Source: https://www.acslaw.org/analysis/acs-supreme-court-review/lucia-v-sec-and-the-attack-on-the-administrative-state/
Timestamp: 2019-02-20 03:38:02
Document Index: 126068161

Matched Legal Cases: ['§ 80', '§ 2', '§ 7521', '§ 930', '§ 3105', '§ 78']

Lucia v. SEC and the Attack on the Administrative State | ACS
Lucia v. SEC and the Attack on the Administrative State
ACS > Analysis > ACS Supreme Court Review > Lucia v. SEC and the Attack on the Administrative State
In a Term with so many blockbusters, it’s easy to overlook a case like Lucia v. SEC.[1] In that case, the Court held that Securities and Exchange Commission (SEC) administrative law judges (ALJs) were “officers” under the U.S. Constitution’s Appointments Clause,[2] and therefore required appointment by the president or the SEC itself (and not, as they had been appointed, by SEC staff). The Court reversed the decision of an improperly-appointed ALJ and sent the case back to the SEC for a new hearing, with a different, properly-appointed ALJ.
On this level, Lucia is easy to overlook. For one thing, the case deals with only a technical and position-specific question under a relatively clear textual provision, the Appointments Clause. For another, the Court could resolve the issue, and did resolve it, by applying a single, narrow precedent—and avoiding any grand statements about the Appointments Clause, presidential authority, or the separation of powers. And finally, the practical response to the ruling was straightforward and uncontroversial: the SEC simply reappointed its ALJs itself and thus solved the Appointments Clause problem. On its surface, then, Lucia appears unexceptional.
But scratching just a little beneath the surface, we see that Lucia has significant implications for presidential authority and the separation of powers. It will likely lead to challenges to the appointments of ALJs across the executive branch, and to functional separation-of-powers challenges to ALJs within independent agencies. It will also likely lead to Appointments Clause challenges to a much broader range of positions within the executive branch. Most significantly, it has already led to a presidential order extinguishing merit-based selection for ALJs, with a line of reasoning that could curtail all statutory appointment restrictions within the executive branch.
Individually, each of these implications represents a significant attack on independent, expert actors within the executive branch. Each puts more control over previously independent and expert ALJs in the hands of the president and agency heads. And by extension, each threatens to put more control over all independent and expert executive actors in those same hands. These mark a substantial attack on independent and expert positions within the agencies, and, at the extreme, threaten to turn them into mere political pawns.
But there’s more. Lucia comes amid a much broader, coordinated movement against the administrative state. This movement includes challenges to judicial deference to agency rulemaking under the Chevron doctrine.[3] It also includes increasingly viable separation-of-powers challenges to statutory removal protections for executive positions. And it even includes a current challenge to the nondelegation doctrine. Taken together, these could substantially upend our constitutional understanding of the administrative state. It’s important to see Lucia as part of this movement.
So while Lucia appears unremarkable, especially among this Term’s bigger cases, we ought to pay careful attention. This sleeper-of-a-case is in fact a key part of a larger, coordinated effort to undermine and even dismantle the modern administrative state. This movement is afoot, and unless we heed cases like Lucia, it will succeed.
I start with the background of the case, then move to the decision, and finally discuss the implications.
In 2012, the SEC charged Raymond J. Lucia with violating the antifraud provisions of the Investment Advisers Act[4] and SEC rules. The SEC alleged that Lucia, an investment professional, misled potential investors in nearly forty free retirement-planning seminars by touting his “Buckets-of-Money” investment strategy. Under the strategy, investors would spread their investments across several types of assets, with different degrees of risk and liquidity. According to Lucia, the strategy would allow prospective clients to “live comfortably off of their investment income while also leaving a large inheritance.”[5]
In demonstrating the “Buckets-of-Money” strategy, Lucia used a slideshow to demonstrate how the strategy would have performed in the past (as opposed to how it might perform in the future). Using this “backtesting” analysis, Lucia compared how his strategy would have performed as compared to others for a fictional couple retiring in historical times of economic downturn. “Each example showed that a couple using the ‘Buckets-of-Money’ strategy would have increased the value of their investments despite the market downturns and would have done much better than those utilizing other investment strategies.”[6]
There was just one problem: the SEC alleged that Lucia misled potential investors by misrepresenting key information in his analysis. In particular, the SEC claimed that Lucia made faulty and unstated assumptions about the economy and the way his strategy worked. The SEC charged Lucia under the Investment Advisors Act and assigned the case to ALJ Cameron Elliot.
