Are administrative law judges (ALJ) constitutionally allowed to issue final decisions in adjudicative and administrative hearings? This is a question the Supreme Court is taking up during its current session.
ALJs have been presiding over administrative hearings at federal agencies at least since the establishment of the Administrative Procedure Act of 1946. As of 2016, there are more than 1,500 ALJs working at various federal agencies, with the vast majority of them working at the Social Security Administration.
ALJs are attorneys who are appointed by federal agencies to oversee administrative hearings. They must complete a four-hour written exam and an oral exam before a panel consisting of American Bar Association and Office of Personnel Management (OPM) representatives, as well as a current federal ADJ. Though ALJs are hired by agencies, they act impartially by weighing the evidence presented by Agencies and those members of the public appealing Agency decisions.
What is being called into question before the Supreme Court is whether the appointment of ALJs to preside over administrative hearings is proper under the Appointments clause of the US Constitution. U.S. Court of Appeals rulings in two different circuits regarding Securities and Exchange Commission (SEC) ALJs contradict one another on this issue, and it is now up to the Supreme Court to decide which Court is constitutionally correct.
In August 2016, the District of Columbia Circuit ruled that the SEC could use ALJs to preside over its administrative hearings because ALJs were instructed only to offer initial decisions, which would then be sent to the full SEC board to determine if the full SEC would follow or reject the decision. Four months later, the Tenth Circuit ruled that SEC ALJs could not preside over these matters because of how they were appointed, in direct contravention of the DC Circuit opinion.
The debate centers around the Appointment Clause under Article II, section 2 of the Constitution. That requires that persons regarded as “Officers of the United States” – such as federal judges or federal agency leaders such as Cabinet heads – must be appointed by the President and vetted and approved by the Senate. Since ALJs are only required to pass a written and an oral exam before being appointed by a federal agency head, the Tenth Circuit argues that they are “inferior officers” as defined by the Constitution and are thus unable to make decisions that could potentially shape agency policies. However, the D.C. Circuit suggests that ADJs can preside over SEC administrative hearings because their decisions are not final unless the full SEC board approves them.
How the Supreme Court rules in this matter could dictate the future of ALJs at many federal agencies, including how they are appointed and on what cases they can legally rule. Given the number of ALJs at federal agencies, this decision could result in an overhaul of the ALJ system that would take years to complete and create a backlog of administrative hearings for years to come.