Amicus Curiae Brief — Raymond J. Lucia, et al., Petitioners v. Securities and Exchange Commission

Supreme Court briefApr 2, 2018

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No. 17-130

IN THE

Supreme Court of the United States

___________

RAYMOND J. LUCIA, ET AL.,

Petitioners,

SECURITIES AND EXCHANGE COMMISSION,

Respondent.

___________

On Writ of Certiorari to the United States Court of

Appeals for the District of Columbia Circuit

___________

BRIEF OF CONSTITUTIONAL AND ADMINISTRATIVE LAW SCHOLARS AS AMICI CURIAE IN

SUPPORT OF AFFIRMANCE

___________

GILLIAN E. METZGER

CENTER FOR CONSTITUTIONAL GOVERNANCE

Columbia Law School

435 West 116th Street

New York, NY 11027

(212) 854-2667

gmetzg1@law.columbia.edu

PETER SHANE

THE OHIO STATE UNIVERSITY

MORITZ COLLEGE OF LAW

55 W 12th Avenue

Columbus, OH 43210

(614) 688-3014

shane.29@osu.edu

ELIZABETH B. WYDRA

BRIANNE J. GOROD

Counsel of Record

ASHWIN P. PHATAK

CONSTITUTIONAL

ACCOUNTABILITY

CENTER

1200 18th Street, NW, Ste 501

Washington, D.C. 20036

(202) 296-6889

brianne@theusconstitution.org

Counsel for Amici Curiae

TABLE OF CONTENTS

Page

TABLE OF AUTHORITIES .................................

INTEREST OF AMICI CURIAE ..........................

SUMMARY OF ARGUMENT ..............................

ARGUMENT .........................................................

CONGRESS ENJOYS BROAD AUTHORITY TO SHAPE THE STRUCTURE OF THE FEDERAL GOVERNMENT, INCLUDING THE DISCRETION TO DETERMINE HOW TO APPOINT FEDERAL EMPLOYEES SERVING AS AGENTS OF, OR SUBORDINATE TO, OFFICERS ............................

II. THROUGHOUT THE NATION’S HISTORY, CONGRESS HAS GRANTED

SIGNIFICANT

RESPONSIBILITIES

TO NON-OFFICERS SO LONG AS

THEY ACTED AS AGENTS OF, OR

SUBORDINATE TO, OFFICERS ...........

III. SEC ADMINISTRATIVE LAW JUDGES

ARE NOT CONSTITUTIONAL OFFICERS AND THUS NEED NOT BE APPOINTED IN CONFORMITY WITH

THE APPOINTMENTS CLAUSE ..........

CONCLUSION ...............................................

(i)

TABLE OF AUTHORITIES

Cases

Page(s)

Andrade v. Regnery,

824 F.2d 1253 (D.C. Cir. 1987) ................. 4, 28

Bandimere v. SEC,

844 F.3d 1168 (10th Cir. 2016) ...... 4, 25, 26, 29

Buckley v. Valeo,

424 U.S. 1 (1976) ................................... passim

Edmond v. United States,

520 U.S. 651 (1997) ...................................

Free Enter. Fund v. Pub. Co. Accounting

Oversight Bd.,

561 U.S. 477 (2010) ..............................

passim

Freytag v. Comm’r,

501 U.S. 868 (1991) .......................... 2, 8, 25, 26

Go-Bart Importing Company v. United

States,

282 U.S. 344 (1931) ................................... 26-27

Harmelin v. Michigan,

501 U.S. 957 (1991) ...................................

Landry v. Fed. Deposit Ins. Corp.,

204 F.3d 1125 (D.C. Cir. 2000) .................

McCulloch v. Maryland,

17 U.S. 316 (1819) .....................................

Morrison v. Olson,

487 U.S. 654 (1988) ...................................

iii

TABLE OF AUTHORITIES – cont’d

Page(s)

N.L.R.B. v. Noel Canning,

134 S. Ct. 2550 (2014) ...............................

Opinions of the Justices,

3 Greenl. (Me.) 481 (1822) ........................

Ramspeck v. Fed. Trial Exam’rs Conf.,

345 U.S. 128 (1953) ................................... 19, 20

Steele v. United States,

267 U.S. 505 (1925) ...................................

Tucker v. Comm’r,

676 F.3d 1129 (D.C. Cir. 2012) ................. 22-23

United States v. Germaine,

99 U.S. 508 (1878) ..................................... 7, 8, 9

United States v. Maurice,

26 F. Cas. 1211 (C.C.D. Va. 1823)

(15,747) ......................................................

United States v. Mouat,

124 U.S. 303 (1888) ...................................

Weiss v. United States,

510 U.S. 163 (1994) ...................................

Constitutional Provisions

U.S. Const. art. I, § 8, cl. 18 .......................... 2, 6

U.S. Const. art. II, § 2, cl. 1...........................

U.S. Const. art. II, § 2, cl. 2......................... 2, 6, 7

TABLE OF AUTHORITIES – cont’d

Page(s)

Statutes, Regulations, and Legislative Materials

An Act to Amend an Act Entitled “An Act

to Regulate Commerce,” ch. 3591, 34

Stat. 584 (1906) .................................

18-19

An Act to Amend Title 5, United States

Code, Pub. L. No. 95-251, 92 Stat. 183

(1978) .................................................

An Act to Authorize the Securities and Exchange Commission to Delegate Certain

Functions, Pub. L. No. 87-592, 76 Stat.

394 (1962) ................................................. 20-21

An Act to Establish the Judicial Courts of

the United States, ch. 20, 1 Stat. 73

(1789) ................................................. 11, 12, 15

An Act to Provide More Effectually for the

Collection of the Duties Imposed by Law

on Goods, Wares and Merchandise Imported into the United States, ch. 35, 1

Stat. 145 (1790) .................................. 12, 13, 14

An Act to Regulate the Collection of Duties

on Imports and Tonnage, ch. 22, 1 Stat.

627 (1799) ..................................................

An Act to Regulate the Collection of the

Duties Imposed by Law on the Tonnage

of Ships or Vessels, and on Goods, Wares

and Merchandises Imported into the

United States, ch. 5, 1 Stat. 29

(1789) ..................................... 12, 13, 14, 15, 16

TABLE OF AUTHORITIES – cont’d

Page(s)

Civil Service Reform Act of 1978, Pub. L.

No. 95-454, § 201, 92 Stat. 1111 .............. 20, 21

Pub. L. No. 79-404, § 11, 60 Stat. 237

(1946) .....................................................

3, 19

S. Comm. on Homeland Sec. and Gov’t Affairs, 114th. Cong., Policy and Supporting Positions (Comm. Print 2016),

http://www.fdsys.gov ..................................

5 C.F.R. § 2.109 (1949) ..................................

5 C.F.R. § 34.4 (1949) ....................................

5 C.F.R. § 930.201(d) .....................................

5 C.F.R. § 930.201(e) .....................................

17 C.F.R. § 201.360(a)(1) ............................... 4, 23

17 C.F.R. § 201.360(d) ................................... 4, 23

17 C.F.R. § 201.360(d)(1)...............................

17 C.F.R. § 201.360(d)(2)............................... 4, 23

17 C.F.R. § 201.411(a) ...................................

17 C.F.R. § 201.452 ....................................... 4, 24

5 U.S.C. § 1202(d) ..........................................

5 U.S.C. § 7521(a) ..........................................

5 U.S.C. § 7521(b) ..........................................

15 U.S.C. § 77i(a)........................................... 4, 25

15 U.S.C. § 78d-1(a).......................................

TABLE OF AUTHORITIES – cont’d

Page(s)

1961 U.S.C.C.A.N. 1351 ................................

Executive Branch Materials

Appointment and Removal of Inspectors of

Customs, 4 Op. Att’y Gen. 162 (1843) .......

