“LIBERTY REQUIRES ACCOUNTABILITY”: THE APPOINTMENTS CLAUSE, LUCIA V. SEC, AND THE NEXT CONSTITUTIONAL CONTROVERSY

“Liberty Requires Accountability”: The Appointments Clause,

Lucia v. SEC, and the Next Constitutional Controversy

Michael A. Sabino, Esq.* 

ABSTRACT

“Liberty requires accountability” is the essential precept which animates the Appointments Clause of Article II. This constitutional safeguard assures that those who exercise the sovereign power of the United States remain accountable both to the Chief Executive who appointed them and to the People who elected that President. The proviso was most recently tested in Lucia v. SEC, and, most assuredly, shall be in controversy again. After first expositing the high Court’s extensive Appointments Clause jurisprudence presaging Lucia, this Article thoroughly explores this newest Article II landmark, before concluding with commentary upon future Appointments Clause challenges expected to soon arrive before the Supreme Court.

* Associate, Crowell & Moring LLP. The opinions expressed by the author herein are solely his own and should not be attributed to his firm or clients. The author dedicates this Article to his beloved spouse, Katlyn, and his children, William and Charlotte.

TABLE OF CONTENTS

INTRODUCTION……………………………………………. 175

1. GAINING PERSPECTIVE: SECURITIES LAW, THE SEC, AND ITS ALJS 176
2. THE APPOINTMENTS CLAUSE: TEXTUAL FUNDAMENTALS AND SUPREME COURT LANDMARKS 181
   1. Free Enterprise Fund………………………………… 184
   2. Freytag…………………………………………….. 187
   3. Germaine……………………………………………. 190

• ACT ONE: THE TRIAL COURTS…………………………. 192

1. ACT TWO: THE CIRCUIT COURTS AVOIDING THE APPOINTMENTS CLAUSE QUESTION 198
2. ACT THREE: TWO CIRCUITS DO BATTLE OVER THE APPOINTMENTS CLAUSE 202
   1. Lucia Companies I and II……………………………. 202
   2. Bandimere……………………………………………. 204
   3. Petitioning for Supreme Court Review………………… 208
3. ACT FOUR: THE SUPREME COURT DECIDES LUCIA…………… 212

• ANALYSIS AND COMMENTARY……………………………. 226
  1. Lucia and Its Appointments Clause Teachings………….. 227
  2. Avoiding the Doctrine of Constitutional Avoidance……. 235
  3. Lucia as the Template for Challenging ALJs…………… 237
  4. Lucia’s Unanswered Question and the Next Constitutional Crisis for the Appointments Clause 241
  5. Liberty, Accountability, and Lucia………………….. 246

CONCLUSION……………………………………………… 250

INTRODUCTION

For over eight decades now, the Securities and Exchange Commission (SEC or “the Commission”) has been the primary watchdog over Wall Street.1 Since its inception in 1934,2 the SEC has been tasked with regulating the securities industry in its varied and sundry forms. The Commission’s oversight ranges broadly from superintending the issuance of securities,3 to policing the marketplace for securities fraud.4 We are therefore accustomed to witnessing the agency exert its regulatory powers over corporations, broker-dealers, and other industry participants.

What is rare—indeed, almost novel—is the SEC occupying the eye of a constitutional storm. One does not normally associate the Commission with a controversy implicating the precise meaning of Article II of the Constitution, and its ramifications for the wielding of presidential authority.

Yet that is exactly the scenario which brought the SEC before the United States Supreme Court in Raymond J. Lucia, et al. v. SEC.5 In a challenge to the lawful authority of the in-house jurists the Commission employs to adjudicate alleged violations of the federal securities laws, the very power of the Chief Executive to appoint, and remove, Executive Branch officials was put to the test.6

We write this Article, not merely to exposit the immediacy of the Court’s newest landmark decision with respect to securities law enforcement, but with even greater awareness as to how this decision, conceived in a securities industry dispute, holds grave and long-lasting ramifications for constitutional law. For Lucia is far more than a high Court precedent regarding the federal securities laws; it is destined to enter the pantheon of constitutional landmark decisions which determine the very meaning of the Constitution, particularly with respect to assuring that the Executive Branch remains accountable to the People. Keeping that overriding significance in mind, we proceed to the task at hand.

To that end, this Article shall first set forth the essentials of the Commission’s enforcement power, and the adjudicative structure empowering its administrative law judges (“ALJs”). It is imperative that we follow by setting forth the constitutional landmarks that regulate the manner in which officials of this type attain office, so we can better comprehend the roots of the Article II controversy addressed by Lucia. We shall then proceed to a brief recapitulation of the controversy in its nascent stage before the federal district courts.

Thereafter, we shall explore how different circuit courts of appeals took varying approaches in the main endeavor to avoid the constitutional controversy. This will naturally bring us to the point of unavoidable conflict between two tribunals, one of them the birthplace of the Lucia case, which then finally percolated to the highest level of the American judiciary.

The final element of this essential prelude shall include notation of the government’s sharp course reversal with respect to defending the decision below. All that accomplished, we shall then embark upon a detailed examination of Lucia in all its noteworthy aspects.

To be sure, our final analysis shall not be confined to the ramifications Lucia holds for the SEC’s enforcement of the securities laws. It is our intention to delve deeply into the broader, constitutional implications of the instant case, and its more lasting meaning for Article II, the Executive Branch, and all administrative agencies.

1 15 U.S.C. § 78d (2012).

2 Id.

3 See generally id. § 77.

4 Id. § 78j-1(b); 17 C.F.R. § 240.10b-5 (2006).

5 Lucia v. SEC, 138 S. Ct. 2044, 2044 (2018).

6 Id. at 2061.

I.   GAINING PERSPECTIVE: SECURITIES LAW, THE SEC, AND ITS ALJS

To have the fullest appreciation possible of Lucia, one must first understand the securities law which provides the backdrop for this latest pronouncement. Certainly, in Lucia, the Supreme Court ruled upon a constitutional challenge rooted in the Appointments Clause of Article II.7 Yet, since the office-holders thereby challenged were part of the imposing construct that is federal securities regulation, the appropriate point of view is taken from the New Deal–era laws which have assured the nation of open and honest capital markets since the 1930s.8

The edifice that is modern federal securities law is firmly based on two cornerstones. The first is the Securities Act of 1933.9 The other noble cornerstone is the Securities Exchange Act of 1934.10

The 1934 Act established the Securities and Exchange Commission as the paramount federal regulator of the Nation’s securities markets.11 The SEC is authorized by statute to commence administrative enforcement proceedings against those believed to have violated the various securities acts.12

Heading the agency are five Commissioners, each appointed by the President with the advice and consent of the Senate.13 Unquestionably, the five appointees that comprise the SEC’s ruling council are not only officers of the United States, but qualify as principal officers of the United States residing within the Executive Branch.14

Obviously, five mere mortals could never undertake the herculean task of overseeing the securities exchanges and its denizens without the assistance of a sizable bureaucracy. The Depression-era Congress wisely gave the Commission “the authority to delegate, by published order or rule, any of its functions” to, among others, “an administrative law judge.”15 The powers which may be delegated to such a jurist include, and are not limited to, “hearing, determining, ordering … or otherwise acting” with respect to any SEC function.16

In-house agency adjudicators, once called “hearing examiners,” were given the title “Administrative Law Judges” in 1978, and the number of such positions was increased.17 Thus, the controversy which this Article concerns itself with grew from that tiny seed.

Indeed, with the benefit of hindsight, it might be said that this innocuous name change helped precipitate the Appointments Clause challenge under discussion here. Forty years ago, the lawmakers casually observed that administrative law judges “hold a position with tenure very similar to that provided for Federal judges under the Constitution.”18 The imprecision of that comparison was fraught with peril and portended the constitutional crisis this Article now addresses.

To be sure, these newly minted ALJs were not granted autonomy. Undoubtedly to preserve accountability to the Chief Executive and the People, it was declared that “the Commission shall retain a discretionary right to review the action of any … administrative law judge.”19

This oversight prerogative can be initiated by the Commission sua sponte “or upon petition of a party.”20 Only a single Commissioner need vote in favor of review in order to bring any ALJ action before the full body.21

Significantly, should the SEC decline to exercise its power of oversight or if review is not requested in a timely manner, then the action decreed by an administrative law judge “shall … be deemed the action of the Commission.”22 Note well the legislative choice of the imperative “shall,” and not the permissive “may,” in this particular proviso.

Of course, who guards the guardians? After all, the SEC is an administrative body.23 Its awesome powers to regulate the stock markets must be kept in check, lest we descend into a totalitarian regime.

To protect against such calamities, any person aggrieved “by a final order of the Commission” may seek judicial review of the relevant judgment either “in the United States Court of Appeals for the circuit in which he resides or has his principal place of business” or, alternatively, “the District of Columbia Circuit.”24 Not only does this assure Article III oversight, thereby preserving accountability, and, hence, liberty, the various options for the situs of the reviewing court often plays a role in the evolution of these proceedings, including the matter now under discussion.

And while the appellate tribunal is empowered to affirm, modify or overturn “in whole or in part” any final order of the Commission,25 the regulators’ factual findings are conclusive, provided they are supported by substantial evidence.26

The essentials of this regulatory infrastructure, that being the Commission, its lawful delegation of authority to administrative law judges, and so forth, remained fundamentally the same well into the Twenty First Century.27 It took the cataclysm of the Great Recession to statutorily modify the SEC’s enforcement powers in such a way as to provoke a constitutional challenge to its in-house adjudicators.28

This enabling legislation, made law during the heat of the financial meltdown in the late 2000s, is correctly known by the turgid moniker of the Dodd-Frank Wall Street Reform and Consumer Protection Act.29 Better known by the far less cumbersome appellation of Dodd-Frank, this is a body of remedial statutes epic in proportion, and physically the size of an old-fashioned telephone directory.30 Thankfully, the Appointments Clause issue extant here permits us to take a laser-like focus upon the sole proviso germane to the instant controversy.

The revamped law expanded the role of the Commission’s administrative law judges in the following manner. Prior to the new enactment, if the SEC sought a monetary penalty against a nonregulated individual or entity, the agency was required to file suit in an appropriate federal district court.31

Dodd-Frank changed all that by giving the regulators the choice of bringing such an action in the district court or by commencing an administrative enforcement proceeding before its in-house adjudicators.32 To be sure, the choice of the forum to proceed in lies solely within the agency’s discretion.33

At least one appellate court declared that Dodd-Frank “dramatically expanded” the Commission’s power to institute enforcement proceedings before its own ALJs, reputedly “with a rate of success notably higher than it has achieved in federal district courts.”34 Thus, at the commencement of the second decade of the Twenty First Century, we find the SEC possessed a newfound power.35 No longer was it required to bring supposed miscreants before a federal trial court for adjudication; now, the Commission could try alleged wrongdoers before its own, in-house tribunal.36

To summarize, the duties and powers of the SEC’s present-day adjudicators, particularly in light of the Dodd-Frank enforcement regime, predict the controversy under review here. By virtue of their traditional prerogatives, as enhanced by the Dodd-Frank reforms, ALJs now play an even more critical role in upholding the federal securities acts.37

The Commission’s in-house jurists hear cases and create records of those proceedings.38 These adjudicators find facts, draw conclusions of law, and decide the validity of charges brought by the SEC against private persons.39 Notwithstanding subsequent review by the Commission—if any—ALJs most certainly do not merely advise, recommend, or investigate.40 In every sense of the phrase, the agency’s internal jurists exercise, by any yardstick, significant sovereign authority.41

This concludes our primer upon the fundamental notions of federal securities regulation that set the stage for Lucia. As indicated, many of these statutory norms have existed since the Securities and Exchange Commission was created via the 1934 Act.42 Nevertheless, it was the enactment of the

Dodd-Frank legislation, conceived in the crisis atmosphere of the Great Recession, which sparked the constitutional conflagration over the authority of the Commission’s ALJs.43

Yet Lucia was a constitutional crisis, not merely a dispute under the laws regulating the securities markets.44 For that reason, it is imperative that we next turn to the fundamental principles of constitutional law which formed the basis for the high Court’s newest landmark.

