Constitutional Limitations on Federal Government Participation in Binding Arbitration

Constitutional Limitations on Federal Government

Participation in Binding Arbitration

The Appointments Clause does not prohibit the federal government from submitting to binding arbitra­

tion.

N or does any other constitutional provision or doctrine impose a general prohibition against the federal

government entering into binding arbitration, although the Constitution does impose substantial

lim its on the authority of the federal government to enter into binding arbitration in specific cases.

September 7, 1995

M e m o r a n d u m O p in io n f o r t h e A s s o c i a t e A t t o r n e y G e n e r a l

You have asked for our opinion as to whether the Constitution in any way

limits the authority of the federal government to submit to binding arbitration.1

Specifically, you have asked us to explain and expand on advice we issued on

September 19, 1994, in which we confirmed our earlier oral advice that “ the

Office of Legal Counsel no longer takes the view that the Appointments Clause,

U.S. Const, art. II, §2, cl. 2, bars the United States from entering into binding

arbitration.” Memorandum for David Cohen, Director, Commercial Litigation

Branch, Civil Division, from Dawn Johnsen, Deputy Assistant Attorney General,

Office of Legal Counsel, Re: Binding Arbitration (Sept. 19, 1994).2 Below, we

reiterate this conclusion and, pursuant to your request, set forth the reasoning by

which we reached it. In addition, we consider, again pursuant to your request,

the various other constitutional provisions that may be implicated when the federal

government enters into binding arbitration. We conclude that none absolutely bars

the federal government from taking such action. We should point out, however,

that Exec. Order No. 12778 remains in effect. See Civil Justice Reform, 56 Fed.

1 Several com ponents o f the Department o f Justice have submitted comments on the subject of binding arbitration.

See M emorandum for W alter Dellinger, Assistant Attorney General, Office o f Legal Counsel, from Carol DiBattiste,

Director, Executive Office for United States Attorneys, Re: Binding Arbitration Involving the Federal Government

as a Party (M ar. 1, 1995) ( “ EOUSA mem orandum ” ); M emorandum for W alter Dellinger, Assistant Attorney Gen­

eral, O ffice o f Legal Counsel, from Frank W. Hunger, Assistant Attorney General, Civil Division, Re: Constitu­

tionality o f Binding Arbitration Involving the Federal Government as a Party (Feb. 28, 1995) ( “ Civil Division

m em orandum ” ); M emorandum for Walter Dellinger, Assistant Attorney General, Office of Legal Counsel, from

Lois J. Schiffer, Assistant Attorney General, Environment and Natural Resources Division, Re: Binding Arbitration

Involving the Federal Government as a Party (Feb. 24, 1995) ( “ ENRD m emorandum” ).

2 The O ffice o f Legal Counsel has never issued an opinion on the matter. Then Assistant Attorney General for

the O ffice o f Legal Counsel William Barr, however, testified that the Appointments Clause would prohibit the govern-

m ent from entering into binding arbitration unless arbitrators were appointed by one of the methods described in

that Clause, which they typically are not. See Administrative Dispute Resolution Act o f 1989: Hearing Before the

Subcomm. on Oversight o f Gov’t Management o f the Senate Comm, on Governmental Affairs, iO lst Cong. 86 (1989)

(statem ent o f Assistant Attorney General W illiam P. Barr); Administrative Dispute Resolution Act: Hearings on H.R.

2497 Before the Subcomm. on Admin. Law and Gov’t Relations o f the House Comm, on the Judiciary, 101st Cong.

38 (1990) (statem ent o f Assistant Attorney General William P. Barr). In addition, the Civil Division has issued

a m anual entitled Guidance on the Use o f Alternative Dispute Resolution fo r Litigation in the Federal Courts (1992).

That m anual asserted that “ [t]he Government cannot enter into agreements to participate in ‘binding* arbitration.”

Id. at 4. The legal basis cited for this assertion was the Appointments Clause. Id. at 4 & n.8.

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Reg. 55,195 (1991). That order forbids litigation counsel for federal agencies from

seeking or agreeing to enter into binding arbitration. Id. § 1(c)(3). Therefore, while

a constitutionally valid statute may compel litigation counsel to enter into binding

arbitration, litigation counsel may not voluntarily agree to binding arbitration.3

I. Background

Neither term in the phrase “ binding arbitration” bears a settled meaning. First,

“ arbitration” may be a very different exercise in different contexts and cases

because there are no universally applicable rules of practice, procedure, or evi­

dence governing the conducting of arbitration. In addition, there is no standard

as to whether arbitration is to be conducted by a single arbitrator or by a panel

of arbitrators or as to the method for selecting the individuals who serve in that

capacity.4 Moreover, arbitration may be voluntary — in that both parties have

agreed to resolve their dispute by this method — or compulsory — in that some

other requirement such as a statute compels the parties to resolve their dispute

by this method. Second, it is not at all clear what exactly is meant by referring

to an arbitration as “ binding.” We take this to mean that judicial review of the

arbitral decision is narrowly limited, as opposed to non-binding arbitration in

which each party remains free to disregard any arbitral ruling. The limitation on

judicial review could take numerous forms. It may mean that there is to be no

review of an arbitral decision. Alternatively, it may mean that an arbitral decision

is reviewable only under a very limited standard, such as fraud by the arbitrator(s)

or arbitrary and capricious decision making. Because of this indeterminacy, it is

3The President’s power is at its lowest ebb where the President issues an executive order that is contrary to

other law. See Youngstown Sheet & Tube Co. v. Sawyer, 343 U.S. 579 (1952). For this reason, we doubt that Exec.

O rder No. 12778 is meant to forbid entering into binding arbitration where there is a statutory or other legal obligation

to do so. So, for instance, if the Federal Arbitration Act, 9 U.S.C. §§ 1-6 were to require the enforcement o f a

contractual binding arbitration provision, we would not interpret Exec. Order No. 12778 as attempting to override

this statute.

Because your request focuses on the constitutional issues that might arise in connection with binding arbitration,

we do not regard it as necessary to determine whether, setting aside Exec. Order No. 12778, the executive is author­

ized to enter into binding arbitration as part o f a contract. Nevertheless, we point out that the President and the

executive branch have broad authority to negotiate for o r agree to contractual terms that they view as advancing

the federal governm ent's various interests. In a given case, this authority may stem from the Constitution, the specific

statute authorizing the President or an executive branch official to enter into a contract, or from a broader statutory

authorization. See generally 40 U.S.C. §486; Authority to Issue Executive Order on Government Procurement, 19

Op. O.L.C. 90(1995).

Another threshold inquiry is whether there is a basis for bringing a claim against the government. The United

States is immune from suit except where it consents to be sued. See, e.g.. United States v. Lee, 106 U.S. 196

(1882); Cohens v. Virginia, 19 U.S. (6 Wheat.) 264, 411-12 (1821). The waiver o f sovereign immunity must be

express. See, e.g., Department o f Energy v. Ohio, 503 U.S. 607 (1992). Moreover, only Congress m ay waive sovereign

immunity; the executive may not waive this immunity, such as through consenting to binding arbitration. See United

States v. Shaw, 309 U.S. 495, 501 (1940). The three most significant statutory waivers of sovereign immunity are

the Administrative Procedures Act, 5 U.S.C. §702, the Federal Tort Claims Act, 28 U.S.C. §§ 1346(b), 2671-2680,

and the Tucker Act, 28 U.S.C. §§ 1346(a), 1491. W hether any claim is encompassed within one of these or any

other express waiver o f sovereign immunity depends upon the specific claim asserted.

4Typically, arbitrators either are professional arbitrators or possess some expertise in the subject matter o f the

specific arbitration wherein they act. Throughout this memorandum, we assume that they are selected to arbitrate

particular disputes on a case-by-case basis in the manner o f independent contractors.

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not possible to draw many specific conclusions. We are able, however, to offer

generalizations and guidance pertaining to participation by the federal government

in the various forms that binding arbitration may take.

II. The Appointments Clause

A. Whether Arbitrators Are Officers of the United States

To understand why the assertion that the Appointments Clause prohibits the

government from entering into binding arbitration is not well-founded, it is nec­

essary first to examine the requirements of the Appointments Clause itself. The

Appointments Clause provides that

[the President,] shall nominate, and by and with the Advice and

Consent of the Senate, shall appoint Ambassadors, other public

Ministers and Consuls, Judges of the supreme Court, and 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 Courts

of Law, or in the Heads of Departments.

U.S. Const, art. II, §2, cl. 2. The Appointments Clause sets forth the exclusive

mechanisms by which an officer of the United States may be appointed. See

Buckley v. Valeo, 424 U.S. 1, 124-37 (1976) (per curiam). The first issue to be

resolved is, who is an “ officer” within the meaning of the Constitution and there­

fore must be appointed by one o f the methods set out in the Appointments Clause?

Not everyone who performs duties for the federal government is an officer

within the meaning of the Appointments Clause. The requirements of the Appoint­

ments Clause apply only where an individual is appointed to an “ office” within

the federal government. From the early days of the Republic, the concepts of

“ office” and “ officer” have been understood to embrace the ideas of “ tenure,

duration, emolument, and duties.” United States v. Hartwell, 73 U.S. (6 Wall.)

385, 393 (1867). Because Hartwell has long been taken as the leading statement

of the constitutional meaning o f “ officer,” 5 that statement is worth repeating in

full:

5 In an opinion discussing an Appointments Clause issue. Attorney General Robert F. Kennedy referred to Hartwell

as providing the “ classical definition penaining to an officer.” Communications Satellite Corporation, 42 Op. A tt’y

Gen. 165, 169 (1962). Hartwell itself cited several earlier opinions, including United States v. Maurice, 26 F. Cas.

1211 (C.C.D. Va. 1823) (No. 15,747) (M arshall, Circuit Justice), see Hartwell, 73 U.S. at 393 n .f, and in turn

has been cited by num erous subsequent Suprem e Court decisions, mcluding United States v. Germaine, 99 U.S.

508, 511-1 2 (1878), and Aujjfmordt v. Hedden , 137 U.S. 310, 327 (1890). These latter two decisions were cited

with approval by the Court in Buckley, 424 U .S. at 125-26 & n.162.

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An office is a public station, or employment, conferred by the

appointment of government. The term embraces the ideas of tenure,

duration, emolument, and duties.