Officers of the United States Within the

Meaning of the Appointments Clause,

31 Op. O.L.C. 73 (2007)................ 10, 17, 23, 25

Books, Articles, and Other Authorities

Administrative Law Judges, Office of Pers.

Mgmt., https://www.opm.gov/services-foragencies/administrative-lawjudges/#url=ALJs-by-Agency (last visited

Mar. 28, 2018) ............................................

Administrative Procedure Act, Legislative

History, S. Doc. No. 79-248 (1944-46) .......

Administrative Procedure in Government

Agencies, S. Doc. No. 77-8 (1941) ..............

Attorney General’s Manual on the Administrative Procedure Act (1947) ...................... 3, 25

Kent Barnett, Against Administrative

Judges, 49 U.C. Davis L. Rev. 1643

(2016) ..........................................................

Vanessa K. Burrows, Cong. Research Serv.,

RL34607, Administrative Law Judges:

An Overview (2010) ....................................

1 Asher C. Hinds, Hinds’ Precedents of the

House of Representatives (1907) ....... 17, 18, 23

vii

TABLE OF AUTHORITIES – cont’d

Page(s)

Robert J. Jackson, Jr., Fact and Fiction:

The SEC’s Oversight of Administrative

Law Judges, The CLS Blue (Mar. 9,

2018), http://clsbluesky.law.columbia.edu/2018/ 03/09/fact-and-fiction-thesecs-oversight-of-administrative-lawjudges/ .........................................................

Letter from George Washington to Charles

Carroll (of Carrollton) (Aug. 25, 1793),

https://founders.archives.gov/documents/Washington/05-13-02-0361 .............

John F. Manning, Separation of Powers As

Ordinary Interpretation, 124 Harv. L.

Rev. 1939 (2011) .........................................

Jennifer J. Mascott, Who Are “Officers of

the United States”?, 70 Stan. L. Rev. 443

(2018) ........................................................ 14-15

Jerry L. Mashaw, Recovering American Administrative Law: Federalist Foundations, 1787-1801, 115 Yale L.J. 1256

(2006) ..........................................................

Gillian E. Metzger, Foreword: 1930s Redux: The Administrative State Under

Siege, 131 Harv. L. Rev. 1 (2017) ..............

2 The Records of the Federal Convention of

1787 (Max Farrand ed., 1911) ...................

Tax Ct. R. 183(d) ...........................................

INTEREST OF AMICI CURIAE1

Amici are law professors who teach or have taught

courses in constitutional and administrative law and

whose scholarship has devoted significant attention to

the separation of powers, including Article II’s Appointments Clause.

A full listing of amici appears in the Appendix.

SUMMARY OF ARGUMENT

The Securities and Exchange Commission (SEC) is

an independent agency tasked by Congress with regulating the nation’s securities markets. To assist the

five-member Commission with its myriad responsibilities, Congress has permitted the Commission to “delegate, by published order or rule, any of its functions

to . . . an administrative law judge.” 15 U.S.C. § 78d1(a). Administrative law judges (ALJs) are civil servants who are hired through a competitive process. See

Vanessa K. Burrows, Cong. Research Serv., RL34607,

Administrative Law Judges: An Overview 2-4 (2010).

Although the Commission has chosen to delegate the

tasks of holding hearings and drafting initial decisions

in agency adjudications to ALJs, it has retained the

authority to review any initial decision de novo, and no

ALJ initial decision becomes binding without an express order of the Commission.

1 The parties have consented to the filing of this brief and their

letters of consent have been filed with the Clerk. Under Rule 37.6

of the Rules of this Court, amici state that no counsel for a party

authored this brief in whole or in part, and no counsel or party

made a monetary contribution intended to fund the preparation

or submission of this brief. No person other than amici or their

counsel made a monetary contribution to its preparation or submission.

Petitioners challenge the method by which ALJs

are hired, arguing that ALJs are “Officers of the

United States” under the Constitution’s Appointments

Clause, and that they therefore must be appointed by

the President, a Court of Law, or the Head of a Department, rather than through a competitive hiring process. See U.S. Const. art. II, § 2, cl. 2. Petitioners’ argument distorts the meaning of the Appointments

Clause, contravenes over two centuries of practice, and

threatens substantial disruption to the federal government’s operations.

As this Court has emphasized, the Appointments

Clause “is among the significant structural safeguards

of the constitutional scheme,” Edmond v. United

States, 520 U.S. 651, 659 (1997), guarding against

“congressional encroachment” and “ensur[ing] public

accountability,” id. at 659-60, by “preventing the diffusion of the appointment power,” Freytag v. Comm’r,

501 U.S. 868, 878 (1991). Yet at the same time the

Framers sought to accomplish these goals, they also

sought to ensure that Congress would have flexibility

in crafting the structure of the government and who

works within it. See U.S. Const. art. I, § 8, cl. 18. This

flexibility is apparent in the Appointments Clause’s

text, which grants Congress power to “vest the Appointment of . . . inferior Officers . . . in the President

alone, in the Courts of Law, or in the Heads of Departments,” as Congress “think[s] proper.” Id. art. II, § 2,

cl. 2. Moreover, as this Court has long recognized, the

vast majority of federal government employees are

“lesser functionaries” who fall outside the Appointments Clause’s scope and whose method of appointment Congress has substantial discretion to determine. See Free Enter. Fund v. Pub. Co. Accounting

Oversight Bd., 561 U.S. 477, 506 n.9 (2010).

Congress has exercised this flexibility from the

first days of the Republic to the present, consistently

choosing to imbue some federal employees with significant responsibilities without requiring them to be appointed in the manner prescribed for constitutional

“Officers of the United States.” The First Congress, for

example, passed statutes that created such positions

as deputy marshal and customs inspector; these officials had important responsibilities, but were not appointed by the President, a Court of Law, or the Head

of a Department. Notably, these early non-Officer employees shared many characteristics with modern

ALJs: they assisted Officers with important statutory

responsibilities, but they were always agents of, and

therefore subordinate to, those Officers.

In 1946, with the growth of the modern administrative state, Congress passed the Administrative Procedure Act (APA) and created the position of hearing

officer—the antecedent to today’s ALJ—to assist federal agencies with their myriad regulatory and adjudicative responsibilities. See Pub. L. No. 79-404, § 11, 60

Stat. 237, 244. Though hearing officers, and subsequently ALJs, had the significant responsibilities of

holding hearings and drafting initial decisions, agencies retained the sole authority to issue final, binding

orders, and so ALJs themselves were not considered to

be “Officers of the United States.” See generally Attorney General’s Manual on the Administrative Procedure

Act 83 (1947) (“Attorney General’s Manual”) (noting

that under the APA, an agency “is in no way bound by

the decision” of a hearing officer and “retains complete

freedom of decision—as though it had heard the evidence itself”).

Despite these numerous examples dating back to

the nation’s birth, Petitioners insist that ALJs must be

constitutional “Officers” because of their “substantive

and procedural powers that require the exercise of

broad discretion,” Pet’rs Br. 21. But the Appointments

Clause is not concerned with “day-to-day discretion.”

