The ALJ position was created by the Administrative Procedure Act of 1946 (APA) The APA separated the rulemaking functions from administrative adjudication proceedings in federal agencies, and sought to ensure fairness and due process in both. The APA provides for formal hearings in certain cases where a party has been affected by an agency decision or determination. Typically, ALJs have two primary duties in the administrative adjudication process. The first duty is to preside over the taking of evidence at agency hearings and act as the finder of facts in the proceedings. An ALJ’s other main duty is to act as a decision maker by making or recommending an initial determination about the resolution of the dispute. In these regards, ALJs, who are executive branch employees, function much like trial judges in the judicial branch. In general, ALJs hear cases that fall into four different categories: (1) enforcement cases; (2) entitlement cases; (3) regulatory cases; and (4) contract cases. Depending on the rules relevant to the particular issue in dispute, the hearings can be either adversarial, where the parties or their representatives debate evidence and law before the ALJ, or non-adversarial, where the ALJ investigates the facts and develops the arguments both for and against each party. In fiscal year 2008, the federal government employed 1,436 civilian ALJs at 25 agencies. The ALJ agencies are extremely diverse, ranging from components of cabinet-level agencies, such as the U.S. Coast Guard at the Department of Homeland Security, to independent agencies such as SSA, the National Transportation Safety Board and the Securities and Exchange Commission. SSA employed the largest number of federal ALJs with 1,192 ALJs (83 percent of the federal ALJ workforce), distantly followed by HHS, which employed 72 ALJs, about 5 percent of the ALJ workforce. Seventeen ALJ agencies each employed 5 or fewer ALJs. The conditions of employment for ALJs are unique among federal employees. In order to ensure ALJs carry out their duties impartially, the Administrative Procedure Act (APA) stipulates that ALJs are to be independent of their employing agencies in matters of appointment, tenure and compensation. To achieve this objective, the APA assigns responsibilities for the ALJs to three agencies: OPM, the ALJ agency, and the Merit Systems Protection Board (MSPB). The ALJ agencies are responsible for managing the ALJs they hire. MSPB has a role in disciplining ALJs. Under its authority to issue regulations implementing the APA, the OPM regulations divide the responsibilities for hiring, pay and performance management among OPM, the ALJ agency and the MSPB. Table 1 lists how the major hiring, pay and individual performance management responsibilities are divided between OPM and the ALJ agency. OPM has a number of responsibilities for ALJs under the statutory framework of the APA. OPM is responsible for administering the exam and creating a register of qualified candidates for ALJ positions. OPM also has the authority to prescribe regulations regarding (1) various sections of the APA governing ALJs; (2) implementing the section governing the appointment of ALJs; (3) implementing the requirements that ALJs be assigned cases in rotation as so far as is practicable and not perform duties inconsistent with their duties and responsibilities as ALJs; (4) implementing the detail provisions of the APA, which allow details of ALJs to agencies with occasional or temporary needs for ALJs as selected by OPM; (5) regulations excluding ALJs from the definition of employee for the purposes of performance appraisals; and (6) implementing the three levels of basic pay for ALJs and allowing OPM to provide for appointment of an ALJ in the lowest level at an advanced rate where OPM deems it appropriate. In the hiring of ALJs, OPM is responsible for examining applicants and certifying qualified candidates, while the ALJ agency is responsible for identifying the number of new ALJs they require and appointing individual ALJs from OPM’s list of certified candidates. As required by the APA, OPM sets the three levels of pay for ALJs, determines the qualifications required for appointment to each level, assigns each of the agency’s ALJ positions to one of the pay levels, and determines the time-in-service required to advance to a higher pay level. OPM must provide prior approval before an ALJ agency can appoint retired annuitants, pay an ALJ applicant a higher rate of pay due to superior qualifications, promote ALJs to higher pay levels, or execute noncompetitive placements (e.g. transfers), intra-agency details or temporary assignments. Once the ALJ is employed, OPM and the ALJ agency share responsibility for managing the ALJ’s performance. For example, OPM defines those management practices that ALJ agencies may not perform, such as issuing performance ratings and awards and the ALJ agency is responsible for day-to-day management. According to its implementing regulation, OPM shares the responsibility with the ALJ agency for ensuring the ALJ’s