Jerome Nelson

Article Title

Administrative Law Judges' Removal "Only For Cause": Is That Administrative Procedure Act Now Unconstitutional?





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Under the Administrative Procedure Act (APA), administrative law judges (ALJs) are removable by the employing agency “only for good cause established and determined by the Merit Systems Protection Board.” The constitutionality of that sixty-four-year-old protection may now be questionable under the recent Supreme Court decision in Free Enterprise Fund v. Public Co. Accounting Oversight Board.

The Sarbanes–Oxley Act (the Act) created the Public Company Accounting Oversight Board (PCAOB or Board) with extensive regulatory powers over the accounting industry. Board members are appointed by the Securities and Exchange Commission (SEC) and can be removed only “for good cause” by SEC members, who themselves can be removed by the President only “for cause.” In an opinion by Chief Justice Roberts, the Court (by a 5–4 vote) held that this double “for cause” protection created an unconstitutional legislative intrusion on the President’s power to remove officers—a violation of the constitutional separation of powers principle. To cure this defect, the Court excised the Board members’ “for cause” protection and declared that they would now be removable by the Commission at will.

Justice Breyer’s dissent argued that the two “for cause” layers passed muster under a “functional” approach to separation of powers. He also reasoned that the job security and decisions of many high-ranking federal employees with double for cause protection—including all ALJs—were left “constitutionally at risk.” These nearly 1600 judges generally hear and decide a variety of cases which Congress thought significant enough to warrant formal hearings, and Justice Breyer questioned whether “every losing party before an ALJ now ha[s] grounds to appeal on the basis that the decision entered against him is unconstitutional?”

This Recent Development argues that ALJs are fundamentally different from PCAOB members and should not be covered by the Free Enterprise rationale. Eliminating the adjudicatory independence conferred by the APA’s good cause provision would undermine the adjudicatory process by subjecting ALJs to agency pressure and possible retaliatory agency action for decisions perceived as unfavorable.

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