Yesterday the Supreme Court ruled in Lucia v. SEC, evaluating whether the Securities and Exchange Commission had used improper methods to hire its administrative law judges. A fairly lopsided 7-2 margin of justices concluded that it had. Standing alone, Justice Stephen Breyer found that the SEC had committed a statutory violation by improperly delegating appointments authority to staff — similar to an argument previously raised by professor Jennifer Nou. Six of the remaining justices held that the SEC’s staff-level appointments of ALJs constituted a constitutional violation. In an opinion written by Justice Elena Kagan, the court concluded that the SEC’s ALJs are “officers of the United States” who must be appointed by “the President, a court of law, or a head of department” — not by staff.
In addition to the somewhat surprising margin of decision in what at times seemed a controversial case, the Lucia litigation had several atypical twists along the way. The U.S. Court of Appeals for the District of Columbia Circuit had agreed to rehear the Lucia decision en banc even though the panel opinion was a straight-up application of D.C. Circuit precedent from 2000. Then the en banc court split 5-5, issuing just “a per curiam order denying Lucia’s claim.” Finally, at the cert stage, the government changed its litigating position, agreeing with the petitioner that the ALJs are “officers.” Further, the solicitor general asked the court to consider whether the ALJ’s good-cause removal protections improperly restrict executive supervision.
The SG’s position appeared well-calculated yesterday. The seven-justice determination that the ALJ appointments were unlawful suggested that the SG’s legal position was on solid ground. And although generally one thinks of the SG’s role as to defend executive branch practices — such as an agency’s staffing procedures — larger-scale issues of the integrity of executive power were at play. Ultimately the government’s position defended the Article II prerogative of the executive to have either himself or his one-step-removed department head appoint executive officers. Further, Breyer’s opinion agreed with the government that the constitutional removal and appointments questions were inextricably intertwined.
Despite the intriguing posture of the case, in the end the majority opinion itself was modest. As prolific appointments clause scholar Kent Barnett has pointed out, the Lucia decision was about as narrow as it could be.
Kagan’s remarks at oral argument foreshadowed the outcome. In 1991, in Freytag v. Commissioner, the Supreme Court held that special trial judges who presided over certain Tax Court proceedings were Article II “officers.” In an exchange with court-appointed amicus Anton Metlitsky at oral argument, Kagan said: “[I]f you had a list and you said top 10 attributes of the judges that were involved in Freytag and the judges that are involved here, you’d pretty much say that nine of them are the same and maybe one is different.”
The court’s opinion consequently pointed out that the Freytag STJs “are near-carbon copies” of the SEC’s ALJs. Both sets of officers “take testimony,” “[r]eceiv[e] evidence and [e]xamine witnesses at hearings,” “take pre-hearing depositions,” “conduct trials,” “administer oaths, rule on motions,” “generally regulat[e] the course of a hearing,” “rule on the admissibility of evidence,” and “have the power to . . . punish all [c]ontemptuous conduct” — i.e., both may utilize “nearly all the tools of federal trial judges.”
At the most basic level, then, Lucia is just a straightforward application of Freytag. But the Lucia opinion also brings some subtle changes to the court’s formulation of the Article II “officer” standard that may impact appointments clause cases in the lower courts.
For starters, in the past, the D.C. Circuit in particular has read essentially every facet of Supreme Court appointments-clause discussion as establishing new mandatory “officer” elements. In Freytag, the court discussed final decision-making authority in the alternative — and the D.C. Circuit concluded that only officials with such authority are “officers.” The Freytag court mentioned discretionary authority and the handling of important issues as indicia of Article II “officer” status— and the D.C. Circuit in Tucker v. Commissioner of Internal Revenue suggested that both of those factors — and final decision-making — are mandatory. In Lucia, the court indicated that this interpretive approach is incorrect. The court explicitly stated that it was not deciding whether each ALJ/STJ characteristic is constitutionally required “for someone conducting adversarial hearings to count as an officer.” In other words, as Justices Clarence Thomas and Neil Gorsuch expressed in their concurring opinion, the court’s opinions have suggested that certain characteristics are sufficient, but perhaps not necessary, for Article II “officer” status.