Bandimere v. SEC, 844 F.3d 1168, 1197 (10th Cir.

2016) (McKay, J., dissenting). After all, “it is an

everyday occurrence in the operation of government

for staff members to conceive and even carry out

policies for which duly appointed or elected officials

take official responsibility.” Andrade v. Regnery, 824

F.2d 1253, 1257 (D.C. Cir. 1987). Rather, to decide

whether an employee is an “Officer,” courts must

engage in a case-by-case inquiry that asks whether the

employee is “exercising significant authority” in his or

her own right, or is rather a “lesser functionar[y]

subordinate to officers,” Buckley v. Valeo, 424 U.S. 1,

126 & n.162 (1976), who supervise that employee and

will be held accountable for that employee’s actions.

At every turn, ALJs are lesser functionaries subordinate to, and subject to the control of, the SEC.

Though ALJs conduct hearings, their “initial decision[s]” are not final, let alone binding, see 17 C.F.R.

§ 201.360(a)(1) & (d), and any ALJ “decision becomes

final” only “upon issuance of [an] order” by the Commission, id. § 201.360(d)(2). Moreover, the Commission reviews the initial decisions of ALJs de novo, Pet.

App. 91a, and may, “[u]pon its own motion or the motion of a party, . . . allow the submission of additional

evidence,” 17 C.F.R. § 201.452. Finally, because only

orders of the Commission have any binding effect, only

orders of the Commission may form the basis of a challenge in an Article III court. See 15 U.S.C. § 77i(a).

For all these reasons, ALJs are not constitutional “Officers,” and they need not be hired in the manner prescribed by the Appointments Clause.

Were this Court to conclude otherwise, the disruption to the operations of the federal government could

be substantial, throwing into question the constitutionality of merit-based hiring for thousands of ALJs

and non-ALJ administrative judges in other agencies,

as well as other civil servants with significant responsibilities.2 After all, if the linchpin of Petitioners’ analysis is the mere existence of day-to-day responsibility

and discretion—without taking into consideration

whether employees are agents of, or subordinate to,

Officers—their theory would seemingly encompass a

large portion of the federal workforce. Such a profound

expansion in the category of constitutional “Officers”

would not only contravene longstanding precedent and

practice, it would also undercut the Appointments

Clause’s goal of accountability by encouraging pro

forma appointments. That cannot be right.

ARGUMENT

I. CONGRESS ENJOYS BROAD AUTHORITY

TO SHAPE THE STRUCTURE OF THE FEDERAL GOVERNMENT, INCLUDING THE

DISCRETION TO DETERMINE HOW TO APPOINT FEDERAL EMPLOYEES SERVING

AS AGENTS OF, OR SUBORDINATE TO, OFFICERS.

1. When the Framers drafted the Constitution,

they gave Congress broad flexibility to determine how

best to shape the federal government. Although the

Constitution presupposes the existence of federal “Departments,” see U.S. Const. art. II, § 2, cl. 1, it does not

specify what those Departments are, how they are to

be organized, or who is to work within them. Likewise,

2 Amici use the term “civil servants” colloquially to refer to fed-

eral government employees hired based on merit, as opposed to

political Officers.

while the Framers recognized that there would be “Officers of the United States” whom the President must

appoint with the advice and consent of the Senate and

“inferior Officers” whose appointment Congress could

“vest . . . in the President alone, in the Courts of Law,

or in the Heads of Departments,” id. art. II, § 2, cl. 2,

they did not specify in detail the characteristics that

distinguish principal Officers from inferior Officers, or

inferior Officers from other employees of the federal

government.

This decision to leave open most questions about

the structure of the federal government was no accident. The Constitutional Convention specifically rejected a plan that would have delineated in the Constitution itself the roles of specific executive departments. See 2 The Records of the Federal Convention of

1787, at 335-36 (Max Farrand ed., 1911) (proposal

specifying duties of six department secretaries). Instead the Framers gave Congress the authority to

“make all Laws which shall be necessary and proper

for carrying into Execution the . . . Powers vested by

this Constitution in the Government of the United

States.” U.S. Const. art. I, § 8, cl. 18.

The Necessary and Proper Clause “is the one and

only provision of the Constitution that directly addresses the establishment of the federal government,”

and it “gives the relevant power expressly to Congress.” John F. Manning, Separation of Powers As Ordinary Interpretation, 124 Harv. L. Rev. 1939, 1986

(2011). Under the Constitution, therefore, “Congress

has plenary control over the salary, duties, and even

existence of executive offices,” Free Enter. Fund, 561

U.S. at 500, wielding broad authority over the structure of federal agencies and the Officers and employees who work within them.

2. Of course, Congress wields this power to shape

the government subject to constitutional requirements, including the Appointments Clause. See Buckley, 424 U.S. at 138-39. But in giving Congress flexibility, the Framers also gave it considerable discretion

to determine how the new government’s functionaries

would be selected.

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.”

U.S. Const. art. II, § 2, cl. 2. Yet it allows Congress to

“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.” Id.

Moreover, this Court has long recognized that “[one]

‘may be an agent or employ[ee] working for the government and paid by it . . . without thereby becoming its

officer[].’” United States v. Germaine, 99 U.S. 508, 509

(1878); United States v. Maurice, 26 F. Cas. 1211, 1214

(C.C.D. Va. 1823) (Marshall, C.J.) (“Although an office

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

To determine whether any given employee is an

“Officer,” this Court has insisted on a case-by-case inquiry that examines whether a given administrative

structure grants that employee significant authority

in his or her own right, or instead makes him or her

subordinate to, or an agent of, an “Officer.” In Buckley,

for example, this Court identified an “Officer” as “any

appointee exercising significant authority pursuant to

the laws of the United States,” 424 U.S. at 126, but

also made clear that “lesser functionaries” who act

“subordinate to officers of the United States” are nonOfficers and not subject to the Appointments Clause’s

requirements, id. at 126 n.162. Other decisions have

articulated additional relevant features, such as

whether the positions involve the “exercise [of] significant discretion,” final decision-making power, Freytag,

501 U.S. at 881-82, “continuing and permanent” duties, or regular payment, Germaine, 99 U.S. at 511-12.

In the 1879 decision United States v. Germaine,

this Court held that civil surgeons appointed by the

Commissioner of Pensions “to make the periodical examination of pensioners which are or may be required

by law, and to examine applicants for pension” were

not “Officers” under Article II. 99 U.S. at 508 (quoting

Act of March 3, 1873, ch. 234, 17 Stat. 576). In reaching that conclusion, this Court considered the “occasional and intermittent” nature of a civil surgeon’s duties and the fact that Congress did not require that

civil surgeons be appointed in conformity with Appointments Clause procedures. Id. at 511-12. Importantly, the Court also underscored that the surgeon

is “but an agent of the commissioner . . . to procure information needed to aid in the performance of [the

commissioner’s] own official duties.” Id. at 512 (emphasis added). Indeed, the Court noted that “[t]he surgeon is only to act when called on by the Commissioner

of Pensions in some special case, as when some pensioner or claimant of a pension presents himself for examination.” Id. Thus, despite the civil surgeons’ significant responsibilities in helping to determine who

could receive a pension, their status as agents of the

Commissioner meant they were not constitutional “Officers.” Id.; see United States v. Mouat, 124 U.S. 303,

307 (1888) (reaffirming Germaine).