ALJ Elliot was one of five ALJs at the SEC, all of whom were appointed by Commission staff (and not the Commission itself).[7] SEC ALJs have authority to preside over administrative hearings and to make recommendations to the full SEC. In so doing, they also have “authority to do all things necessary and appropriate to discharge [these] duties” and to ensure a “fair and orderly” administrative proceeding.[8] Their particular powers include supervising discovery, issuing subpoenas, ruling on motions, ruling on evidence, and examining witnesses, among others. SEC ALJs even have authority to issue sanctions for “[c]ontemptuous conduct” or violations of procedural requirements.[9] In short, “an SEC ALJ exercises authority ‘comparable to’ that of a federal district judge conducting a bench trial.”[10] After a hearing, SEC ALJs have authority to issue an “initial decision,” setting out findings of fact and conclusions of law and specifying an appropriate sanction or relief.[11] The full SEC can review an ALJ’s decision on its own or upon request; or, if it declines to review the decision, it can “issue[] an order that the decision has become final,” and thus becomes the final “action of the Commission.”[12]
ALJ Elliot heard nine days of testimony and argument in the Lucia matter. He issued an initial decision concluding that Lucia had violated the Act and recommending $300,000 in civil penalties and a lifetime bar from the investment industry. After remand from the SEC, ALJ Elliot later made additional findings and issued a revised initial decision but imposed the same sanctions.[13]
Lucia appealed to the SEC, arguing that ALJ Elliot’s decision was wrong on the merits, and that in any event the proceeding was invalid, because ALJ Elliott was appointed in violation of the Appointments Clause. As to the latter claim, Lucia contended that SEC ALJs are “Officers of the United States” under the Appointments Clause, and that they can only be appointed by the president, “Courts of Law,” or “Heads of Departments.”[14] Lucia argued that SEC ALJs, including ALJ Elliot, were appointed merely by SEC staff, and not the actors specified in the Appointments Clause. As a result, Lucia contended that ALJ Elliot was invalidly appointed and lacked authority to convene a hearing, much less to issue a decision, in his case.
The SEC rejected this argument. It held that its ALJs were not “Officers of the United States,” but instead were “mere employees,” not subject to the Appointments Clause. According to the Commission, that was because its ALJs do not “exercise significant authority independent of [its own] supervision.”[15]
A three-judge panel of the United States Court of Appeals for the D.C. Circuit affirmed,[16] and an equally divided (5-5) en banc court denied Lucia’s claim.[17] The ruling created a split with the United States Court of Appeals for the Tenth Circuit,[18] and the Supreme Court granted certiorari.[19] The government switched its previous position (supporting the ALJs’ appointments) and argued in favor of Lucia. The Court appointed an amicus to defend ALJ Elliot’s appointment.
The parties and amici framed their arguments around two principal issues. First, the parties and amici took up the formal Question Presented—whether SEC ALJs are officers of the United States within the meaning of the Appointments Clause—and wrangled over what it means to be an “officer” (as opposed to a mere “employee,” which is not subject to the Appointments Clause).[20] This is a significant and largely unresolved question. Up to now, the Court has defined these categories in only the vaguest of terms. Thus, in one early case, the Court held that doctors hired to perform various physical exams were mere employees, because their duties were “occasional or temporary,” not “continuing and permanent.”[21] In another, more recent case, the Court held that members of the Federal Elections Commission were officers, because they “exercis[ed] significant authority pursuant to the laws of the United States.”[22] But the Court never defined the phrases “occasional or temporary,” “continuing and permanent,” or “significant authority” with any determinacy. As a result, these rulings left Congress and the president partially in the dark about which executive branch positions were “officers” that are subject to Appointments Clause requirements and which are “employees” that are not.