decisional independence. The APA divides the responsibility for disciplining of ALJs between the ALJ agency and the MSPB. The APA permits the agencies to take serious disciplinary action against an ALJ only for good cause as established and determined by the MSPB on the record, after an opportunity for hearing before the board. Policymakers, ALJ agencies, and other stakeholders have been discussing aspects of ALJ management for decades. Over the years, several options have been proposed to change the roles and responsibilities for the administration of the ALJ program. Three of these options are described in more detail later in this report. Over this same timeframe, to help support deliberations on ALJ issues, we have issued more than 10 reports where the focus was either on ALJs at specific agencies or on the federal ALJ program (see list of related GAO products at the end of this report). Most recently, we issued two reports relating to ALJ performance at SSA and the Department of Homeland Security. In 2007, OPM revised its examination of ALJ applicants by, among other things, revising the minimum qualification requirements, developing a set of competencies, assessing applicants against the competencies, and changing the examination scoring method. According to OPM, in fiscal year 2008, SSA hired 185 ALJs and HHS hired 7 ALJs from the register established as a result of OPM’s new ALJ examination. SSA officials told us that they are very pleased with the quality of ALJs they hired. HHS officials stated that they are satisfied that the process provided them with highly qualified candidates. OPM is responsible for scoring the results of the competitive examination and maintaining a register of qualified candidates in rank order of their final scores. According to OPM officials, after the job announcements in 2007 and 2008, it took about 6 months for OPM to complete the examination process and assign the final ratings to qualified applicants. The pool of potential ALJ applicants appears to be large because in 2007 and 2008 OPM was able to receive the requested number of applications in only a few days. According to OPM officials, when OPM reopened the ALJ register in 2007, they received the desired number of applications within 1 week of posting an ALJ vacancy announcement. In 2008, OPM received its desired number of applicants within 3 days. In November 2009, OPM opened a new vacancy announcement for ALJ vacancies. It received the requested number of applicants within 2 days. Upon request, OPM provides ALJ agencies with a certified list, referred to as a certificate, of the highest scoring candidates from the register who are available to serve at the vacancy locations. If agency officials choose to fill a vacant ALJ position with a new ALJ, then the agency must appoint one of the candidates listed on OPM’s certificate. The interview and selection processes vary across ALJ agencies, but all agencies must comply with federal law and regulations regarding competitive employment. For example, agencies must comply with the veterans’ preference requirement and the “rule of three”—agencies must select from the highest scoring three candidates available to serve in a given location. SSA and HHS officials told us that it took 8 to15 weeks from the date the agency requested an OPM certificate of candidates until a selected candidate reported to work. Despite their satisfaction with the quality of the ALJ candidates, SSA and HHS officials stated that the ALJ hiring process should have more flexibility in order for them to appoint candidates that best meet their agency-specific needs. According to SSA officials, OPM uses a one-size- fits-all approach in establishing its register of candidates. SSA officials’ reported position was that OPM’s ALJ examination of applicants should also weigh the specialized knowledge and skills needed to adjudicate SSA cases such as the ability to manage a large docket because SSA ALJs adjudicate a high volume of cases, and the temperament to work on non- adversarial cases with unrepresented claimants. SSA was also concerned about the process for assessing whether an ALJ candidate on an OPM list of certified candidates was actually suitable for selection and appointment. SSA officials told us that they currently try to assess the specialized abilities and the potential suitability of ALJ candidates through SSA’s ALJ interviewing process and investigating the candidates’ backgrounds. SSA officials told us that, in their opinion, the process was laborious, and requested that OPM assess the suitability of candidates listed on the certificates provided to agencies. Lastly, SSA raised concerns about the adequacy of the register to meet their hiring needs. Given SSA’s plans to hire more than 226 ALJs during fiscal year 2010, SSA officials reported to us their concern that the register would not provide an adequate number of suitable candidates to consider for selection. SSA requested that OPM refresh the register with new candidates as soon as possible and plan to do so, on a regular basis.