Because “lesser functionaries” who act as agents

of, and subordinate to, Officers are not themselves constitutional Officers, this Court has long recognized

that non-Officers make up the vast bulk of the federal

workforce. In 1878, the Court posited that “ninetenths of the persons rendering service to the government undoubtedly” fell into this non-Officer category,

Germaine, 99 U.S. at 509, and the Court recently noted

that “[t]he applicable proportion has of course increased dramatically since [then],” Free Enter. Fund,

561 U.S. at 506 n.9.

This view that “lesser functionaries” who act “subordinate to officers of the United States” are non-Officers not only has a long vintage in this Court’s precedents, it is also reflected in practices dating back to the

nation’s birth, as the next Section discusses.

II. THROUGHOUT THE NATION’S HISTORY,

CONGRESS HAS GRANTED SIGNIFICANT

RESPONSIBILITIES TO NON-OFFICERS

SO LONG AS THEY ACTED AS AGENTS OF,

OR SUBORDINATE TO, OFFICERS.

As this Court has repeatedly reaffirmed, “‘[l]ong

settled and established practice is a consideration of

great weight in a proper interpretation of constitutional provisions’ regulating the relationship between

Congress and the President.” N.L.R.B. v. Noel Canning, 134 S. Ct. 2550, 2559 (2014) (quoting The Pocket

Veto Case, 279 U.S. 655, 689 (1929)); see McCulloch v.

Maryland, 17 U.S. 316, 401 (1819) (courts “ought to receive a considerable impression” from “the practice of

the government”).

Recognizing this, Petitioners place weight on examples in which Congress has required seemingly lowlevel federal employees to be appointed in conformity

with the Appointments Clause. See Pet’rs Br. 17-18.

But “the Appointments Clause does not prevent Congress from treating a position that is not, in the constitutional sense, an office under the United States as

nevertheless subject to statutory restrictions on offices

or officers.” Officers of the United States Within the

Meaning of the Appointments Clause, 31 Op. O.L.C. 73,

116 (2007); cf. Weiss v. United States, 510 U.S. 163, 182

(1994) (Souter, J., concurring) (Congress may “decline[] to adopt the less onerous appointment process

available for inferior officers” and instead require

them to be “appointed in the manner of principal officers”).3 For that reason, the positions for which Congress has required Article II appointment procedures

are less indicative of the Appointments Clause’s scope

than positions for which Congress has not required Article II appointment procedures.

It is therefore noteworthy that from the early days

of the Republic through the modern era, Congress has

assigned significant responsibilities to some federal

employees without requiring that they be appointed

via the Appointments Clause. In all of these areas, the

employees acted as agents of, or subordinate to, other

Officers and were therefore not considered to be “Officers of the United States” despite the significance of

their day-to-day responsibilities.

1. The First Congress created “deput[ies]” for numerous public officials and assigned these deputies

significant responsibilities as agents of their principals, yet did not require that they be appointed in the

manner required by the Appointments Clause. See

3 For example, although most of the more than 240,000 active

military officers are inferior Officers under the Appointments

Clause, they are appointed in the manner of principal officers because Congress concluded that such appointment was preferable

as a policy matter. Weiss, 510 U.S. at 182 (Souter, J., concurring).

Harmelin v. Michigan, 501 U.S. 957, 980 (1991) (opinion of Scalia, J.) (“actions of the First Congress” are

“persuasive evidence of what the Constitution

means”).

For example, the First Judiciary Act of 1789 created the position of “marshal” for each judicial district

and empowered the marshal “to appoint as there shall

be occasion, one or more deputies, who shall be removable from office by the judge of the district court, or the

circuit court sitting within the district, at the pleasure

of either.” An Act to Establish the Judicial Courts of

the United States, ch. 20, § 27, 1 Stat. 73, 87 (1789).

These deputies were, like marshals themselves,

“bound for the faithful performance” of the marshal’s

duties—namely, “to attend the district and circuit

courts when sitting therein,” “to execute throughout

the district, all lawful precepts directed to him,” and

“to command all necessary assistance in the execution

of his duty.” Id. Moreover, deputies—like marshals—

were required to take an oath of office that they would

“faithfully execute all lawful precepts directed to the

marshal of the district . . . under the authority of the

United States, and true returns make, and in all

things well and truly, and without malice or partiality,

perform the duties of the office of marshal (or marshal’s deputy, as the case may be).” Id. Finally, the

Act provided that “in case of the death of any marshal,

his deputy or deputies shall continue in office, unless

otherwise specially removed; and shall execute the

same in the name of the deceased, until another marshal shall be appointed and sworn.” Id. § 28, 1 Stat. at

87 (emphasis added).

As the statute says, then, the deputy to a U.S. marshal was given significant responsibility to carry out

all of the marshal’s statutory duties and even took over

the marshal’s role upon his death until a successor was

appointed. Moreover, the First Judiciary Act referred

to the “marshal’s deputy” as an “office” with “duties,”

required deputies to take an oath of office, and permitted a deputy marshal to be removed only by district

court judges. Id. § 27, 1 Stat. at 87. Despite the significance of the deputy marshals’ authority, however,

the statute provided that they be appointed by the

marshal himself, not the President, a Court of Law, or

the Head of a Department. See Steele v. United States,

267 U.S. 505, 508 (1925) (“The deputy marshal is not

in the constitutional sense an officer of the United

States” despite being “engaged in serving all sorts of

writs, and . . . called upon to exercise great responsibility and discretion in the service of some of them, in

dealing with the person and property of individuals

and in the preservation of their constitutional

rights.”).

Similarly, the First Congress created various customs officers known as collectors, naval officers, and

surveyors, and provided for these Officers to appoint

their own deputies who were not themselves considered to be Officers. See An Act to Regulate the Collection of the Duties Imposed by Law on the Tonnage of

Ships or Vessels, and on Goods, Wares and Merchandises Imported into the United States, ch. 5, § 1, 1

Stat. 29, 29-30 (1789). A 1790 statute provided “[t]hat

every collector, naval officer and surveyor, in cases of

occasional and necessary absence, or of sickness, and

not otherwise, may respectively exercise and perform

their several powers, functions and duties, by deputy

duly constituted under their hands and seals respectively, for whom in the execution of the trust they shall

respectively be answerable.” An Act to Provide More

Effectually for the Collection of the Duties Imposed by

Law on Goods, Wares and Merchandise Imported into

the United States, ch. 35, § 7, 1 Stat. 145, 155 (1790)

(emphasis added). Furthermore, the Act provided that

“in the case of the disability or death of a collector, the

duties and authorities vested in him shall devolve on

his deputy . . . for whose conduct the estate of such disabled or deceased collector shall be liable.” Id. § 8, 1

Stat. at 155.

Given that deputies were empowered to “exercise

and perform” the powers of collectors, naval officers,

and surveyors at certain times, it is notable that collectors, naval officers, and surveyors had significant

power and responsibilities. For instance, collectors

were, among other things, empowered to

receive the entry of all ships and vessels, and

of all the goods, wares and merchandise imported in such ships or vessels, together with

the original invoices thereof; to estimate the

duties payable thereon, and to endorse the

same on each entry; to receive all monies paid

for duties, and to take all bonds for securing

the payment of duties; [and] to grant all permits for the unlading and delivery of goods, to

employ proper persons as weighers, gaugers,

measurers and inspectors at the several ports

within his district.

