The Collision Between the Constitution of the 1930s and the Constitution of 2020
The D.C. Circuit is wrestling with some fascinating issues in Fleming v. U.S. Department of Agriculture, Docket No. 17-1246. The dispute has its roots in the Supreme Court’s 1936 opinion in Morgan v. U.S., 298 U.S. 468 (1936), often referred to as Morgan I. In the context of an adjudication with an 11,000 page record created during a two-month long hearing, the Court reversed a decision of the Secretary of Agriculture because the Secretary had not personally heard the evidence. The Court held that due process requires that “the one who decides must hear.” Two years later, the Court denied the government’s petition for rehearing in Morgan v. U.S., 304 U. S. 1 (1938) (Morgan II). The Court held that due process precluded the Secretary from adopting findings of facts that had been drafted by subordinates, holding that “the officer who makes the determination must consider and appraise the evidence which justifies them.”
Morgan I and II created enormous problems for DOA. The Secretary could not possibly preside in scores of lengthy hearings or read the voluminous records created in those hearings. In 1940, Congress responded to Morgan I and II by enacting a statute that created a new position in DOA called the “Judicial Officer.” Congress authorized the Secretary to delegate his power to review initial decisions made by hearing examiners (later renamed Administrative Law Judges) to the Judicial Officer. Congress gave the Secretary no power to review a decision made by the Judicial Officer because Congress believed that conferring decision making power on someone who could not possibly personally read all of the evidence in a case would violate the holdings in Morgan I and II.
If Congress had waited another year before responding to the crisis the Court created in Morgan I and II, it could have avoided the perceived need to change the structure of the adjudicatory decision making process at DOA. In United States v. Morgan, 313 U.S. 409 (1941) (Morgan IV), the Court made everything it said in Morgan I and II irrelevant by holding that no one can question the person who makes a decision on behalf of an agency to determine whether or to what extent the decision maker read the record on which the decision was based. Morgan IV was one of the critical building blocks for the modern system of agency adjudication that Congress created in the Administrative Procedure Act (APA) and that the Court upheld in Ramspeck v. Federal Trial Examiners Conference, 345 U.S. 128 (1953).
The 1990s produced Supreme Court decisions that reflected a new way of thinking about the Constitution that eventually collided with the old way of thinking. In Freytag v. Commissioner, 501 U.S. 868 (1991), and Edmond v. U.S., 520 U.S. 651 (1997), the Court held that an officer can be an “inferior officer” only if he is subordinate to a principal officer who is appointed through the process of nomination by the president and confirmation by the Senate. For an officer with adjudicatory responsibilities to be inferior to a principal officer, his decisions must be reviewable by a principal officer. The Judicial Officer at DOA cannot be a principal officer because he was appointed by the Secretary. It follows logically that ALJs at DOA are principal officers, rather than inferior officers, and that their appointment by the Secretary of Agriculture was unconstitutional.
The government is trying to resist that argument in Fleming by arguing that the Secretary of Agriculture can and does influence the decisions of the Judicial Officer. The government argues that “the Secretary can at any time prior to [the] issuance of a decision by the Judicial Officer, instruct the Judicial Officer regarding the disposition of any adjudicatory proceeding.” That argument creates another problem, however. In Morgan II, the Court explicitly rejected as unconstitutional the then-practice of the Secretary of engaging in ex parte communications with the employees who made the findings in cases adjudicated at the Department. That holding has never been overruled and was one of the safeguards of due process that Congress codified in §557 of the APA.
Fortunately, DOA can remedy the flaw in its decision making structure. The statute that authorizes the Secretary to delegate the function of reviewing ALJ initial decisions to the Judicial Officer also authorizes the Secretary to revoke that delegation with prospective effect. The Secretary can correct the constitutional flaw in the decision making structure that Congress created in response to Morgan I and II, by revoking the delegation to the person who is now the Judicial Officer and either exercising the review function himself or delegating it to another principal officer who was appointed through the process of nomination by the President and confirmation by the Senate.
Unfortunately, the petitioners have raised another issue that is not as easy to resolve. They argue that ALJs at DOA are unconstitutional because they can only be removed for cause by the Merit Systems Protection Board (MSPB). Since the members of the MSPB can only be removed for cause, the ALJs are protected from removal by two layers of for cause protection. That is arguably inconsistent with the Court’s holding in Free Enterprise Fund v. PCAOB, 561 U.S. 477 (2010), that Congress cannot provide two layers of for cause protection for any officer. The court reasoned that two layers of insulation of an officer from presidential control interferes impermissibly with the president’s ability to exercise the functions vested in him by Article II and to insure that the laws are faithfully executed.
It is not at all clear that the holding in Free Enterprise Fund applies to ALJs. In footnote 10 of that opinion, the Court disavowed any intention to address the status of ALJs and other officers who perform solely adjudicatory functions. The government is not attempting to rely on footnote 10 as the basis for its defense of the adjudicatory structure at DOA, however. It is arguing instead that the court can adopt a construction of the statute that protects ALJs from removal except for cause that will save that provision from a holding that it is unconstitutional.
Petitioners argue that the D.C. Circuit has no power to adopt such a statutory construction. They note that the Federal Circuit has exclusive jurisdiction to review MSPB decisions. It follows arguably that the Federal Circuit has exclusive jurisdiction to interpret the statute that allows ALJs to be removed for cause in the process of reviewing an order in which MSPB has found that there is good cause to remove an ALJ.
To its credit, the D.C. Circuit panel that is in the process of deciding Fleming has recognized that the case raises important issues that affect all ALJs. On December 6, it issued an order in which it appointed an amicus to argue that the statute that protects ALJs from removal except for cause is constitutional even if the court rejects the government’s argument that the court can adopt a saving construction of that statute. The court also invited others to file amicus briefs that address that issue. This case bears watching whether or not you decide to file an amicus brief.
Richard J. Pierce, Jr. is the Lyle T. Alverson Professor of Law at George Washington University.