Monday, February 18, 2019
The First Circuit ruled last week that the congressionally created Board to oversee the restructuring of Puerto Rico's debt was constituted in violation of the Appointments Clause. The court, however, stopped short of halting the Board's federal lawsuit to initiate debt adjustment proceedings on behalf of Puerto Rico, giving the government 90 days to cure the appointments defect.
The ruling in Aurelius Investment v. Commonwealth of Puerto Rico puts the ball in the government's court to get the Board members properly appointed before the debt readjustment proceeding can move forward.
The case involves the Financial Oversight Management Board created under the Puerto Rico Oversight, Management, and Economic Stability Act ("PROMESA"). Congress created the Board to provide independent supervision and control over Puerto Rico's financial affairs and to help the Island "achieve fiscal responsibility and access to capital markets." Under the Act, Board members are appointed by the President from a slate of candidates created by congressional leadership. (If the President doesn't select a member from one of these lists, the Senate has to confirm the President's nominee. But current Board members all came from a list, without Senate confirmation.)
The Board filed for debt readjustment on behalf of Puerto Rico. Debt-holders sought to dismiss the suit, arguing that the Board lacked authority to file, because Board members weren't appointed pursuant to the Appointments Clause. The Board responded that Congress had authority to constitute the Board this way under the Territorial Clause.
The First Circuit ruled against the Board. The court first acknowledged that the Territorial Clause gives Congress broad authority over U.S. territories, but rejected the argument that the the Clause is so powerful as to allow Congress to bypass the Appointments Clause. The court applied the specific-governs-the-general canon and held that the specific Appointments Clause prevails over the more general Territorial Clause. Moreover, the court said that the Territorial Clause doesn't allow Congress to override the requirement of other structural provisions, like presentment (under the Presentment Clause); so, too, it it doesn't allow Congress to override the requirements of the Appointments Clause.
The court also rejected the claim that the nondelegation doctrine, which operates more flexibly in territories (allowing Congress wider berth to delegate lawmaking authority), gives Congress room to bypass the Appointments Clause. Moreover, the court rejected arguments based on congressional control over the D.C. courts, and declined to read the Insular Cases as creating an Appointments Clause-free-zone in Puerto Rico.
As to the Appointments Clause itself, the court ruled that Board members are "officers" and therefore subject to the Clause, because the positions are "continuing," the incumbent exercises significant authority, and that authority is exercised pursuant to the laws of the United States. On this last point, the court noted that "[e]ssentially everything [Board members] do is pursuant to federal law." The court distinguished high-level Puerto Rican officials who are elected by Puerto Ricans, even though their ultimate authority traces to Congress. "So the elected Governor's power ultimately depends on the continuation of a federal grant. But that fact alone does not make the laws of Puerto Rico the laws of the United States, else every claim brought under Puerto Rico's laws would pose a federal question."
Finally, the court held that Board members are "principal" officers, because, under Edmond, "[t]hey are answerable to and removable only by the President and are not directed or supervised by others who were appointed by the President with Senate confirmation." As such, they must be nominated by the President, with advice and consent of the Senate.
The court declined to dismiss the Board's Title III petitions, however, because "[a]t a minimum, dismissing the Title III petitions and nullifying the Board's years of work will cancel out any progress made towards PROMESA's aim of helping Puerto Rico 'achieve fiscal responsibility and access to the capital markets.'" Moreover, the court stayed its ruling for 90 days to give the government time for Senate confirmation.
Tuesday, November 20, 2018
Senators Richard Blumenthal, Sheldon Whitehouse, and Mazie Hirono filed suit yesterday against "purported Acting Attorney General" Matthew Whitaker and President Trump, seeking declaratory and injunctive relief against President Trump's designation of Whitaker as Acting AG.
The complaint contends that the designation (done under the purported authority of the Federal Vacancies Reform Act) violated the Appointments Clause and sidestepped the DOJ succession statute. (These arguments are similar to the points in the filing last week seeking Supreme Court review of the designation.)
The complaint points especially to the Senate's advice-and-consent role in principal officer appointments as a separation-of-powers check. That's partly to establish standing: "By designating Mr. Whitaker to perform the functions and duties of the Attorney General without having been subject to Senate confirmation, President Trump has unlawfully denied the Plaintiffs their right, as sitting U.S. Senators, to vote on whether to consent to his appointment to that role."