Next, the government and some amici argued that the Court should limit or strike the SEC ALJs’ statutory removal protection as a violation of the separation of powers. SEC ALJs can only be removed from office by the SEC “for good cause established and determined by the Merit Systems Protection Board.”[23] Members of the SEC, in turn, can only be removed from office by the president for “inefficiency, neglect of duty, or malfeasance in office.”[24] The government argued that the Court should narrowly construe the ALJs’ removal protection and the role of the MSPB in order to avoid the “serious constitutional concern[]” that the protection would impermissibly restrict the president’s authority to supervise officials in the executive branch.[25]
While the parties and amici framed their entire arguments around these issues, the Court managed to dodge them entirely. Instead, the Court ruled narrowly, based on a single precedent, that SEC ALJs were “officers” and that therefore their appointment by SEC staff was invalid.
Justice Kagan wrote the majority opinion, joined by Chief Justice Roberts and Justices Kenndy, Thomas, Alito, and Gorsuch. The Court held that the outcome was dictated by Freytag v. Commissioner.[26] In that case, the Court held that Tax Court special trial judges (STJs), which had authority to conduct a trial and draft a proposed decision for a regular Tax Court judge, were “officers” under the Appointments Clause.[27] The Freytag Court noted that STJs held a continuing office and that they had authority and “significant discretion” to conduct a full adversarial hearing.[28] In particular, the Court noted that STJs had the powers to administer oaths, to take testimony, to rule on motions and the admissibility of evidence, and even to punish all “[c]ontemptuous conduct,” including violations of orders. The Court applied the continuing-office standard and “the unadorned ‘significant authority’ test” and ruled that STJs were “officers.”[29]
Justice Kagan wrote simply that Freytag “necessarily decides this case.”[30] As an initial matter, she wrote that SEC ALJs, like Tax Court STJs “hold a continuing office established by law.”[31] “Far from serving temporarily or episodically, SEC ALJs ‘receive[] a career appointment.’ And that appointment is to a position created by statute, down to its ‘duties, salary, and means of appointment.’”[32]
Moreover, Justice Kagan wrote that “the Commission’s ALJs exercise the same ‘significant discretion’ when carrying out the same ‘important functions’ as STJs do.”[33] She noted that SEC ALJs have all the powers (described above) that STJs have.[34] Indeed, she wrote that SEC ALJs have potentially even more autonomous authority after a hearing:
As the Freytag Court recounted, STJs “prepare proposed findings and an opinion” adjudicating charges and assessing tax liabilities. Similarly, the Commission’s ALJs issue decisions containing factual findings, legal conclusions, and appropriate remedies. And what happens next reveals that the ALJ can play the more autonomous role. In a major case like Freytag, a regular Tax Court judge must always review an STJ’s opinion. And that opinion counts for nothing unless the regular judge adopts it as his own. By contrast, the SEC can decide against reviewing an ALJ decision at all. And when the SEC declines review (and issues an order saying so), the ALJ’s decision itself “becomes final” and is “deemed the action of the Commission.” [35]
This made the case a fortiori: “If the Tax Court’s STJs are officers, as Freytag held, then the Commission’s ALJs must be too.”[36] And because ALJ Elliot was appointed by an SEC employee (and not the president, the courts, or the SEC itself), his appointment violated the Appointments Clause, and his decision in the Lucia case was invalid.
