Bench Memos

Law & the Courts

Today’s Ruling in Lucia v. SEC

In its ruling today in Lucia v. SEC, the Supreme Court held by a vote of 7-2 that an administrative law judge at the Securities and Exchange Commission was not lawfully appointed and therefore had no authority to issue a decision.

There should be a lot of interesting commentary on this ruling. For present purposes, I’ll just present this quick summary.

In her majority opinion joined by the five justices to her right (the Chief, Kennedy, Thomas, Alito, and Gorsuch), Justice Kagan held that the SEC’s administrative law judges qualify as “Officers” (rather than employees) under the Appointments Clause of the Constitution. In Kagan’s analysis, this conclusion flowed directly from the Court’s 1991 ruling in Freytag v. Commissioner. Under the Appointments Clause (Article II, section 2), Congress may vest the appointment of “inferior Officers” in the “Heads of Departments.” But the SEC as a body did not itself appoint ALJ Cameron Elliot; he was instead appointed by SEC staff members. His appointment was therefore unconstitutional.

In a brief concurring opinion, Justice Thomas (joined by Gorsuch) argued that under the original public meaning of “Officers of the United States,” all federal civil officials “with responsibility for an ongoing statutory duty” are “Officers.”

In his opinion concurring in part in the judgment, Justice Breyer concluded that the appointment of the ALJ violated the Administrative Procedure Act, as the SEC unlawfully delegated its appointment power to its staff. He objected to deciding that ALJs are “Officers” under the Constitution “without first deciding … what effect that holding would have on the statutory ‘for cause’ removal protections that Congress provided for administrative law judges.” In short, if being “Officers” means that they could be fired at will, he would not conclude that they are “Officers.” (Unlike the majority, he also concluded that the same ALJ, upon being properly appointed, could hear the case.)

Foes of the administrative state will be heartened by Breyer’s concern that by considering the “Officers” question separately from the removal question, “the Court risks … unraveling, step-by-step, the foundations of the Federal Government’s administrative adjudication system as it has existed for decades.”

In her dissent, Justice Sotomayor (joined by Ginsburg) opined that only someone with “the ability to make final, binding decisions on behalf of the Government” qualifies as an “Officer” under the Appointments Clause. Perhaps I’m missing it on a quick read, but I don’t see how that test allows for the existence of any inferior officers. I’m also unclear how Sotomayor derives it. (She does present “some historical support for such a requirement,” but that sounds very weak.)

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