7 See id. at 2063.

8 15 U.S.C. § 78d (2012).

9 Id. § 77a.

10 Id. § 78a.

11 Id. § 78d(a).

12 The Securities Act of 1933, 15 U.S.C. § 77h-1; The Securities Exchange Act of 1934, 15 U.S.C. § 78u-3; The Investment Company Act of 1940, 15 U.S.C. § 80a-9(b); The Investment Advisers Act of 1940, 15 U.S.C. § 80b-3(e).

13 15 U.S.C. § 78(d)(a).

14 See U.S. CONST. art. II, § 2, cl. 2.

15 § 78d-1(a).

16 Id.

17 See Act of Mar. 27, 1978, Pub. L. No. 95-251, 92 Stat. 183, 183–84 (1978).

18 S. REP. NO. 95-697, at 2 (1978), reprinted in 1978 U.S.C.C.A.N. 496, 497.

19 § 78d-1(b).

20 Id.

21 Id.

22 Id. § 78d-1(c).

23 See id. § 78d.

24 § 78y(a)(1).

25 § 78y(a)(3).

26 § 78y(a)(4).

27 See generally id. § 78a.

28 Hill v. SEC, 114 F. Supp. 3d 1297, 1315 (N.D. Ga. 2015), vacated and remanded, 825 F.3d 1236 (11th Cir. 2016).

29 Pub. L. No. 111-203, § 1(a), 124 Stat. 1376 (2010); see also Jarkesy v. SEC, 803 F.3d 9, 12 (D.C. Cir. 2015).

30 See generally Pub. L. No. 111-203, § 1, 124 Stat. 1376 (2010).

31 Bebo v. SEC, 799 F.3d 765, 768 (7th Cir. 2015).

32 Id.; see also Pub. L. No. 111-203, § 929P(a)(2), 124 Stat. 1376 (2010).

33 Tilton v. SEC, 824 F.3d 276, 278 (2d Cir. 2016), cert. denied, 137 S. Ct. 2187 (2017).

34 Id. at 279.

35 Id. at 278.

36 Id. at 279.

37 See id.

38 Id.

39 Id.

40 See 17 C.F.R. § 201.111 (2006).

41 See Buckley v. Valeo, 424 U.S. 1, 126 (1976).

42 See generally 15 U.S.C. § 78(a) (2012).

43 See Buckley, 424 U.S. at 126–27; Tilton, 824 F.3d at 276, 279–80.

44 See Lucia v. SEC, 138 S. Ct. 2044, 2047 (2018).

II.  THE APPOINTMENTS CLAUSE: TEXTUAL FUNDAMENTALS AND SUPREME COURT LANDMARKS

From the very inception of the Republic, one of the paramount motivations of the Founders was a justifiable concern for power concentrated in the hands of the one or the few, and worse yet, such authority lacking accountability to the political will of the citizenry.45 It was this “fear that prompted the Framers to build checks and balances into our constitutional structure.”46

Specifically, to preserve our ordered system of liberty from the excesses of executive power, the Framers acted upon a fundamental and inarguable precept. “Liberty requires accountability.”47 In recognition of that basic truth, the Framers incorporated several “accountability checkpoints” into the Constitution,48 each one securing separation of powers and checks and balances.

Several of these guardians of our precious liberty are found within Article II.49 Concurrent with establishing the duties and responsibilities of the Executive Branch, and empowering the office of the Chief Executive, the Article equally restrains presidential ambitions, by assuring the chief magistrate stays responsive to the popular will.50 Both courts and commentators have lauded Article II as one of the Constitution’s most noble provisions, guaranteeing accountability to the People.51

Prominent among Article II’s critical subcomponents is the Appointments Clause, a “structural safeguard” that tethers federal officers to the “sovereign power of the United States, and thus to the people.”52 Above all else, the Appointments Clause insists that those who wield executive authority remain “accountable to political force and the will of the people.”53

The requirements of the Appointments Clause are “among the significant structural safeguards of the constitutional scheme” and are “designed to preserve political accountability relative to important Government assignments.”54 In regulating the manner of taking office, the proviso assures that appointees are “accountable to the President, who himself is accountable to the people.”55

Accountability is maintained by the Appointments Clause in the following manner: officers of the United States are appointed by the President, who answers to the People.56 When the electorate takes exception to the action of an executive officer, they protest to the Chief Executive who they elected, and she must then inquire of the appointee.57 This is how the chain of responsibility operates, and the unitary and uniform execution of the law secured.58

With regard to the relevant text of the Appointments Clause, its most visible segment is well known to most Americans. The President is empowered, with the advice and consent of the Senate, to nominate and appoint ambassadors, “ministers” (cabinet level department heads in more modern terms), “Judges of the [S]upreme Court, and all other Officers of the United States.”59 It is unassailable that all officers of the United States must be appointed in accordance with the Appointments Clause.60

Not as high profile, but nevertheless at the eye of the constitutional tempest which is the subject of this Article, the Appointments Clause makes further provision that Congress may, by law, “vest the Appointment of such inferior Officers, as they think proper, in the President alone, in the Courts of Law, or in the Heads of Departments.”61

Distilled to its essence, and highly germane to the instant discussion, Article II posits the foregoing as an alternative to the more cumbersome (and, dare we say, more politically contentious) process of presidential nomination subject to senatorial oversight.62 Presuming a statutory grant, the Chief Executive, as well as department heads and the courts, enjoy the inherent authority to emplace lesser office-holders.63

At the end of the day, the Appointments Clause provides meaningful assurance that officers of the United States do not elude the reach of the Chief Executive, and, thereby, the People.64 That is, the Appointments Clause, textually speaking. How it has been interpreted and applied is our next topic.

45 Dep’t of Transp. v. Ass’n of Am. R.R., 135 S. Ct. 1225, 1244 (2015) (Thomas, J., concurring).

46 Id.

47 Id. at 1234 (Alito, J., concurring).

48 Id. at 1237 (Alito, J., concurring).

49 See U.S. CONST. art. II.

50 See id. § 2.

51 See PHH Corp. v. CFPB (PHH II), 881 F.3d 75, 164 (D.C. Cir. 2018) (en banc) (Henderson, J., dissenting).

52 Bandimere v. SEC, 844 F.3d 1168, 1188 (10th Cir. 2016) (Briscoe, J., concurring).

53 Freytag v. Comm’r of Internal Revenue, 501 U.S. 868, 884 (1991).

54 Edmond v. United States, 520 U.S. 651, 659, 663 (1997).

55 Dep’t of Transp. v. Ass’n of Am. R.R., 135 S. Ct. 1225, 1238 (2015) (Alito, J., concurring).

56 See U.S. CONST. art. II, § 2, cl. 1–2.

57 See id.

58 See PHH Corp. v. CFPB (PHH II), 881 F.3d at 142 (Henderson, J., dissenting).

59 U.S. CONST. art. II, § 2, cl. 2.

60 See Buckley v. Valeo, 424 U.S. 1, 140–41 (1976).

61 U.S. CONST. art. II, § 2, cl. 2.

62 See id.

63 See id.

64 See id.

A.  Free Enterprise Fund

In the main, the epicenter of the high Court’s Appointments Clause jurisprudence is occupied by two fairly modern landmarks. Given such, we shall posit these cornerstones first, as the foundation of our analysis.

In contemporary Article II case law, it is beyond argument that Free Enterprise Fund v. Public Company Accounting Oversight Board65 stands preeminent in guaranteeing separation of powers and checks and balances.

For nearly a decade, Free Enterprise Fund has been the pivot upon which Appointments Clause controversies have turned.66 Its precepts constitute a significant portion of “the best guidance we have about the original and enduring meaning of Article II.”67

Appropriately enough for this writing, this first crucial landmark is itself rooted in yet another financial crisis of recent vintage. The holding of Free Enterprise Fund can be directly traced to the accounting industry reforms made in the early 2000s, subsequent to the scandalous doings of Enron,

WorldCom, and similar nefarious corporations being revealed to an outraged investor class.68 To counteract the blatant financial reporting trickery found in those ignominious cases, Congress promulgated the Sarbanes-Oxley Act (SOX).69 For all intents and purposes, the legislation was a massive auditing reform law calling for stricter oversight of the accounting profession.70

The legislation also created the respondent above named, the Public Company Accounting Oversight Board, the “PCAOB” (colloquially pronounced “Peek-A-Boo”), to administer SOX’s new regime of registering all public accounting firms that audit publicly traded companies, regimenting their standards of practice, and imposing rigorous oversight to assure their compliance.71

The PCAOB was not without its challengers, however, and these opponents set out to stop the Board in its tracks.72 The chosen form of attack was to invoke the Appointments Clause of Article II of the Constitution.73

As Chief Justice Roberts explains in Free Enterprise Fund, the Appointments Clause authorizes the President to appoint two classes of officers within the Executive Branch to assist in executing the laws of the United States.74 The first grouping of appointees is familiar, consisting of ambassadors, cabinet members, and the like (such as Article III jurists), usually called “principal officers,” whom the President appoints with the advice and consent of the Senate.75

The second set of Executive Branch adjuncts is comprised of so-called “inferior officers,” whose defining attributes are that they exercise significant authority in executing the laws of the land, yet nonetheless remain accountable to the Oval Office—in plain English, the President can fire them at will.76 The latter point cannot be underestimated, for placing these persons beyond the Chief Executive’s power of recall is an irremediable constitutional error.77

Finally, there is an added nuance of the Appointments Clause, specifically that department heads (essentially, cabinet members and agency chiefs) and the federal courts enjoy a similar power to invest their own “inferior officers” with authority to assist the former in executing the laws of the land.78

And here is where Free Enterprise Fund found the fatal flaw in constituting the PCAOB’s membership. Chief Justice Roberts observed how the five Board members were selected by the SEC, not appointed by the President.79 Once in place, a Board member could only be removed “for good cause.”80 Another key link in the chain of Free Enterprise Fund‘s Appointments Clause analysis was that the Commissioners of the SEC itself, the ones who appoint the PCAOB members, likewise cannot be terminated, except “for good cause.”81 Chief Justice Roberts characterized this as, not just one, but two levels of “tenure” shielding PCAOB members from dismissal by the Chief Executive.82

This attribute of the PCAOB led to its downfall.83 The Appointments Clause is predicated upon the notion (as articulated by Founder James Madison while serving in the First Congress) that only the Chief Executive holds the executive power accorded by the Constitution, and part and parcel of her accountability to the People in exercising that power is the unrestricted ability to dismiss appointees who are inadequate to the task of executing the Nation’s laws.84