Act to Regulate the Collection of the Duties, ch. 5, § 5,

1 Stat. at 36–37. Naval officers were empowered “to

receive copies of all manifests, to estimate and record

the duties on each entry made with the collector, and

to correct any error made therein, before a permit to

unlade or deliver shall be granted; [and] to countersign

all permits and clearances granted by the collector.”

Id. § 5, 1 Stat. at 37. And surveyors were empowered,

among other things, to “superintend and direct all inspectors, weighers, measurers and gaugers within his

district, and the employment of the boats which may

be provided for securing the collection of the revenue;

to go on board ships or vessels arriving within his district, or to put on board one or more inspectors, . . . and

to examine whether the goods imported are conformable to the entries thereof.” Id.4

Even though the deputies to these customs officers

were authorized to “exercise and perform [the principal’s] several powers, functions and duties” in the principal’s sickness, absence, disability, or death, An Act to

Provide More Effectually for the Collection of the Duties, ch. 35, § 7, 1 Stat. at 155, they were appointed by

their principals, not the President, a Court of Law, or

the Head of a Department.

These deputies could be appointed by their principals because, despite their significant responsibilities,

they were subordinate to, and acted as agents of, those

principals, and those principals were answerable for

their deputies’ conduct. Indeed, because at the Founding “[a]ctions were personal, against the individual;

damages were a normal remedy; and office-holding

carried no special immunity from suit,” Jerry L.

Mashaw, Recovering American Administrative Law:

Federalist Foundations, 1787-1801, 115 Yale L.J.

1256, 1334 (2006), these early statutes provided that

principals “had to assume personal liability for the

misdeeds of their deputies,” Jennifer J. Mascott, Who

4 Founding-era evidence suggests that deputies often carried

out these significant responsibilities for extended periods. For

example, a letter from President Washington explaining why he

appointed the deputy collector of the Port of Baltimore, Daniel

Delozier, to the role of surveyor for that district explained that

Delozier “acted as Deputy to the Collector—and from the ill

health of [the incumbent Collector] appears to have done a great

pa[r]t of the business of that department, from the time of its organization.” Letter from George Washington to Charles Carroll

(of Carrollton) (Aug. 25, 1793), https://founders.archives.gov/documents/Washington/05-13-02-0361.

Are “Officers of the United States”?, 70 Stan. L. Rev.

443, 519 (2018); see, e.g., An Act to Establish the Judicial Courts, ch. 20, § 28, 1 Stat. at 87-88 (providing that

“defaults or misfeasances” of deputy marshals “shall

be adjudged a breach of the condition of the bond

given, as before directed, by the marshal who appointed them”). That principals were liable for their

deputies’ actions reinforces that the First Congress

viewed deputies as mere agents of, and subordinate to,

their principals, not as Officers in their own right.

2. The same Act that created the collectors, naval

officers, and surveyors (and their deputies) also provided for the employment of weighers, gaugers, measurers, and inspectors. Although these individuals, like

deputies, had significant statutory responsibilities,

they were originally appointed by collectors, not by the

President, a Court of Law, or the Head of a Department.5

Collectors were authorized “to employ proper persons as weighers, gaugers, measurers and inspectors

at the several ports within his district,” and surveyors

were authorized to “superintend and direct” them. Act

to Regulate the Collection of the Duties, ch. 5, § 5, 1

Stat. at 36-37. Though they worked for collectors and

surveyors, these non-Officers had significant responsibilities. With regard to inspectors, the Act provided

that collectors, naval officers, and surveyors could “put

on board [a] ship or vessel one or more inspectors” who

(1) ensured that the ship had a permit for all merchandise it was transporting, (2) entered information about

the permits in a book, (3) seized suspicious goods after

a certain period of time, (4) “compare[d] the account

and entries he ha[d] made of the goods unladen from

5 Congress subsequently changed their method of appointment

to meet the requirements for inferior officers. See infra at 16.

such ship or vessel, with the manifest delivered to the

collector,” and (5) remained with the boat until any inspection was complete. Id. § 15, 1 Stat. at 40-41.

Similarly, the statute provided that every “person

specially appointed by” collectors, naval officers, and

surveyors “shall have full power and authority, to enter any ship or vessel” he believed to contain illicit

goods, to “search for, seize, and secure any such goods,”

and to get “a warrant to enter such house, store, or

other place (in the day time only) and there to search

for such goods, and if any shall be found, to seize and

secure the same for trial.” Id. § 24, 1 Stat. at 43. The

“person[s] specially appointed” to which the statute referred could only have been the weighers, gaugers,

measurers, and inspectors that the Act specifically authorized the collectors to hire and surveyors to direct.

Notably, the Fifth Congress changed the appointment procedure for weighers, gaugers, measurers, and

inspectors in 1799 to require “the approbation of the

principal officer of the treasury department.” An Act

to Regulate the Collection of Duties on Imports and

Tonnage, ch. 22, § 21, 1 Stat. 627, 642 (1799). No evidence from the time, however, suggests that Congress

viewed this change as constitutionally required.6

3. The view that government employees who had

significant duties but acted as agents of, or were subordinate to, Officers were not themselves constitutional “Officers” persisted well after the First Congress, as state supreme court decisions and congressional reports reflect.

6 Nearly a half-century later, Attorney General Hugh S. Legaré

opined that permanent inspectors must be appointed as inferior

officers, Appointment and Removal of Inspectors of Customs, 4

Op. Att’y Gen. 162, 163-64 (1843), but neither Congress nor the

Attorney General expressed such a view in 1799.

For instance, an oft-cited 1822 opinion by the

Maine Supreme Court concluded that an agent for the

preservation of timber on the public lands, appointed

by the governor, was not a civil Officer such that the

state’s Incompatibility Clause would prevent a sitting

senator or representative from being appointed to the

position. See Opinions of the Justices, 3 Greenl. (Me.)

481, 481 (1822); see also Officers of the United States,

31 Op. O.L.C. at 83-84 (listing many other courts that

“treated this early analysis as authoritative”). The

court held that an “office” “implies a delegation of a

portion of the sovereign power to, and possession of it

by the person filling the office.” Opinions of the Justices, 3 Greenl. at 482. This power is “a legal power,

which may be rightfully exercised, and in its effects it

will bind the rights of others, and be subject to revision

and correction only according to the standing laws of

the State.” Id. (emphasis added). Under this definition, the agent for the preservation of timber on public

lands was, according to the Court, not an Officer because he was “clothed with no powers, but those of superintending the public lands, and performing certain

acts in relation to them under the discretionary regulations of the governor.” Id. at 483 (emphasis added).

In other words, although the superintendent of the

public lands surely had significant responsibilities, he

was not an “Officer” because he was an “agent” of the

governor.

Similarly, a House Judiciary Committee report in

1899 concluded that “the member of a commission created by law to investigate and report, but having no

legislative, judicial, or executive powers, was not an officer within the meaning of the constitutional inhibition.” 1 Asher C. Hinds, Hinds’ Precedents of the House

of Representatives 604 (1907). The Committee rea-

soned that the “mere power to investigate some particular subject and report thereon, or to negotiate a

treaty of peace, or on some commercial subject, and report without power to make binding on the Government, does not constitute a person an officer.” Id. at

607-08. The commission members in question were

“mere agents appointed by direction of Congress for the

purpose of gathering information and making recommendations for its use if the Congress sees fit to avail

itself of the labors of the commission.” Id. at 608 (emphasis added). The Commissioners had “no power to

. . . bind the Government” because “[t]heir suggestions

and recommendations have no force; they may or may

not be adopted” by the Congress. Id. at 610. Moreover,

the Committee reasoned that the fact “[t]hat the Senate may feel that it ought to ratify or approve the recommendations of such commission can make no difference, [because] the fact remains that their acts are not

binding upon anyone or upon any departments of the

Government.” Id. at 611.

