Notice & Comment

Regulating Impartiality in Agency Adjudication, by Kent Barnett

To Justice Breyer’s chagrin, the Court in Lucia v. SEC and Free Enterprise Fund v. PCAOB expressly declined to resolve whether the U.S. Constitution condones statutory protection from at-will removal for administrative law judges and other similarly situated agency adjudicators. These thousands of adjudicators enjoy two layers of for-cause statutory protections between them and the president. The first layer directly protects them from at-will removal or discipline by their agencies. The second layer protects members of the Merit Systems Protection Board or MSPB, the agency that—depending on the type of adjudicator—initially decides or reviews action against the adjudicators from the president’s at-will removal.

The question pits the Due Process Clause against Article II, even if the Supreme Court has not expressly said so. On one hand, senior officials may use at-will removal and discipline to pressure agency adjudicators and thereby potentially imperil the impartiality that due process requires. Indeed, the purpose of longstanding statutory protections for administrative law judges was to render ALJs more professional and impartial. On the other hand, the Court in Free Enterprise Fund held that Article II limits Congress’s ability to cocoon executive officers, including potentially agency adjudicators, with more than one for-cause-removal provision.

Which should prevail—the president’s supervisory authority under the Take Care Clause of Article II or the Due Process Clause’s impartiality requirement?

Both, as I argue in my forthcoming article, Regulating Impartiality in Agency Adjudication, in the Duke Law Journal. The executive itself can use orders and regulations—collectively “impartiality regulations”—to protect adjudicatory impartiality that due process requires without implicating Congress’s interference with presidential supervision under Article II. Executive action can calm concerns over doctrinal quandaries and have the executive branch accept responsibility over the fairness of agency action.

Consider, first, the problematic arguments for excusing agency adjudicators from Free Enterprise Fund’s reach. The Free Enterprise Fund majority suggested in dicta that the prohibition on dual-cause provisions does not apply to agency adjudicators. Their current dual for-cause provisions were constitutional either because (1) they are mere employees, as opposed to “officers of the United States,” or (2) they are adjudicators who issue only recommendatory decisions, not policymakers. The Court’s later holding that the SEC’s ALJs were, in fact, “officers of the United States” in Lucia significantly undermines or eviscerates the first proposed exception. The second one seems more promising, and a couple of district courts relied upon it in now-vacated decisions. Nonetheless, the line between adjudication and policymaking is nebulous, and the Supreme Court itself has recognized adjudication as a form of policymaking, and many adjudicators issue initial or final decision (not merely recommendatory ones). In fact, the default under the Administrative Procedure Act is that ALJs issue initial, not recommended, decisions.

My preferred view is for courts to uphold the adjudicators’ statutory protections by creating an exception for agency adjudicators. Under this approach, due process concerns prevail over Article II. But if they do not, the likely remedies are problematic. Striking adjudicators’ direct protection from at-will removal allows agencies to hand the Sword of Damocles over adjudicators to subtly or not so subtly encourage adjudicators to rule as agencies would prefer. Striking the MSPB’s direct protection would be much more disruptive. It would allow the president to remove at will the members of the agency that oversee disciplinary hearings for the entire federal civil service, not just adjudicators. Of course, a ruling favoring Article II will create a significant roadblock for Congress to protect adjudicators’ impartiality going forward.

This tussle between due process and Article II is not academic. In an extraordinary step, the Fifth Circuit has stayed pending proceedings before an SEC ALJ while it considers a regulated party’s challenge to the ALJ’s protection from at-will removal. And the D.C. Circuit has, after argument, called for amicus briefs in considering the statutory protections for an ALJ at the Department of Agriculture. No wonder Dick Pierce has said that the “issue . . . is not . . . easy to resolve.”

To either moot or mitigate the constitutional clash, the executive should promulgate impartiality regulations.

These regulations would duplicate and improve upon agency adjudicators’ indicia of impartiality. They would provide removal or discipline for only good cause, as initially determined by the MSPB. By having the executive, instead of Congress, act, the action cannot violate Article II because the president has authority to limit the oversight of executive officials. Moreover, the MSPB can take jurisdiction over adverse actions against adjudicators because its jurisdiction may be (and has been for decades) expanded by regulation. The impartiality regulations can also seek to improve adjudicatory impartiality by addressing related matters, depending on the type of adjudicator at issue: merit-based hiring, limited ex parte communications, and separation of functions.

The use of executive action to give executive officials a modicum of independence from supervisors is nothing new. The most high-profile current example comes in the Special Counsel Regulations, which permit the removal of the Special Counsel, like former Special Counsel Robert Muller, only for cause. But civil-service protections, too, originated within the executive branch at the turn of the twentieth century. Indeed, President Nixon used executive action to set up the basic format of the soon-after codified civil-service disciplinary process. The president’s willingness to give executive officials breathing space should not be surprising. Doing so can give the executive branch more professional, less partisan, officials and—as is especially important for adjudication—legitimacy to agency action by rendering it more fair and above partisan politics.

Impartiality regulations have two down sides.

First, they lack the permanence of statutory provisions. Impartiality regulations, like other forms of internal administrative law, permit the president and other executive officials to organize, limit, and empower various parts of the branch. This intra-executive control is a bug and a feature: one administration can always repeal an earlier administration’s actions, although it cures any separation-of-powers problem among the branches that arises through statutory law. The executive can create as credible of a commitment as possible by requiring that the enacting, amending, and repealing of impartiality regulations occur through notice-and-comment regulations. The transparency of notice and comment permits affected and interested groups time to mobilize to counter undesirable changes. But make no mistake. A later president bent on limiting adjudicatory impartiality to further his or her own policy preferences can do so.

Second, they require political will and appreciation for long-term benefits. The inertia of and largely unlimited agency discretion under the current system may lead the executive branch to resist change. Given the current Administration’s preference for easier removal of ALJs, change would likely have to await an election. But even with new administrations of either major political party, they may see advantage in being able to control adjudicators in matters that are important to them. Or administrations of one political party may seek to establish impartial adjudicators only to have the administrations of the other political party undo the impartiality regulations to benefit its objectives. In other words, the “virtuous” party would lose policy battles to the “nonvirtuous” party.

These concerns highlight an underlying imperative of my proposal: administrations of both major political parties must appreciate the long-term benefits that impartiality provides, and they must allow those long-term benefits to outweigh their short-term partisan interests. Of course, impartiality can hinder an administration’s short-term policy goal. But for adjudications to have moral force they must apply, and at times develop, policies in a fair and evenhanded way. That moral force benefits everyone involved in adjudication by giving fairness to the affected parties and legitimacy to the process that, over time, can develop an agency’s policy preferences.

If my confidence in grand notions of good government and long-term interests of different actors seems naïve, I leave with you one reminder. The federal government encountered significant concerns over the impartiality of agency adjudicators during the New Deal. Congress and President Truman responded by giving ALJs (the agency adjudicators whom they expected to preside over nearly all evidentiary hearings) significant indicia of impartiality in the Administrative Procedure Act. To be sure, the action was in the form of statutory law, not executive action. But the APA provisions on impartiality came from the Franklin D. Roosevelt Administration’s recommendations (via the Attorney General’s Committee to Study Administrative Procedure). The broader point is that our political system has recognized and addressed concerns over agency adjudicators’ impartiality. And it can do so again.

Kent Barnett is the J. Alton Hosch Associate Professor of Law at the University of Georgia School of Law.

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