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Trump Shifts ALJ Appointment and Removal Power to Agency Heads

President Trump on Tuesday exempted administrative law judges (ALJ) from the federal government's competitive service selection procedures, shifting appointment responsibility for the positions instead to agency heads.

The decision was made based on a recent Supreme Court decision focused on Securities and Exchange Commission (SEC) ALJs, but has apparent implications for FERC and other regulatory agencies that depend on ALJs in their decision-making processes.

ALJs have been appointed through competitive examination and competitive service selection procedures. But the role of ALJs "has increased over time and ALJ decisions have, with increasing frequency, become the final word of the agencies they serve," Trump said in an executive order (EO) issued Tuesday. Based on that expanding responsibility and the recent Supreme Court decision in Lucia v. Securities and Exchange Commission (No. 17-130), "at least some -- and perhaps all -- ALJs are 'Officers of the United States,' and thus subject to the Constitution's Appointments Clause, which governs who may appoint such officials," according to the EO.

In Lucia v. Securities and Exchange Commission, the Supreme Court of the United States last month found that SEC ALJs are "Officers of the United States," and not "simply employees of the federal government," because they "hold a continuing office established by law," and exercise "significant discretion" when carrying out important functions. "The Appointments Clause prescribes the exclusive means of appointing 'Officers.' Only the President, a court of law, or a head of department can do so," according to the Court's opinion.

Those same appointers would also have the power to remove the ALJs they appoint "for cause," without the protections inherent via the competitive service selection process.

In a dissenting opinion, Justice Sonia Sotomayor, joined by Justice Ruth Bader Ginsburg, argued that ALJs are not officers for purposes of the Appointments Clause, because they provide advice and recommendations, but do not "make final, binding decisions on behalf of the government."

The outcome of the case raises questions about the method of appointing ALJs, "including whether competitive examination and competitive service selection procedures are compatible with the discretion an agency head must possess under the Appointments Clause in selecting ALJs," according to Trump's EO. "Regardless of whether those procedures would violate the Appointments Clause as applied to certain ALJs, there are sound policy reasons to take steps to eliminate doubt regarding the constitutionality of the method of appointing officials who discharge such significant duties and exercise such significant discretion...

"I find that conditions of good administration make necessary an exception to the competitive hiring rules and examinations for the position of ALJ. These conditions include the need to provide agency heads with additional flexibility to assess prospective appointees without the limitations imposed by competitive examination and competitive service selection procedures."

ALJs at the Federal Energy Regulatory Commission make recommended decisions which must be voted on and may be changed by the commissioners.

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