26 Journal of Regulatory Compliance Issue II
power structures demand it. 35
I. NECESSARY APPOINTMENT BY EXECUTIVE BRANCH ACTORS
This part of the essay briefly will explain why courts should conclude that
the SEC’s ALJs are Article II “officers.” It then will contend that if courts
so conclude, the executive branch actors listed in Article II—not courts of
law36—should appoint the ALJs.
A. Administrative Law Judges Are “Officers of the United States.”
The Supreme Court has held that government officials with “significant
authority” are “Officers of the United States” subject to the Appointments
Clause. 37 According to the Court, several factors indicating “significant
authority” include whether the relevant position, its duties, and salary, are
created and specified by statute and thus, “‘established by Law’”; whether
the duties are important; and whether the official exercises discretion in
carrying out those duties. 38
Both circuit courts recently ruling on the “officer” status of ALJs seem to
agree that the SEC’s ALJs have duties “established by Law” that involve
some measure of discretion and importance. 39 The core disagreement arises
from the D.C. Circuit’s view that the Supreme Court’s opinion in Freytag v.
Commissioner added the power to issue final decisions to the list of elements
required for Article II “officer” status. 40 Because the original D.C. Circuit
panel considering the Lucia case determined that the SEC ALJs lack final
decision-making power, the panel concluded they were employees. 41 The
Tenth Circuit disagreed, finding that the Supreme Court in Freytag did not
require final decision-making authority for “officer” status42 and the SEC
ALJs thus fall within the scope of Article II. 43
The D.C. Circuit precedent applying Freytag is mistaken based on a fairly
that the Laws be faithfully executed . . . .”).
35. See generally Lawson, Rise and Rise, supra note 19.
36. See infra note 66 (Justice Scalia interpreting “Courts of Law” to mean just Article III
courts—not Article I courts or any other kind of adjudicative tribunal).
37. Buckley, 424 U.S. at 125–26.
38. Freytag v. Comm’r, 501 U.S. 868, 881–82 (1991).
39. Bandimere, 844 F.3d at 1179–80; Raymond J. Lucia Cos., 832 F.3d at 284–85.
40. See Raymond J. Lucia Cos., 832 F.3d at 284–85 (indicating its decision hinged on the
determination that the ALJs do not issue final decisions—a required element for “officer”
status under precedential D.C. Circuit decisions interpreting Freytag); Landry v. F.D. I.C., 204
F.3d 1125, 1134 (2000).
41. See Raymond J. Lucia Cos., 832 F.3d at 285–87.