August 25, 2018 Articles

Lucia v. SEC—ALJs Are “Officers” of the United States Who Must Be Appointed under the Appointments Clause

One implication is that hundreds of new hearings may need to be held, and there are others

Robert H. Cox

In a 6–3 ruling, the Supreme Court held that the Securities and Exchange Commission’s (SEC’s) five administrative law judges (ALJs) are “Officers of the United States,” subject to the Appointments Clause of Article II of the U.S. Constitution. Lucia v. SEC, 138 S. Ct. 2044 (2018). The opinion may have wider application beyond the SEC, potentially invalidating the appointments of ALJs at other federal agencies, such as the Social Security Administration or the Federal Energy Regulatory Commission. The Court stated that its holding in Freytag v. Commissioner, 501 U.S. 868 (1991), “says everything necessary to decide this case.” Writing for the majority, Justice Kagan found that SEC ALJs, like the special trial judges in Freytag, hold a continuing office established by law and exercise significant discretion in carrying out important functions, such as taking testimony, conducting trials, and ruling on disputes that could become final if not reviewed by the SEC commissioners. Therefore, ALJs are officers subject to the Appointments Clause who must be constitutionally appointed by the president, courts, or heads of departments, such as the SEC commissioners. Because the ALJ was not constitutionally appointed, he was not authorized to decide the case and Lucia’s case must be retried before a properly appointed ALJ. 

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