The employment of the defendant was in the public service of

the United States. He was appointed pursuant to law, and his com­

pensation was fixed by law. Vacating the office of his superior

would not have affected the tenure of his place. His duties were

continuing and permanent, not occasional or temporary. They were

to be such as his superior in office should prescribe.

A government office is different from a government contract. The

latter from its nature is necessarily limited in its duration and spe­

cific in its objects. The terms agreed upon define the rights and

obligations of both parties, and neither may depart from them with­

out the assent of the other.

Id. at 393.

Hartwell and the cases following it specify a number of criteria for identifying

those who must be appointed as constitutional officers, and in some cases it is

not entirely clear which criteria the court considered essential to its decision.

Nevertheless, we believe that from the earliest reported decisions onward, the con­

stitutional requirement has involved at least three necessary components. The

Appointments Clause is implicated only if there is created or an individual is

appointed to (1) a position of employment (2) within the federal government (3)

that is vested with significant authority pursuant to the laws of the United States.

1. A Position o f Employment: The Distinction between Appointees and Inde­

pendent Contractors. An officer’s duties are permanent, continuing, and based

upon responsibilities created through a chain of command rather than by contract.

Underlying an officer is an “ office,” to which the officer must be appointed.

As Chief Justice Marshall, sitting as circuit justice, wrote: “ Although an office

is ‘an employment,’ it does not follow that every employment is an office. A

man may certainly be employed under a contract, express or implied, to do an

act, or perform a service, without becoming an officer.” Maurice, 26 F. Cas.

at 1214. Chief Justice Marshall speaks here of being “ employed under a con­

tract” ; in modem terminology the type of non-officer status he is describing is

usually referred to as that of independent contractor. In Hartwell, this distinction

shows up in the opinion’s attention to the characteristics of the defendant’s

employment being “ continuing and permanent, not occasional or temporary,” as

well as to the suggestion that with respect to an officer, a superior can fix and

then change the specific set of duties, rather than having those duties fixed by

a contract. 73 U.S. at 393.

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The Court also addressed the distinction between employees and persons whose

relationship to the government takes some other form in Germaine. There, the

Court considered whether a surgeon appointed by the Commissioner of Pensions

“ ‘to examine applicants for pension, where [the Commissioner] shall deem an

examination . . . necessary,’ ” Germaine, 99 U.S. at 508 (quoting Rev. Stat.

§ 4777), was an officer within the meaning of the Appointments Clause. The sur­

geon in question was ‘‘only to act when called on by the Commissioner of Pen­

sions in some special case” ; furthermore, his only compensation from the govern­

ment was a fee for each examination that he did in fact perform. Id. at 512. The

Court stated that the Appointments Clause applies to “ all persons who can be

said to hold an office under the government,” id. at 510, and, applying Hartwell,

concluded that “ the [surgeon’s] duties are not continuing and permanent and they

are occasional and intermittent.” Id. at 512. The surgeon, therefore, was not an

officer of the United States. Id.6

2. Appointment to a Position within the Federal Government. In addition,

Hartwell and the other major decisions defining “ Officers of the United States”

all reflect the historical understanding that the Appointments Clause speaks only

to positions within the federal government. The Appointments Clause simply is

not implicated when significant authority is devolved upon non-federal actors. In

Hartwell the Court stated that “ [a]n office is a public station, or employment,

conferred by the appointment of government.” 73 U.S. at 393. In holding that

the Appointments Clause applied in that case, the Court stressed that “ [t]he

employment of the defendant was in the public service of the United States.”

Id.; see also Germaine, 99 U.S. at 510 (founders intended appointment pursuant

to the Appointments Clause only for “ persons who can be said to hold an office

under the government about to be established under the Constitution” ). This

means that the delegation of federal authority to state officials can present no

Appointments Clause difficulties, because the individuals serve as state officials

rather than as federal officials.7 It is a conceptual mistake to argue that federal

6 Germaine clearly was discussing the concept o f "o ffic e r” in the constitutional, and not simply a generic, sense:

the alternative basis for the holding was that the surgeon was not an officer because he was appointed by the Commis­

sioner who, as the head o f a bureau w ithin the Interior Department, could not be a “ head o f Department,” with

the authority to appoint officers. Id. at 511.

7 The fram ers appear to have envisioned that state officials would enforce federal law. For exam ple, Madison

wrote,

eventual collection [of certain Federal taxes] under the immediate authority o f the Union, will generally

be made by the officers, and according to the rules, appointed by the several States. Indeed it is extremely

probable that in other instances, . . . the officers o f the States w ill be clothed with the correspondent

authority o f the Union.

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laws delegating authority to state officials create federal “ offices,” which are then

filled by (improperly appointed) state officials. Rather, the “ public station, or

employment” has been created by state law; the federal statute simply adds federal

authority to a pre-existing state office.8 Accordingly, the substantiality of the dele­

gated authority is immaterial to the Appointments Clause conclusion.9 An analo­

gous point applies to delegations made to private individuals: the simple assign­

ment of some duties under federal law, even significant ones, does not by itself

pose an Appointments Clause problem.10

In our view, therefore, the lower federal courts have been correct in rejecting

Appointments Clause challenges to the exercise of federally-derived authority by

state officials,11 the District of Columbia City Council,12 qui lam relators under

the False Claims Act,13 and plaintiffs under the citizen suit provisions of the Clean

The Federalist No. 45, at 292 (James Madison) (Clinton Rossiter ed., 1961). The framers also seem to have acted

upon this understanding. The first Judiciary Act, enacted by the first Congress, required state magistrates and justices

of the peace to arrest and detain any criminal offender under the laws o f the United States. Ch. XX, §33, 1 Stat.

73, 91 (1789). This statute, in immaterially modified form, remains in effect. 18 U.S.C. §3041. At least two courts

have interpreted this statute to authorize state and local law enforcement officers to arrest an individual who violates

federal law. See United States v. Bowdach, 561 F.2d 1160 (5th Cir. 1977); Whitlock v. Boyer, 77 Ariz. 334, 271

P.2d 484(1954).

As discussed below, the delegation to private persons or non-federal government officials o f federal-law authority,

sometimes incorrectly analyzed as raising Appointments Clause questions, can raise genuine questions under other

constitutional doctrines, such as the non-delegation doctrine and general separation o f powers principles. Compare

Confederated Tribes o f Sileiz Indians v. United States, 841 F. Supp. 1479, 1486-89 (D. Or. 1994) (appeal pending)

(confusing Appointments Clause with separation o f powers analysis in holding invalid a delegation to a state gov­

ernor) with United States v Ferry County, 511 F. Supp. 546, 552 (E.D. Wash. 1981) (correctly dismissing A ppoint­

ments C lause argument and analyzing delegation to county commissioners under non-delegation doctrine).

8 This should be distinguished from the case where a federal statute creates a federal office— such as membership

on a federal commission that wields significant authority— and requires that a particular state officer occupy that

office. In this instance, Congress has actually created a federal office and sought to fill it, which is the prototype

of an Appointments Clause violation.

9 See Seattle Master Builders Ass’n v. Pacific Northwest Elec. Power & Conservation Planning Council, 786

F.2d 1359, 1365 (9th Cir. 1986) (“ because the Council members do not serve pursuant to federal law ,” it is “ immate­

rial whether they exercise some significant executive or administrative authority over federal activity” ), cert, denied,

479 U.S. 1059(1987).

>0One might also view delegations to private individuals as raising the same considerations as suggested by the

distinction drawn earlier between appointee and independent contractor— so long as the statute does not create such

tenure, duration, emoluments and duties as would be associated with a public office, the individual is not the occupant

of a constitutional office but is, rather, a private party who has assumed or been delegated some federal responsibil­

ities.

n See, e.g., Seattle Master Builders, 786 F.2d at 1364-66. The particular state officials at issue were serving

on an entity created by an interstate compact established with the consent o f Congress, but that fact is not significant

for Appointments Clause purposes. The crucial point was that “ [t]he appointment, salaries and direction” o f the

officials were “ state-derived” : “ the states ultimately empower the [officials] to c an y out their duties.” Id. at 1365.

The Supreme C ourt’s decision in New York v. United States, 505 U.S. 144 (1992), which held that Congress cannot

“ com m andeer” state officials to serve federal regulatory purposes, reinforces this conclusion. W here state officials

do exercise significant authority under or with respect to federal law, they do so as state officials, by the decision

and under the ultimate authority o f the state.

12 See Techworld Dev. Corp. v. D.C. Preservation League, 648 F. Supp. 106, 115-17 (D.D.C. 1986). Though

the court did not fully develop the point, we believe that the District o f Columbia stands on a special footing.

C ongress’s plenary authority to legislate for the District entails authority to establish a municipal government for

the District, the officers o f which are municipal rather than federal officers to whom the Appointments Clause simply

does not apply.

13 We believe that United States ex rel. Kelly v. Boeing Co., 9 F.3d 743, 757-59 (9th Cir. 1993) (rejecting Appoint­

ments Clause challenge to False Claims Act), cert, denied, 510 U.S. 1140 (1994), reached the correct result but

Continued

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Water Act.14 The same conclusion should apply to the members of multinational

or international entities who are not appointed to represent the United States.15

3. The Exercise of Significant Authority. Chief Justice Marshall’s observation

that “ [although an office is ‘an employment,’ it does not follow that every

employment is an office,” Maurice, 26 F. Cas. at 1214, points to a third distinc­

tion as well — although not one that was at issue in Maurice itself. An officer

is distinguished from other full-time employees of the federal government by the

extent of authority he or she can properly exercise. As the Court expressed in

Buckley.

We think that the term “ Officers of the United States” as used

in Art. II, defined to include “ all persons who can be said to hold

an office under the government” in United States v. Germaine,

[means] that any appointee exercising significant authority pursuant

to the laws of the United States . . . must . . . be appointed in

the manner prescribed by [the Appointments Clause],

424 U.S. at 125-26 (emphasis added).16 In contrast, “ [e]mployees are lesser func­

tionaries subordinate to officers of the United States.” Id. at 126 n.162.

through an incorrect line o f analysis. See id. at 758 (Clause not violated because o f the relative modesty o f the

authority exercised by the relator). The better Appointments Clause analysis, in our view, is that o f the court in

United States ex rel. Burch v. Piqua Eng' g, Inc., 803 F. Supp. 1 15, 120 (S.D. Ohio 1992), which held that “ because

qui tam [relators] are not officers of the United States, the FCA does not violate the Appointments C lause.” We

disapprove the A ppointm ents Clause analysis and conclusion o f an earlier memorandum o f this Office, Constitu­

tionality o f the Qui Tam Provisions o f the False Claims Act, 13 Op. O.L.C. 207 (1989) (arguing that the qui tam

provisions violate the Appointments Clause).