But it's also to illustrate why the Senate's role matters. Quoting Federalist 76, the complaint says:
It is precisely so that matters like these can be thoroughly examined by Senators that the Constitution prohibits the appointment of principal federal Officers without the Senate's advice and consent. That safeguard, the Framers recognized, helps prevent the President from appointing Officers with "no other merit than that of . . . possessing the necessary insignificance and pliancy to render them the obsequious instruments of his pleasure." The Framers regarded the advice-and-consent requirement as "an excellent check upon a spirit of favoritism in the President" that "would tend greatly to prevent the appointment of unfit characters from State prejudice, and from family connection, [and] from personal attachment."
Friday, November 16, 2018
Tom Goldstein, frequent Supreme Court litigator and publisher of SCOTUSblog, asked the Supreme Court today to rule on the legality of President Trump's designation of Matthew Whitaker as Acting AG. The issue came up in Goldstein's motion to substitute Rod Rosenstein (and not Matthew Whitaker) in a case against the AG.
The case pits the AG Succession Act (which specifies an automatic line of succession for the office) against the Vacancies Reform Act (which applies more broadly and gives the President more flexibility in naming an acting officer). It also asks whether the President's designation violated the Appointments Clause, because the AG is an "officer" that requires Senate confirmation.
The government's position is set out here, in the OLC memo concluding that President Trump had authority to designate Whitaker. Walter Dellinger and Marty Lederman have an outstanding "initial reactions" here, at Just Security.
Sunday, August 26, 2018
Judge Ketanji Brown Jackson (D.D.C.) ruled yesterday in American Federation of Government Employees v. Trump that President Trump's executive orders sharply curtailing federal employees' collective bargaining and labor rights violate federal labor law. The ruling means that most of the EOs' limitations are invalid.
Together, the EOs set a timeframe for completion of collective bargaining negotiations; removed certain matters from the bargaining table completely; set certain procedures for negotiations; limited the extent to which federal employees could engage in union work during business hours; limited the government resources that union members could use for union activities; made it easier for the government to dismiss federal employees for unsatisfactory performance.
The court recognized that the EOs are subject to restrictions in statutory law, but that "the President could always theoretically claim that he possesses the inherent constitutional authority to take a given action, regardless of any conflict with a congressional statute and his resulting lack of statutory authority." "But Defendants have made no such assertion in the instant case; instead, they have 'expressly recognized statutory limitations on the President's authority to act in this area.'" The court, therefore, didn't rule on the constitutional question.
The government's omission of a constitutional argument might seem surprising, given the President's recent constitutional extrapolation from the Court's ruling in Lucia in an EO designed to rein in control over executive branch ALJs. That move seemed like an attack, under cover of Lucia and claimed plenary Article II authority over the executive branch, on civil service laws that in any way restrict the President's claimed authority to hire and fire whomever he wants. That attack would seem to apply equally here. But the government didn't press it.
On the statutory questions, Judge Jackson summarized:
[T]he Order provisions concerning matters such as the reduction of the availability of and support for official time activities [to engage in union-related work], and the specific prohibitions against bargaining over [certain matters], or hte unilateral narrowing of any negotiated grievance procedures, dramatically decrease the scope of the right to bargain collectively, because, in the [Federal Service Labor-Management Relations Act], Congress clearly intended for agencies and unions to engage in a broad and meaningful negotiation over nearly every "condition of employment." Likewise, the Orders' requirements, such as the directive that agencies should "ordinarily" seek to conclude collective bargaining negotiations within five to seven months, or should limit the applicability of grievance procedures "[w]henever reasonable[,]" effectively instruct federal agencies and executive departments to approach collective bargaining in a manner that clearly runs counter to the FSLMRS's expectation of good-faith conduct on the part of negotiating parties. . . .
[T]he only challenged provisions of [the EOs] that can stand are those that neither contribute to a reduction in the scope of the collective bargaining that Congress has envisioned nor impede the ability of agencies and executive departments to engage in the kind of good-faith bargaining over conditions of federal employment that Congress has required.
Monday, August 13, 2018
Judge Dabney L. Friedrich (D.D.C.) today rejected challenges to Special Counsel Robert Mueller's office and authority by a defendant in the criminal case against thirteen Russian individuals and three corporations. The ruling in U.S. v. Concord Management says that the special counsel office is constitutional and that Special Counsel Mueller was acting within his authority in bringing this case. The ruling allows the case to go on.