4. Consistent with this longstanding approach,

Congress has repeatedly over the last century permitted agencies to use ALJs or their equivalents—employees hired based on merit and not pursuant to the Appointments Clause—to help federal agencies develop

administrative records and to make initial findings

and decisions. Hearing examiners—the contemporary

equivalent of today’s ALJs—have existed since the

turn of the twentieth century. In one early example,

Congress permitted the Interstate Commerce Commission to “employ special agents or examiners, who

shall have authority under the order of the Commission to inspect and examine any and all accounts, records, and memoranda kept by such carriers.” An Act

to Amend an Act Entitled “An Act to Regulate Commerce,” ch. 3591, § 7, 34 Stat. 584, 594-95 (1906). The

statute did not require that hearing examiners be appointed in the manner prescribed by the Appointments

Clause. Id.

Even more apposite here, in 1946 Congress passed

the Administrative Procedure Act, which maintained

and updated the position of hearing examiner. At that

time, Congress recognized that “agencies [had] such a

volume of business, including cases in which a hearing

is required, that the agency heads, the members of

boards or commissions, can rarely preside over hearings in which evidence is required.” Ramspeck v. Fed.

Trial Exam’rs Conf., 345 U.S. 128, 130 (1953). Thus,

the APA provided that “[s]ubject to the civil-service

and other laws . . . , there shall be appointed by and for

each agency as many qualified and competent examiners as may be necessary for proceedings . . . , who shall

be assigned to cases in rotation so far as practicable.”

Pub. L. No. 79-404, § 11, 60 Stat. at 244.

Although the legislative history is ambiguous with

respect to how these hearing examiners were to be appointed and whether their appointment outside the

process prescribed by the Appointments Clause was

seen as raising constitutional concerns, 7 the final text

7 Compare Administrative Procedure in Government Agencies,

S. Doc. No. 77-8, at 47 (1941) (report of a committee appointed by

the Attorney General recommending that hearing examiners be

appointed by the Office of Federal Administrative Procedure,

which would investigate an examiner’s “judicial qualifications

and capacity” and have “full power to approve and appoint or disapprove and refuse to appoint persons nominated by an agency”

without discussing any constitutional concerns), with Administrative Procedure Act, Legislative History, S. Doc. No. 79-248, at

42 (1944-46) (Senate report noting that a proposal in which the

Office of Administrative Justice appoints hearing examiners may

raise constitutional difficulties because it “is a committee and not

of the enacted law did not require that they be appointed in conformity with the Appointments Clause.

Rather, the text required that they be “qualified and

competent.” Id. Moreover, they were “given independence and tenure within the existing Civil Service system,” and Congress “vest[ed] control of their compensation, promotion and tenure in the Civil Service Commission to a much greater extent than in the case of

other federal employees.” Ramspeck, 345 U.S. at 132;

see id. at 133 (describing hearing examiners as “classified Civil Service employees”).8 Early regulations implementing the Act provided that “the regulations for

appointment to the competitive system . . . shall apply

to appointments to hearing examiner positions.” 5

C.F.R. § 34.4 (1949); see, e.g., id. § 2.109 (“Upon receipt

of a request for certification of eligibles, there shall be

certified . . . a sufficient number of names to permit the

appointing officer to consider three eligibles in connection with each vacancy.”).

In 1962, Congress permitted the SEC to use these

hearing examiners—who were hired competitively and

not pursuant to the Appointments Clause—to assist in

completing the Commission’s many responsibilities. A

proposal submitted by the President to Congress recommended that Congress permit the Commission to

delegate some of its responsibilities to employees “for

greater flexibility in the handling of the business before the Commission, permitting its disposition at different levels so as better to promote its efficient dispatch.” 1961 U.S.C.C.A.N. 1351, 1351. Thus, in An

a court and hence may not be within the constitutional authorization for appointing powers”).

8 In 1978, the Commission was replaced by the Office of Per-

sonnel Management, the Merit Systems Protection Board, and

the Federal Labor Relations Authority. See Civil Service Reform

Act of 1978, Pub. L. No. 95-454, § 201, 92 Stat. 1111.

Act to Authorize the Securities and Exchange Commission to Delegate Certain Functions, Pub. L. No. 87592, 76 Stat. 394, 394-95 (1962), Congress provided

that “the Securities and Exchange Commission, . . .

shall have the authority to delegate, by published order or rule, any of its functions to a division of the Commission, an individual Commissioner, a hearing examiner, or an employee or employee board.” Congress,

however, ensured that the Commission retained the

“discretionary right to review the action of any such

division of the Commission, individual Commissioner,

hearing examiner, employee, or employee board, upon

its own initiative or upon petition of a party to or intervenor in such action.” Id.

In 1978, the term “administrative law judge” was

substituted for “hearing examiner.” See An Act to

Amend Title 5, United States Code, Pub. L. No. 95-251,

§ 2, 92 Stat. 183 (1978). Later that year, Congress specifically codified the requirement that ALJs be required to undergo “competitive examinations” by the

Office of Personnel Management before joining the

“competitive service.” Pub. L. No. 95-454, § 201, 92

Stat. at 1120; see 5 C.F.R. § 930.201(d)-(e). Otherwise,

the statutory scheme remains the same today.

In short, both the President and Congress agreed

that hearing officers and later ALJs should be assigned significant responsibilities to assist the Commission in carrying out its duties. Notwithstanding

that, ALJs have never been statutorily required to be

appointed by the President, a Court of Law, or the

Head of a Department.

***

This history demonstrates that, although Congress

must wield its power to shape the government in a

manner consistent with the Appointments Clause’s requirements, those requirements allow Congress great

flexibility in determining how federal employees are

hired. From the deputies and customs employees in

the First Congress, to hearing officers in the last century, there have been many government employees

who exercised significant responsibilities, but were not

required to be appointed as constitutional “Officers.”

Importantly, each of these non-Officers acted as the

agent of, or subordinate to, an Officer, and it was the

Officer—not the subordinate agent—who was accountable for the agent’s actions. As the next section demonstrates, ALJs at the SEC are no different.

III. SEC ADMINISTRATIVE LAW JUDGES ARE

NOT CONSTITUTIONAL OFFICERS AND

THUS NEED NOT BE APPOINTED IN CONFORMITY WITH THE APPOINTMENTS

CLAUSE.

1. ALJs act as agents of, and are subordinate to,

the Commissioners of the Securities and Exchange

Commission, and their initial decisions never become

binding without the Commission’s express order. They

are therefore not constitutional “Officers of the United

States,” and need not be appointed by the President, a

Court of Law, or the Head of a Department.

As noted earlier, this Court has held that “any appointee exercising significant authority pursuant to

the laws of the United States is an ‘Officer of the

United States.’” Buckley, 424 U.S. at 126. In delineating the boundaries of this definition, the Court has

reasoned that non-Officers “are lesser functionaries

subordinate to officers of the United States” and “subject to the control or direction of any other executive,

judicial, or legislative authority.” Id. at 126 n.162; see

also Tucker v. Comm’r, 676 F.3d 1129, 1134 (D.C. Cir.