14 Here, the court phrased its analysis in terms o f separation o f powers, but the challenge to the statute was,

at its core, based on the Appointments C lause. See Chesapeake Bay Found, v. Bethlehem Steel Corp., 652 F. Supp.

620, 624 (D. Md. 1987) (Buckley v. Valeo, 424 U.S. 1 (1976) (per curiam), “ does not stand for the proposition

. . . that private persons may not enforce any federal laws simply because they are not Officers o f the United

States appointed in accordance with Article II o f the C onstitution” ).

15 A t least where these entities are created on an ad hoc o r temporary basis, there is a long historical pedigree

for the argum ent that even the United States representatives need not be appointed in accordance with Article II.

See, e.g., A lexander Hamilton, The Defence No. 37 (Jan. 6, 1796), reprinted in 20 The Papers o f Alexander Hamilton

13, 20 (H arold C. Syrett ed., 1974)-

As to what respects the Commissioners agreed to be appointed [under the Jay Treaty with Great Britain],

they are not in a strict sense OFFICERS. They are arbitrators between the two Countries. Though in

the Constitutions, both o f the U[nited] States and o f most o f the Individual states, a particular mode of

appointing officers is designated, yet in practice it has not been deem ed a violation o f the provision to

appoint C om m issioners or special Agents for special purposes in a different mode.

The traditional view o f the Attorneys G eneral has been that the members o f international commissions hold “ an

office or em ploym ent em anating from the general treaty-making power, and created by it” and the foreign nation(s)

involved and that m embers are not constitutional officers. Office— Compensation, 22 Op. A tt’y Gen. 184, 186 (1898);

see generally Dames & Moore v. Regan, 453 U.S. 654 (1981); Harold H. Bruff, Can Buckley Clear Customs?,

49 W ash. & Lee L. Rev. 1309 (1992); Jim C. Chen, Appointments with Disaster: The Unconstitutionality o f the

Binational Arbitral Review under the United States-Canada Free Trade Agreement, 49 Wash. & Lee L. Rev. 1455

(1992); W illiam J. Davey, The Appointments Clause and International Dispute Settlement Mechanisms: A False

Conflict, 49 W ash. & Lee L. Rev. 1315 (1992); Alan B. M orrison, Appointments Clause Problems in the Dispute

Resolution Provisions o f the United States-Canada Free Trade Agreement, 49 Wash. & Lee L. Rev. 1299 (1992).

16 See Appointments in the Department o f Commerce and Labor, 29 Op. A tt’y Gen. 116, 118-19, 122-23 (1911)

(official authorized to perform all the duties o f the Commissioner o f Fisheries, who was appointed by the President

and confirm ed by the Senate, was an officer, scientists, technicians, and superintendent o f mechanical plant in the

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The distinction between constitutional officers and other employees is a long­

standing one. See, e.g., Burnap v. United States, 252 U.S. 512, 516—19 (1920)

(landscape architect in the Office of Public Buildings and Grounds was an

employee, not an officer); Second Deputy Comptroller o f the Currency— Appoint­

ment, 26 Op. Att’y Gen. at 628 (Deputy Comptroller of the Currency was “ mani­

festly an officer of the United States” rather than an employee). At an early point,

the Court noted the importance of this distinction for Appointments Clause anal­

ysis. See Germaine, 99 U.S. at 509.17

The Supreme Court relied on the officer/employee distinction in Freytag v.

Commissioner, 501 U.S. 868 (1991). In Freytag, the Court rejected the argument

that special trial judges of the Tax Court are employees rather than officers

because “ they lack authority to enter a final decision” and thus arguably are

mere subordinates of the regular Tax Court judges.18 Id. at 881. The Court put

some weight on the fact that the position of special trial judge, as well as its

duties, salary, and mode of appointment, are specifically established by statute;19

the Court also emphasized that special trial judges “ exercise significant discre­

tion” in carrying out various important functions relating to litigation in the Tax

Court. Id. at 882.

Bureau of Standards were employees rather than officers), Second Deputy Comptroller o f the Currency— Appoint­

ment, 26 Op. A tt'y Gen. 627, 628 (1908) ( “ The officer is distinguished from the employee in the greater importance,

dignity, and independence o f his position” ; official authorized to exercise powers o f the Comptroller o f the Currency

in the absence o f the Comptroller was clearly an officer).

We hasten to note that the exercise o f significant authority alone is not a sufficient condition to characterizing

a position as an office within the meaning o f the Appointments Clause. To be considered a position that must

be filled in conformance with the Appointments Clause, the position must also be one of employment within the

federal government. For a discussion o f this point, see infra section D.B.

17 The status o f certain officials traditionally appointed in modes identical to those designated by the Appointments

Clause is somewhat anomalous. For instance, low-grade military officers have always been appointed by the President

and confirmed by the Senate and understood to be “ Officers o f the United States” in the constitutional sense;

in Weiss v. United States, 510 U.S. 163, 171 (1994), the Supreme Court recently indicated its agreement with that

understanding. It is at least arguable, however, that the authority exercised by second lieutenants and ensigns is

so limited and subordinate that their analogues in the civil sphere clearly would be employees. There are at least

three possible explanations. (1) Congress may make anyone in public service an officer simply by requiring appoint­

ment in one o f the modes designated by the Appointments Clause. The Clause, on this view, mandates officer

status for officials with significant governmental authority but does not restrict the status to such officials. This

apparently was the nineteenth-century view. See, e.g., United States v. Perkins, 116 U S . 483, 484 (1886) (cadet

engineer at the Naval Academy was an officer because “ Congress has by express enactment vested the appointment

of cadet-engineers in the Secretary o f the Navy and when thus appointed they become officers and not em ploye[e]s” ).

(2) Certain officials are constitutional officers because in the early Republic their positions were o f greater relative

significance in the federal government than they are today. C f Buckley, 424 U.S. at 126 (postmasters first class

and clerks o f district courts are officers). (3) Even the lowest ranking military or naval officer is a potential com­

mander of United States armed forces in com bat— and, indeed, is in theory a potential commander o f large military

or naval units by presidential direction or in the event o f catastrophic casualties among his or her superiors.

IBIn fact, as the Court pointed out, the chief judge of the Tax Court can assign special trial judges to render

final decisions in certain types o f cases, a power that the government conceded rendered them, in those circumstances,

“ inferior officers who exercise independent authority.” The Court rejected the argument that special trial judges

could be deemed inferior officers for some purposes and employees for others. Id. at 882.

19 The text o f the Appointments Clause implies that offices in the sense o f the Clause must be established in

the Constitution or by statute. See U.S. Const, art. II, §2, cl. 2 (specifying certain officers and then referring to

“ all other Officers o f the United States, whose Appointments are not herein otherwise provided for, and which

shall be established by Law ” ).

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In contrast, as this Office has concluded, the members of a commission that

has purely advisory functions “ need not be officers of the United States” because

they “ possess no enforcement authority or power to bind the Government.” Pro­

posed Commission on Deregulation o f International Ocean Shipping, 7 Op. O.L.C.

202, 202-03 (1983). For that reason, the creation by Congress of presidential

advisory committees composed, in whole or in part, of congressional nominees

or even of members of Congress does not raise Appointments Clause concerns.

Because employees do not wield independent discretion and act only at the

direction of officers, they do not in their own right “ exercis[e] responsibility under

the public laws of the Nation,” Buckley, 424 U.S. at 131.20 Conversely, “ any

appointee” in federal service who “ exercis[es] significant authority pursuant to

the laws of the United States” must be an officer in the constitutional sense and

must be appointed in a manner consistent with the Appointments Clause.21 Id.

at 126.

To recapitulate, one who occupies a position o f employment within the federal

government that carries significant authority pursuant to the laws of the United

States is required to be an officer of the United States, and therefore to be

appointed pursuant to the Appointments Clause. Each one of the italicized terms

signifies an independent condition, all three of which must be met in order for

the position to be subject to the requirements of the Appointments Clause. We

now turn to consideration of whether arbitrators occupy a position of employment

in the federal government and exercise significant federal authority.

4. Arbitrators. It seems beyond dispute that arbitrators exercise significant

authority, at least in the context of binding arbitration involving the federal

government. However, arbitrators retained for purposes of resolving a single case

do not satisfy the remaining necessary conditions. They are manifestly private

actors who are, at most, independent contractors to, rather than employees of,

the federal government. Arbitrators are retained for a single matter, their service

expires at the resolution of that matter, and they fix their own compensation.

Hence, their service does not bear the hallmarks of a constitutional office—

tenure, duration, emoluments, and continuing duties. Consequently, arbitrators do

not occupy a position of employment within the federal government, and it cannot

be said that they are officers of the United States. Because arbitrators are not

officers, the Appointments Clause does not place any requirements or restrictions

on the manner in which they are chosen.

20That an em ployee may not exercise independent discretion does not, o f course, mean that his or her duties

may not encom pass responsibilities requiring the exercise o f judgm ent and discretion under the ultimate control

and supervision o f an officer. In Steele v. United States (No. 2), 267 U.S. 505, 508 (1925), the Supreme Court

noted that a “ deputy marshal is not in th e constitutional sense an officer o f the United States," yet “ is called

upon to exercise great responsibility and d iscretio n " in “ the enforcement o f the peace o f the United States, as

that is em braced in the enforcement of federal law.” But deputy marshals act at the direction o f “ the United States

marshal under whom they serve,” id, who is an officer in the constitutional sense.

21 See Appointment and Removal of Inspectors o f Customs, 4 Op. A tt’y Gen. 162, 164 (1843) (Congress may

not provide for the appointment o f “ any em ploye[e], coming fairly within the defmition o f an inferior officer of

the governm ent,” except by a mode consistent with the Appointments Clause).

