; it is just a single decision. But it is a tremendously important decision. No Appointments Clause problem?

One more example: Imagine Congress enacts a statute that gives regulatory authority to two entities to regulate an industry, and further says that if they disagree, a third entity should appoint an arbitrator who will make a “binding” decision. That isn’t a “continuing” job, either; it is just a one-off arbitration. But it would be a decision that regulates an entire industry. That doesn’t raise an Appointments Clause issue?

I’m probably missing something — this is just a blog post! But doesn’t that seem strange?

(2) Lucia does decide whether SEC ALJs are principal or inferior officers.

When the Supreme Court agreed to decide Lucia, I hoped it would address not just the line between employees and inferior officers, but also the line between inferior officers and principal officers. 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.

Edmond v. United States is the leading case here:

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.

The Supreme Court, however, did not answer this question in Lucia. Instead, it included this footnote:

That statement [i.e., “The Appointments Clause prescribes the exclusive means of appointing ‘Officers.’ Only the President, a court of law, or a head of department can do so.”] elides a distinction, not at issue here, between “principal” and “inferior” officers. See Edmond v. United States, 520 U.S. 651, 659–660 (1997). Only the President, with the advice and consent of the Senate, can appoint a principal officer; but Congress (instead of relying on that method) may authorize the President alone, a court, or a department head to appoint an inferior officer. See Both the Government and Lucia view the SEC’s ALJs as inferior officers and acknowledge that the Commission, as a head of department, can constitutionally appoint them. See Brief for United States 38; Brief for Petitioners 50–51.

This footnote suggests that SEC ALJs are inferior officers; after all, it cites the parties’ concessions. But it also says that the distinction is “not at issue here.” So here are my questions. Are there some ALJs — or, perhaps AJs — that can make final, unreviewable decisions? And if so, are they principal officers?

Why might this matter? Well, because of this chart:

ACUS AJ Report Fig 16

If someone can issue an unreviewable decision, is that person a principal or inferior officer? How does Edmond work in this context? I’m curious what the experts have to say.

(3) Did the Supreme Court make a constitutional holding? Or exercise a supervisory power? Or common law? Or something else?

At the tail of her opinion for the Court, Justice Kagan addressed remedies, and held that the ALJ on remand cannot be the same ALJ who decided the initial matter:

Lucia made just such a timely challenge: He contested the validity of Judge Elliot’s appointment before the Commission, and continued pressing that claim in the Court of Appeals and this Court. So what relief follows? This Court has also held that the “appropriate” remedy for an adjudication tainted with an appointments violation is a new “hearing before a properly appointed” official. Id., at 183, 188. And we add today one thing more. That official cannot be Judge Elliot, even if he has by now received (or receives sometime in the future) a constitutional appointment. Judge Elliot has already both heard Lucia’s case and issued an initial decision on the merits. He cannot be expected to consider the matter as though he had not adjudicated it before. To cure the constitutional error, another ALJ (or the Commission itself) must hold the new hearing to which Lucia is entitled.

As a matter of policy, this strikes me as obviously correct. It is better for everyone if the ALJ steps aside; even if the same ALJ could be fair, appearances matter. But where does the power come from to order that relief? Is this a constitutional due process holding, akin to Caperton v. AT Massey Coal Co., Inc.? That strikes me as unlikely; the Court would have said something (and presumably some in the majority would have objected). Or did the Court exercise a supervisory power, as it does with, say, the procedural requirements of qualified immunity? Yet can the Court do that when an agency, as opposed to a court, is involved? Or does the Appointments Clause itself compel this remedy, which Justice Kagan seems to suggest in a footnote? But if so, where is the evidence? This remedy isn’t in the text of the clause and I’m not sure it is historically grounded either. If I had to guess, I would say this is a common law remedy — but if so, is that okay in this context?

(4) Freytag is needlessly confusing.

Justice Sotomayor, joined by Justice Ginsburg, dissented, based in part on her reading of Freytag. Her analysis is similar to the D.C. Circuit’s from a case called Landry v. FDIC. I don’t think that is the correct reading of Freytag, for reasons given by Justice Kagan and Judge Randolph (when he dissented from Landry). But Freytag is more confusing than it should be. So how about this? If a court is going to issue an alternative holding, it should clearly label it as an alternative holding. Law is already confusing; there is no need to compound the confusion with imprecision.

(5) Lucia is delightfully non-partisan.

Law is hard. Rather than figuring out who is right in any particular case, it is tempting to rely on proxies, such as the identity of the judges on the various sides of an issue. That is dangerous. Even worse, human nature being what it is, we may be tempted to identify which judges are good proxies for legal correctness based on partisan considerations. Law, however, is not politics. Whether a case is right or wrong depends on its analysis, not its author, and certainly not which president appointed its author.