The court first ruled that the special counsel is an "inferior" office under the Appointments Clause and was validly appointed by the Acting AG. The court said that different features of the office pointed in both the "principal officer" and "inferior officer" direction under Edmond, but ultimately the revocability of DOJ's special counsel regulations mean that the office is "inferior":
The regulations' revocability is "[t]he crucial difference" between the Special Counsel regulations and a statute that seeks to bind the executive branch from without, and it is this different that ensures the Special Counsel is an inferior officer. That is, to the extent that the regulations threaten to impair the Acting Attorney General's ability to direct and supervise the Special Counsel, the Department of Justice may simply rescind or revise the regulations at any time. This ability to rescind or revise the regulations as needed means that the Special Counsel is subject to the Acting Attorney General's plenary supervision. It also makes the Special Counsel effectively removable at will: if the for-cause provision stands in the way, the Acting Attorney General need only rescind or revise the regulation in order to remove the Special Counsel.
The court also ruled that the special counsel was an "inferior office" under Morrison v. Olson.
The court went on to say that the office didn't violate the separation of powers. In particular, the court ruled that even if the special counsel regulations are nonbinding on the special counsel (as Concord argued), then "the Special Counsel would be subject to the Acting Attorney General's plenary control by statute. Because executive power would remain wholly within the executive branch, no separation-of-powers problem would arise." Moreover, the court said that the AG had plenty of statutory authority to issue the special counsel regs.
Finally, the court said that Special Counsel Mueller wasn't acting outside of his appointment authority in bringing this particular case.
Friday, August 3, 2018
Check it Out: Tillman and Blackman on Why the Special Counsel may be an Employee (but still invalidly appointed)
For yet a different take on Mueller's constitutionality, check out Seth Barrett Tillman and Josh Blackman's piece on Lawfare, Is Robert Mueller an "Officer of the United States" or an "Employee of the United States?"
They argue that under Lucia, the special counsel is really an "employee," not subject to the Appointments Clause:
The Supreme Court's recent decision in Lucia v. SEC explains that if a federal position is only "temporary," then such a position is likely not an "office of the United States." . . . Therefore, [the special counsel] may not be an "officer of the United States" under the rule in Lucia.
As an employee, they argue, the special counsel is subject to the ordinary appointment requirements for any (non-officer) civil servant.
Still, they argue that there are four reasons to question Mueller's appointment, including that he wasn't appointed pursuant to civil-servant rules, that he may exercises outsized power for an employee, and that his for-cause termination protection runs into Justice Scalia's dissent in Morrison. (On that last point, they say: Lucia may afford a potentially soon-to-be-more-conservative Supreme Court the opportunity to do what Judge Brett Kavanaugh speculated about in 2016: make Justice Scalia's Morrison dissent into a majority opinion.")
Thursday, August 2, 2018
Chief Judge Beryl A. Howell (D.D.C.) rejected a challenge to Special Counsel Robert Mueller's appointment under the Appointments Clause. The ruling, which came in response to a witness's challenge to a grand jury subpoena issued by Mueller, means that the witness--identified by several sources as Andrew Miller, a former associate of Roger Stone--will have to comply with the subpoena.
The ruling aligns with other district court rulings that upheld Mueller's appointment.
Miller challenged a grand jury subpoena issued by Mueller, arguing that Mueller was invalidly appointed under the Appointments Clause. Judge Howell rejected that claim. The court, relying on the factors in Morrison v. Olson, ruled that Mueller was an "inferior officer" and was validly appointed, pursuant to federal statute, by the head of a department. As to Miller's claim that DAG Rod Rosenstein wasn't the "Head of Department" for purposes of the Appointments Clause (because he was the DAG, not the AG), the court said that federal law authorizes the DAG to serve as Acting AG when the AG is recused, and that a different statutory provision allows the AG to delegate to the DAG authority to appoint the Special Counsel.
The Sixth Circuit ruled this week in Jones Brothers, Inc. v. Sec'y of Labor that administrative law judges in the Mine Safety and Health Review Commission are "inferior officers" and were invalidly appointed under the Appointments Clause.
The very short ruling (on the merits) is a straight-line application of Lucia.
The case arose when the Mine Safety and Health Administration imposed a civil penalty on Jones Brothers for failing to comply with agency safety requirements. A Commission ALJ upheld the penalty, and the Commission itself affirmed.
The problem: The ALJ was appointed by the Commission's Chief ALJ, and not by the "department head" (the Commission itself).
The Sixth Circuit ruled that Mine Commission ALJs operated almost exactly like the SEC ALJs at issue in Lucia, and so were "inferior officers" under the Appointments Clause:
The Commission's administrative law judges are likewise established by statute . . . and exercise significant authority commensurate with their SEC counterparts. Like SEC administrative law judges, they preside over trial-like hearings. In that role, they shape the administrative record by taking testimony, regulating document production and depositions, ruling on the admissibility of evidence, receiving evidence, ruling on dispositive and procedural motions, and issuing subpoenas. Indeed, they exercise "nearly all the tools of federal trial judges."