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Auffmordt compels this conclusion. That case involved a statute that entitled

an importer who was dissatisfied with the government’s valuation of dutiable

goods to demand a reappraisement jointly conducted by a general appraiser (a

government employee) and a “ merchant appraiser” appointed by the collector

of customs for the specific case. Despite the fact that the reappraisement decision

was final and binding on both the government and the importer, 157 U.S. at 329,

the Court rejected the argument that the merchant appraiser was an “ inferior

Officer” whose appointment did not accord with the requirements of the Appoint­

ments Clause. In describing the merchant appraiser, the Court said:

He is selected for the special case. He has no general functions,

nor any employment which has any duration as to time, or which

extends over any case further than as he is selected to act in that

particular case. . . . He has no claim or right to be designated,

or to act except as he may be designated. . . . His position is with­

out tenure, duration, continuing emolument, or continuous duties

. . . . Therefore, he is not an ‘officer,’ within the meaning of the

clause.

Id. at 326-27. Not only does Auffmordt compel our conclusion, the contrary posi­

tion— that an independent contractor or non-federal employee who exercises

significant governmental authority must be appointed pursuant to the Appoint­

ments Clause — would be inconsistent with the Germaine and Hartwell cases dis­

cussed above.22

Our conclusion is consistent with the Supreme Court’s classification of the inde­

pendent counsel as an inferior officer in Morrison v. Olson, 487 U.S. 654 (1988).

There the Court observed that “ [i]t is clear that appellant is an ‘officer’ of the

United States, not an ‘employee.’ ” Id. at 671 n.12. Significantly, the lone

authority the Court cited for this proposition was “ Buckley, 424 U.S. at 126, and

n. 162.” Id. At the page cited, the Buckley Court quoted and reaffirmed Germaine,

and in the footnote cited the Court reaffirmed both Germaine and Auffmordt.

Buckley, 424 U.S. at 126 & n.162. This coupled with Morrison's express approval

of Germaine, 487 U.S. at 670, strongly counsel against interpreting Morrison to

have scuttled the Auffmordt and Germaine definition of office, which treats tenure,

duration, emoluments, and continuing duties as necessary conditions.

22ENRD reads Auffmordt and Germaine as limited to “ judgments o f experts on areas within their expertise, as

opposed to policy or legal ju d g m en ts/' ENRD memorandum at 3. Apparently, ENRD’s position is that the negative

inference from the Appointments Clause is to be drawn except where an expert acts within the scope of his or

her expertise. In other words, the Appointments Clause prohibits any private actor from exercising significant

authority, unless the private actor is an expen who exercises significant authority within the scope o f his or her

expertise. While there may be strong policy reasons for wishing to restrict Auffmordt and Germaine in this way,

there is no basis in the Constitution for doing so. The text o f the Appointments Clause makes no reference to,

let alone an exception for, expen action. Furthermore, there is nothing in the Auffmordt or Germaine opinions them ­

selves that supports narrowing them in this way.

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We believe that the factors that make it “ clear” that an independent counsel

is an officer of the United States demonstrate that an arbitrator is not. The office

of independent counsel is created by statute. See 28 U.S.C. §§591-599. The inde­

pendent counsel’s compensation is fixed specifically by statute at the rate set forth

at 5 U.S.C. §5315 for level IV of the Senior Executive Service. Id. § 594(b).

All of the others listed as receiving this compensation are in the full-time employ­

ment of the federal government and, insofar as we are aware, are in fact officers

within the meaning of the Appointments Clause. See 5 U.S.C. §5315 (setting com­

pensation for, inter alia, assistant attorneys general). The independent counsel’s

operating and overhead expenses are fixed23 by statute and appropriation. 28

U.S.C. § 594(c) (fixing compensation of attorneys employed by an independent

counsel); id. § 594(1) (providing for administrative support, office space, and travel

expenses). Significantly, Congress is the exclusive source of funding for any oper­

ations undertaken by the independent counsel. In this way, Congress takes some

part in providing an ongoing definition to the office of independent counsel and

may exercise some degree of influence over the independent counsel. Indeed, as

the Court noted, Congress expressly retained oversight authority with respect to

the activities of independent counsels and provided for submission of reports by

independent counsels to congressional oversight committees. Morrison, 487 U.S.

at 664-65. In addition, the independent counsel occupies a position that is formally

within the federal government. That position is, according to the Supreme Court,

within the executive branch chain of command to at least some extent and subject

to oversight and control by the President and guidance of the Attorney General.

Id. at 685-92; 28 U.S.C. § 594(e). The independent counsel also may request and

receive the assistance of the Department of Justice. Id. § 594(d). The independent

counsel thus clearly occupies a position of employment within the federal govern­

ment. In fact, this point was so clear that Congress went out of its way expressly

to provide that the position of independent counsel would be “ separate from and

independent of the Department of Justice” for certain purposes. Id. §594(i).

Arbitrators share none of these material qualities. The position of arbitrator is

not created by a congressional enactment. Arbitrators set their own fee and charge

the client parties, including but not limited to the government, that fee. No appro­

priation is made specifically to support the operations or expenses of arbitrators.24

As a result, an arbitrator’s compensation even for a case involving the government

is not limited to the fee paid by the government and an arbitrator remains free

to turn to other sources for funding of his or her operations and expenses, subject

23By use o f the term “ f ix e d /' we mean to distinguish this schem e— in which Congress sets the independent

counsel’s salary and overhead— from one in which an arbitrator’s fee and overhead are determined by the arbitrator

and passed on to the federal government, even though the government may ultimately pay them from a specific

appropriation.

24 O f course, any fee that the government pays must ultimately come from appropriated funds. Nevertheless, the

fee is paid to an arbitrator not in the m anner o f an em ployee o f the government but rather as a non-government

actor w ho provides services to the government.

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of course to conflict of interest and ethical limitations. In addition, arbitrators are

not subject to congressional oversight or to presidential control.

Finally, the statute creating the office of independent counsel also defines the

procedures by which the office may be terminated. Morrison, 487 U.S. at 664.

Arbitrators, by contrast, serve until the matter they are retained to resolve is com­

pleted; there is no statutory process for termination of their “ office.” This vividly

demonstrates that while there is an office underlying the position of independent

counsel, there is no similar office underlying one who acts as an arbitrator; there

is no process for terminating the office of an arbitrator because there is no office

to terminate.

This is not to say that it is impossible for a binding arbitration mechanism to

run afoul of the Appointments Clause. As indicated, arbitrators whose sole or

collective decisions are binding on the government exercise significant authority.

If any such arbitrator were to occupy a position of employment within the federal

government, that arbitrator would be required to be appointed in conformity with

the Appointments Clause. See Freytag, 501 U.S. at 880-82. Thus, if a federal

agency were to conduct binding arbitrations and to employ arbitrators whom it

provided with all relevant attributes of an office, all such arbitrators would be

required to be appointed in conformity with the Appointments Clause.

B. The Appointments Clause as a Bar against Delegations to Private Actors

We do not understand there to be any dispute that arbitrators are private rather

than government actors. See Davey, supra, at 1318 (“ no one would argue that

[arbitrators] are” officers of the United States). Instead, the position that the

Appointments Clause prohibits the government from entering into binding arbitra­

tion rests on a negative inference drawn from the Appointments Clause — specifi­

cally, that only officers of the United States appointed pursuant to the Appoint­

ments Clause may exercise significant federal authority. See, e.g., Civil Division,

U.S. Dep’t of Justice, Guidance on the Use o f Alternative Dispute Resolution fo r

Litigation in the Federal Courts 4 n.8 (1992) (“ Under the Appointments Clause,

[significant governmental] duties may be performed only by ‘Officers of the

United States,’ appointed in the constitutionally prescribed manner.” (citation

omitted)). This negative inference lacks textual support and is contrary to the con­

sistent interpretations of the Clause by the Supreme Court.

By its own terms, the Appointments Clause addresses only the permissible

methods by which officers may be appointed. The term officer has been defined

to mean one who occupies a position of employment within the federal govern­

ment that carries significant authority pursuant to the laws of the United States.

The Appointments Clause’s text says nothing about whether or what limits exist

on the government’s power to devolve authority on private or other non-federal

actors.

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Instead, what limits exist on the ability to delegate governmental authority to

private actors are encompassed within the non-delegation doctrine.25 The very

existence of the non-delegation doctrine strongly suggests that looking to the

Appointments Clause for limits on the federal government’s ability to delegate

authority to non-federal actors is a misguided enterprise. If the Appointments

Clause prohibited all delegations of significant federal governmental authority to

non-federal actors, there would be no need for a separate non-delegation doctrine

in that context. While some o f the most notable controversies under the non-dele­

gation doctrine have involved delegations from the federal legislature to the fed­

eral executive, see, e.g., Skinner v. Mid-America Pipeline Co., 490 U.S. 212

(1989); Panama Ref. Co. v. Ryan, 293 U.S. 388 (1935), the doctrine has by no

means been limited to this context. The Supreme Court and the lower federal

courts have reviewed the delegation of significant federal governmental authority

to non-federal actors under the non-delegation doctrine. Moreover, the courts,

including the Supreme Court, have upheld such delegations without even hinting

that the Appointments Clause might be implicated. See, e.g., Thomas v. Union

Carbide Agric. Prods. Co., 473 U.S. 568 (1985) (upholding delegation to private

arbitrators); Sunshine Anthracite Coal Co. v. Adkins, 310 U.S. 381 (1940)

(upholding delegation of regulatory authority to private industry group); Kentucky

Horseman’s Benevolent & Protective Ass’n v. Turfway Park Racing Ass’n, 20

F.3d 1406 (6th Cir. 1994) (upholding delegation of regulatory authority to a state

and to private industry group); Nance v. EPA, 645 F.2d 701 (9th Cir. 1981)

(upholding delegation of authority under Clean Air Act to Indian tribe); First

Jersey Sec., Inc. v. Bergen, 605 F.2d 690 (3d Cir. 1979) (upholding delegation

of adjudicative authority to private industry group); Crain v. First Nat’l Bank,

324 F.2d 532, 537 (9th Cir. 1963) (“ While Congress cannot delegate to private

corporations or anyone else the power to enact laws, it may employ them in an

administrative capacity to carry them into effect.” ); cert, denied, 454 U.S. 108

(1981); R.H. Johnson & Co. v. SEC, 198 F.2d 690 (2d Cir.) (upholding delegation

of adjudicative authority to private industry group), cert, denied, 344 U.S. 855

(1952).26

The Supreme Court’s interpretations of the Appointments Clause actually refute

the negative inference that is sometimes asserted. The Court’s decision in

Auffmordt is especially compelling. There, the Court held that because the mer­

25 The application o f the non-delegation doctrine to binding arbitration is discussed more fully infra at section

W.C.