In other words, the Appointments Clause does not merely regulate the manner of appointments; it assures that office-holders shall be accountable to the President who commissioned them, and ergo, the

citizens who elected the Chief Executive.85

Accordingly, the Free Enterprise Fund Court found the SOX methodology for constituting the PCAOB antithetical to the rigors of the Appointments Clause.86 Moreover, the liberty interest protected by the Article II proviso was further confounded by the two levels of insulation the board members enjoyed.87

This tenure protection made the PCAOB fundamentally untethered to the President’s will, given the clear inability of the President to exercise her prerogative of recall.88 The resultant lack of accountability to the President only exacerbated the constitutional infirmity.89

While the high Court left the vast bulk of SOX undisturbed,90 this assertion of the Appointments Clause’s requirements vis-à-vis the PCAOB set in place a vital imperative for the constitutional delegation of administrative authority, cutting across a wide swath of regulatory agencies, and not just the ones tasked to administer the securities laws.91 Indeed, Free Enterprise Fund continues to emerge as a touchstone in cases questioning the apportionment of governmental power within the Executive and other Branches.92

We will soon see that the disavowed parameters for appointments to the PCAOB at issue in Free Enterprise Fund bore a striking similarity to the appointive process for the Commission’s ALJs.93 That justifies our care in expositing Free Enterprise Fund as a linchpin in the imbroglio that challenged the authority of the SEC’s adjudicators, for those similarities were exploited to no end by those opposing the agency’s jurisdiction.94

65 See generally Free Enter. Fund v. PCAOB, 561 U.S. 477, 513–14 (2010).

66 See PHH Corp. v. CFPB (PHH II), 881 F.3d 75, 155 (D.C. Cir. 2018) (en banc) (Henderson, J., dissenting).

67 PHH II, 881 F.3d at 155 n.13 (Henderson, J., dissenting).

68 See Free Enter. Fund, 561 U.S. at 484.

69 See id.

70 See id.

71 See id.

72 See id. at 487.

73 See id.

74 See id.

75 See U.S. CONST. art. II, § 2, cl. 2.

76 Free Enter. Fund, 561 U.S. at 493.

77 Id.

78 U.S. CONST. art. II, § 2, cl. 2.

79 Free Enter. Fund, 561 U.S. at 484–85.

80 Id. at 478.

81 Id.

82 Id.

83 Id. at 492.

84 Id.

85 Id. at 493.

86 Id. at 503.

87 Id. at 492.

88 Id. at 495.

89 Id.

90 Id. at 509.

91 See Stern v. Marshall, 564 U.S. 462, 503 (2011); Morrison v. Olson, 487 U.S. 654, 696–97 (1988).

92 See Stern, 564 U.S. at 503; Morrison, 487 U.S. at 696–97.

93 See Freytag v. Comm’r of Internal Revenue, 501 U.S. 868, 868 (1991).

94 See id.

B.  Freytag

Our second high Court precedent was one that somewhat presaged the coming of Free Enterprise Fund, albeit nearly two decades earlier.95 In Freytag v. Commissioner of Internal Revenue, the plaintiff was a taxpayer aggrieved by the IRS’s assessment of additional tax due.96 More importantly, this plaintiff went so far as to challenge the very constitutionality of the judicial process whereby his tax was determined.97 Freytag’s argument was one we are already familiar with: his main contention was that the judicial officer hearing his controversy exercised significant authority under federal law, yet the mode the judicial officer’s appointment, and that of his fellows, did not comport with the requisites of the Appointments Clause.98

Taking center stage here were the officials entitled Special Trial Judges (STJs), effectively adjuncts to the United States Tax Court, a body itself long deemed to be an Article I “legislative court.”99 Indeed, in its arguments for confirming the validity of the existing system, the government emphasized the supposedly subordinate role of the STJs, calling them merely assistants to the actual Tax Court jurists in such matters as taking evidence, drafting proposed findings of fact and opinions, and other purely ministerial tasks.100 In sum, and despite the taxpayer’s protestations to the contrary, the government held fast to its claim that the STJs were little more than glorified clerks.101

The Supreme Court ruled otherwise, and, in taking the taxpayer’s side, carefully parsed the exact duties of these judicial officers.102 STJs, noted the high Court, take testimony, conduct trials, rule on the admissibility of evidence, and have the power to enforce compliance with discovery orders, among other things.103 In addition, the very office in which they serve is a creation of statute, and the precise tasks, salary, and means of appointment for STJs are likewise specified by law.104

Combining the foregoing powers of the STJs with the means by which they attain and keep office, it was no surprise that the Court concluded that these judicial helpmates “exercise significant discretion” in their everyday duties.105 Thus, the Supreme Court had no hesitancy in categorizing the STJs as “inferior officers” for Article II purposes.106

But leaving nothing to chance, Freytag did not end there. It contrasted the STJs to “special masters,” yet another variety of judicial appointee found across the landscape of the federal court system.107 The role of special master is, to be sure, not established by statute, nor does the law clearly delineate the duties and obligations of the office.108 Special masters serve the Article III bench on a temporary and ad hoc basis or, as the Justices put it so well, are “episodic” in the frequency of their service to the Judicial Branch.109 This effectively forecloses any characterization of special masters as “inferior officers,” whereas, in sharp contradistinction, it underscores the conclusion that STJs are even more deserving of that title, with all of its constitutional implications.110

Having thus set forth the appreciable powers of the STJs, and having further placed them in exquisite counterpoise to special masters and the latter’s comparatively limited purview, the Supreme Court readily concluded that the former exercised “significant discretion” under the law, as that term is understood for Article II purposes.111 That established, the Court declared that the STJs were, in fact, “inferior officers,” as Article II jurisprudence classifies that title.112 Therefore, such persons “must be properly appointed” pursuant to the strictures of the Appointments Clause.113 And since this helpmate to the Tax Court had not attained office in a manner consonant with Article II, his adjudication of the plaintiff’s tax liability was invalidated.114

In sum, Freytag was the trailblazer towards the primacy of Free Enterprise Fund in resolving contemporary disputes over the scope and application of the Appointments Clause. Given the role it was to eventually play in resolving the instant controversy over SEC ALJs, we urge mindfulness of Freytag‘s carefully drawn distinctions amongst different classifications of adjudicators, and the sharp implications for the matter at hand.

95 One might even venture it provided the rule for decision.

96 See Freytag, 501 U.S. at 868.

97 Id. at 872.

98 Id.

99 Id.

100 Id. at 880–81.

101 Id.

102 Id. at 881–82.

103 Id.

104 Id. at 881.

105 Id. at 882.

106 Id.

107 Id. at 881.

108 Id.

109 Id.

110 Id. at 882.

111 Id.

112 Id.

113 Id.

114 Id. at 892.

C.  Germaine

Before departing entirely from the realm of modern Appointments Clause jurisprudence, we are required to briefly explore a Reconstruction era holding that presaged some of the current Article II controversy. Why reach back some one hundred and forty years to a ruling that could not have possibly conceived of today’s Administrative State? The direct answer is because the high Court itself called upon this venerable edict to help resolve the controversy most recently at the bar.

United States v. Germaine presents the sordid tale of a civilian surgeon accused of extorting monies from the pension applicants he was charged with examining.115 One aspect of his appeal was that the

avaricious medico had been prosecuted under a law calling for the fine or imprisonment of any officer of the United States found guilty of committing extortion under color of his office.116 The obvious prerequisite to a successful prosecution thereunder was that the defendant actually qualify as a bona fide officer of the United States.117 Seeking to avoid that penalty, the defendant contended he enjoyed no such status.118 To the contrary, Germaine alleged his appointment by the Commissioner of Pensions was not compliant with the procedures mandated by Article II.119

Writing for a unanimous Court, Justice Miller made short shrift of the entire affair.120 Obviously, the defendant had not been appointed by the President or the courts of law.121 Adhering strictly to the plain text of Article II, the sole question remaining was whether the Commissioner of Pensions was the head of a department.122 As he was not, it was clear to the Justices that neither this defendant nor anyone holding office by virtue of the Commissioner’s order could be deemed an officer of the United States.123 Since Germaine did not qualify as an officer of the United States, he could not be prosecuted under a statute prohibiting malfeasance by such appointees.124

Relevant to today’s Appointments Clause challenge to the power of SEC ALJs, we may draw the following lessons from Germaine. First, “[t]he Constitution … very clearly divides all its officers into two classes.”125 Principal officers must be nominated by the President and confirmed by the Senate.126 All others, denoted as inferior officers, may attain office as appointees of the President, the courts of law, or the heads of departments, if Congress so provides by statute.127

Notably, the Germaine Court justified this more convenient mode of appointment as the Constitution foreseeing the day “when officers became numerous, and sudden removals necessary.”128 One can only applaud the prescience of the Germaine Court, not to mention the Founders, for predicting the present-day Administrative State.

Be that as it may, the Justices of that bygone era were unequivocal in one other key finding. “[T]here can be but little doubt” that the foregoing two methodologies are the exclusive means by which one attains the vaunted status of Officer of the United States.129

Hereinabove, we have not only illuminated the Article II precedents instrumental in deciding Lucia, we now have a greater appreciation for the high Court’s fidelity to the Appointments Clause as a guarantor of accountability, and, thereby, liberty. While all this is a necessary precursor to the review which is soon to follow, we must remember that the latest addition to the Court’s Article II jurisprudence traveled a complex and arduous trail of litigation, which we are duty bound to explore.

For while the ultimate focus of this Article shall be the Supreme Court’s decision in Lucia, that new landmark cannot be rightly contemplated in isolation. Our analysis is informed by the many conflicting lower court opinions that preceded the high Court’s final ruling here.

Cases similar to Lucia were first the subject of vastly different approaches taken by trial judges, and then the decisions of various appellate tribunals took vectors in a direction totally contrary to that of the Supreme Court’s eventual ruling.130 This newest high Court pronouncement can only be considered in light of its jurisprudential roots. It could be said that the saga which is Lucia is a play in four acts.

Accordingly, we expound upon it in that fashion.

115 United States v. Germaine, 99 U.S. 508, 508–09 (1878).

116 Id. at 509.

117 Id. at 512.

118 Id. at 509.

119 Id.

120 Id. at 508–09.

121 Id. at 510.

122 Id.

123 Id. at 511.

124 Id. at 512.

125 Id. at 509.

126 Id. at 509–10.

127 Id. at 510.

128 Id.

129 Id.

130 See Bandimere v. SEC, 844 F.3d 1168, 1171 n.2 (10th Cir. 2016).

III.  ACT ONE: THE TRIAL COURTS

The road to a Supreme Court landmark is typically predictable and linear. It commences when a substantial number of federal district courts issue dissimilar rulings with regard to the same controversy. The discord is heightened when a significant number of circuit courts, sitting in review, declare their own views, presumably contrary to each other. Warring factions soon take shape, until the highest court in the land steps in, and ends the internecine controversy by promulgating its own edict.