And like SEC administrative law judges, they have the authority to issue initial decisions assigning liability and imposing sanctions. After 40 days, those decisions become final decisions of the Mine Commission unless the Commission decides to review them. But such review is available at "the sound discretion of the Commission," not as a "matter of right." This process is nearly identical to the SEC's review process.
The court said that Commission ALJs, like SEC ALJs, are therefore "inferior officers." And as "inferior officers," they have to be appointed by the President, a court, or a head of department. But they weren't: they were appointed by the Commission's Chief ALJ. So they're unconstitutional.
The court recognized that the Commission ratified the appointment of every ALJ. That works fine going forward, but for this case, the court, like the Supreme Court in Lucia, ordered that Jones Brothers get a new ALJ hearing before a validly appointed ALJ who is not the original ALJ.
The court spilled quite a bit of ink determining whether Jones Brothers forfeited the constitutional argument by not raising at the administrative stage. The court said that Jones Brothers did forfeit it, but that the forfeiture was excusable here.
Thursday, July 12, 2018
President Trump issued an executive order earlier this week that created a new hiring process for administrative law judges, excepting them from competitive hiring rules and examinations and authorizing their appointments to the newly created "Schedule E" of the excepted service by department heads. (H/t to conlaw student Sahil Malhotra.)
The move abolishes the centralized process currently in place for the competitive selection of ALJs and places their appointments in department heads. The move has been criticized because it could politicize the appointments of ALJs, and thus politicize their work.
The EO says that the move is in response to the Supreme Court's recent ruling in Lucia. Recall that the Court held that SEC ALJs aren't mere employees, but instead are "officers" subject to the Appointments Clause. This means that they need to be appointed by the President or the department head (or the courts). It doesn't (necessarily) mean that they need to be excepted from competitive hiring altogether, though. Still, the EO appears to take the position that competitive hiring might be a violation of the Appointments Clause, and, for that reason, excepts ALJs from competitive hiring altogether. From the EO:
As evident from recent litigation, Lucia may also raise questions about the method of appointing ALJs, including whether competitive examination and competitive selection procedures are compatible with the discretion an agency head must possess under the Appointments Clause in selecting ALJs. Regardless of whether those procedures would violate the Appointments Clause as applied to certain ALJs, there are sound policy reasons to take steps to eliminate doubt regarding the constitutionality of the method of appointing officials who discharge such significant duties and exercise such significant discretion.
The EO applies Lucia to all ALJs across the Executive Branch, even though Lucia doesn't necessarily reach that far (which the EO itself recognizes). (Lucia was based on the roles and functions of SEC ALJs, which may be different than other agencies' ALJs.)
The EO doesn't apply to current ALJs. Under Lucia, some or all of these will require re-appointment by their agency head--again, depending on how similar they are to the SEC ALJs in Lucia (an question that agencies are currently working out). And notably the EO only changes ALJs' appointment, not their removal.
Friday, June 29, 2018
Judge T.S. Ellis III (E.D. Va.) earlier this week rejected a motion by Paul Manafort to dismiss Special Counsel Robert Mueller's superseding indictment for bank fraud and tax charges.
Recall that Judge Berman Jackson (D.D.C.) earlier rejected a similar move by Manafort. The D.C. court's earlier ruling came in Manafort's civil challenge to Mueller's authority. In contrast, Judge Ellis's ruling this week came as a defense in Manafort's criminal case.
Judge Ellis ruled that the superseding indictment fell squarely within DOJ special-counsel regulations and Rod Rosenstein's memo authorizing Mueller's investigation and prosecution.
Judge Ellis also ruled that Mueller's appointment was valid, and that he had legal authority to issue the indictment. (This analysis came in response to Manafort's argument that Manafort had standing to challenge Mueller's indictment, notwithstanding the fact that DOJ regs specifically do not "create any rights . . . by any person . . . in any matter, civil, criminal, or administrative," based on the theory that Mueller lacks legal authority.)
The Special Counsel's legal authority is not grounded in the procedural regulations at issue here, but in the Constitution and in the statutes that vest the authority to conduct criminal litigation in the Attorney General and authorize the Attorney General to delegate these functions when necessary. And because the Special Counsel was appointed in a manner consistent with both these sources of legal authority, there is no basis for dismissal of the Superseding Indictment.