26 It is theoretically possible that the courts have upheld these delegations because the parties challenging them

have repeatedly failed to raise the Appointments Clause. Compare White v. Massachusetts Council o f Constr.

Employers, 460 U.S. 204 (1983) (upholding residency requirement for public works project against dormant Com­

merce Clause challenge) with United Bldg. and Constr. Trades v. Camden, 465 U.S. 208 (1984) (striking down

residency requirem ent for public svorks projects as violation o f Privileges and Immunities Clause). We would be

reluctant to place the numerous delegations so upheld on such a capricious footing absent a clear indication in

the C ourt’s Appointments Clause jurisprudence. While not all non-delegation litigants have raised Appointments

Clause challenges, som e have and, as we detailed in the preceding section, those challenges consistently have been

rejected.

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chant appraiser— who stands formally and functionally in the same position as

an arbitrator in a binding arbitration involving the federal government— was a

private actor, the Appointments Clause did not apply and so upheld the statutory

delegation of arbitral authority to the merchant appraiser. In other words,

Auffmordt held that the Appointments Clause does not prohibit delegating signifi­

cant federal authority to private actors. The Court employed the same reasoning

to reject the Appointments Clause challenges in Germaine and Hartwell.

The argument asserting the negative inference from the Appointments Clause

relies on Buckley. We believe, however, that under its best reading Buckley reflects

and endorses our view that the Appointments Clause simply does not apply to

non-federal actors, and that the negative inference argument misreads the opinion.

First, Buckley cites both Germaine and Auffmordt approvingly. See 424 U.S. at

125-26 & n.162. Second, in several of its statements of the definition of “ offi­

cers,” Buckley, sometimes citing Germaine explicitly, says that the term applies

to appointees or appointed officials who exercise significant authority under fed­

eral law, thus recognizing the possibility that non-appointees might sometimes

exercise authority under federal law. See, e.g., id. at 131 (“ Officers” are “ all

appointed officials exercising responsibility under the public laws.” ).

It is true that, at other points in its opinion, the Buckley Court used language

that, taken in isolation, might suggest that the Appointments Clause applies to

persons who, although they do not hold positions in the public service of the

United States, exercise significant authority pursuant to federal law. See id. at

141. However, we think such a reading of Buckley is unwarranted. So understood,

Buckley must be taken to have overruled, sub silentio, Germaine and Auffmordt—

cases upon which it expressly relies in its analysis, see id. at 125-26 & n.162 —

and its repeated quotation of the Germaine defmition of “ officer” as “ all persons

who can be said to hold an office under the government” would make no sense.

Not only does such a reading render Buckley internally inconsistent, it fails to

explain the Supreme Court’s continuing and unqualified citations to and reliance

upon Germaine. See Freytag, 501 U.S. at 881; Morrison, 487 U.S. at 672.

The apparently unlimited language of some passages in Buckley has a simpler

explanation: there was no question that the officials at issue in Buckley held posi­

tions of “ employment” under the federal government, and thus the question of

the inapplicability of the Appointments Clause to persons not employed by the

federal government was not before the Court.27 The post-Buckley Supreme Court

27 The weight o f scholarship that has considered the interplay o f Buckley with Hartwell, Germaine, and Auffmordt

accords with our approach. As one commentator has asserted:

The Buckley Court’s entire analysis is predicated upon its construction o f the appointments clause in the

context o f its ‘cognate’ separation-of-powers provisions. The decision, as in Germaine and the other

appointments clause cases, was concerned with determining the status o f an individual who w as employed

by the United States. The Court’s definition thus was employed to distinguish between classes o f federal

employees; it was not used to distinguish between federal and nonfederal employees. Since the two ques­

tions differ radically, it is hardly surprising that a standard helpful in resolving one leads to absurd results

when applied to the other.

Continued

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has often assessed the validity of statutes that would starkly pose Appointments

Clause issues if, in fact, the Court had adopted the position that wielding signifi­

cant authority pursuant to the laws of the United States, without more, requires

appointment in conformity with that Clause. In none of these cases has the Court

even hinted at the existence of an Appointments Clause issue. It is especially

telling that two of these decisions have involved forms of binding arbitration.

See Thomas v. Union Carbide Agric. Prods. Co., 473 U.S. 568 (1985) (upholding

statutory requirement that registrants under a federal regulatory scheme submit

to binding arbitration conducted by a panel of arbitrators who are not appointed

by one of the methods specified in the Appointments Clause and are subject only

to limited judicial review); Schweiker v. McClure, 456 U.S. 188 (1982) (upholding

submission of dispute to binding, unreviewable determination by a single arbiter

who is a private actor); see also FERC v. Mississippi, 456 U.S. 742 (1982)

(upholding requirement that states enforce federal regulatory scheme relating to

utilities); Lake Carriers’ Ass’n v. Kelley, 456 U.S. 985 (1982) (mem.), a jf g 527

F. Supp. 1114 (E.D. Mich. 1981) (three-judge panel) (upholding statute that

granted states authority to ban sewage emissions from all vessels); Train v.

National Resources Defense Council, Inc., 421 U.S. 60 (1975) (construing provi­

sion of Clean Air Act that gave states authority to devise and enforce plans for

achieving congressionally defined, national air quality standards).28 The Supreme

Court’s decision in Buckley, we conclude, did not modify the long-settled principle

that a person who is not an officer under Hartwell need not be appointed pursuant

to the Appointments Clause.

Prior writings of this Office have read Buckley more broadly as standing for

the proposition disavowed here — that is, that all persons exercising significant

federal authority, by virtue of that fact alone, must be appointed pursuant to the

Appointments Clause. We are aware of four instances in which our disagreement

with this understanding of Buckley would cause us to reach a different conclusion

on the Appointments Clause question presented. See Constitutionality o f Sub­

section 4117(b) o f Enrolled Bill H.R. 5835, the “Omnibus Budget Reconciliation

Act o f 1990," 14 Op. O.L.C. 154, 155 (1990) (statutory scheme under which

congressional delegations and physicians’ organizations of certain states exercise

Dale D. Goble, The Council and the Constitution: An Article on the Constitutionality o f the Northwest Power Plan­

ning Council, 1 J. Hnvtl. L. & Litig. 11, 53 (1986); see also Harold J. Krent, Fragmenting the Unitary Executive:

Congressional Delegations o f Administrative Authority Outside the Federal Government, 85 Nw. U. L. Rev. 62,

7 2 -7 3 n.26 (1990) (w hether one who exercises governmental authority is an officer is determined by looking to

the factors set out in Hartwell, Germaine, and Auffmordt).

28 It is sometimes asserted that the Supreme Court in Bowsher v. Synar, 478 U.S. 714 (1986), adopted the negative

inference from the Appointments Clause. W e see no basis for this proposition. That case simply did not involve

the A ppointm ents Clause. W hile the Court m akes a passing reference to the Appointments Clause, id. at 722-23,

we can find no passage in which the Court even appears to contemplate construing the Appointments Clause. The

question in Bowsher pertained to the limits o n the authority that the Comptroller General could exercise. The Comp­

troller General is appointed by the President and confirmed by the Senate, see 31 U.S.C. §703. This method o f

appointm ent conform s to the letter of the Appointments Clause. See U.S. C onst, art. II, § 2 , cl. 2. We cannot conceive

o f a reasonable reading o f Bowsher as eith er explicitly o r implicitly affirm ing— or, for that matter, rejecting—

the negative inference from the Appointments Clause.

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“ significant authority” violates Appointments Clause); Constitutionality o f the

Qui Tam Provisions o f the False Claims Act, 13 Op. O.L.C. 207, 222 (1989)

(provisions of False Claims Act authorizing qui tam suits by private parties violate

Appointments Clause because qui tam relators exercise “ significant governmental

power” ); Representation o f the United States Sentencing Commission in Litiga­

tion, 12 Op. O.L.C. 18, 26-28 (1988) (private party acting as counsel for United

States agency must be appointed pursuant to Appointments Clause); Proposed

Legislation to Establish the National Indian Gaming Commission, 11 Op. O.L.C.

73, 74 (1987) (Appointments Clause problems raised where state and local offi­

cials given authority to waive federal statute). We now disavow the Appointments

Clause holdings of those precedents. To the extent that our reading of Buckley

is inconsistent with the Appointments Clause reasoning of other prior precedents

of this office, that reasoning is superseded. See Common Legislative Encroach­

ments on Executive Branch Authority, 13 Op. O.L.C. 248, 248-49 (1989). We

do not disavow these precedents lightly. These more recent citations, however,

are inconsistent and in some cases irreconcilable with prior opinions of the Attor­

neys General. Moreover, the Supreme Court has not overruled but has reaffirmed

Auffmordt, Hartwell, and Germaine, and we are bound to follow them.

III. The Take Care Clause

It has been suggested that the Take Care Clause prohibits the federal govern­

ment from entering into binding arbitration, because that clause requires all power

exercised by the executive branch to be exercised in a manner that the President

judges to be “ faithful.” This approach forbids the President’s judgment from

being subordinated to the judgment of an arbitrator. This suggestion misconstrues

the Take Care Clause. The Constitution establishes that “ [t]he executive power

shall be vested in a President of the United States of America,” U.S. Const, art.

II, § I, cl. 1; and that the President “ shall take Care that the Laws be faithfully

executed,” id. art. II, §3. The Supreme Court and the Attorneys General have

long interpreted the Take Care Clause as standing for the proposition that the

President has no inherent constitutional authority to suspend the enforcement of

the laws, particularly of statutes. See, e.g., INS v. Chadha, 462 U.S. 919, 953

n.16 (1983); Kendall v. United States ex rel. Stokes, 37 U.S. (12 Pet.) 524, 609-

13 (1838); The Attorney General’s Duty to Defend and Enforce Constitutionally

Objectionable Legislation, 4A Op. O.L.C. 55, 59 (1980) (opinion of Attorney Gen­

eral Civiletti) (“ The President has no ‘dispensing power.’ ” ). See generally Chris­

topher N. May, Presidential Defiance o f “Unconstitutional” Laws: Reviving the

Royal Prerogative, 21 Hastings Const. L.Q. 865, 869-74 (1994).