Notably, Lucia did not precisely follow that familiar pattern.131 Its contours first took shape with a remarkably small number of trial court decisions, most of which coalesced around a common point of argument.132 In time, said argument became the focal point of the high Court’s attention, and therefore the gravamen of its ultimate holding.133

Yet, at the appellate court level, a near majority of circuit panels rejected the postulations of the lower courts, and moved in an entirely different direction.134 In truth, two—and only two—federal tribunals embarked upon paths which placed them in the requisite counterpoise.135 Thus, the conflict finally resolved by the Supreme Court entailed contentiousness between a mere fraction of the more than one dozen circuit courts of appeals.136 That, in and of itself, is unusual.

Given that Lucia did not track in a manner customary to the evolution of a high Court landmark, we are compelled to first sample, ever so briefly, the decisions of selective district courts that set the nascent controversy on the path to its final adjudication by the Justices.

Lucia‘s early roots were embodied in district court rulings addressing challenges to the SEC’s newly expanded prerogative to have enforcement cases presided over by the agency’s in-house adjudicators.137 Respondents named in such proceedings actively resisted having administrative law judges hear the Commission’s charges against them.138

One of the first such cases, Hill v. SEC, presented a plaintiff of a different sort.139 Hill described himself as a real estate developer.140 Thus, he was not a securities industry professional, normally subject to SEC jurisdiction.141 After he made nearly three-quarters of a million dollars transacting in the stock of a takeover target, the Commission accused Hill of indulging in the wrongful act of insider trading.142

The plaintiff disputed the authority of the SEC ALJ overseeing his proceeding.143 Arguing before Judge Leigh Martin May, Mr. Hill contended that the Commission’s administrative law judges were officers of the United States, yet had attained office in contravention of the Appointments Clause.144 “Not so,” countered the agency; “the SEC’s ALJs are mere employees.”145

District Judge May sided with the plaintiff.146 Her touchstone was Freytag‘s postulation that the exercise of “significant authority” was the litmus test for deciding if an Executive Branch functionary is an officer of the United States, subject to the rigors of the Appointments Clause.147

For all these reasons, Hill was among the first of the lower courts to hold that the Commission’s in-house adjudicators held office in violation of the Appointments Clause.148

Notably, Hill offered a means to end the evolving controversy before it erupted into a full-blown constitutional crisis. District Judge May suggested that the full Commission, collectively a head of a

department as contemplated by Article II, nominate and appoint each and every SEC ALJ.149 But, lacking any such initiative from the agency, Hill forbade the agency’s adjudicator from conducting further proceedings involving this plaintiff.150

Whilst Hill emanated from southerly climes, it provided a template for resolution adopted by certain federal trial courts within walking distance of Wall Street itself.151 The case in point—Duka v.

SEC152—in actuality comprised an interconnected set of rulings, which willingly joined Hill‘s assessment of the burgeoning controversy as a matter of constitutional import.153

Duka presented an industry professional accused by the SEC of wrongdoing in disseminating inaccurate and misleading credit ratings, to the detriment of investors who relied upon such reports when transacting in the ranked securities.154 This respondent sought to enjoin the Commission from further pursuit.155 Duka’s claim—like the one interposed in Hill—was an allegation that the Appointments Clause had been violated in empowering the agency’s in-house adjudicators.156

The end result was markedly the same.157 In a sequence of interlocked opinions, District Judge Berman eventually concluded that SEC ALJs do, in fact, exercise “significant authority,” as that term is utilized in the lexicon of the Appointments Clause.158 Key to the trial court’s determination was its recognition that the Commission’s administrative law judges do much of what ordinary judges do on an everyday basis.159

Accordingly, Duka II easily resolved the Article II question by finding that the agency’s adjudicators were, indeed, officers of the United States, and therefore required a nomination compliant with the strictures of the Appointments Clause.160 These rulings compelled the Duka II court to halt the SEC’s enforcement proceeding, given the constitutional defect in how the presiding ALJ attained office.161

Notably, this New York district jurist took up the suggestion of his colleague from the Northern District of Georgia, to wit, that the Commission remedy the entire matter by having the “[h]eads of [d]epartments,” that being the Commissioners themselves, appoint the SEC ALJs anew, thereby correcting the nettlesome Article II violation.162 Regrettably, as in Hill, the agency failed to act upon the court’s prompting.163

At this juncture, it must be remembered that federal trial judges are not bound by the decisions of their peers, even those from within the same judicial district.164 That fundamental truth was exemplified in the instant controversy’s early stages.165 Specifically, yet another district jurist, also hailing from the same vicinage as Duka II, issued a holding inapposite to both the aforementioned and Hill.166

This contrary decision was the first iteration of Tilton v. SEC.167 Replicating the now familiar pattern, a financial professional and her affiliated companies were subjected to Commission action, based upon the SEC’s allegation that they had, jointly and severally, violated the federal securities law.168 This plaintiff counterattacked, alleging that the agency’s administrative law judge took office in violation of Article II; therefore, the Commission’s enforcement case should be enjoined from continuing before the in-house adjudicator.169

Taking a different tack from her brethren, District Judge Ronnie Abrams disagreed with both the plaintiff before her, and with the rulings issued in Hill and Duka II.170 Notwithstanding the assertion of an

Appointments Clause violation, the court in Tilton I looked to the fact that the plaintiff retained a statutory right to have an appellate court review any sanction decreed by the SEC.171 Given the undisputed availability of a subsequent hearing before a circuit tribunal, Tilton I refused to prevent the Commission from proceeding with the enforcement action.172

We pause here for a moment of contemplation. The controversy, which was to percolate through the federal courts, and conclude with the new landmark of Lucia, commenced with a relatively small

cross-section of trial courts at odds with each other on the ostensible constitutional crisis.

Some halted Commission enforcement proceedings, out of recognition of the alleged Appointments Clause violation.173 Others set to the side the purported constitutional infirmity.174

At that time, we commented that the internecine struggle would not go away soon, nor would it depart neatly.175 We accurately predicted that only Supreme Court intervention could restore order.176 While grateful for that small bit of prescience, no one could have foretold the various directions the instant controversy would take.177

Having submitted the above for your edification, we are now able to turn to the circuit conflict, in its variegated form, which ultimately led to the fresh landmark we now know as Lucia.

131 See Lucia v. SEC, 138 S. Ct. 2044, 2049–50 (2018).

132 See In the Matter of Raymond J. Lucia Co., 106 SEC 4611 (2013) (initial decision).

133 Lucia, 138 S. Ct. at 2055–56.

134 See Bandimere, 844 F.3d at 1171 n.2.

135 Compare Hill v. SEC, 114 F. Supp. 3d 1297, 1301 (N.D. Ga. 2015), with Tilton v. SEC (Tilton I), No. 15-CV-2472, 2015 WL 4006165, at *1, *2 (S.D.N.Y. June 30, 2015).

136 See Bandimere, 844 F.3d at 1171 n.2.

137 Lucia Cos., Inc. v. SEC (Lucia Cos. II), 832 F.3d 277, 280–81 (D.C. Cir. 2016).

138 See generally Michael A. Sabino & Anthony Michael Sabino, Challenging the Power of SEC ALJs: A Constitutional Challenge or a More Nuanced Approach?, 43 SEC. REG. L.J. 369 (2015).

139 Hill, 114 F. Supp. 3d at 1301.

143 Id. at 1304–05.

144 Id. at 1316.

145 Id. at 1317.

148 Id. at 1319.

149 Id. at 1320.

150 Id. at 1320–21.

151 Duka v. SEC (Duka I), 103 F. Supp. 3d 382 (S.D.N.Y. 2015).

152 Id., abrogated by Tilton v. SEC (Tilton II), 824 F.3d 276 (2d Cir. 2016), cert. denied, 137 S. Ct. 2187 (2017).

153 Duka II, 124 F. Supp. 3d at 289.

154 Duka I, 103 F. Supp. 3d at 387.

155 Id. at 385–86.

156 Id. at 385.

157 Id. at 395–96.

158 Duka II, 124 F. Supp. 3d at 289.

161 Id. at 290.

162 Id. at 289.

163 Id. at 288.

164 See Am. Elec. Power Co. v. Connecticut, 131 S. Ct. 2527, 2530 (2011).

165 Id. at 2532–33.

166 Id. at 2531.

167 Tilton v. SEC (Tilton I), No. 15-CV-2472, 2015 WL 4006165, at *1, *2 (S.D.N.Y. June 30, 2015).

168 Id. at *1–3.

169 Id. at *2.

170 Id. at *5.

171 Id. at *5–6.

172 Id. at *12–14.

173 Challenging SEC ALJs, supra note 138, at 378–79.

174 Id. at 378–80.

175 Id. at 369, 386.

176 Id. at 386.

177 See id. at 373–76.

IV.  ACT TWO: THE CIRCUIT COURTS AVOIDING THE APPOINTMENTS CLAUSE QUESTION

As already postulated herein above, the essence of this controversy is the constitutional question as to whether administrative law judges of the SEC are officers of the United States and attain office in a manner compliant with the Appointments Clause of Article II. The conventional wisdom has long been that, for questions of constitutional magnitude, the Supreme Court typically refrains from asserting its prerogative of review until a substantial number of the circuit courts of appeals have weighed in on the issue at hand.

That is not precisely what happened with respect to the instant controversy.179 To be sure, in a following section, we shall exposit the two diametrically opposed circuit decisions that led to the ultimate resolution of Lucia. However, we duly note that a substantial number of circuit tribunals, when asked to resolve the very Appointments Clause challenge at the heart of Lucia, declined to do so.180 These appellate courts essentially ignored the Article II claim, and resolved the litigation before them on more prosaic grounds.181

In order to fully comprehend Lucia, we must provide some discussion of those circuit decisions, since it cannot be denied they made their own contribution to the abovementioned landmark, albeit by indirect means. However, because of their contrarian approach, and the further reason that we do not wish to detract from Lucia‘s true underpinnings, we can be brief in expositing these cases.