Justice Kagan concluded with the remedy. She wrote that Lucia was entitled to a new hearing before a different, and constitutionally appointed, ALJ:
That official cannot be Judge Elliot, even if he has received (or receives sometime in the future) a constitutional appointment. Judge Elliot has already both heard Lucia’s case and issued an initial decision on the merits. He cannot be expected to consider the matter as though he had not adjudicated it before. To cure the constitutional error, another ALJ (or the Commission itself) must hold the new hearing to which Lucia is entitled.[37]
Justice Thomas, joined by Justice Gorsuch, concurred. He argued that the “original public meaning” of “Officers of the United States” swept much more broadly than the Court acknowledged. He wrote that “[t]he Founders likely understood the term ‘Officers of the United States’ to encompass all federal civil officials who perform an ongoing, statutory duty—no matter how important or significant the duty.”[38] According to Justice Thomas, that means that “officers” includes all executive actors whose duty is established by statute, “even if they perform[] only ministerial statutory duties.”[39] These could even include “recordkeepers, clerks, and tidewaiters (individuals who watched goods land at a customhouse).”[40] Justice Thomas argued that this sweep accorded with “early congressional practice . . . . Congress required all federal officials with ongoing statutory duties to be appointed in compliance with the Appointments Clause.”[41]
Justice Breyer, writing only for himself, concurred in part. Justice Breyer argued that the Court should have resolved the case under the Administrative Procedure Act (APA).[42] He noted that the APA provides for the appointment of ALJs across the executive branch, and that it authorizes “[e]ach agency” to appoint “as many administrative law judges as are necessary for” hearings under the APA.[43] He argued that the APA does not authorize the SEC to delegate appointment of its ALJs to SEC staff—that under the APA the SEC must appoint its ALJs itself.[44] He wrote that because the SEC delegated ALJ Elliot’s appointment to SEC staff, the appointment violated the APA.[45]
Justice Breyer argued that his statutory approach to the case would allow the Court to avoid creating a larger constitutional problem, that is, that the SEC ALJ’s statutory double for-cause removal protection might impermissibly intrude on the president’s Article II powers and therefore violate the separation of powers under Free Enterprise Fund. Justice Breyer noted that the Court struck a double for-cause removal protection in Free Enterprise Fund because it impermissibly intruded on the president’s authority to supervise actors in the executive branch.[46] Even though he dissented in that ruling,[47] he argued that a faithful application of it could mean that the SEC ALJs’ double for-cause removal protection similarly violates the separation of powers.[48] If so, the better course would be to hold that SEC ALJs are not “officers,” because such a holding would respect congressional intent under the APA to provide ALJs with removal protection while avoiding the constitutional problem. He explained:
I would not answer the question whether the Securities and Exchange Commission’s administrative law judges are constitutional “Officers” without first deciding the pre-existing 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 not intend to make administrative law judges inferior “Officers of the United States.”[49]
For these reasons, Justice Breyer argued that the Court should have ruled ALJ Elliot’s appointment invalid under the APA alone.
Justice Breyer also dissented in part, joined by Justices Ginsburg and Sotomayor. He argued that the Court ought not to have required the SEC to grant Lucia a new hearing with a different ALJ.
The Securities and Exchange Commission has now itself appointed the Administrative Law Judge in question, and I see no reason why he could not rehear the case. After all, when a judge is reversed on appeal and a new trial ordered, typically the judge who rehears the case is the same judge who heard it the first time.[50]
Finally, Justice Sotomayor, joined by Justice Ginsburg, dissented. Justice Sotomayor argued that SEC ALJs were not “officers,” because they lacked final agency decision-making authority. She noted that the ALJs issue only initial decisions, and that those decisions only become final upon the action of the SEC.[51] She argued that because they cannot issue final and binding agency decisions, SEC ALJs do not exercise significant authority. Justice Sotomayor distinguished Freytag by arguing that the part of that decision relating to STJs’ authorities with regard to hearings “was unnecessary to the result” in that case.[52]
At first glance, Lucia appears to be a narrow ruling, with little, if any, application or relevance outside of like cases. That’s because the holding hangs on just one precedent, Freytag, which itself is relatively narrow and particularized. By aligning Lucia with Freytag, the Court dodged the bigger issues in the case—a more precise definition of “officer,” and the separation-of-powers implications of the ALJs’ statutory for-cause removal protection. It’s also because the SEC and other agencies with ALJs can solve (and now have solved) the Appointments Clause problem in Lucia by simply reappointing ALJs by the agency head. After the agencies and the courts remand and rehear any remaining cases where a litigant argued that an improperly appointed ALJ rendered a decision, there should be no more Lucia problems, at least not with ALJs.