The Supreme Court’s decision in Kendall is illuminating. A dispute between

the postmaster general and several contractors had arisen. Congress passed a law

directing the Solicitor of the Department of the Treasury to resolve the dispute

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and requiring the postmaster general to pay whatever sum the Solicitor determined

was due. The postmaster general refused to comply with the Solicitor’s decision,

arguing that he “ was alone subject to the direction and control of the President,

with respect to the execution of the duty imposed upon him by this law; and

this right of the President is claimed, as growing out of the obligation imposed

upon him by the constitution, to take care that the laws be faithfully executed.”

37 U.S. at 612. The Court emphatically rejected this argument.29 Instead the Court

ruled that the Congress had waived sovereign immunity and submitted to whatever

resolution the Solicitor ordered. “ The terms of the submission was a matter resting

entirely in the discretion of congress; and if they thought proper to vest such

a power in any one, and especially as the arbitrator was an officer of the govern­

ment, it did not rest with the postmaster general to control congress, or the solic­

itor, in that affair.” Id. at 611 (emphasis added). Thus, Kendall stands for the

proposition that the Executive must comply with the terms of valid statutes and

that if a statute requires the Executive to submit to binding arbitration, the Execu­

tive must do so.

The Take Care Clause itself has no bearing on the question of whether the

Constitution permits the federal government to enter into binding arbitration; in

this context, it simply requires the President to “ take Care” that whatever valid

legal requirements might exist are followed.30 It is necessary to consider the

application of this principle in three situations. First, where a statute or other law

operates to require the government to submit to binding arbitration, the govern­

ment must submit. Kendall, 37 U.S. at 611. Second, where a statute or other law

forbids submission to binding arbitration, such as where it expressly vests discre­

tion in a particular government officer, submission to binding arbitration is forbid­

den. See Establishment of a Labor Relations System fo r Employees o f the Federal

Labor Relations Authority, 4B Op. O.L.C. 709, 715-16 (1980).31 Finally, where

the statutes and other laws are silent, the Take Care Clause simply has nothing

to say about whether the government may submit to binding arbitration.

29 “ This is a doctrine that cannot receive the sanction o f this court. . . . To contend that the obligation imposed

on the President to see the laws faithfully executed, implies a pow er to forbid their execution, is a novel construction

o f the constitution, and entirely inadmissible.” Id.

30 In the above-cited opinion. Attorney G eneral Civiletti did not ignore his power, and indeed obligation, to decline

to enforce o r decline to defend an unconstitutional statute, especially one violating the Constitution’s separation

o f legislative and executive powers. See The Attorney General's Duty to Defend and Enforce Constitutionally

Objectionable Legislation , 4A Op. O.L.C. at 56 (in such a situation, the Attorney General “ would be untrue to

his office if he w ere to do otherwise” ); Presidential Authority to Decline to Execute Unconstitutional Statutes , 18

Op. O.L.C. 199, 199 (1994) (“ there are circumstances in which a President may appropriately decline to enforce

a statute that he view s as unconstitutional” ).

3 ‘ W here a statute vests final decisionmaking authority in an executive branch official, that official must make

the decision and m ay n o t— absent congressional authorization— delegate that authority to another official or to

a private actor such as an arbitrator. See id. This case must be distinguished from the situation where the final

decision o f an executive official is subject to judicial review. Here, the official must make the decision in the first

instance. I f a challenge is subsequently brought, then absent som e specific statutory bar or other legal impediment,

there is nothing in the Take Care Clause th at would prohibit such an official from opting for binding arbitration

rather than adjudication before an Article in court. Currently, Exec. Order No. 12778 imposes an absolute prohibition

on opting for binding arbitration where litigation counsel is not otherwise compelled to submit to it.

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IV. Other Article II Issues

In addition to recognizing the mandatory nature of the processes — such as the

Appointments Clause — that the Constitution expressly ordains, the Supreme

Court’s decisions have identified broader structural principles that separate and

limit the powers of the three branches of government. One important principle

is that Congress may not vest itself, its members, or its agents with ‘‘ ‘either

executive power or judicial power,’ ” Metropolitan Wash. Airports Auth. v. Citi­

zens for the Abatement o f Aircraft Noise, Inc., 501 U.S. 252, 274 (1991) (citation

omitted), and that Congress therefore may not intervene in the decision making

necessary to execute the law. Bowsher, 478 U.S. at 733-34; FEC v. NRA Political

Victory Fund, 6 F.3d 821, 827 (D.C. Cir. 1993), af f d on other grounds, 513

U.S. 88(1994).

“ The structure of the Constitution does not permit Congress to execute the laws;

it follows that Congress cannot grant to an officer under its control what it does

not possess.” Bowsher, 478 U.S. at 715, 726. Therefore, any scheme whereby

Congress — whether itself or through one of its committees, members, or agents —

appoints, retains removal authority over, or otherwise exercises any type of con­

tinuing authority over an arbitrator32 violates the constitutional anti-aggrandize­

ment principle. This principle extends to non-voting members. NRA Political Vic­

tory Fund, 6 F.3d at 827. Consequently, we do not believe that Congress could

make one of its members or agents an ex officio non-voting member of an arbitral

panel. Id.

Legislation that is consistent with the Constitution’s express procedures and with

the Bowsher principle may nonetheless affect the constitutional separation of

powers by invading the constitutional roles of the executive or judicial branches.

“ [I]n determining whether [such an] Act disrupts the proper balance between the

coordinate branches, the proper inquiry focuses on the extent to which it prevents

the Executive Branch from accomplishing its constitutionally assigned functions.”

Nixon v. Administrator o f Gen. Servs., 433 U.S. 425, 443 (1977); cf. CFTC v.

Schor, 478 U.S. 833, 856-57 (1986) (“ the separation of powers question presented

in this litigation is whether Congress impermissibly undermined . . . the role of

the Judicial Branch” ). An affirmative answer to the question of whether Congress

has prevented the executive or judiciary from accomplishing its functions, further­

more, would not lead inexorably to the judicial invalidation of the statute: in that

case, the Court has stated, it would proceed to “ determine whether that impact

is justified by an overriding need to promote objectives within the constitutional

authority of Congress.” Nixon, 433 U.S. at 443.

32 Buckley and NRA Political Victory Fund establish that Congress violates the anti-aggrandizement principle if

it retains control over any member o f a nonlegislative body, even though a single member cannot alone take any

dispositive action. Thus, in .the arbitration setting, it would not matter for purposes of separation o f powers analysis

that Congress exercises control over only a single member of, for example, a three-member arbitral panel. Such

an arrangement would violate the anti-aggrandizement principle.

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In the context of binding arbitration, concerns under this general separation of

powers principle would arise if an arbitral panel were given authority that is con­

stitutionally committed to the executive. For example, the Supreme Court has held

that the President must retain at least some ability to control the exercise of federal

criminal prosecutorial power. See Morrison v. Olson, 487 U.S. 654 (1988). Thus,

we believe the general separation of powers principle would stand as a bar to

vesting an arbitration panel with unreviewable authority to direct or control the

prosecution or conduct of federal litigation by the executive branch’s attorneys.

Where, on the other hand, a dispute over the exercise of executive authority

is submitted to binding arbitration, the general separation of powers principle has

little force. The principle prohibits incursions that “ preventf] the Executive

Branch from accomplishing its constitutionally assigned functions.” Nixon, 433

U.S. at 443 (emphasis added), quoted in Morrison v. Olson, 487 U.S. 654, 695

(1988). The Constitution does not, however, assign to the executive branch exclu­

sive responsibility for resolving disputes over the exercise of its authority. The

very language of Article III providing for federal court jurisdiction over disputes

involving “ the United States” demonstrates that the Constitution does not require

that the authority to resolve such disputes over executive action be vested in the

executive branch itself. Resolution of such disputes by private arbitrators, there­

fore, does not in itself disturb the separation of powers that the Constitution

ordains.

In addition, the Constitution’s text and structure grant the President a number

of powers that are not, as such, subject to the general separation of powers prin­

ciple; examples include the commander in chief and foreign affairs powers. The

President may not be bound to the decision of an arbitrator in the exercise of

these constitutional powers, whether by statute or by purported agreement of the

President. Congress may not, for example, require the President to exercise the

President’s pardon power pursuant to the dictates of an arbitrator. See generally

United States v. Klein, 80 U.S. 128, 148 (1871); Ex Parte Garland, 71 U.S. (4

Wall.) 333, 380 (1866).

V. Article III

Article III of the Constitution, which establishes the federal judicial branch,

places at least some limitations on the ability of the federal government to submit

to binding arbitration. Article III provides that “ [t]he judicial Power of the United

States, shall be vested in one supreme Court, and in such inferior Courts as the

Congress may from time to time ordain and establish.” U.S. Const, art. Ill, § 1.

This “ judicial power” does not refer to all federal adjudications, however. See,

e.g., Freytag, 501 U.S. at 909 (Scalia, J., concurring) (“ there is nothing ‘inherently

judicial’ about ‘adjudication’ ” ). The Supreme Court has long wrestled with the

mandatory scope of the Article III vesting clause — that is, what federal adjudica­

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tions must be committed to an Article III tribunal.33 It is clear, however, that

Article III prohibits at least some matters from being submitted to binding arbitra­

tion.

Early on, the Supreme Court settled on a general approach for resolving ques­

tions regarding Article Ill’s scope:

we do not consider congress can either withdraw from judicial cog­

nizance any matter which, from its nature, is the subject of a suit

at the common law, or in equity, or admiralty; nor, on the other

hand, can it bring under the judicial power a matter which, from

its nature, is not a subject for judicial determination. At the same

time there are matters, involving public rights, which may be pre­

sented in such form that the judicial power is capable of acting

on them, and which are susceptible of judicial determination, but

which congress may or may not bring within the cognizance of

the courts of the United States, as it may deem proper.

Murray’s Lessee v. Hoboken Land & Improvement Co., 59 U.S. (18 How.) 272,

284 (1855). In its generalities, this statement remains an accurate description of

the Court’s approach to Article III: there are three categories of determinations —

those that must be submitted to an Article III tribunal, those that may be submitted

to such a tribunal, and those that may not be submitted to such a tribunal.