Along the way, Judge Ellis gave something of a (often highly critical) tutorial in the constitutional issues--Appointments Clause and separation of powers--involved in independent counsel and special counsel authorities, offering some scathing comments about the design of the special counsel office (though not about Mueller in particular). Here's just a flavor:
The Constitution's system of checks and balances, reflected to some extent in the regulations at issue, are designed to ensure that no single individual or branch of government has plenary or absolute power. The appointment of special prosecutors has the potential to disrupt these checks and balances, and to inject a level of toxic partisanship into the investigation of matters of public importance. This case is a reminder that ultimately, our system of checks and balances and limitations on each branch's powers, although exquisitely designed, ultimately works only if people of virtue, sensitivity, and courage, not affected by the winds of public opinion, choose to work within the confines of the Law. Let us hope that the people in charge of this prosecution, including the Special Counsel and the Assistant Attorney General, are such people. Although this case will continue, those involved should be sensitive to the danger unleashed when political disagreements are transformed into partisan prosecutions.
Saturday, June 23, 2018
Check out the on-line symposium at SCOTUSblog on the Term's separation-of-powers and administrative-law decisions, led by analysis of Thursday's Lucia (holding that SEC ALJs are "officers" under the Appointments Clause (and not employees not subject to the Clause), and therefore require appointment by the SEC, as head of the agency).
Friday, June 22, 2018
The Supreme Court ruled today in Ortiz v. United States that a military officer could serve on both the military Court of Criminal Appeals (as an inferior officer) and the Court of Military Commission Review (as a principal officer) without violating the Appointments Clause. The ruling also says that the dual appointment didn't violate federal statutory law.
The ruling leaves in place a conviction upheld by a CCA panel that included an officer who also had an appointment on the CMCR (which reviews military commission decisions--different than court martial rulings--out of Guantanamo Bay).
But before the Court said anything about the dual appointment, it said quite a bit about its jurisdiction to hear the case. Justice Kagan, joined by Chief Justice Roberts and Justices Kennedy, Thomas, Ginsburg, Breyer, and Sotomayor, wrote that the Court (the top of the Article III branch) had jurisdiction over the appeal from the military courts (located in Article I), because "the judicial character and constitutional pedigree of the court-martial system enable this Court, in exercising appellate jurisdiction, to review the decisions of the court sitting at its apex." The Court thus rejected arguments by amicus Professor Aditya Bamzai that the Court lacked jurisdiction over military-court appeals because military courts aren't Article III courts. (The argument is substantially more complicated than that; check out the opinion, and Prof. Bamzai's brief.) Justice Thomas concurred, basing his conclusion that military courts exercise a judicial function (and therefore that the Court can exercise appellate jurisdiction over them) on his originalist argument that adjudicating "private" rights is a core judicial function. Justice Alito, joined by Justice Gorsuch, dissented, arguing that military courts can't exercise judicial power, because that would violate the separation of powers:
Today's decision is unprecedented, and it flatly violates the unambiguous text of the Constitution. Although the arguments in the various opinions issued today may seem complex, the ultimate issue is really quite simple. The Court and the concurrence say that Congress may confer part of the judicial power of the United States on an entity that is indisputably part of the Executive Branch. But Article III of the Constitution vests "[t]he Judicial Power of the United States"--every single drop of it--in "one supreme Court, and in such inferior Courts as the Congress may from time to time ordain and establish" in compliance with that Article. A decision more contrary to the plain words of the Constitution is not easy to recall.
On the merits, the Court held that the dual appointment didn't violate the Appointments Clause. The reason is easy: That Clause simply doesn't forbid dual service, even when one office is an "inferior office" and the other is a "principal office," especially so long as the two offices have nothing to do with each other:
The problem, [petitioner] suggests, is that the other (inferior officer) judges on the CCA will be "unduly influenced by" Judge Mitchell's principal-officer status on the CMCR.
But that argument stretches too far. This Court has never read the Appointments Clause to impose rules about dual service, separate and distinct from methods of appointment. Nor has it ever recognized principles of "incongruity" or "incompatibility" to test the permissibility of holding two offices. As Ortiz [the petitioner] himself acknowledges, he can "cite no authority holding that the Appointments Clause prohibits this sort of simultaneous service."
And if we were ever to apply the Clause to dual office-holding, we would not start here. Ortiz tells no plausible story about how Judge Mitchell's service on the CMCR would result in "undue influence" on his CCA colleagues. The CMCR does not review the CCA's decisions (or vice versa); indeed, the two courts do not have any overlapping jurisdiction. They are parts of separate judicial systems, adjudicating different kinds of charges against different kinds of defendants. We cannot imagine that anyone on the CCA acceded to Judge Mitchell's views because he also sat on the CMCR . . . . The CAAF put the point well: "When Colonel Mitchell sits as a CCA judge, he is no different from any other CCA judge." So there is no violation of the Appointments Clause.