But at the same time, Lucia is fast becoming a much more important case—one with significant implications for the separation of powers, particularly given the increasingly aggressive attacks on the modern administrative state. In particular, Lucia will almost certainly inspire a flurry of separation-of-powers challenges to ALJs across the executive branch. It will also encourage a new round of Appointments Clause challenges to many executive positions, especially those in the grey area between “officer” and “employee.” Finally, Lucia gave President Trump constitutional window dressing for his executive order removing ALJs from the merit system service[53]—a move that could politicize the ALJ corps and, by extension, other politically independent and expert executive positions that are subject to merit-based appointments.
All this comes against the backdrop of a larger assault on the administrative state. In addition to the Lucia fallout, other attacks include ongoing, and increasingly viable, challenges to the Chevron doctrine and judicial deference to agency rulemaking; ongoing and increasingly viable challenges to executive office independence through statutory for-cause removal protections; and even a current challenge to the nondelegation doctrine. Individually, each of these fronts is alarming to defenders of expert, independent agency decision-making in its own way. Taken together, and with the Lucia implications, these could lead to a hyper-politicization of the previously independent and expert bureaucracy, especially under a president that seems bent on politicizing nearly everything.
That said, let’s take a look at what could happen—and what is happening—in the wake of Lucia.
First, the ruling will almost certainly draw a flurry of challenges to ALJs and their decisions across the executive branch. Most obviously, SEC ALJs’ decisions will be subject to challenge, at least in those cases where a litigant raised an Appointments Clause claim when the case was pending. Although the SEC itself has now reappointed its ALJs in compliance with the Appointments Clause and Lucia, there may still be some decisions rendered by an invalidly appointed ALJ that are in the pipeline. When litigants challenge these decisions, the courts will apply the Lucia remedy: remand the case for a new hearing before a different ALJ.
ALJs’ decisions outside of the SEC will be subject to challenge, too. There are currently nearly 1,900 ALJs in various federal agencies; most of these serve in the Social Security Administration. Depending on these ALJs’ authorities—that is, if they have authority like the SEC ALJs and the Tax Court STJs—many of their decisions could be subject to an Appointments Clause challenge under Lucia. Even if agencies reappoint their ALJs to comply with Lucia, there may be older cases still in the pipeline that are subject to remand and a new hearing.
These Lucia-type challenges to ALJs and their decisions could be more or less disruptive to the organization of federal agencies and the work and role of their ALJs. This will depend on how many viable challenges remain (given that agencies have now reappointed ALJs in light of Lucia) and how the courts rule in those cases (which depends, in turn, on the authorities of ALJs outside of the SEC). But the mere fact that Lucia required agencies to reappoint their ALJs means that the case had an impact on the way agencies operate.
More importantly, Lucia threatens the independence of any ALJ who serves in an independent agency, like the SEC, in which the agency head or heads themselves enjoy for-cause removal protection. As Justice Breyer reminded us in his concurrence in Lucia, ALJs enjoy statutory for-cause removal protection. If they serve in an independent agency, their two-tiered for-cause protection could violate the separation of powers under Free Enterprise Fund. As Justice Breyer argued, this two-tiered removal protection wouldn’t necessarily violate Free Enterprise Fund; and in any event there may be a statutory way to preserve their removal protection. But Justice Breyer wrote only for himself on these points. And given the current make-up on the Court, it seems highly likely, or even certain, that Lucia teed up the Court’s next separation-of-powers ruling—that independent ALJs within independent agencies violate the separation of powers. If so, Lucia is a key stepping-stone to a ruling that would eradicate the independence of ALJs.
Second, Lucia invites Appointments Clause challenges to many executive actors, especially those in the grey area between “officer” and “employee,” and their actions. The Court in Lucia signaled its willingness to strike an appointment as violating the Appointments Clause when Congress misjudges the (employee) status of a position. Yet at the same time, the Court did nothing to clarify the murky distinction between “officer” and “employee.” Moreover, at least two justices, Justices Thomas and Gorsuch, opined that all, or nearly all, executive positions are “offices” under the Appointments Clause. (It’s not clear whether other justices hold this view, too. Remember that this argument was not a part of the case and was not necessary to the holding, so others may agree, even if they didn’t sign on.) Taken together, the Court’s ruling, the remaining ambiguity between “officer” and “employee,” and Justice Thomas’s concurrence encourage Appointments Clause challenges to many executive “employees” and to their actions. If the Court adopts a more expansive definition of “officer,” more executive actors would have to be appointed by the president or an agency head. This could strike a significant blow to the traditional political independence of line executive actors and the administrative agencies they serve.