Moreover, these circuits, which chose to resolve their respective cases by means other than resorting to the text of the Appointments Clause, comprise a fair cross-section of the federal judiciary.182

Chronologically speaking, the first tribunal to be heard from was the venerable Seventh Circuit.183 In Bebo v. SEC, that court deflected the plaintiff’s constitutional challenge to the authority of a SEC ALJ to hear the proceeding brought against her by the Commission.184

Writing for the panel, Circuit Judge Hamilton found that jurisdiction was lacking, as the plaintiff had not yet exhausted her options.185 “Bebo will be able to raise her constitutional claims in this circuit or in the D.C. Circuit” pursuant to the statutory review scheme provided by Congress.186 Per force, this would include the assertion that the administrative law judge then hearing her case held office in violation of the Appointments Clause.187 Put another way, said the Seventh Circuit, Bebo’s Article II challenge was preserved until she sought out review by a federal appeals court.188

Not long after Bebo was decided, the august Second Circuit added to the dialogue with its holding in Tilton v. SEC.189 Suffice to say, the New York–based tribunal ruled consistently with its brethren in Chicago, finding the plaintiff’s Appointments Clause claim was premature.190 Circuit Judge Sack opined on behalf of the panel that Tilton, a securities industry professional, was required to raise her constitutional challenge within the “exclusive” review infrastructure created by Congress.191 In so doing, the Second Circuit likewise did not approach the Article II issue that was to become the focus of Lucia.192

Consistency was maintained amongst the federal tribunals with Hill v. SEC,193 a ruling issued only days after Tilton II appeared.194 There, the Eleventh Circuit joined its sister circuits in declining jurisdiction,195 and directed the subjects of an enforcement proceeding to first exhaust their rights of

review, as provided by Congress in the statutory scheme of the Exchange Act.196

As the author of the opinion, Circuit Judge Pryor distinguished the case at bar from the “precarious position the Supreme Court found unacceptable” in Free Enterprise Fund.197 In this fashion, the Eleventh Circuit avoided the constitutional challenge brought by Hill pursuant to the Appointments Clause.198

The circle of appellate courts declining to entertain the constitutional arguments of respondents challenging the power of SEC ALJs was completed by the Fourth Circuit in Bennett v. SEC.199 The unanimous panel commenced the opinion with a declaration that the Fourth Circuit was now conjoined with its kin.200

As a point of additional interest, Bennett likewise observed that the plaintiff’s theory of unconstitutionality in the appointment of the Commission’s adjudicators “reads too much into the Free Enterprise Court’s conclusion,” which this tribunal found was factually distinguishable.201

Thus, as 2016 drew to a close, there was apparent unanimity amongst the circuit courts of appeals on the matter of Appointments Clause challenges to Commission ALJs holding office, and presiding over the agency’s enforcement actions.202 After all, the D.C., Seventh, Second, Eleventh, and Fourth Circuits had held the line, refusing to hear the constitutional complaints made by the subjects of SEC proceedings.203

By the straightforward expedient of directing such persons to return to the agency’s adjudicators, and counseling that their Article II claims were preserved there and in the subsequent review process, nearly half of the Nation’s appellate courts had successfully—and, one could venture, appropriately—avoided resolving a question of constitutional magnitude.204

179 Id. at 373, 380, 383.

180 See Bennett v. SEC, 844 F.3d 174, 176 (4th Cir. 2016); Hill v. SEC, 825 F.3d 1236, 1241 (11th Cir. 2016); Tilton v. SEC (Tilton

II), 824 F.3d 276, 291 (2d Cir. 2016), cert. denied, 137 S. Ct. 2187 (2017); Bebo v. SEC, 799 F.3d 765, 767 (7th Cir. 2015), cert.

denied, 136 S. Ct. 1500 (2016).

181 See Bennett, 844 F.3d at 176; Hill, 825 F.3d at 1241; Tilton II, 824 F.3d at 291; Bebo, 799 F.3d at 767.

182 See Bandimere v. SEC, 844 F.3d 1168, 1171 n.2 (10th Cir. 2016).

183 See id. at 1171 n.2; see also Bebo, 799 F.3d at 765.

184 Bebo, 799 F.3d at 765, 767.

185 Id. at 767, 775.

186 Id. at 767–68.

187 Id. at 768.

188 Id. at 774.

189 Tilton v. SEC (Tilton II), 824 F.3d 276 (2d Cir. 2016), cert. denied, 137 S. Ct. 2187 (2017).

190 Id. at 291.

193 825 F.3d 1236 (11th Cir. 2016).

194 Tilton II was decided June 1, 2016. Hill was rendered on June 17, 2016.

195 Hill, 825 F.3d at 1241.

196 Id. at 1237.

197 Id. at 1247.

198 See id. at 1247–48.

199 See generally Bennett v. SEC, 844 F.3d 174 (4th Cir. 2016).

200 Id. at 176.

201 Id. at 182, 186.

202 See supra text accompanying note 204.

203 Bennett was issued on December 16, 2016.

204 But see Citizens United v. Fed. Election Comm’n, 558 U.S. 310, 375 (Roberts, C.J., concurring).

V.  ACT THREE: TWO CIRCUITS DO BATTLE OVER THE APPOINTMENTS CLAUSE

As already stipulated, a near majority of circuit courts of appeals had successfully avoided divisiveness by deftly sidestepping the Appointments Clause questions put before them. Then, two tribunals clashed head on, giving rise to what would eventually become the Supreme Court’s Article II landmark in Lucia.205

We now examine the two—and only two—appellate decisions that gave rise to the internecine conflict, now concluded, at least for the time being.

A.  Lucia Companies I and II

For reason that the Supreme Court’s decision in Lucia occupies the apex of this Article, it would be wasteful to expend much effort in discussing the appellate court decision that was reversed and remanded by the Justices. Therefore, while reserving the bulk of our dissertation for the high Court’s reasoning, we note, but briefly, the holding which preceded the new landmark.

In Raymond J. Lucia Cos., Inc. v. SEC, a panel of the D.C. Circuit Court of Appeals was asked to overturn a Commission final order imposing sanctions upon an investment adviser.206 The petitioning entities raised the now-familiar Appointments Clause challenge to the power of the SEC ALJ who initially heard and decided the underlying enforcement proceeding.207

First, the panel devoted many pages to a detailed analysis of the statutory predicate for the Commission’s enforcement power, its ability to delegate, and the role of its in-house adjudicators.208 Then, turning to the petitioners’ contentions that the ALJ presiding over their case did not hold office in conformity with Article II,209 the august tribunal began—and ended—with a singular observation.

The decisive point here, wrote Circuit Judge Rogers, is whether the SEC’s administrative law judge had the power to issue final decisions.210 Since he did not, the panel ruled the agency’s in-house jurist was not an officer of the United States, and thus there was no constitutional infirmity in the manner in which the ALJ took office.211

The tribunal found it conclusive that the full Commission “retained full decision-making powers,” and that body “alone issues final orders.”212 As simple as that, the D.C. Circuit handily refuted the Appointments Clause claim.213

Nearly an entire year passed before the D.C. Circuit issued the penultimate decree which primed the matter for final adjudication by the Supreme Court.214 In a per curiam judgment, “an equally divided court” denied further review at the circuit level.215 The case at bar was now ready to be placed before the Nation’s highest tribunal.216

But first, it needed a conflicting ruling to be set in opposition. A panel of a circuit court nearly fifteen hundred miles distant from the Nation’s capital soon provided the necessary counterpoint, and it is that contrarian view that we exposit next.217

B.  Bandimere

Bandimere v. SEC came before the courts much like the cases which preceded it.218 The SEC alleged that David F. Bandimere, a Colorado businessman, had breached various federal securities laws.219 An administrative law judge assigned by the Commission presided over the enforcement proceeding, ruled Bandimere was liable as charged, and assessed various punishments against the respondent, including a lifetime ban from securities industry.220

The full Commission essentially confirmed the decision of its ALJ, while simultaneously rejecting Bandimere’s Appointments Clause challenge.221 Upon the respondent’s petition for review,222 the controversy was submitted to the Tenth Circuit for further adjudication.223

The Tenth Circuit pronounced its judgment without equivocation.224 In only the second paragraph of its opinion, and citing solely to Freytag, this western tribunal firmly declared that the ALJ who heard Bandimere’s case “was not constitutionally appointed, [and] held his office in violation of the Appointments Clause.”225

Circuit Judge Matheson commenced the analysis with an overview of the Appointments Clause.226 The proviso, he noted, “embodies both separation of powers and checks and balances.”227 In addition, the Appointments Clause assures accountability, by establishing the vital chain between those appointed and the elected officials who bestowed the office.228 Relying upon the very words of Freytag, the Bandimere court emphasized these constraints upon the appointment power were the best guarantee that the machinery of government would be accountable to the will of the People.229

There followed an in-depth discussion of the Supreme Court’s jurisprudence regarding those persons found to constitute inferior officers of the United States, and an extensive cataloging of those positions.230 This was set in counterpoise to Freytag,231 then punctuated by a notation that SEC ALJs are permitted to take office via the Administrative Procedure Act,232 and are the proper delegates of the Commission’s lawful functions, pursuant to the 1934 Exchange Act.233 Possibly most telling in this discourse was the concession by the agency that “its ALJs are not appointed by the President, a court of law, or the head of a department.”234

All this inexorably led to the Tenth Circuit’s conclusion that, as decreed in Freytag, SEC administrative law judges are inferior officers of the United States, and they must therefore attain their rank via a process congruent with the Appointments Clause.235 Since the adjudicator in Bandimere’s case had not, the respondent possessed a valid Article II claim.236

Writing for this western appeals court, Circuit Judge Matheson promptly disposed of the matter.237 He opined that the appellate bench residing in the Nation’s capital had concluded SEC ALJs are employees, not officers of the United States, primarily because the agency’s administrative law judges cannot render final decisions.238

“We disagree,” stated the Tenth Circuit, indicating that the finality (or purportedly lack thereof) of an ALJ’s ruling is not dispositive.239 Once more, and again invoking the teachings of Freytag, the Bandimere panel deemed the totality of circumstances surrounding the SEC’s ALJs, how they took office, the authority they possessed, and, again most especially, the significant discretion they exercised in adjudicating securities law cases, decreed that these persons were indeed officers of the United States.240

So Bandimere concluded finding that SEC ALJs were, in truth, officers of the United States, yet they attained office unconstitutionally, for reason that the rigors of the Appointments Clause had not been satisfied.241 Accordingly, the Commission’s final rendering against this respondent was overturned due to that constitutional defect.242 Now the die was cast, and a final showdown before the Nation’s highest Court appeared to be a foregone conclusion.243

C.  Petitioning for Supreme Court Review

In ordinary circumstances, commentators have little or no need to discuss the petition for certiorari stage of a case which subsequently evolves into a Supreme Court landmark. But Lucia‘s path to the high bench was somewhat exceptional, and therefore deserving of a few words of explanation.

Very briefly, Mr. Lucia’s plea for high Court review assumed the shape one would expect, given his losses in the court below.244 He posited the salient question rather straightforwardly: “Whether administrative law judges of the Securities and Exchange Commission are Officers of the United States within the meaning of the Appointments Clause.”245

Far more remarkable was his advocacy contending the matter was ripe for review. Mr. Lucia characterized the division between Bandimere and his own case as an “intractable” circuit split.246

The government’s reversal of position was perhaps the most remarkable development. Not only did the United States ask the Supreme Court to renounce its victory before the D.C. Circuit, it appended a further request: whether the statutory restraints on removing the Commission’s ALJs from office unconstitutionally impair the President’s ability to faithfully execute the laws.247

While the petition for certiorari was pending, the Commission ratified the appointment of all its ALJs, including the agency adjudicator who initially heard the enforcement proceeding against Mr. Lucia.248 It is a fair supposition that the SEC undertook this remedial step for reasons other than influencing the eventual outcome in Lucia. Far more practical, the Commission most likely promulgated this blanket ratification in order to preserve the authority of its in-house adjudicators in pending and future cases.

Certainly, it would be excessive to classify as unprecedented the events immediately preceding the high Court’s grant of review in Lucia. Rather, let us categorize them as unusual, insofar as the government, the victor in the proceedings below, now effectively wished the ruling in its favor to be reversed.

205 See Lucia v. SEC, 138 S. Ct. 2044 (2018).

206 Lucia Cos. I, 832 F.3d at 277.

207 Id. at 280.

208 Id. at 281–83.

209 Id. at 283–85.

210 See id. at 285.

211 See id.

212 Lucia Cos. I, 823 F.3d at 286.

213 The remainder of Lucia Cos. I likewise rejected the petitioners’ challenges to the finding of liability and choice of sanctions decreed by the SEC’s ALJ. Id. at 289–96.

