Lucia v. Securities and Exchange Commission

August 25, 2017 • Legal Briefs

Accountability to the people is a cornerstone of our republic. The Constitution provides for the creation of certain offices that may be filled by appointment, but the law has been clear: the line between appointed officers and the electorate may not become too attenuated or else accountability will be lost.

The line between certain administrative judges and the people has reached well past this point. Administrative law judges (ALJs) are individuals who serve as adjudicators presiding over hearings within federal agencies. In most cases, they wear long black robes just like judges, and preside over a hearing process that, to a layperson, would appear to be very similar to a trial. In some agencies, they determine what benefits the government should give to certain person. But in others they determine the outcome of actions the government has taken against individuals. They hear witness testimony, determine witness credibility (i.e., whether a witness is lying), decide what evidence can be presented, and ultimately rule on the case and decide the punishment.

And yet these ALJs are not selected either through presidential appointment, as federal judges are, or through election, as many state judges are. They are not even considered at present to be “officers” under the appointments clause of the Constitution. Instead, they are deemed mere employees and are hired through a complex process involving both the federal Office of Personnel Management and the heads of the agencies in which they serve. 

It is ludicrous that someone vested with so much power is deemed a mere employee and not an officer.

Today, Cato filed a brief urging the Supreme Court to accept the case of Lucia v. SEC, and to find that the ALJs who preside over cases at the Securities and Exchange Commission are officers. There are broader questions as to whether ALJs should be used in enforcement actions at all. But to the extent that they are, they should at least adhere to the basic principles of accountability provided by the appointments clause.

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About the Authors
Ilya Shapiro

Director, Robert A. Levy Center for Constitutional Studies, Cato Institute