Moving forward, if lower courts can identify that a particular official has responsibilities that are more significant than those of the SEC’s ALJs, a court might fairly confidently rule that the official is an “officer.” But for any position with duties non-analogous to agency adjudicators, or with duties arguably less weighty than the SEC’s ALJs, there is an open question. Lower courts, and Congress when it creates new governmental positions, will have to use their best judgment to compare and contrast the position under consideration with officials previously determined to be “officers.” But lower courts can no longer point to highly detailed factors from a particular Supreme Court appointments clause decision and necessarily contend that those factors have been mandated by the court.
In continuity with Buckley v.Valeo, the court in Lucia remains committed to the amorphous “significant authority” standard for “officer” status, declining to flesh it out any more than just to clarify that the SEC’s ALJs satisfy it under Freytag. The one curious addition that the Lucia opinion does emphasize, however, is the threshold qualification that only officials in “continuing positions” are “officers.” The Lucia opinion suggests that this “continuing position” element — emphasized in United States v. Germaine in 1879 — was also embraced by the court in Freytag. But neither of the court’s modern appointments clause decisions, in Buckley or Freytag, explicitly imposed the “continuing” officer requirement. And no litigant in Lucia contended that this element might be outcome-determinative.
Perhaps the court highlighted the “continuing position” qualification for “officer” status along with its discussion of “significant authority” because the qualification plays a fairly prominent role in the Department of Justice’s 2007 “officer” definition, discussed in the SG’s Lucia brief. Or, perhaps the court is trying to more closely tie the modern Buckley officer formulation to its 19th-century appointments clause cases. At one point the court in Free Enterprise Fund v. Public Company Accounting Oversight Board in 2010 suggested that language in Germaine indicates that the vast majority of civil servants are non-officers. But the 2010 opinion apparently misconstrued Germaine’s discussion to apply to fulltime government employees, not just to individuals hired intermittently for services like government contractors or the civil surgeons at issue in Germaine.
One final point about the Lucia opinions that merits discussion relates to Breyer’s continued uneasiness about the impact of appointments clause jurisprudence on civil service tenure protections. Breyer indicates that he turned to statutory grounds in Lucia because he is deeply concerned that concluding that ALJs are Article II “officers” may lead to the companion conclusion that ALJ tenure protections are barred under Free Enterprise Fund’s prohibition on double for-cause removal protections for certain executive officers. Further, Breyer fears that applying Free Enterprise Fund to “high-level civil servants threatens to change the nature of our merit-based civil service as it has existed from the time of President Chester Alan Arthur.” But this final concern appears to be based, at least in part, on factual imprecision.
Arthur served during the 1883 enactment of the Pendleton Act, the first statute to establish a comprehensive merit-based civil service selection system. But that act had very little to do with the labyrinthine set of tenure protections applicable to civil servants today. The theory of an expert civil service at the time was based much more on selecting qualified officers on the front end. The Pendleton Act barred only removals motivated by retaliation related to political campaign activity. Even the Lloyd-La Follette Act’s establishment of more generous removal protections in 1912 apparently was motivated by particular concerns related to whistleblowing-employee speech protections — not a generalized idea that federal employees must be insulated from removal to ensure an expert civil service.
The court’s apparently modest-at-least-for-now opinion in Lucia intentionally leaves several unanswered questions. Are the ALJs’ tenure protections unconstitutionally restrictive? (The court needs thorough lower-court review before it would take this up.) Has the SEC properly ratified the previously improper ALJ appointments? (The court sees no reason to address this.) Is a “new officer … required for every Appointments Clause violation”? (Not necessarily.) What exactly are the factors that give a government official sufficiently “significant authority” to be an “officer”? (You have it if the court has held previously that your position is an “office.”) It’s unclear how, or whether, courts will address these issues in the future. But it seems likely that appointments clause scholars and practitioners will be productively employed for at least a few more years.
*This post originally appeared in SCOTUSblog’s June 2018 symposium on October Term 2017’s separation-of-powers and administrative-law decisions.