Lucia is great because it disrupts reliance on proxies. Justice Kagan authored the majority opinion; Justice Sotomayor authored the main dissent; and Justice Breyer concurred in part with his own theory altogether. The D.C. Circuit was evenly divided, which necessarily means things did not break down along “partisan” lines. (As an aside, Landry was authored by Judge Williams.) Likewise, the Tenth Circuit in Bandimere v. SECwhich created the circuit split — disagreed with Landry, in an opinion authored by Judge Matheson. Who appointed Judge Matheson? President Obama.

(6) The role of corpus linguistics.

In today’s world, it is possible to help identify the meaning of words and phrases through massive databases. This is called corpus linguistics. I’m not an expert, nor — based on what I do know — do I think this methodology is relevant to all or even perhaps many interpretative puzzles. But I was curious to see what role, if any, corpus linguistics might play in Lucia, especially because two briefs were filed raising corpus linguistics arguments. Justice Thomas — joined by Justice Gorsuch — seems open to corpus linguistics; he cited Jenn Mascott’s research four times. Because this case was controlled by Freytag, the Court did not delve into these issues in any great detail. But it is worth monitoring.

(7) Why didn’t the litigation dam break after Freytag?

Lucia has prompted some alarm; just how far will it go, and how many government officials will it cover? I have no idea. But I do have a question; if there is going to be an avalanche of challenges, why didn’t Freytag prompt it? In Freytag, “special trial judges” were deemed officers because they “take testimony, conduct trials, rule on the admissibility of evidence, and have the power to enforce compliance with discovery orders.” As Kagan observed, the same is true for SEC ALJs. But presumably it is also true for many other ALJs and AJs. So why did it take so long for Lucia to occur? And if Freytag didn’t prompt an avalanche, will Lucia?

I don’t know, but here’s a possibility. Perhaps Landry — and the D.C. Circuit’s reputation more generally — prevented the avalanche. Landry has been cited many times. (On the other hand, Landry was decided almost a decade after Freytag ….) Or perhaps there is another reason. Thoughts?

(8) The D.C. Circuit should not appoint ALJs!

I’ve already complimented Kent Barnett in this post; now I will disagree with him. Kent (still) thinks that the D.C. Circuit should appoint ALJs. The D.C. Circuit does not appear to have much of an appetite for that role:

Counsel: Your Honor, I just recently read a law review article that suggested that the answer would be … [that] this court appoint all of the administrative law judges.

Court: I read that too. That’s not—I don’t think that’s going to happen.

I don’t think it is going to happen either. After Lucia, however, there may be legislation. And someone may propose this idea. They shouldn’t! I’m not certain such a scheme would be constitutional, for reasons Jenn Mascott has suggested. But even if it was constitutional, it strikes me as a bad idea for at least two reasons. First, I don’t think the D.C. Circuit would be good at it; they don’t know the needs of agencies, especially particular agencies. Second, and more importantly, it may change how the D.C. Circuit goes about its work; distance is not a bad thing.

(9) What does “good cause” mean?

One big thought is what Lucia might mean when combined with Free Enterprise Fund v. PCAOB. Here is how Gillian Metzger frames the issue:

More importantly, now that ALJs are deemed inferior officers, the strong removal protection enjoyed by ALJs at independent agencies becomes ripe for challenge as a form of the double-for-cause removal protection held unconstitutional in Free Enterprise Fund v. PCAOB. No justice other than Breyer thought the court should reach the removal issue—appropriately so, as this issue had not been briefed or addressed by the court of appeals. But Breyer is surely right that this double-for-cause challenge will be immediately forthcoming.

Generally speaking (and this is a gross simplification), the U.S. Supreme Court has upheld single “for cause” removal — i.e., Congress can restrict the President’s ability to fire an officer at will. But two levels of “for cause” protection is unconstitutional; that infringes too much on the President’s authority. Because SEC ALJs (and presumably ALJs in many other agencies) are officers, and because they have “for cause” protection, there are two levels of “for cause” protection for ALJs within independent agencies. That’s a big thought.

Here, however, is a smaller thought — but it may turn into a big thought. ALJs can be removed for “good cause,” which arguably may include inefficiency. But if so, it is useful to recall Judge Griffith’s concurrence in PHH Corp. v. CFPB, which argues that “inefficiency” is a very weak standard that “preserves in the President sufficient supervisory power to perform his constitutional duties.” This sort of argument may appear in future cases.

(10) Another loss for the D.C. Circuit.

This has not been a good term for the D.C. Circuit. According to SCOTUSBlog’s statistics, the D.C. Circuit sent five cases to the Supreme Court this term, and was reversed in four of them. It could be worse; several of the circuits have not been affirmed even once, and the Eleventh Circuit is batting just one for six. Even so, 20% is a low number for the D.C. Circuit.