The Court also ruled that the dual appointment didn't violate federal statutory law.
June 22, 2018 in Appointment and Removal Powers, Cases and Case Materials, Courts and Judging, Executive Authority, Jurisdiction of Federal Courts, News, Opinion Analysis, Separation of Powers | Permalink | Comments (0)
Thursday, June 21, 2018
The Supreme Court ruled today in Lucia v. SEC that SEC Administrative Law Judges are "Officers," and that their appointment by SEC employees violates the Appointments Clause. The ruling invalidates the ALJ decision before the Court and sends the case back for another hearing (before a different, validly appointed ALJ, or before the SEC itself). (The SEC "ratified" the appointment of its ALJs while this case was working its way up. But the Court didn't address the significance of the ratification, so we don't know whether this action makes the ALJs' appointments valid. The Court said it didn't matter to this case, though, because the SEC might assign the case to a validly appointed ALJ (outside the ratification) or the SEC itself.)
The ruling may affect the appointments, and decisions, of the many ALJs across the executive branch. (This depends on how they were appointed, and under what authority.) Under the Court's ruling, going forward, ALJs who exercise authority similar to the SEC ALJs will satisfy the Appointments Clause so long as they are appointed by the President, a court, or the head of a department. (The parties agreed that SEC ALJs were "inferior officers," and therefore didn't require presidential nomination and Senate advice and consent, as "principal officers" do. More on that below.)
Justice Kagan wrote for the Court, joined by Chief Justice Roberts and Justices Kennedy, Thomas, Alito, and Gorsuch.
The Court, relying on Freytag v. Commissioner, said that an "Officer" under the Appointments Clause is someone who (1) holds a continuing office and (2) exercises "significant authority" pursuant to the laws of the United States. (The Court distinguished between "Officer" and "employee," who is not covered by the Appointments Clause at all.) The Court said that SEC ALJs easily meet these two requirements. As to the first, it held that they plainly occupy a continuing office. As to the second, it said that Freytag "says everything necessary to decide this case":
the Commission's ALJs exercise the same "significant discretion" when carrying out the same "important functions" as STJs do [in Freytag]. Both sets of officials have all the authority needed to ensure fair and orderly adversarial hearings--indeed, nearly all the tools of federal trial judges. . . . So point for point--straight from Freytag's list--the Commission's ALJs have equivalent duties and powers as STJs in conducting adversarial inquiries.
And at the close of those proceedings, ALJs issue decisions much like that in Freytag--except with potentially more independent effect. . . . By contrast [to Freytag], the SEC can decide against reviewing an ALJ decision at all. And when the SEC declines review (and issues an order saying so), the ALJs decision itself "becomes final" and is "deemed the action of the Commission." That last-word capacity makes this an a fortiori case: If the Tax Court's STJs are officers, as Freytag held, then the Commission's ALJs must be too.
Because the ALJs are "Officers," they have to be appointed by the President, the courts, or the head of the department, here the SEC. And because they were appointed by SEC employees, and not the SEC itself, their appointment was invalid, as was the ALJ's ruling in this case.
Importantly, the Court assumed, as agreed by the parties, that the ALJs were "inferior officers," not "principal officers." This means that they can be appointed by the President, the courts, or the head of a department. This, in turn, means that SEC ALJs--and any other ALJs who weren't appointed by the head of a department--have to be reappointed by the head of a department under law. It also means that this case says nothing about the line between inferior officers and principal officers; it only speaks to the difference between "Officers" and "employees" (which are not covered by the Appointments Clause at all and are therefore not at all subject to Appointments Clause requirements).
The Court ordered the SEC to grant a new hearing to the petitioner, with a different and validly appointed ALJ or with the SEC itself.
Justice Thomas, joined by Justice Gorsuch, concurred, and argued that "Officer," under an original understanding, should sweep much, much more broadly, to "all federal civil officials 'with responsibility for an ongoing statutory duty.'"
Justice Breyer argued that the Court could've resolved the case under the Administrative Procedure Act (which provides for the appointment of ALJs) and Free Enterprise Fund:
I would not answer the question whether the Securities and Exchange Commission's administrative law judges are constitutional "Officers" without first deciding the preexisting Free Enterprise Fund question--namely, what effect that holding would have on the statutory "for cause" removal protections that Congress provided for administrative law judges. If, for example, Free Enterprise Fund means that saying administrative law judges are "inferior Officers" will cause them to lose their "for cause" removal protections, then I would likely hold that the administrative law judges are not "Officers," for to say otherwise would be to contradict Congress' enactment of those protections in the Administrative Procedure Act. In contrast, if Free Enterprise Fund does not mean that an administrative law judge (if an "Office[r] of the United States") would lose "for cause" protections, then it is more likely that interpreting the Administrative Procedure Act as conferring such status would not run contrary to Congress' intent. In such a case, I would more likely hold that, given the other features of the Administrative Procedure Act, Congress did intend to make administrative law judges inferior "Officers of the United States."