214 Raymond J. Lucia Cos., Inc. v. SEC (Lucia Cos. II), 868 F.3d 1021, 1021 (D.C. Cir. 2017).

215 Id. at 1021.

216 Id.

217 See generally Bandimere v. SEC, 844 F.3d 1168 (10th Cir. 2016).

218 Id. Bandimere was decided on December 27, 2016.

219 Bandimere, 844 F.3d at 1171.

220 Id.

221 Id.

222 See 15 U.S.C. § 78(y)(a)(1).

223 Bandimere, 844 F.3d. at 1171.

224 Id. at 1170.

225 Id.

226 Id. at 1172–73.

227 Id. at 1172.

228 Bandimere, 844 F.3d at 1172.

229 Id. at 1173.

230 Id. at 1173–74.

231 Id. at 1174–76.

232 Id. at 1174.

233 Id. at 1177.

234 Id. at 1176.

235 Id. at 1179, 1181.

236 Id. at 1179.

237 Id. at 1182.

238 Id.

239 Id. at 1182; accord Burgess v. FDIC, 871 F.3d 297, 300–01 (5th Cir. 2017).

240 Bandimere, 844 F.3d at 1179–81.

241 Id. at 1181–82.

242 Id. at 1188.

243 See concurring and dissenting opinions in Bandimere for additional context.

244 Petition for Writ of Certiorari at i, Lucia v. SEC, 138 S. Ct. 2044 (2018) (No. 17-130).

245 Id.

246 Id. at 2.

247 Brief for the Respondent at 21, Lucia v. SEC, 138 S. Ct. 2044 (2018) (No. 17-130).

248 See SECURITIES AND EXCHANGE COMMISSION, Order (Aug. 26, 2019).

VI.  ACT FOUR: THE SUPREME COURT DECIDES LUCIA

The particulars having now been set forth herein above, it is time to review the actual decision of the Supreme Court in Lucia. To be sure, the Court ably resolved the constitutional challenge to the power of SEC ALJs, while adding to its stock of Appointments Clause jurisprudence. Yet, as shall be discussed later on, the high Court’s holding, while resolving the controversy at hand, might well have presaged future Article II challenges to the vast federal bureaucracy.

The Court’s summary of the facts was brief; in fact, surprisingly so.249 It quickly noted the Commission’s allegations that Mr. Lucia misled investors with his “Buckets of Money” strategy, administrative proceedings were presided over by an ALJ, and the adjudicator ruled against the respondent.250

With similar alacrity, that Court took cognizance of the petitioner’s claim that the ALJ held office in violation of the Appointments Clause, the full Commission rejected his assertion, and thereafter a panel of the D.C. Circuit sided with the SEC.251 Few words were spared to note the en banc split of the entire D.C. tribunal.252

Shockingly terse was the notation that the D.C. Circuit’s affirmance in Lucia conflicted with the Tenth Circuit’s holding in Bandimere.253 No discussion of Bandimere followed.254 Nor did the Lucia Court even mention the differing approaches of the many other circuits wherein the power of SEC ALJs was challenged.255

Instead, the high bench was content to characterize the internecine conflict as a split between those two circuit courts alone, effectively adopting Mr. Lucia’s posture as to the question to be resolved.256 Indeed, the Court did spare a few words to note the government’s about-face on the controversy, and, more importantly, to praise the amicus curiae appointed by the high Court to defend the judgment below.257 The preliminaries thus disposed of in summary fashion, the high bench moved on to the substance of the controversy.

Justice Kagan minced no words in pronouncing the issue to be resolved.258 “The sole question here,” she declared, is whether the administrative law judges of the SEC are “‘Officers of the United States’ or simply employees of the Federal Government.”259 After positing the essence of the Appointments Clause, the learned jurist acknowledged the undisputed fact that the ALJ who decided the petitioner’s case was assigned to the task by the SEC staff, and not the Commission itself.260

This led to a crucial observation by Justice Kagan. If it was decided that the ALJs were, in fact, “officers” of the United States, Mr. Lucia’s claim of a constitutional violation was indeed valid.261 Then “[t]he only way to defeat his position” was to hold the Commission’s adjudicators were “non-officer employees” or, put another way, “‘lesser functionaries’ in the Government’s workforce.”262

In order to resolve this weighty constitutional question, the Court first established a framework for decision, that structure anchored by two fundamental landmarks.263 The first such cornerstone reached back nearly one hundred and forty years ago, to Reconstruction Era America. In United States v.

Germaine,264 the high bench classified doctors hired by the federal government to administer physical examinations as “mere employees” because the work they performed was but occasional or temporary, not

continuing or permanent.265 Germaine was thus emplaced to occupy one end of the spectrum.

The other anchorage was occupied by Buckley v. Valeo, well-known as one of the Court’s more illustrious exercises in constitutional jurisprudence in the latter half of the twentieth century.266 Justice Kagan stressed the importance of Buckley to the matter at hand, as the former “set out another requirement, central to [Lucia].”267

Buckley held that members of a federal commission qualified as “officers” for reason that they “exercis[ed] significant authority pursuant to the laws of the United States.”268 As summarized by the Lucia court, the appropriate inquiry here must focus upon “the extent of power an individual wields in carrying out his assigned functions.”269

The Court was clearly motivated to establish these foundation stones because the government, among others, sought an elaboration upon Buckley‘s articulation of the “significant authority” test.270 Yet the Justices refuted the request, declaring “that project unnecessary.”271

Rather, the Court looked to another decision along the spectrum established by Germaine and Buckley, the case entitled Freytag v. Commissioner.272 The Justices found Freytag instructive here, for reasons that it applied the “significant authority” test of Buckley, without adornment, to adjudicators “who are near-carbon copies” to the ALJs in the SEC’s service.273 Indeed, the Lucia Court pronounced that the Freytag theorem “necessarily decides” the case at bar.274

As recapitulated by Justice Kagan, Freytag concerned the constitutional status (or lack thereof) of the “special trial judges” of the United States Tax Court.275 The disputed tax deficiency in the underlying case was a billion and a half dollars, a major proceeding indeed.276 Understandably, the STJ conducted in excess of three months of hearings.277 When the Tax Court jurist adopted the specialist’s draft decision as his own, the aggrieved taxpayer challenged the ruling on the constitutional ground that the STJ did not hold office in conformity with the Appointments Clause.278

In relating Freytag to the matter at hand, Justice Kagan emphasized that the Court in the former case emphasized the significance of the duties of office exercised by the STJs.279 Freytag’s reliance upon the fact that these tax specialists took testimony, ruled on evidentiary matters, and conducted proceedings was decisive.280 In doing so, these adjudicators exercised broad discretion.281 “That fact meant they were officers, even when their decisions were not final,” Lucia declared.282

That summary of Freytag given, the Lucia majority reiterated that it now possessed everything necessary to decide the instant case.283 It found that, similar to the Tax Court’s specialist judges, the Commission’s ALJs “hold a continuing office established by law,” a fact undisputed by any party.284

Moreover, the SEC’s in-house jurists exercise significant discretion and perform important functions.285 Justice Kagan pronounced they hold “all the authority needed to ensure fair and orderly adversarial hearings,” much like Article III judges.286

Once more, Lucia catalogued these essential attributes of judicial power as the ability to administer oaths, take testimony, examine witnesses, rule on motions, conduct trials, and enforce compliance with their directives.287 “So point for point,” in drawing comparisons between STJs and the SEC’s ALJs, Justice

Kagan found both sets of adjudicators held “equivalent duties and powers” in the course of completing their assigned tasks.288

Lastly, the Commission’s administrative law judges, much like their fellows in Freytag, issue decisions—”except with potentially more independent effect.”289 The Lucia majority noted that in a major case a Tax Court judge must always review a STJ’s proposed findings.290 In contradistinction, if the full Commission declines to review the conclusion of one of its own ALJs, then the jurist’s decision becomes final and is backed by the full weight of the SEC.291 In other words, declared Justice Kagan, “the [Commission] ALJ can play the more autonomous role.”292

Characterizing that attribute as a “last-word capacity,” the majority deemed it inescapable that the case at bar must fall into alignment with Freytag.293 “If the Tax Court STJs are officers, as Freytag held, then the Commission’s ALJs must be too.”294

The Court would have none of the agency’s counter-arguments.295 Even lacking in the formal authority to punish contempt of court, a SEC jurist is nevertheless empowered to shape proceedings in such a manner as to assure compliance with the adjudicator’s edicts.296 Not the least of these “conventional weapons,” as so poetically described by Justice Kagan, is the ALJ’s ultimate power to issue an opinion, which the full Commission can very well adopt in toto.297

The second argument, pertaining to the standard of oversight applied to an administrative law judge’s decision, fared no better.298 The standard of subsequent review was of no moment to Freytag‘s Appointments Clause analysis, found Justice Kagan, and so it should not be conclusive in Lucia.299

Combining its own reasoning in the case at bar with the rationale previously espoused in Freytag, the Lucia Court declared that the Commission’s administrative law judges are “officers of the United States,” subject to the strictures of the Appointments Clause of Article II.300 And since the prerequisites of that constitutional proviso had not been complied with, the SEC’s ALJs held office in an unconstitutional manner.301

The substance of its holding thus delivered, the high bench then turned to the best remedy for the constitutional defect that now lay exposed. Justice Kagan commenced with the precept that a party who timely challenges the constitutional validity of the appointment of the adjudicator hearing his case is entitled to relief.302 The Court speedily moved to answer the obvious question of what relief accordingly flows from said principle. Justice Kagan readily replied that the most appropriate remedy is a new hearing before a constitutionally appointed official.303

The Court decreed that the administrative law judge who originally heard the petitioner’s case was prohibited from presiding at any renewed enforcement proceedings.304 The Court ordered that a new ALJ properly appointed pursuant to the Appointments Clause oversee all subsequent hearings.305 Justice Kagan postulated that the first adjudicator “cannot be expected to consider the matter as though he had not adjudicated it before.”306

The sanctity of the Appointments Clause having been upheld, and the appropriate remedy accorded to the petitioner, the Supreme Court brought Lucia to a close. Standing above all else was the Court’s unequivocal declarations that the administrative law judges of the Securities and Exchange Commission

were officers of the United States, and they could constitutionally hold office if they were appointed in a manner compliant with the Appointments Clause of Article II.307 Since the ALJ presiding over Mr. Lucia’s proceeding had not, the decision adverse to the petitioner was reversed and the enforcement proceeding against him was remanded.308

Before departing Lucia entirely, note must be taken of the concurring opinion therein of Justice Thomas.309 Justice Thomas readily agreed that Lucia was “indistinguishable” from Freytag.310 Yet that was not enough, he declared.311 Looking to the next test of Article II and beyond, Justice Thomas postulated that “this Court will not be able to decide every Appointments Clause case by comparing it to Freytag.”312 The learned Justice’s concern was rooted in his perception that “our precedents in this area do not provide much guidance.”313

Justice Thomas characterized Freytag as instructing what suffices to qualify someone as an officer of the United States, but Freytag and its fellows “have never clearly defined what is necessary” to declare that an office-holder has attained the vaunted constitutional status of an “officer[ ] of the United States.”314

To end this deficiency, Justice Thomas proposed an examination of the Appointments Clause grounded upon original meaning.315 Turning to the constitutional text, Justice Thomas affirms that the Appointments Clause provides the “exclusive process” for appointing officers of the United States.316