2012) (employees are not “Officers” where they are

“subject to consultation requirements, to guidelines,

and to supervision”). Other authorities have similarly

reasoned that “Officers of the United States” are only

those who have “power lawfully conferred by the government to bind third parties, or the government itself, for the public benefit,” Officers of the United

States, 31 Op. O.L.C. at 87; see 1 Hinds’ Precedents at

610 (non-Officers may not “bind the Government”).

ALJs are lesser functionaries “subject to the control” of the SEC and do not have the power in their own

right to bind third parties or the government. Though

ALJs conduct hearings, their “initial decisions” are not

final, let alone binding. See 17 C.F.R. § 201.360(a)(1)

& (d). Once the ALJ issues an initial decision, “a party

or an aggrieved person [may] timely file[] a petition for

review or a motion to correct a manifest error of fact in

the initial decision,” id. § 201.360(d)(1), which the

Commission always grants, see App. 89a. The Commission may also “on its own initiative order[] review

of a decision.” 17 C.F.R. § 201.360(d)(1). Even when

an aggrieved party or person fails to file a timely petition for review and the Commission does not order a

review on its own initiative, the Commission must “order that the decision has become final as to that party,”

and “[t]he decision becomes final” only “upon issuance

of the order” by the Commission. Id. § 201.360(d)(2).

Put differently, “ALJs’ initial decisions . . . do not become the final and effective decision of the agency

without affirmative action on [the Commission’s]

part—specifically, [its] issuance of a finality order.”

App. 90a n.109; see id. at 90a (“no initial decision becomes final simply ‘on the lapse of time’ by operation

of law”).9

Moreover, the Commission reviews the initial decisions of ALJs de novo. Id. at 91a. The Commission

“may affirm, reverse, modify, set aside or remand for

further proceedings, in whole or in part, an initial decision by a hearing officer and may make any findings

or conclusions that in its judgment are proper and on

the basis of the record.” 17 C.F.R. § 201.411(a). It also

may, “[u]pon its own motion or the motion of a party,

. . . allow the submission of additional evidence.” Id.

§ 201.452. In short, “although ALJs may play a significant role in helping to shape the administrative record initially, it is the Commission that ultimately controls the record for review and decides what is in the

record.” App. 91a.

Finally, “[b]ecause the Commission is not bound in

any way by its ALJ’s decisions, . . . the blame for its

9 Petitioners and the United States argue that “[i]n about 90%

of cases . . . the ALJ’s initial decision ‘become[s] final without plenary agency review,’” Pet’rs Br. 32 (quoting Bandimere, 844 F.3d

at 1180 n.25); see U.S. Br. 22, but a recent study by a current SEC

Commissioner examined all SEC ALJ decisions from 2014 to 2015

and found that “[f]ully 80 percent of the ALJ decisions during that

period were default decisions” in which the respondent did not

appear. Robert J. Jackson, Jr., Fact and Fiction: The SEC’s Oversight of Administrative Law Judges, The CLS Blue (Mar. 9, 2018),

http://clsbluesky.law.columbia.edu/2018/03/09/fact-and-fictionthe-secs-oversight-of-administrative-law-judges/. “In the rest of

the cases, the respondent appeared,” but “chose not to ask the

commission to review the case.” Id. Indeed, so far as that Commissioner is aware, “the only proceeding . . . during this time period where review of an ALJ’s decision was timely sought and the

commission refused review was one in which the SEC’s own enforcement division made the request.” Id. (emphasis omitted).

unpopular decisions will fall squarely on the commissioners and, in turn, the president who appointed

them.” Bandimere, 844 F.3d at 1198 (McKay, J., dissenting). The relevant statute permits “[a]ny person

aggrieved by an order of the Commission [to] obtain a

review of such order in the court[s] of appeals of the

United States.” 15 U.S.C. § 77i(a). In other words, in

the same way that marshals and customs officers created by the First Congress were liable for their deputies’ misdeeds, only orders of the Commission—the

only orders that have any binding effect—may form

the basis of a challenge in an Article III court.

As this Court has suggested, then, ALJs at the

SEC “possess purely recommendatory powers.” Free

Enter. Fund, 561 U.S. at 507 n.10; cf. Attorney General’s Manual at 83 (agencies are “in no way bound by

the decision” of ALJs and “retain[] complete freedom

of decision—as though [they] had heard the evidence

[themselves]”). For that reason, they are quintessentially “lesser functionaries subordinate to officers of

the United States,” Buckley, 424 U.S. at 126 n.162—

namely, the Commissioners of the SEC. Moreover, because an initial ALJ decision does not become final

without the de novo review of and order by the Commission, ALJs do not themselves have the power “to

bind third parties, or the government itself, for the

public benefit,” Officers of the United States, 31 Op.

O.L.C. at 87.

Petitioners’ theory rests heavily on this Court’s decision in Freytag, but that case is not to the contrary.

There, the Court held that special trial judges of the

Tax Court were “inferior Officers” in part because of

“the significance of the duties and discretion that special trial judges possess.” 501 U.S. at 881. But part of

the reason special trial judges enjoy significant discretion is because the Tax Court is required to defer to a

special trial judge’s fact and credibility findings unless

they are “clearly erroneous.” Landry v. Fed. Deposit

Ins. Corp., 204 F.3d 1125, 1133 (D.C. Cir. 2000); see

Tax Ct. R. 183(d) (“the findings of fact recommended

by the Special Trial Judge shall be presumed to be correct” (emphasis added)). At the SEC, by contrast, the

Commission reviews all of an ALJ’s factual findings de

novo. See supra at 24. Moreover, it was important to

the Freytag Court that in the case of declaratory judgment proceedings and limited-amount tax cases, special trial judges “render[ed] the decisions of the Tax

Court” with no subsequent order or sign off from a

higher official. Freytag, 501 U.S. at 882. Thus, the

special trial judges exercised precisely the type of “independent authority,” id., that ALJs at the SEC do not

have.

Notably, the facts of Freytag contrast starkly with

the facts here. In Freytag, although the special trial

judge presided over a two-year trial, including 14

weeks of complex financial testimony and 3,000 exhibits, the special trial judge’s decision was filed as the

Tax Court’s decision on the same day the Tax Court

received the trial judge’s report, suggesting essentially

no review or oversight of special trial judges whatsoever. See Bandimere, 844 F.3d at 1195 (McKay, J., dissenting). By contrast, here, the ALJ issued an initial

decision, the Commission remanded the case for further findings of fact, the ALJ issued a revised initial

decision, the Commission granted review, and on an

independent review of the record and in a detailed

opinion the Commission found that Petitioners committed anti-fraud violations. App. 8a-9a.

Petitioners also attempt to analogize ALJs to court

commissioners, the predecessors of magistrate judges,

whom the Court held were inferior Officers in Go-Bart

Importing Company v. United States, 282 U.S. 344,

352 (1931). See Pet’rs Br. 20. But court commissioners performed a variety of significant duties that could

bind third parties. They were empowered under federal statute, among other things, “to arrest and imprison, or bail, for trial,” “to issue warrants for and examine persons charged with being fugitives from justice,” “to hold to security of the peace and for good behavior,” “to issue search warrants,” “to take bail and

affidavits in civil causes,” “to discharge poor convicts

imprisoned for non-payment of fines,” “to institute

prosecutions under laws relating to the elective franchise and civil rights and to appoint persons to execute

warrants thereunder,” and “to enforce arbitration

awards of foreign consuls in disputes between captains

and crews of foreign vessels.” Go-Bart, 282 U.S. at 353

n.2 (citations omitted). ALJs do not come close to having this panoply of significant powers; to the contrary,

as previously explained, ALJ initial decisions have no

power to bind third parties in their own right.