Justice Breyer, joined by Justices Ginsburg and Sotomayor, also would have allowed the same ALJ to re-hear the case on remand.
Justice Sotomayor, joined by Justice Ginsburg, dissented, arguing that "Commission ALJs are not officers because they lack final decisionmaking authority."
Friday, April 20, 2018
Check out the Yale Journal on Regulation's symposium on Lucia v. SEC, the case testing whether SEC ALJs are principal officers under the Appointments Clause (and, if so, appointed in violation of the Clause). The Court will hear oral arguments in the case on Monday.
Wednesday, April 4, 2018
The Government's 53 page Memorandum (with an additional 230 pages of exhibits), Response in Opposition to Motion to Dismiss, in United States v. Manafort provides another window into the prosecution of Paul Manafort. In his motion to dismiss, Manafort challenges the validity of the Acting Attorney General’s order appointing the Special Counsel and defining the Special Counsel’s jurisdiction (Office of the Deputy Att’y Gen., Order No. 3915-2017, Appointment of Special Counsel to Investigate Russian Interference with the 2016 Presidential Election and Related Matters, May 17, 2017), available here.
According to the Government, any constitutional claims underlying Manafort's arguments regarding the current Special Counsel Appointment Order result from a "fundamental misunderstanding of the way in which this regime differs from the former Independent Counsel Act." In Morrison v. Olson, 487 U.S. 654 (1988), while the Court sustained the constitutionality of the Independent Counsel Act in which independent counsel was appointed by the judicial branch, the Court held that the power of the judicial branch to determine that independent counsel's own powers (and jurisdiction) was valid only to the extent of the appointment power. Thus, as the Government's memo phrases it, to "ensure that the court’s jurisdiction-defining power remained “truly ‘incidental’” to its constitutional justification," the Court in Morrison held that “the jurisdiction that the court decides upon must be demonstrably related to the factual circumstances that gave rise to the Attorney General’s investigation and request for the appointment of the independent counsel in the particular case.”
But the Independent Counsel Act is expired. And the Special Counsel was not appointed by a court, but by the Justice Department. Thus, according to the Government's Memorandum, "Unlike the former statutory scheme that authorized court-appointed independent counsels, the definition of the Special Counsel’s authority remains within the Executive Branch and is subject to ongoing dialogue based on sensitive prosecutorial considerations" In other words, there are no constitutional considerations - - - and certainly no separations of powers issues - - - in "the wholly Executive-Branch regime created by the Special Counsel regulations" under which Special Counsel was appointed and directed.
For LawProfs looking for a relatively succinct discussion of the Special Counsel, this Government memo is a good example, especially given its clear and crisp writing style.
[image: Caricature of Paul Manafort by Donkey Hotey via]
Tuesday, February 27, 2018
Check out this NYT editorial on Senator McConnell's refusal to consider President Obama's nominee, Judge Merrick Garland, for the Supreme Court vacancy created by Justice Scalia's passing. We posted on Another Reason Why Justice Gorsuch Matters here.
Tuesday, February 20, 2018
Check out Neal Katyal and Kenneth Starr's piece in the NYT on A Better Way to Protect Mueller. They argue that instead of Congress acting to protect the special counsel, DOJ should do what Robert Bork did in Watergate--that is, after he fired Cox:
As acting attorney general, Bork appointed a new special prosecutor, Leon Jaworski. He then issued a regulation that "the president will not exercise his constitutional powers to effect the discharge of the special prosecutor or to limit the independence that he is hereby given." It went on to specify that the special prosecutor could be terminated only for "extraordinary improprieties," and even then, Nixon could do it only with a "consensus" of the House and Senate majority and minority leaders, and the chairmen and ranking members of the chambers' judiciary committees. Bork codified these restrictions in federal regulations, and told the news media that Nixon had agreed to them.
Katyal and Starr argue that DOJ should issue its own "Bork regulation."
Wednesday, January 31, 2018
A sharply fractured and divided en banc D.C. Circuit today rejected a challenge to the independent single director at the Consumer Protection Financial Bureau. The ruling deals a blow to opponents of the CFPB's power structure. But this ruling almost certainly doesn't end the matter; instead, it likely only tees the case up for the Supreme Court, giving this Court a chance to put its gloss on independence within the Executive Branch.