Finally, Lucia gave President Trump a functional separation-of-powers excuse (independent of the Appointments Clause) to take aim at ALJ independence and expertise from the appointment side. This move opens up a new line of attack against executive independence—a separation-of-powers attack on executive office appointment restrictions (in addition to the more familiar attacks on removal restrictions)—so that opponents of executive independence and expertise can now attack executive positions from both the front end (against statutory appointments restrictions) and the more familiar back end (against statutory removal restrictions). This attack on the bureaucracy could easily result in a hyper-politicization of previously independent and expert positions within the executive branch.
President Trump started down this road by enacting an executive order that exempted ALJs from the competitive service.[54] Before the order, ALJs were selected competitively, based on objective qualifications, and independent of politics. But after the order, agency heads (both independent and conventional) can now appoint anyone they like as an ALJ, not just those from a pre-screened and competitively selected pool. This means that agency heads must now appoint ALJs directly, without going through a competitive process. It thus gives agency heads (whether independent or politically appointed) exclusive power to appoint whomever they like.
President Trump justified his order based, in part, on his claim that “Lucia may also raise questions about the method of appointing ALJs.”[55] He didn’t further explain his constitutional reasoning, and nothing in Lucia or the Appointments Clause compels, or even suggests, his conclusion. But one reasonable inference may be that President Trump is reopening an old, but now settled, debate as to whether competitive appointment within the executive branch violates the president’s Article II authority to execute the law and the separation of powers. According to this argument, any statutory restriction on the president’s ability to appoint executive actors infringes on the president’s authority, much like any statutory restriction on the president’s ability to remove executive actors (or so the argument goes).
If President Trump’s order is based on this kind of constitutional reasoning, he has (re)opened a second line of attack on politically independent and expert positions within the executive branch—a functional separation-of-powers attack on the appointment side, in addition to the more familiar attack on the removal side. This move has a direct impact on ALJs: it means that agency heads can now appoint whomever they like. Moreover, it also has that same potential impact on all executive actors who are subject to any kind of appointment qualification or restriction. In other words, this reasoning, if accepted, could wipe out the competitive service and any other statutory hiring restrictions of any executive actor. Taken to its extreme, it could mean the complete politicization of the executive branch.
Lucia is a case that’s easy to overlook. On its surface, it appears to be a narrow ruling about a very specific position, with an easy administrative fix. But on a deeper level, the case opens up at least three lines of significant attack against independent and expert positions in the executive branch. And moreover, it’s a key part of a larger, coordinated effort to undermine the bureaucracy.
Lucia is, indeed, easy to overlook. But if we’re interested in preserving the modern administrative state, we ought to pay heed. This sleeper-of-a-case just might help dismantle it.
* Steven D. Schwinn is Professor of Law at The John Marshall Law School, Chicago and serves on the Board of Advisors for the Chicago Lawyer Chapter of the American Constitution Society.
[1] Lucia v. SEC, 138 S. Ct. 2044 (2018).
[3] Chevron U.S.A., Inc. v. Natural Res. Def. Council, Inc., 467 U.S. 837, 844 (1984) (noting that “a court may not substitute its own construction of a statutory provision for a reasonable interpretation made by the administrator of an agency”).
[4] 15 U.S.C. § 80b-1 et seq.
[5] Raymond J. Lucia Cos., Inc. v. SEC, 832 F.3d 277, 290 (D.C. Cir. 2016).
[7] Lucia v. SEC, 138 S. Ct. 2044, 2049-50 (2018). The following discussion of the ALJs’ powers comes from the Court’s ruling, which, in turn cites the relevant regulations. Id.
[8] Id. at 2046 (citation omitted).
[9] Id. at 2049 (citation omitted).
[10] Id. (quoting Butz v. Economou, 438 U.S. 478, 513 (1978)).
[11] Id. at 2046 (citation omitted).
[13] Id. at 2050.