In short, although ALJs certainly have been

granted important responsibilities by the Commission

to aid the Commission’s work, they do not “exercis[e]

significant authority pursuant to the laws of the

United States” for purposes of Article II. Thus, they

may be hired through a merit-based system, rather

than in the manner prescribed by the Appointments

Clause.

2. Were this Court to conclude otherwise, the disruption to the operations of the federal government

could be substantial. This Court has repeatedly insisted that the vast majority of civil servants in the

federal government do not qualify as constitutional

“Officers.” See supra at 9. That is because, though

many civil servants have significant responsibilities

and exercise substantial discretion on a day-to-day ba-

sis, they are agents of, or otherwise subordinate to, Officers and therefore do not “exercis[e] significant authority” for Appointments Clause purposes. “Our government in fact depends on such delegation of responsibility, and it does not offend the Appointments

Clause so long as the duly appointed official has final

authority over the implementation of the governmental action.” Andrade, 824 F.2d at 1257.

Petitioners and their amici, however, would have

this Court adopt a much broader test, suggesting that

any civil servant who has “substantive and procedural

powers that require the exercise of broad discretion” is

an “Officer” and must be appointed in conformity with

the Appointments Clause. Pet’rs Br. 21; see Br. of

Amici Curiae Scholars of Corpus Linguistics 19 (the

term “Officer of the United States” “applie[s] broadly

to all government employees—‘civil and military’—exercising any non-trivial federal authority”); Br. of Professor Jennifer L. Mascott as Amicus Curiae in Supp.

of Pet’rs 2 (“Officer” encompasses “every federal civil

official with ongoing responsibility to carry out a statutory duty”). These definitions, which focus on the

day-to-day discretion of government workers rather

than whether or not they independently bind third

parties or act as agents of, or subordinate to, other Officers, have the potential to sweep in all sorts of civil

servants.10

10 Notably, Petitioners’ theory would invalidate appointments

allowed by the First Congress. For instance, under Petitioners’

theory, deputy marshals would have been required to be appointed as Officers because they carried out the same significant

responsibilities that marshals did. Similarly, inspectors were delegated significant duties by the First Congress, and under Petitioners’ theory, those job duties alone would make them constitutional “Officers.”

For one thing, though only five ALJs work at the

SEC, there are thousands of other ALJs working

throughout the federal government. See Free Enter.

Fund, 561 U.S. at 542 (Breyer, J., dissenting); see also

Administrative Law Judges, Office of Pers. Mgmt.,

https://www.opm.gov/services-for-agencies/administrative-law-judges/#url=ALJs-by-Agency (last visited

Mar. 28, 2018). The Social Security Administration

alone employs 1,655 ALJs, while dozens more ALJs assist agencies as varied as the Federal Mine Safety and

Health Review Commission, the Department of Labor,

and the Office of Medicare Hearings and Appeals at

the Department of Health and Human Services. Id.

Many of these ALJs have responsibilities similar to

those of SEC ALJs. See Bandimere, 844 F.3d at 1199

(McKay, J., dissenting). In addition, more than 3,000

administrative judges, who lack the independence of

ALJs but perform similar functions, also populate the

Executive Branch.

See generally Kent Barnett,

Against Administrative Judges, 49 U.C. Davis L. Rev.

1643, 1652-62 (2016).

If Petitioners’ theory is correct, “every losing party

before an ALJ [might] now have grounds to appeal on

the basis that the decision entered against him is unconstitutional[.]” Free Enter. Fund, 561 U.S. at 543

(Breyer, J., dissenting). Indeed, “Appointment Clause

problems may exist even in . . . agencies where the

agency head does select the ALJs, given [the Office of

Personnel Management’s] role in limiting the pool of

ALJ candidates and the fact that some agency heads

may not qualify as department heads for constitutional purposes because their agencies are nested

within bigger administrative entities.” Gillian E.

Metzger, Foreword: 1930s Redux: The Administrative

State Under Siege, 131 Harv. L. Rev. 1, 20 n.99 (2017).

Though there may be ways to distinguish among different types of ALJs or other administrative judges, a

ruling for Petitioners would at least open the door to

constitutional challenges from nearly everyone who is

regulated by an administrative agency, swamping

courts and destabilizing the government’s ability to

function.

Moreover, Petitioners’ definition of “Officer” would

seemingly include other federal employees who have

never been considered Officers. For example, there are

3,684 career employees in the Senior Executive Service who have significant responsibilities, but are subordinate to Officers. See S. Comm. on Homeland Sec.

and Gov’t Affairs, 114th. Cong., Policy and Supporting

Positions

216

(Comm.

2016),

http://www.fdsys.gov; see id. at 217-18 (describing the

merit-based hiring of these career employees). If these

career positions were considered Offices under the Appointments Clause, the individuals filling those positions would have to be appointed by Presidential nomination and Senate confirmation, until and unless

Congress said otherwise. This would be a revolutionary change in how the government functions.

On top of this, Petitioners’ theory threatens to

eliminate the dual layer of removal protection afforded

to ALJs and other civil servants who have significant

responsibilities because this Court has held that “dual

for-cause limitations on the removal” of some inferior

Officers violates the constitutional separation of powers. Free Enter. Fund, 561 U.S. at 492. Under federal

law, ALJs may be removed by the Merit Systems Protection Board only for good cause, see 5 U.S.C.

§ 7521(a), (b), and members of the Merit Systems Protection Board may be removed “only for inefficiency,

neglect of duty, or malfeasance in office,” id. § 1202(d).

This, of course, is a common way to structure how civil

servants in independent agencies can be removed. See

Free Enter. Fund, 561 U.S. at 540-52 (Breyer, J., dissenting) (listing examples). But Petitioners’ theory

throws into doubt the constitutionality of these longstanding removal provisions and contravenes this

Court’s warning not to “cast doubt on the use of what

is colloquially known as the civil service system within

independent agencies,” id. at 507 (majority opinion).11

In short, on top of rowing against centuries of practice in which Congress has chosen how government

employees who are agents of, or subordinate to, Officers should be hired, Petitioners’ theory threatens to

destabilize the modern federal government and throw

into doubt the constitutionality of how thousands of

civil servants who work in every corner of the federal

government are hired. Given that dramatically expanding the number of appointments that must be

made in conformity with the Appointments Clause will

significantly undermine the federal government’s ability to function, efforts to minimize that disruption will

11 The United States argues that this Court should decide this

removal question now, even though the Court was specifically

asked to grant certiorari on it and declined to do so. Contrary to

the views of the United States, that question is not “fairly encompassed” in the question this Court did grant, U.S. Br. 39 n.7, because dual for-cause limitations on removal may be permissible

for some inferior Officers, see Free Enter. Fund, 561 U.S. at 507

n.10. Put differently, whether ALJs are “Officers” is a separate

question from whether their removal protections “interfere impermissibly with [the President’s] constitutional obligation to ensure the faithful execution of the laws,” Morrison v. Olson, 487

U.S. 654, 692-93 (1988), and this Court should not decide that

question without full briefing on the meaning of “good cause,”

whether “good cause” limitations on SEC ALJs “interfere impermissibly with [the President’s]” Take Care obligations, and other