Justice Thomas hypothesized that the Founders most likely perceived officers of the United States to be those “who perform an ongoing, statutory duty—no matter how important or significant the duty.”317 He opined that the SEC’s administrative law judges “easily qualify” as officers of the United States.318 Setting aside the relative importance or significance of their duties, Justice Thomas declared “[a]ll that matters is that the [ALJs] are continuously responsible for performing them.”319

Our analysis of Lucia does not end here. Equally worthy of contemplation is the opinion of Justice Breyer, concurring in the judgment in part, and dissenting in part.320 Foremost in Justice Breyer’s approach was his stated inclination to resolve the instant case upon statutory, and not constitutional, grounds.321 This preference was rooted in his grave concern that the case at bar necessarily involved the resolution of “a different, embedded constitutional question,” that companion issue being “the constitutionality of the statutory ‘for cause’ removal protections Congress afforded administrative law judges.”322

To be sure, Justice Breyer was in concert with the majority’s holding that the Commission’s ALJs attain office in contravention of the Appointments Clause.323 Yet his path to that same conclusion commenced with statutory law, precisely, the Administrative Procedure Act (APA).324 Justice Breyer found it critical that the administrative law judge designated in Lucia was appointed by the SEC staff, not the Commission itself.325

Justice Breyer posited that this analysis “may differ for other agencies that employ administrative law judges.”326 He specifically mentioned the statute governing the Social Security Administration and inferred that the abundance of dissimilar statutory regimes which govern the plethora of federal agencies other than the SEC might well lead to disparate outcomes on the same question.327

Couching his trepidation in a sequence of hypotheticals, Justice Breyer cautioned that making a

full-fledged application of Free Enterprise Fund to the validity of the appointments in question here might then require applying the same rubric of constitutional analysis to the concomitant statutory removal procedures safeguarding ALJs.328 “This would risk transforming administrative law judges from independent adjudicators into dependent decision makers,” beholden to the Commission which installed them in office.329

Justice Breyer then elucidated why he believed that making a ruling upon constitutional grounds in the instant case could be upsetting to legislative intent.330 Properly understood, the Appointments Clause grants Congress “a degree of leeway as to whether particular Government workers are officers or instead mere employees.”331

Justice Breyer concluded the duality of his concurrence and dissent with a stern warning. The Court’s methodology this day in resolving Lucia was “problematic” at best.332 The bifurcation of the appointments controversy from the removal provisions question threatened to unravel the entire federal construct of administrative adjudication one agency at a time.333

Lucia ends there, and now assumes its rightful place in the pantheon of constitutional jurisprudence.

249 See Lucia v. SEC, 138 S. Ct. 2044, 2049–50 (2018).

250 Id. at 2049–50.

251 Id. at 2050.

252 See id.

253 See id. (citing Bandimere v. SEC, 844 F.3d 1168, 1179 (2016)).

254 Id.

255 Id. at 2050.

256 Id.

257 Id. at 2050–51. The amicus curiae appointed to defend the D.C. Circuit’s decision was Anton Metlitsky.

258 Id. at 2051.

259 Id.

260 Id.

261 Id.

262 Id. (quoting Buckley v. Valeo, 424 U.S. 1, 126 n.162 (1976)).

263 Id.

264 United States v. Germaine, 99 U.S. 508, 511–12 (1879).

265 Lucia, 138 S. Ct. at 2051.

266 Id.

267 Id.

268 Buckley v. Valeo, 424 U.S. 1, 126 (1976).

269 Lucia, 138 S. Ct. at 2051.

270 See Lucia, 138 S. Ct. at 2051.

271 Id.

272 Freytag v. Comm’r of Internal Revenue, 501 U.S. 868 (1991).

273 Lucia, 138 S. Ct. at 2052.

274 Id.

275 Id.

276 Id.

277 Id.

278 Id.

279 Id.

280 Id.

281 Id. (citing Freytag, 501 U.S. at 882).

282 Id.

283 Id. at 2053.

284 Id.

285 Id.

286 Id. at 2053.

287 Id.

288 Id.

289 Id.

290 Id. at 2053–54.

291 Id. at 2053.

292 Id.

293 Id. at 2054.

294 Id.

295 Id.

296 Id.

297 Id.

298 Id. at 2054–55.

299 Id. at 2054.

300 Id. at 2055.

301 Id.

302 Id. (citing Ryder v. United States, 515 U.S. 177, 182–83 (1995)).

303 Id.

304 Id.

305 Id.

306 Id.

307 Id. at 2055.

308 Id. at 2056.

309 Id. at 2056–57 (Thomas, J., concurring). Justice Gorsuch joined in Justice Thomas’s concurrence.

310 Id. at 2056 (Thomas, J., concurring).

311 Id.

312 Id.

313 Id.

314 Id.

315 Id.

316 Id.

317 Id.

318 Lucia, 138 S. Ct. at 2056 (Thomas, J., concurring).

319 Id. at 2057.

320 Id. at 2057 (Breyer, J., concurring in the judgment in part and dissenting in part). Justices Ginsburg and Sotomayor joined Justice Breyer in part.

321 Id. at 2057.

322 Id.

323 Id. at 2057 (Breyer, J., concurring).

324 Id. See generally 5 U.S.C. § 500 (1999).

325 Lucia, 138 S. Ct. at 2058 (Breyer, J., concurring).

326 Id.

327 Id.

328 Id. at 2060.

329 Id.

330 Id. at 2062–63.

331 Id. at 2062.

332 Id. at 2064.

333 Id. Justice Sotomayor, as joined by Justice Ginsburg, filed a dissent contending that Commission ALJs lack final decision making authority and are therefore not officers. Id. at 2066 (Sotomayor, J., dissenting).

VII.  ANALYSIS AND COMMENTARY

We come now to the important task of analyzing Lucia. From the outset, it must be made clear that we eschew the traditional mode of review, that is, merely dissecting this new landmark in isolation, with nothing more. That methodology is woefully insufficient in the instant case.

To be certain, there is a good deal more to be said with regard to this latest proclamation of the Supreme Court. Lucia is a landmark first notable for how it arrived at the high Court, for reason that its route to the Justices varied from the customary path.334 Nor is it even enough to make a more fulsome examination of this precedent’s lineage.

What Lucia bodes for the future, the questions left unanswered, and the significant controversies that may yet ensue, is equally worthy of our contemplation, possibly more so. We now address these points seriatim.

A.  Lucia and Its Appointments Clause Teachings

It is only fitting that the first portion of our analysis be devoted to the wisdom Lucia imparts with respect to the Appointments Clause, and our understanding thereof. Again, this is what makes this new landmark one of the constitutional variety and not merely a resolution of securities law issues.

Hereinabove, we have exposited the precise language of Lucia; therefore, we have no need at this point to regurgitate same. Rather, our analysis shall be of the essentials of this newest landmark, for reason that part of Lucia‘s elegance is its simplicity.

First, consider the initial layer of the Court’s decision. It brings together a pair Article II precedents separated in time by nearly a century yet bound by their clear expressions of the meaning of the Appointments Clause.335

Anchoring one corner of this foundation is Germaine, the post–Civil War case that distinguished officers of the United States from mere employees, based, in part, upon the permanency of their endeavors.336

Standing opposite is the companionable case of Buckley v. Valeo, and its wisdom that it is the exertion of significant authority by an office-holder which largely determines if that person should be classified as an officer of the United States.337 Yet these counterparts, important as they might be, provided only the first level of the necessary Appointments Clause critique.338

Far more crucial is the role the high Court assigned to Freytag in resolving the current controversy regarding the appointment of the SEC’s ALJs. The first and most telling point is the kinship between the adjudicators challenged in Lucia and the special trial judges under scrutiny in Freytag. Without putting too fine a point on it, both sets of jurists toiled internally at important government agencies, deliberated upon complex factual matters and even more complicated disputes of law, and then issued decisions with significant repercussions for private citizens embroiled in litigation with the sovereign.339

Most compelling, it was the means by which these in-house judges adjudicated the matters put before them by their respective agencies. Both the SEC’s administrative law judges and the Tax Court’s STJs heard testimony, weighted credibility, and held considerable sway over the course of these contested

proceedings.340 An exercise of “significant authority,” indeed, as defined by the Supreme Court consistently throughout Germaine, Buckley, and Freytag.341

Lastly, by placing the probability of the finality of the decisions rendered by the SEC’s in-house judges in contradistinction with the potential for conclusiveness enjoyed by the specialist tax adjudicators, the Lucia case wisely and pragmatically recognized the true extent of the “significant authority” routinely exercised by jurists who have much in common in the discharge of their duties.342 Little wonder the Supreme Court declared the SEC ALJs of Lucia are almost complete duplicates of the STJs, and therefore subject to the exact same Appointments Clause precepts enunciated in Freytag.343

It is beyond peradventure that Freytag comprehensively listed the elements which classify an

office-holder as an officer of the United States subject to the requirements of the Appointments Clause.344

Lucia shares that same worthwhile characteristic.

In this newest Article II landmark, Justice Kagan parsed these attributes into two distinct categories: the nature of the office and the powers exercised by the appointee.345

As to the first, Lucia bestows officer of the United States status where the position in question is established by statute, continuously operates (and, conversely, is therefore not intermittent), pays a salary, and imposes duties set out in the law.346 One might categorize these as the structural components establishing an appointee as an officer of the United States subject to the Appointments Clause.

The second body of elements which lead to classification as an officer of the United States bound to the rigors of Article II are the actual tasks to be performed by the office-holder.347 The greater the discretion exercised by the appointee, the more significant the functions she performs, then the more certain the individual is an officer of the United States.348

Quite telling is how the Lucia majority compared the means by which the SEC’s ALJs conduct proceedings with the customary duties of full-fledged Article III jurists.349 There is an undeniable symmetry here. Federal judges attain their lofty posts by an appointive process clearly set out in Article

II.350 Lucia has now decreed that agency adjudicators must undergo the same rigors of the Appointments Clause because they exercise a portion of the sovereign power of the United States, again something that only true officers of the United States are capable of doing.351

Also worthy of our respect is Lucia‘s close scrutiny of the finality of decisions reached by the SEC ALJs, particularly when compared to the powers of the STJs in Freytag, and as a component of determining status as officers of the United States. The Lucia Court took pains to note that the adjunct tax jurists were subject to far more oversight of their rulings than the Commission’s administrative law judges.352

Moreover, greater opportunities existed for the ruling of an SEC ALJ to avoid further review and become, without alteration, final agency action.353 Justice Kagan’s pithy comment that the Commission’s in-house adjudicators enjoy far more autonomy and independence in rendering their decisions justifies Lucia‘s holding that these ALJs are truly officers of the United States.354

Another astute conclusion reached in Lucia is its refusal to equate the absence of a formal power of contempt with a lack of authority.355 The high Court deftly notes that a jurist does not require the contempt power in order to exercise significant authority.356

And the culmination of the judicial powers vested in the agency’s ALJs might be the most decisive of all: the ultimate power to rule. Lucia recognized that, in a very real sense, the power of an administrative law judge to issue a decision is all the exercise of significant authority she needs in order to be classified as an officer of the United States, and one that must withstand the rigors of the Appointments Clause

vis-à-vis her attainment of office.357

Lastly, there is the admittedly ancillary, yet no less necessary, component of Lucia‘s ultimate adjudication: the degree of finality typically bestowed upon the deliberations of the SEC’s ALJs. Justice Kagan concisely marshaled the salient points: the Commission generally accords deference to the findings of its in-house adjudicators; it is the exception, not the rule, for the SEC to reverse the final determinations of the agency’s jurists.358

Now to summarize Lucia for its own sake. This newest Article II landmark decision is built upon the firmest of foundations, specifically Freytag and its kin. In a real sense, Freytag supplied the rule of decision here, and rightly so.

