Notice & Comment

The Combination of Lucia, Edmond and Political Polarity Is a Disaster, by Richard J. Pierce, Jr.

In Lucia v. SEC, 138 S. Ct. 2044 (2018), the Court held that Administrative Law Judges (ALJs) at the SEC are inferior officers rather than employees. That holding probably means that all 2000 ALJs and many thousand administrative judges (AJs) are inferior officers. In Edmond v. U.S., 520 U.S. 651 (1997), the Court held that an officer is an inferior officer only if he is inferior to a principal officer who is nominated by the president and confirmed by the Senate. He must be inferior in two ways—his decisions must be reviewable by a principal officer and he must be removable by a principal officer. When Congress drafted the statutes that apply to agency adjudications it had no idea that the Court would decide Lucia and Edmond as it did. Many of those statutes create decision making structures that are unconstitutional as a result of those two holdings.

The statute that creates the decision making structure at the Patent and Trademark Appeals Board (PTAB) illustrates the problem. Hundreds of Administrative Patent Judges (APJs) have the power to make decisions with respect to the validity of patents. Their decisions are not reviewable by anyone. Not surprisingly, the Federal Circuit held that the PTAB decision making structure is unconstitutional in Arthrex v. Smith & Nephew, 941 F. 3d 1320 (Fed. Cir. 2019). Since the court believed that it could not add to the statute a right to obtain review of an APJ decision by a principal officer, the court concluded that it could save the statute from a holding that it is unconstitutional only by making all APJs removable at will by a principal officer. The court held that even the statutory provision that provides a modest degree of protection from arbitrary removal for most civil servants cannot be applied to APJs.

The House Subcommittee on Intellectual Property held a hearing on the Arthrex opinion. There was broad agreement among the members and the witnesses that the result of the Arthrex decision was unacceptable because it created a situation in which the Director of PTAB could tell an APJ that he must decide a case in a particular way or risk removal by the Director.  John Duffy identified three ways in which the statute could be amended to eliminate the fatal flaw that the Federal Circuit identified. Congress could confer the power to review APJ decisions on the Director, who is a principal officer; it could create a multi-member board comprised of principal officers and confer review power on the board; or, it could make all of the hundreds of APJs principal officers who must be nominated by the president and confirmed by the Senate.

ALJs at the Department of Agriculture provide another example. As a result of a statute enacted in 1940, ALJ decisions at DOA are reviewed only by a “Judicial Officer” who is not nominated by the president and confirmed by the Senate. In Fleming v. DOA, D.C. Circuit Docket No. 17-1246, the petitioner is arguing that the DOA ALJ who presided in its case was unconstitutionally appointed because his decisions are not reviewable by a principal officer and, like all ALJs, he is removable only for cause by the Merits Systems Protection Board. The petitioner is likely to win under Edmond, thereby creating a situation analogous to the situation of the hundreds of APJs at PTAB.

Many other agency decision making structures have similar constitutional flaws. Decisions of ALJs at the Social Security Administration (SSA) are reviewable by the Social Security Appeals Council. The members of the Council are not principal officers. Thus, the 1600 SSA ALJs are also in a situation analogous to the hundreds of APJs at PTAB.

Decisions of Immigration Judges (IJs) are reviewable by the Board of Immigration Appeals, but the members of the Board are not nominated by the president and confirmed by the Senate. IJ decisions are also reviewable, in theory, by the Attorney General (AG). In fact, however, the AG cannot possibly review more than a tiny fraction of the decisions of IJs. The Department of Justice requires each of the hundreds of IJs to decide 700 cases per year in an effort to reduce the backlog of 1,100,000 pending cases. If the Edmond test requires actual review rather than merely theoretical review, IJs are also in a situation analogous to the hundreds of APJs at PTAB.

Unless Congress amends the statutes applicable to APJs at PTAB, ALJs at DOA, ALJs at SSA, and IJs, courts are likely to agree with the reasoning of the Federal Circuit in Arthrex and hold that all of those judges must be removable at will. That would eliminate any conceivable argument that they have the degree of decisional independence required to comply with due process.

Thus, Congress must amend many of the statutes that govern adjudicative decision making at the many agencies that have statutorily-mandated decision making structures that violate the constitution as the Supreme Court interpreted it in Lucia and Edmond.  Any of the three types of amendments that Professor Duffy recommended for the PTAB statute would be effective at any of the other agencies that are in a situation analogous to that of PTAB.

This is the point at which political polarity becomes a formidable obstacle, however. It has become nearly impossible for Congress to enact or to amend a statute. It seems unlikely that Congress will be able to amend all of the statutes that now create decision making structures that are unconstitutional in a timely manner. In any context in which Congress is unable to accomplish that daunting task, a court is likely to follow the lead of the Federal Circuit and to hold that the judges at that agency must be subject to at will removal. That, in turn, will create a situation in which those judges do not have any degree of decisional independence from the agencies at which they preside. We could easily find ourselves in a situation in which over a million cases per year are decided in a decision making environment that lacks one of the most important safeguards of due process—an unbiased decision maker.

Political polarity also creates another serious obstacle to the kinds of changes in decision making structure that are required to comply with Lucia and Edmond. Amendments that add enough principal officers to review the millions of decisions made by the judges whose decisions are not now subject to review by a principal officer would add scores of principal officers to the approximately 1200 agency officials who now must be nominated by the president and confirmed by the Senate. Amendments that make those judges principal officers would more than double the number of agency officials who must be nominated by the president and confirmed by the Senate.

As Anne Joseph O’Connell has documented in detail, political polarity has created a situation in which the process of nomination and confirmation has gotten slower in every administration. It is so slow now that we have a large number of vacancies in many important positions. It seems highly unlikely that the process of appointment and confirmation would be able to cope with any significant increase in the number of agency officials who must be nominated and confirmed.

I am confident that the Supreme Court was not aware of the effects of its decisions in Lucia and Edmond when it made those decisions. Now that those effects have become apparent, it should reconsider the tests that apply to determine whether an ALJ or an AJ is an officer or an inferior officer in light of the dissastrous effects of the tests that it applied in Lucia and Edmond. In the meantime Congress will have to amend many statutes to create decision making structures that are consistent with Lucia and Edmond. Courts can help Congress make the needed changes and it can help agencies adjust to those changes by following the lead of the Supreme Court in Buckley v. Valeo, 424 U.S. 1 (1976). After holding that the initial structure of the Federal Election Commission was unconstitutional, the Court gave Congress thirty days to amend the statute to create a structure that is constitutional.

Richard J. Pierce, Jr. is the Lyle T. Alverson Professor of Law at George Washington University.