We previously posted on the case here. (This case is not directly related to the litigation over who is the true acting head of the Bureau.)
Opponents of the CFPB power structure argued that Congress violated the Take Care Clause in creating the CFPB with an independent single director. They said that while the Supreme Court has approved independent agencies in the Executive Branch, these have all been boards, not single directors. And creating an independent single director put too much power in the hands of the CFPB director--and took too much power away from the President.
The court today rejected those claims. The multiple opinions run 250 pages, but the majority's approach came down to this:
The Supreme Court eighty years ago sustained the constitutionality of the independent Federal Trade Commission, a consumer-protection financial regulator with powers analogous to those of the CFPB. Humphrey's Executor v. United States. In doing so, the Court approved the very means of independence Congress used here: protection of agency leadership from at-will removal by the President. The Court has since reaffirmed and built on that precedent, and Congress has embraced and relief on it in designing independent agencies. We follow that precedent here to hold that the parallel provision of the Dodd-Frank Wall Street Reform and Consumer Protection Act shielding the Director of the CFPB from removal without cause is consistent with Article II.
Congress's decision to provide the CFPB Director a degree of insulation reflects it permissible judgment that civil regulation of consumer financial protection should be kept one step removed from political winds and presidential will. We have no warrant here to invalidate such a time-tested course. No relevant consideration gives us reason to doubt the constitutionality of the independent CFPB's single-member structure. Congress made constitutionally permissible institutional design choices for the CFPB with which courts should hesitate to interfere. "While the Constitution diffuses power the better to secure liberty, it also contemplates that practice will integrate the dispersed powers into a workable government." Youngstown Sheet & Tube Co. v. Sawyer.
Thursday, January 11, 2018
Judge Timothy J. Kelly (D.D.C.) yesterday denied Leandra English's motion for a preliminary injunction against President Trump in the dispute over the acting directorship of the Consumer Financial Protection Bureau.
Recall that outgoing director Richard Cordray appointed English as deputy in late November. Under Dodd-Frank, this meant that English would become acting director upon Cordray's resignation. But at the same time, President Trump appointed OMB Director John Michael Mulvaney as acting director pursuant to his authority under the Federal Vacancies Reform Act. As a result, both English and Mulvaney claimed title to acting director. English sued to get the courts to recognize her as the actual acting director.
Judge Kelly ruled that English was unlikely to succeed on the merits of her claim. According to the court, that's because Dodd-Frank and the FVRA can be read in harmony--in favor of the President's authority to appoint an acting director over Dodd-Frank's provision automatically assigning the post to the deputy:
The best reading of the two statutes is that Dodd-Frank requires that the Deputy Director "shall" serve as acting Director, but that under the FVRA the President "may" override that default rule. This reading is compelled by several considerations: the text of the FVRA, including its exclusivity provision, the text of Dodd-Frank, including its express-statement requirement and Deputy Director provision, and traditional principles of statutory construction.
The court said that constitutional avoidance principles confirmed this result. In particular,
English's interpretation of Dodd-Frank potentially impairs the President's ability to fulfill his obligations under the Take Care Clause. Under English's theory, because Cordray installed her as Deputy Director, she must remain acting Director--no matter whom the President would prefer in that role--until a new permanent Director is appointed. . . .
Under English's interpretation, however, Cordray could have named anyone the CFPB's Deputy Director, and the President would be virtually powerless to replace that person upon ascension to acting Director--no matter how unqualified that person might be. That alone threatens to undermine the President's ability to fulfill his Take Care Clause obligations. And this problem is compounded by another unique feature of the directorship of the CFPB: it is vested with unilateral, unchecked control over the CFPB's substantial regulatory and enforcement power.
The court said that nothing in Dodd-Frank prevented the President from appointing the acting OMB chief to simultaneously serve as CFPB Director.
The ruling is only on English's motion for a preliminary injunction--and doesn't finally settle the directorship dispute--but it foretells the ultimate result in this court.
Wednesday, November 29, 2017
U.S. District Judge Timothy J. Kelly (D.D.C.) ruled in favor of the President in the ongoing dispute over who is acting director of the Consumer Financial Protection Bureau. We last posted here; WaPo has a story here.
Judge Kelly ruled from the bench against Leandra English, the CFPB deputy director, and declined to unseat Mick Mulvaney, President Trump's appointee.
This is hardly the final say in the matter. We'll post on any written decision when it's released.