The statement in Murray’s Lessee, however, has been taken further to establish

a so-called public rights doctrine. Under that doctrine, all federal adjudication

would be required to be conducted in an Article in forum except adjudication

involving a public right.34 Public rights adjudication could presumably take what­

ever form Congress prescribed. Use of this doctrine reached its highwater mark

in Northern Pipeline Constr. Co. v. Marathon Pipe Line Co., 458 U.S. 50 (1982)

(plurality opinion), which defined public rights as “ matters arising ‘between the

Government and persons subject to its authority in connection with the perform­

ance of the constitutional functions of the executive or legislative departments’ ”

and private rights as “ ‘the liability of one individual to another under the law

as defined.’ ” Id. at 67-68, 69-70 (quoting Crowell v. Benson, 285 U.S. 22, 50,

51 (1932)); see Thomas, 473 U.S. at 585 (characterizing Northern Pipeline).

More recently the Court has eschewed the public rights doctrine as set forth

in Northern Pipeline. The Court no longer accepts either the proposition that all

federal adjudications of private disputes must be submitted to an Article III tri­

33 Congress may, however, have power to decline to provide for any federal adjudication o f som e matters. See

generally Henry M. Hart, Jr., The Power o f Congress to Limit the Jurisdiction o f Federal Courts: An Exercise

in Dialectic, 66 Harv. L. Rev. 1362 (1953). If Congress has such a power, one notable exception would be the

Supreme C ourt's original jurisdiction, which we do not believe that Congress could eliminate. See U.S. Const, art.

HI, § 2 , cl. 2.

34 The genera] rule did not apply to courts for the territories or the District o f Columbia, which arguably perform

federal adjudication, or to the courts martial. Northern Pipeline Constr. Co., 458 U.S. at 64-70.

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bunal or that Article III has no force in cases between the government and an

individual. Thomas, 473 U.S. at 585-86. The Supreme Court dismissed the public

rights doctrine approach35 as formalistic and admonished that “ practical attention

to substance rather than doctrinaire reliance on formal categories should inform

application of Article III.” Id. at 587 (construing Crowell v. Benson, 285 U.S.

22 (1932)). The Court has thus directed that “ the constitutionality of a given

delegation of adjudicative functions to a non-Article III body . . . be assessed

by reference to the purposes underlying the requirements of Article III.” Schor,

478 U.S. at 847. The Court has identified two such purposes: the first is to fulfill

a separation of powers interest— protecting the role of an independent judiciary—

while the second is to protect an individual right— the right to have claims

decided by judges who are free of domination by other branches. Id. at 848.36

Under the separation of powers rubric, the Court has resisted adopting a for­

malistic approach in favor of one that looks to the actual effects on the constitu­

tional role of the Article III judiciary. The most significant factor is whether the

adjudication involves a subject matter that is part of or closely intertwined with

a public regulatory scheme. We consider the implications of the purposes of

Article III first in the context of a statute that mandates binding arbitration and

then in the context of consensual submission to binding arbitration.37

A. Statutorily Mandated Binding Arbitration

1. Separation o f Powers. The separation of powers purpose served by Article

III, Section 1 was explained in Schor: that vesting clause “ safeguards the role

of the Judicial Branch in our tripartite system by barring congressional attempts

‘to transfer jurisdiction [to non-Article III tribunals] for the purpose of emascu­

35 W hile the Court has abandoned the public rights doctrine , it occasionally uses the term “ public rights** as

a shorthand reference to matters that need not be vested in an Article III tribunal, particularly in the context of

the Seventh Am endm ent. See, e.g., Granfinanciera, SA . v. Nordberg, 492 U.S. 33 (1989); Schor, 478 U.S. at 853

( “ this C ourt has rejected any attempt to m ake determinative for Article lH purposes the distinction between public

rights and private rights” ).

36 For the purposes o f this inquuy. Article HI also defines the scope o f another individual right, the Seventh

A m endm ent right to a jury trial. If an adjudication may be vested in a non-Article in tribunal, the Seventh Amend­

ment does not prohibit non-jury fact-finding:

[T]f [an] action must be tried under th e auspices o f an Article III court, then the Seventh Amendment

affords the parties a right to a jury trial whenever the cause o f action is legal in nature. Conversely, if

C ongress m ay assign the adjudication o f a statutory cause o f action to a non-Article III tribunal, then

the Seventh A m endm ent poses no independent bar to the adjudication o f that action by a nonjury factfinder.

Granfinanciera, 492 U.S. at 63-64.

37 The EN R D m emorandum refers to a third category— court-ordered binding arbitration. We believe that a court

m ay order binding arbitration only if it is specifically authorized to do so. W hen Congress expressly commits jurisdic­

tion to resolve cases o f a particular type to the Article m judiciary, the Article m judiciary may not rewrite the

jurisdictional statute to provide for final resolution by some other agent— any more than the executive may refuse

to carry out a valid statutory duty. Cf. Northern Pipeline Constr. Co. v. Marathon Pipe Line Co., 458 U.S. 50

(1982); Youngstown Sheet & Tube Co. v. Sawyer, 343 U.S. 579 (1952); In re United States, 816 F.2d 1083 (6th

Cir. 1987). If a statute grants a court authority to order binding arbitration, the scheme is properly analyzed as

an exam ple o f statutorily mandated binding arbitration. See, e.g., 28 U.S.C. §§651-658 (authorizing federal district

courts to refer m atters to arbitration), 28 U .S.C. §§631, 636 (authorizing appointment of and establishing powers

o f U nited States M agistrate Judges).

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lating’ constitutional courts and thereby preventing ‘the encroachment or

aggrandizement of one branch at the expense of the other.’ ” Id. at 850 (quoting,

respectively, National Ins. Co. v. Tidewater Co., 337 U.S. 582, 644 (1949) (Vin­

son, C.J., dissenting), and Buckley v. Valeo, 424 U.S. 1, 122 (1976) (per curiam)).

In reviewing assertions that a particular delegation to a non-Article III tribunal

violates Article III, the Court applies a general separation of powers principle;

that is, the Court looks to whether the practical effect of a delegation outside

Article III is to undermine “ the constitutionally assigned role of the federal

judiciary.” Schor, 478 U.S. at 851; see Thomas, 473 U.S. at 590 (looking to

whether a delegation outside Article III “ threatens the independent role of the

Judiciary in our constitutional scheme” ).

It is not possible to draw a broad conclusion regarding the validity of statutory

schemes that mandate binding arbitration, except to observe that some conceivable

schemes would not violate Article HI while other schemes could. See Thomas,

473 U.S. at 594. The Court has listed three factors that it will examine to deter­

mine whether a particular adjudication by a non-Article III tribunal, such as an

arbitration panel, impermissibly undermines the constitutional role of the judiciary.

The Court looks first to the extent to which essential attributes of judicial power

are reserved to Article III courts and the extent to which the non-Article HI forum

exercises the range of jurisdiction and powers normally vested in Article III courts;

second to the origin and importance of the right to be adjudicated; and third to

the concerns that drove Congress to place adjudication outside Article III. Schor,

478 U.S. at 851.

The first factor focuses on whether the subject matter entrusted to the non-

Article III tribunal is restricted to a “ particularized area of [the] law” or instead

is relatively broad-ranging. Id. at 852. The more broad-ranging the tribunal’s

authority, the greater the likelihood of an Article III conflict. Where a tribunal

has a particularized jurisdiction, however, granting the tribunal authority to enter­

tain additional matters in the nature of counterclaims is unlikely to yield an

impermissibly broad jurisdiction. Broadening the scope to reach pendant and

ancillary claims would raise serious concerns. Id. Also relevant is the range of

remedies that the tribunal is empowered to issue. The closer that range approxi­

mates the full range that might be issued by an Article III tribunal, the more

suspect the non-Article in tribunal appears. Most significantly, this factor requires

examination of the standard under which the determination of an arbitration panel

is reviewable. Id. at 853. In Thomas the statute that mandated binding arbitration

permitted judicial review only for “ fraud, misconduct, or misrepresentation.” 473

U.S. at 592. The Court held that this limited review “ preserves the ‘appropriate

exercise of the judicial function’ ” because it “ protects against arbitrators who

abuse or exceed their powers or willfully misconstrue their mandate under the

governing law.” Id. (quoting Crowell v. Benson, 285 U.S. 22, 54 (1932)).

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The second factor is the nature and importance of the right to be adjudicated

by the non-Article III tribunal. First and foremost, the Supreme Court has stated

that any attempt by Congress or the Executive to vest the final adjudication of

questions of constitutional law outside Article III courts38 would raise serious

constitutional concerns, see Thomas, 473 U.S. at 592, although we acknowledge

that the Court has never resolved this question. In any event, this is not to say

that constitutional claims may not ever be submitted to arbitration as an initial

matter. See, e.g., Ruckelshaus v. Monsanto Co., 467 U.S. 986 (1984). Rather, the

serious constitutional concerns that the Court has raised are avoided only if matters

of constitutional law must ultimately be subject to judicial review even if the

matter may not have initially been submitted to an Article III tribunal.39 To avoid

ruling unnecessarily on the difficult constitutional question, the Supreme Court

has required that Congress’s intent to preclude judicial review of constitutional

claims be clear before the Court will entertain the validity of such preclusion.

See, e.g., Webster v. Doe, 486 U.S. 592 (1988); Weinberger v. Salfi, 422 U.S.

749 (1975); Johnson v. Robison, 415 U.S. 361, 373-74 (1974). Without such clear

congressional intent, a statute that simply purports to prohibit judicial review will

not prohibit judicial review of constitutional questions.40

In addition to constitutional issues, there are other rights the Court views as

being “ at the ‘core’ of matters normally reserved to Article III courts.” Schor,

478 U.S. at 853. This category was set forth as far back as Murray’s Lessee and

includes “ suit[s] at common law, or in equity, or admiralty,” Murray’s Lessee,

59 U.S. at 284, as well as claims of a “ state-law character,” see Northern Pipe­

line, 458 U.S. at 100. Because these matters historically have been perceived to

lie at the core of Article HI, attempts to withdraw them from “ judicial cog­

nizance” are subject to “ searching” scrutiny. Schor, 478 U.S. at 854. The Court,

however, has rejected the contention that Article III works a blanket proscription

on entrusting the resolution of such matters to non-Article III tribunals. See id.

at 853 (separation of powers principles do not support “ according] the state law

character of a claim talismanic power in Article III inquiries” ). Instead, we are

to examine the specific adjudication vested outside Article III, focusing on whether

“ Congress has . . . attempted to withdraw from judicial cognizance” the deter­

380 f course, som e constitutional issues m ay arise that are not justiciable by an Article III court. See, e.g., Gold-

water v. Carter, 444 U.S. 996 (1979). This does not mean that no government actor wiJl make a determination

based on constitutional interpretation as to how to proceed. We would not, however, regard this as an "adjudication."