That’s enough on Lucia. The D.C. Circuit decided six cases this week.

In Cellco Partnership v. NLRB, Judge Silberman (joined by Chief Judge Garland and Judge Pillard) granted Verizon’s petition to review the NLRB’s acceptance of an “ALJ’s finding that … Verizon’s discharge of an employee for lying during an investigation was a pretext to rid the company of a prominent union supporter.” This is how Judge Silberman began his opinion: “It is rare that we reject a Labor Board finding based simply on a lack of substantial evidence. This is such a case.” And sure enough, this opinion turns on the facts. For instance, the Court observed that “a stray comment by a junior supervisor who plays no part in a decision to discharge an employee, without more, is of little significance in measuring evidence of anti-union animus.” This is a rare case but it shows that substantial evidence challenges can succeed.

In FTC v. Boehringer Ingelheim Pharmaceuticals, Inc., Judge Kavanaugh (joined by Judges Pillard and Randolph) agreed with the district court that documents and communications relating to a “reverse payment settlement” were subject to attorney-client privilege. The Court determined that the documents at issue had “a legal purpose and a business purpose” but that “obtaining or providing legal advice was one of the significant purposes of the attorney-client communication.” In her concurrence, Judge Pillard emphasized that “the court’s opinion should not be mistaken for an expansion of the attorney-client privilege” and that the district court “followed certain truncated procedures only with the parties’ consent.”

In Electronic Privacy Information Center v. FAA, Judge Sentelle (joined by Chief Judge Garland and Judge Randolph) denied EPIC’s challenge to the FAA’s “regulations for certain classes of nonrecreational small drone operations” as failing, inter alia, to “address privacy issues raised by drone operations.” Without reaching the merits, the Court dismissed EPIC’s petition “[b]ecause EPIC fails to establish standing.” For example, “the highly attenuated chain of causation presented by EPIC dooms any attempt to establish probabilistic standing. The speculative nature of the injury alleged means that EPIC has failed to show that these rules caused either a substantially increased risk of harm or a substantial probability of harm in light of that increased risk.”

In Western Organization v. Zinke, Judge Edwards (joined by Judge Srinivasan and joined in part by Judge Henderson) affirmed denial of Western’s challenge to compel the Secretary to act for “failing to supplement” the Federal Coal Management Program’s “programmatic environmental impact statement” because of scientific studies that “showed that coal combustion is the single greatest contributor to the growing concentration of greenhouse gases in the atmosphere.” Western claimed that the National Environmental Policy Act — NEPA — “requires the Secretary to issue a supplemental PEIS analyzing the climate impacts.” The Court rejected this argument because NEPA is only applicable when “there remains major Federal action to occur” but here, the “action was completed when the [Federal Coal Management Program] was approved.” The Court further clarified that “the fact that actions continue to occur in compliance with the Program does not render the original action incomplete.” The Court, however, identified for Western “several avenues to raise their claims,” such as petitioning for a rulemaking or challenging a specific license; Judge Henderson did not join that part of the opinion because “it is neither necessary nor appropriate to advise parties on potential avenues of relief not before us.” Judge Edwards, also concurring, stated that the Court should have addressed the Secretary’s argument that “[d]eclining to prepare a supplemental EIS is not by itself, a failure to act that qualifies as reviewable final agency action under § 704 of the APA” because the argument is “both wrong and mischievous.”

In Ameren Services Company v. FERC, Judge Srinivasan (joined by Judges Tatel and Griffith) upheld FERC’s “Order 1000, which aims, among other things, to encourage the development of ‘interregional’ electricity transmission projects — projects spanning more than one geographic region.” The petitioner raised sundry arbitrary-and-capricious challenges, all to no avail. Here is a sample of the Court’s analysis: “In short, the Commission, while not disputing the possibility that the harms raised by petitioners could come to pass, determined that the interest in an appropriate allocation of the costs of an interregional project (and the resulting implications for undertaking interregional projects) required MISO to account for already-approved regional projects in its cost-allocation methodology. We see no basis for setting aside that determination by the Commission.”

Finally, in United States v. Haight, Judge Kavanaugh (joined by Chief Judge Garland and Judge Srinivasan) rejected a challenge to a criminal conviction (“a man known as Boo was selling crack cocaine”) but agreed with the Government’s cross-appeal: “The Government argues that Haight was subject to a 15-year mandatory-minimum sentence under the Armed Career Criminal Act because of Haight’s three prior convictions for violent felonies and serious drug offenses. We agree with the Government.” This paragraph may get some attention (non-substantive alteration added):

United States v. Haight

And that’s the week.

* My children.
** Id.

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