Opinion ID: 4111397
Heading Depth: 3
Heading Rank: 2

Heading: Deference to Congress

Text: The SEC further contends Congress intended its ALJs to be employees. It urges us to “accor[d] significant weight” to congressional intent in determining whether the ALJs are inferior officers. Aplee. Br. at 41. The SEC overstates its arguments. In its brief, it has not cited statutory language expressly stating ALJs are employees for purposes of the Appointments Clause. Nor has it cited legislative history indicating Congress has specifically addressed the question whether ALJs are inferior officers. And to the extent the SEC seeks to infer congressional intent from congressional action, the evidence is mixed. On the one hand, the SEC stresses that Congress was “deliberate” in constructing the statutory framework governing the hiring of ALJs and the powers ALJs have in relation to their agencies. Aplee. Br. at 27. This includes placing the position within the civil service and tasking the OPM to prescribe rules governing ALJ hiring. 5 U.S.C. §§ 1302, 3105, 3313; 5 C.F.R. § 930.201. The SEC argues this suggests congressional intent to classify ALJs as employees. But, on the other hand, and as detailed previously, ______________________________________ Cont. FDIC shows only that the ALJ shares the common characteristic of an ‘inferior Officer.’”). - 30 - Congress granted significant authority to SEC ALJs in the APA and the Exchange Act and has authorized the agency to delegate “any of its [non-rulemaking] functions” to ALJs. 5 U.S.C. §§ 556, 557; 15 U.S.C. § 78d-1(a). When it has faced a case or controversy concerning separation of powers, the Supreme Court has determined whether the legislative or executive branches or both have violated the Constitution. See, e.g., Bowsher v. Synar, 478 U.S. 714 (1986); INS v. Chadha, 462 U.S. 919 (1983); Buckley, 424 U.S. at 1; Marbury v. Madison, 5 U.S. (1 Cranch) 137 (1803). This has been so even when a congressional scheme was carefully devised and effective. Bowsher, 478 U.S. at 736.38 However “carefully devised” the ALJ system may be generally and the SEC ALJ program particularly, see Lucia, 832 F.3d at 289, that should not excuse failure to comply with the Appointments Clause. As a circuit court, we must follow Supreme Court precedent. Hutto v. Davis, 454 U.S. 370, 375 (1982) (per curiam) (“[A] precedent of [the Supreme] Court must be followed by the lower federal courts.”). And as explained, Freytag governs our result here. 38 In Bowsher, the Court stated: No one can doubt that Congress and the President are confronted with fiscal and economic problems of unprecedented magnitude, but “the fact that a given law or procedure is efficient, convenient, and useful in facilitating functions of government, standing alone, will not save it if it is contrary to the Constitution. Convenience and efficiency are not the primary objectives—or the hallmarks—of democratic government.” 478 U.S. at 736 (ellipsis omitted) (quoting Chadha, 462 U.S. at 944). - 31 - Moreover, the Supreme Court’s treatment of the government’s deference argument in Freytag is instructive here. The government contended the Supreme Court should “defer to the Executive Branch’s decision that there has been no legislative encroachment on Presidential prerogatives under the Appointments Clause.” 501 U.S. at 879. The Court rejected that argument: “[T]he Clause forbids Congress to grant the appointment power to inappropriate members of the Executive Branch. Neither Congress nor the Executive can agree to waive this structural protection. . . . The structural interests protected by the Appointments Clause are not those of any one branch of Government but of the entire Republic.” Id. at 880; see also NLRB v. Noel Canning, 134 S. Ct. 2550, 2594 (2014) (Scalia, J., concurring in the judgment) (“[T]he political branches cannot by agreement alter the constitutional structure.”). As stated, we question whether Congress has clearly classified SEC ALJs as employees. But even if it had, we would still follow Freytag.