[14] U.S. Const. art. II, § 2, cl. 2. Under the Appointments Clause, the President,
shall nominate, and by and with the Advice and Consent of the Senate, shall appoint . . . all other Officers of the United States, whose Appointments are not herein otherwise provided for, and which shall be established by Law: but the Congress may by law vest the Appointment of such inferior Officers, as they think proper, in the President alone, in the Court of Law, or in the Heads of Departments.
[15] Lucia, 138 S. Ct. at 2050 (citation omitted).
[16] Lucia v. SEC, 832 F.3d 277 (2016).
[17] Lucia v. SEC, 868 F.3d 1021 (2017).
[18] Bandimere v. SEC, 844 F.3d 1168 (10th Cir. 2016).
[19] Lucia v. SEC, 138 S. Ct. 736 (2018) (mem.).
[20] Importantly, the case did not involve the difference between a principal “Officer” and an “inferior Officer.”
[21] United States v. Germaine, 99 U.S. 508, 511-12 (1879).
[22] Buckley v. Valeo, 424 U.S. 1, 126 (1976).
[23] 5 U.S.C. § 7521(a).
[24] Free Enter. Fund v. Pub. Co. Accounting Oversight Bd., 561 U.S. 477, 487 (2010) (citing Humphrey’s Ex’r v. United States, 295 U.S. 602, 620 (1935)).
[25] Brief for Respondent Supporting Petitioners at 45-55, Lucia v. SEC, 138 S. Ct. 2044 (2018) (No. 17-130), 2018 WL 1251862. The government argued that statutory removal protections categorically raise serious constitutional concerns, and that “[t]hese constitutional concerns are heightened in the context of independent agencies whose heads are themselves protected from removal by the President.” Id. at 48. The former argument challenged the Court’s consistent and long-running line of cases upholding similar removal protections against separation-of-powers challenges. See, e.g., Morrison v. Olson, 487 U.S. 654, 693-96 (1988) (holding that the statutory for-cause removal protection for the independent counsel did not violate the separation of powers). The latter argument challenged the double-for cause protection under Free Enterprise Fund, 561 U.S. at 495-98 (holding that the PCAOB’s double for-cause protection violates the separation of powers).
[26] Lucia, 138 S. Ct. at 2052 (citing Freytag v. Comm’r, 501 U.S. 868 (1991)).
[29] Id. at 2052.
[31] Id. at 2053.
[32] Id. (quoting 5 C.F.R. § 930.204(a) (2018) and Freytag v. Comm’r, 501 U.S. 868, 878 (1991)).
[33] Id. (quoting Freytag, 501 U.S. at 878).
[35] Id. at 2053-54 (citations omitted).
[36] Id. at 2054.
[37] Id. at 2055.
[38] Id. at 2056 (Thomas, J., concurring).
[39] Id. at 2057.
[42] Id. at 2057-59 (Breyer, J., concurring).
[43] Id. at 2058 (citing 5 U.S.C. § 3105).
[45] Id. at 2058-59.
[46] Id. at 2059 (“The Court held in that case that the Executive Vesting Clause of the Constitution . . . forbade Congress from providing members of the Board with ‘multilevel protection from removal’ by the President.”).
[47] Free Enter. Fund v. Pub. Co. Accounting Oversight Bd., 561 U.S. 477, 514-588 (2010) (Breyer, J., dissenting).
[48] Lucia, 138 S. Ct. at 2060 (Breyer, J., dissenting) (“If the Free Enterprise Fund Court’s holding applies equally to the administrative law judges—and I stress the ‘if’—then to hold that the administrative law judges are ‘Officers of the United States’ is, perhaps, to hold that their removal protections are unconstitutional.”).
[49] Id. at 2063-64.
[50] Id. at 2064.
[51] Id. at 2066 (Sotomayor, J., dissenting) (“[T]he initial decision only becomes final when the Commission enters a finality order. And by operation of law, every action taken by an ALJ ‘shall, for all purposes . . . be deemed the action of the Commission.’”) (quoting 15 U.S.C. § 78d-1(c)).
[52] Id. at 2067.
[53] Exec. Order No. 13,843, 83 Fed. Reg. 32,755 (July 10, 2018).