39 We do not mean to indicate that a party may never waive a constitutional claim or be b aned from asserting

a constitutional claim for procedural reasons such as failure to exhaust a statutory remedy, mcluding submission

to arbitration.

40 The Supreme Court has held questions relating only to “ the interpretation or application o f a particular provision

o f [a] statute to a particular set o f facts** are not themselves constitutional questions and that Congress may bar

judicial review o f such claims. See Robison, 415 U.S. at 367. The courts have been vigilant in rejecting attempts

by litigants to characterize as constitutional claim s, especially under the Due Process Clause, what are in fact chal­

lenges to “ the interpretation o r application o f a particular provision o f [a] statute to a particular set o f facts."

Id.; see, e.g., Sugrue v. Derwinski, 26 F.3d 8, 11 (2d Cir. 1994) (holding claimants cannot obtain judicial review

o f “ benefits determinations merely because those challenges are cloaked in constitutional term s” ), cert, denied,

515 U.S. 1102(1995).

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mination of these core claims. Id. at 854. Here, we will look to the scope of

the non-Article III tribunal’s jurisdiction over core Article III claims, the extent

to which the scope of that jurisdiction is tailored to “ valid and specific legislative

necessities,” and the extent to which determinations made by the non-Article III

tribunal are subject to Article III review. Id. at 855.

On the other hand, when Congress creates rights outside Article I ll’s core, most

of the matters that arise in connection with these rights can be “ conclusively

determined by the Executive and Legislative Branches.” Thomas, 473 U.S. at 569,

589. The prototype of such non-core matters are rights created by statute as part

of or intertwined with a complicated regulatory scheme. See Schor, 478 U.S. at

853-54; Thomas, A12> U.S. at 589-90. Where this is the case, “ the danger of

[Congress or the executive] encroaching on the judicial powers is reduced.” Id.

at 589. Statutes mandating binding arbitration to resolve disputes that arise in

connection with these rights are unlikely to contravene Article III. That is not

to say that such schemes cannot run afoul of Article III. But see Gordon G. Young,

Public Rights and the Federal Judicial Power: From Murray’s Lessee through

Crowell to Schor, 35 Buff. L. Rev. 765, 792, 842 n.360 (1986). While the

Supreme Court has observed that the threat of encroachment is “ reduced,” in

such circumstances, it has rejected the contention that Article III has no force

in these cases. See Thomas, 473 U.S. at 589.

The third factor, the purpose underlying the departure from Article III adjudica­

tion, has little independent force. That factor looks to whether Congress has

attempted to “ emasculate” the judiciary by enacting a particular binding arbitra­

tion requirement. Thus, Article III prohibits Congress from “ creat[ing] a phalanx

of non-Article III tribunals equipped to handle the entire business of the Article

III courts without any Article III supervision or control.” Schor, 478 U.S. at 855.

Absent such a purpose, however, this factor alone would not limit Congress’s

authority to enact a mandatory binding arbitration scheme. See Thomas, 473 U.S.

at 590; Crowell, 285 U.S. at 46.

The factors listed above should not be considered in isolation from one another.

See, e.g., Thomas, 473 U.S. at 592 (holding limit on judicial review permissible

“ in the circumstances” of that statutory scheme). For instance, the limited review

upheld in Thomas applied to adjudication of a right that was “ closely integrated

into a public regulatory scheme.” Id. at 594. If the right at issue had been closer

to the core with which Article III is particularly concerned, such limited review

might not have been approved. All of this is by way of demonstration that Article

in does not draw bright lines and so does not permit more specific guidance

than we have set forth. Whether a particular statutory scheme impermissibly

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undermines the constitutional role of the judiciary can only be determined by

reviewing the facts and context of each such scheme.41

2. Individual Rights. Article III also safeguards the right of litigants to have

claims decided by “ judges who are free from potential domination by other

branches of government.” Schor, 478 U.S. at 848. It is doubtful that the govern­

ment possesses this individual right.42 Even if it does, this individual right may

be waived. See id. at 850-51; Thomas, 473 U.S. at 592-93. Where Congress

enacts a statute that requires the government to submit to binding arbitration, that

statute — as in the context of sovereign immunity — acts as a waiver of whatever

right the government might have to litigate in an Article III tribunal. The extent

to which private litigants may be statutorily compelled to submit to binding

arbitration is beyond the scope of the present inquiry.43

B. Consensual Binding Arbitration

Where there is no statute requiring parties to enter into binding arbitration, the

parties may nevertheless agree to do so. The same may be said of the government

when it is a party. Absent a statute to the contrary and assuming the availability

of authority to effect any remedy that might result from the arbitration, we per­

ceive no broad constitutional prohibition on the government entering into binding

arbitration. Such arrangements, however, are still technically subject to scrutiny

for conformity to the purposes underlying Article III. See Schor, 478 U.S. at 850-

51 (separation of powers violation may occur even though parties have consented).

It is difficult to see how the executive— litigating on behalf of the government—

impermissibly undermines the role of the judicial branch by agreeing to resolve

a particular dispute through binding arbitration. See Thomas, 473 U.S. at 591

(danger of encroachment is at a minimum where parties consent to arbitration).44

As to Article I ll’s purpose of safeguarding the individual right to independent

adjudication, it is sufficient, where the parties consent, if the agreement preserves

Article HI review of constitutional issues and permits an Article III tribunal to

41 As the Supreme Court instructed in Schor, "d u e regard must be given in each case to the unique aspects

o f the congressional plan at issue and its practical consequences in light o f the larger concerns that underlie Article

E L ” 478 U.S. at 857.

42 G overnm ental interests are generally view ed under the heading of separation of powers. The assertion that Con­

gress im perm issibly invades the executive by compelling the executive to subm it to binding arbitration, for example,

is in essence an argument that Congress has violated the separation o f powers. We assessed these arguments in

sections III and IV.

43 W e note that in Thomas, the Court seem ed to indicate that private parties could be required to submit to binding

arbitration as long as the arbitration process satisfied the requirements o f due process. 473 U.S. at 592-93. The

C ourt had no occasion to define the specific requirements o f due process in the binding arbitration context because

the parties had w aived their due process objections. In addition, a requirement that private parties submit to binding

arbitration could not be imposed in such a way as to work an unconstitutional condition. See Martin H. Redish,

Legislative Courts, Administrative Agencies, and the Northern Pipeline Decision, 1983 Duke L.J. 197, 212-14; see

also Thomas, 473 U.S. at 596 n .l (Brennan, J., concurring).

44 If, how ever, the executive branch w ere to adopt and pursue a policy o f entering into binding arbitration in

a system atic m anner designed to undermine the judiciary's constitutional role, a serious constitutional question would

arise.

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review the arbitrators’ determinations for fraud, misconduct, or misrepresentation.

Id. at 592. Such agreements should also describe the scope and nature of the

remedy that may be imposed and care should be taken to insure that statutory

authority exists to effect the potential remedy.

C. The Non-Delegation Doctrine

The previous discussion demonstrates that, at least in some instances, a non-

Article III tribunal may conduct federal adjudication. It might still be contended

that the constitutional non-delegation doctrine prohibits federal arbitral power from

being vested in private actors. The Supreme Court’s decisions in Auffmordt and

Kendall, however, strongly implied that there is no per se proscription on placing

arbitral authority in private actors. We view the Supreme Court’s opinion in

Thomas as finally rejecting the argument that the Constitution prohibits the delega­

tion of adjudicative authority in a private party. In Thomas the Court found no

particular relevance in the fact that the adjudication was to be performed by

“ civilian arbitrators, selected by agreement of the parties” as long as the cir­

cumstances do not indicate that this mechanism would “ diminish the likelihood

of impartial decisionmaking, free from political influence.” 473 U.S. at 590. As

with all delegations, there must be standards to guide the determination of the

recipient of the delegated adjudicative authority, but this is not an exacting require­

ment. See id. at 593; see generally Yakus v. United States, 321 U.S. 414 (1944).

As long as these two criteria— impartiality and discemable standards — are

present, the non-delegation doctrine does not represent a blanket prohibition of

final and binding resolution of a dispute by private actors.

VI. Due Process

The Due Process Clause, U.S. Const, amend. V, does not prohibit the final

resolution of claims, including claims involving the government, through binding

arbitration. For instance, claims for reimbursement through Part B of the Medicare

program, 42 U.S.C. §§ 1395j to 1395w-4, are subject to the final and unreviewable

determination of a hearing officer who is hired by the insurance carrier with which

the federal government contracts for administration of the program. See United

States v. Erika, Inc. 456 U.S. 201 (1982). The Supreme Court rejected the conten­

tion “ that due process requires an additional administrative or judicial review by

a Government rather than a carrier-appointed hearing officer.” Schweiker, 456

U.S. at 198 (1982). The Due Process Clause does not establish bright-line require­

ments or prohibitions; rather, “ due process is flexible and calls for such procedural

protections as the particular situation demands.” Morrissey v. Brewer, 408 U.S.

471,481 (1972).

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Whether an arbitrator with authority to issue a final, binding decision may be

a private actor or must be a government official, or whether any other facet of

an arbitration proceeding is consistent with the Due Process Clause, is determined

by reference to three relevant factors. Those factors are: the private interest that

will be affected by the official action; the risk of erroneous deprivation through

the procedures used and the probable value of additional or substitute safeguards;

and the government’s interest, including the function involved and the fiscal and

administrative burdens that the additional or substitute procedural requirement

would entail. See Schweiker, 456 U.S. at 198-200; Matthews v. Eldridge, 424

U.S. 319, 335 (1976). The precise requirements of these factors will vary

depending on the facts and circumstances of each specific arbitration. While they

may in some instance combine to require that a final, binding decision be vested

in a government official, Schweiker stands for the proposition that the Due Process

Clause does not per se prohibit vesting such a decision in a private actor.

VII. Conclusion

We reaffirm our conclusion that the Appointments Clause does not prohibit the

federal government from submitting to binding arbitration. In addition, we do not

view any other constitutional provision or doctrine as imposing a general prohibi­

tion against the federal government entering into binding arbitration. Nevertheless,

we do recognize that the Constitution imposes substantial limits on the authority

of the federal government to enter into binding arbitration in specific cases.

WALTER DELLINGER

Assistant Attorney General

Office of Legal Counsel

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