First, there are the factual similarities which are so striking here. True, the Tax Court’s STJs in the Court’s earlier pronouncement were adjuncts to a duly constituted court.359 Nonetheless, the Tax Court, and its subsidiary tax adjudicators, are more accurately described as administrators of that other bureaucratic behemoth, the Internal Revenue Code. Exalting, as we must, substance over mere labels, Freytag‘s STJs are best classified as the administrative law judges of federal tax law. Since it is beyond peradventure that the SEC administers a sister monolith of national law, to wit, the federal securities acts, the Commission’s in-house jurists have a great deal in common with the Tax Court’s subalterns.

Second, let us address the legal principles espoused here. The Lucia Court upheld the precepts of law established in Freytag, paramount among them that an officer of the United States is recognized by her exercise of significant authority.360 In Freytag, Special Tax Judges did so by enjoying a fair degree of authority in presiding over significant tax controversies, having the power to shape proceedings, and were subject to review (and even reversed) in certain circumstances.361 Such was the rule of law announced in Freytag.

At the end of the day, Lucia made a straightforward application of Freytag to the case at bar. The Court of today concluded the Commission’s ALJs exercised as much significant authority as their tax law counterparts, possibly even more because the deference and general lack of review of the former’s determinations emphasized the significance of the authority they exercised, and the discretion granted them.362

Again, precedent ruled the day, as well it should. With the cognizable difference between the Tax Court’s STJs and the SEC’s ALJs ranging from slim to none, Lucia saw no need to depart from the cogent analysis of Freytag.363

As a brief aside, we make the following notes for the future of Freytag, Lucia, and their progeny. We agree with Justice Kagan’s common sense in setting aside the government’s request to clarify Freytag.364 Moreover, we respect Justice Thomas’s erudite concurrence in Lucia, where he makes the discriminating point, inter alia, that Freytag (and, by extension now, Lucia) does not resolve every Appointments Clause challenge.365

Lucia is now concluded. By its teachings, we know that the SEC’s administrative law judges previously attained office unconstitutionally, for reason that the mode of their appointment did not satisfy the rigors of Article II.366

334 Id. at 2049–51.

335 Id. at 2051.

336 Id.

337 Id.

338 We concur with the Court’s choice not to embellish upon the teachings of Buckley, as any expansion would have been superfluous to deciding Lucia.

339 Id. at 2053.

340 Id.

341 Id. at 2051–53.

342 Id. at 2052.

343 Id. at 2053.

344 Id.

345 Id. at 2052–53.

346 Id.

347 Id. at 2053.

348 Id. at 2052–54.

349 Id. at 2053.

350 See U.S. CONST. art. II, § 2, cl. 2.

351 Lucia, 138 S. Ct. at 2055.

352 Id. at 2047, 2053–54.

353 Id. at 2053–54.

354 Id. at 2054.

355 Id. at 2054.

356 Id.

357 Id. at 2053–55.

358 Id. at 2054–55.

359 Freytag, 501 U.S. at 870–71.

360 Lucia, 138 S. Ct. at 2051–52.

361 Freytag, 501 U.S. at 873–74, 881–82.

362 Lucia, 138 S. Ct. at 2053–54.

363 Id. at 2053–55.

364 Id. at 2051.

365 Id. at 2056 (Thomas, J., concurring).

366 See Lucia, 138 S. Ct. at 2055.

B.  Avoiding the Doctrine of Constitutional Avoidance

Our second point of analysis is not what Lucia decided. Rather, we respectfully ask: was it necessary for the Supreme Court to even decide Lucia in the first place?

Yes, Lucia is the law of the land, and worthy of its place in the pantheon of constitutional jurisprudence, particularly with respect to the proper interpretation of the Appointments Clause. But it is far too easy to merely deal with Lucia as a fait accompli.

Notwithstanding the high Court’s willingness in embracing the constitutional question, there are countervailing principles of constitutional interpretation that militate against the Supreme Court’s willingness to enter the fray.

It is axiomatic that the courts should avoid resolving constitutional questions whenever possible: “If there is one doctrine more deeply rooted than any other in the process of constitutional adjudication, it is that [the Court] ought not to pass on questions of constitutionality … unless such adjudication is unavoidable.”367 This “fundamental rule of judicial restraint” enjoys the sanction of “time and experience.”368 It serves an essential need to protect both “the law and the adjudicatory process.”369 In sum, the courts do not decide constitutional questions “needlessly.”370

That “fundamental rule of judicial restraint” was respected in full by a significant number of the appellate courts cited herein above. Prior to the D.C. Circuit issuing the decision that was to come before the high Court, and certainly well before the Justices even deigned to grant review of Lucia, the Seventh, Second, Eleventh, and Fourth Circuits had successfully resolved the essential controversy on grounds other than the Appointments Clause.371

In truth, the number of tribunals which fell into this category did not aggregate into a strict numerical majority of all the circuits.372 Yet they constituted a growing consensus, that, had it been given time, might have eventually coalesced into a true and undeniable majority of circuit court reasoning.

Yet all that was to change mere days later, as the waning days of 2016 brought forth the first opposing pole of a controversy, once thought to be dormant, but now entering the full flower of contentiousness. We now come to the limited, but irreconcilable, rift between the circuits which set the stage for Lucia.

Certainly, it is beyond peradventure that Lucia and Bandimere were diametrically opposed.373 But is Supreme Court review justified when discord, even pertaining to a subject as meaningful as the Appointments Clause, is cabined to only two tribunals out of the more than dozen federal appellate courts?

Let it be repeated that Lucia is a most worthy and notable addition to the Court’s Article II jurisprudence. Yet we are troubled, first by the fact that it might be a proclamation made before its time, and even more so, that this new landmark came at a cost to even more august principles governing when constitutional arguments should be addressed.

367 Zobrest v. Catalina Foothills Sch. Dist., 509 U.S. 1, 14 (1993) (Blackmun, J., dissenting).

368 Id. (Blackmun, J., dissenting).

369 Id. at 16 (Blackmun, J., dissenting).

370 Id.

371 See generally Bennett v. SEC, 844 F.3d 174 (4th Cir. 2016); Hill v. SEC, 825 F.3d 1236 (11th Cir. 2016); Bebo v. SEC, 799 F.3d

765 (7th Cir. 2015); Tilton v. SEC (Tilton II), 824 F.3d 276 (2d Cir. 2016).

372 Four out of the thirteen circuits followed this approach.

373 Bandimere v. SEC, 844 F.3d 1168, 1182 (10th Cir. 2016), cert. denied, 138 S. Ct. 2706 (2018).

C.  Lucia as the Template for Challenging ALJs

An undeniable aspect of modern America is its behemoth administrative state. As so well put by Chief Justice Roberts, Americans have been forced to tolerate bureaucrats “poking into every nook and cranny of daily life.”374 For decades now, regulatory agencies and those that toil therein constitute “a veritable fourth branch of the Government,” essentially rearranging our notions of a tripartite system of governance.375 This extra-constitutional body wields great power, in large part by means of what commentators have labeled a “hidden judiciary.”376

It is beyond refute that the drafters of the Founding Documents could not have foreseen contemporary SEC ALJs,377 nor, in all likelihood, the latter’s numerous peers presently at work within the far-flung bureaucracy extant today. It is equally unlikely the Framers envisioned these administrative adjudicators would outnumber the constitutionally authorized Article III bench by a ratio of two to one.378

As revealed in the instant controversy, there are reportedly a total of 1,792 administrative law judges in service to federal agencies today.379 The number of Social Security Administration adjudicators provide but one pungent example of the pervasive influence of appointed ALJs over the daily lives of many Americans. 1,537 Social Security Administration ALJs alone “collectively handle hundreds of thousands of hearings a year.”380

Such facts were well known to the Court over a decade before Lucia appeared on the docket.381

This lends credence to the statement that “[t]oo many important decisions of the Federal Government are made nowadays by unelected agency officials.”382 It is common knowledge that these agencies and their in-house adjudicators act upon matters of grave importance to ordinary citizens.383

Equally so, administrative agencies today are rightly said to exert significant power over the economic and social life of the Nation.384

Agencies and their nonjudicial arbiters therefore represent one side of a conflict between “executive power and individual liberty.”385 If administrative law judges are left unrestrained, they can pose a “significant threat” to bedrock principles of separation of powers and checks and balances.386

Notwithstanding the pervasiveness of the modern federal bureaucracy, Lucia has made it clear that present-day administrative law judges are susceptible to an Appointments Clause challenge. By extending the precepts of Freytag, reflecting the theoretical basis of Free Enterprise Fund, and even reaching back nearly a century and a half to invoke the teachings of Germaine, the Supreme Court’s latest pronouncement has illuminated a path towards challenging all in-house adjudicators on the claim that they were not appointed consonant with the mandates of Article II.

Could Lucia eventually lead to chaos? Certainly, one hopes not. Yet Justice Sotomayor alluded to such a possibility in her dissent.387

To be quite clear, we proclaim that Lucia was inestimably correct in its core holding; one upholding the guarantee of liberty safeguarded by the Appointments Clause. We applaud Lucia for its forthrightness

in preserving accountability to the People, precisely as the Framers envisioned in the context of Article II and executive appointments.

Yet we have genuine concerns for the systemic risk it might engender. It is virtually assured that Lucia shall unleash an untold number of fresh challenges against ALJs across a broad spectrum of agencies, and endanger the everyday administrative adjudications alluded to above. It is not beyond the realm of possibility that “all federal ALJs are at risk” in the constitutional wake of Lucia.388 We pause at the thought of the further possibility that this new landmark, no matter how necessary and correct it might be, “effectively render[s] invalid thousands of administrative actions.”389

Lucia has the truth of it, then: agency adjudicators exercising significant authority are officers of the United States.390 Therefore, they are susceptible to a constitutional challenge unless they attained office in a manner compliant with the Appointments Clause.391 Without such conformity, they fail to meet the demands of Article II. In postulating these axioms, the Supreme Court’s newest Appointments Clause landmark not only establishes the template for future litigation, it invites it.

374 See City of Arlington v. FCC, 569 U.S. 290, 315 (2013) (Roberts, C.J., dissenting).

375 FTC v. Ruberoid Co., 343 U.S. 470, 487 (1952) (Jackson, J., dissenting).

376 See Kent Barnett, Against Administrative Judges, 49 U.C. DAVIS L. REV. 1643, 1645 (2016).

377 Bandimere, 844 F.3d at 1170.

378 See AUTHORIZED JUDGESHIPS—FROM 1789 TO PRESENT, https://www.uscourts.gov (860 authorized judgeships for 2016).

379 Bandimere, 844 F.3d at 1199 n.5.

380 Id. at 1199 nn.5–6 (McKay, J., dissenting).

381 See Free Enter. Fund v. PCAOB, 561 U.S. 477, 542–43 (2010) (Breyer, J., dissenting).

382 EPA v. EME Homer City Generation, L.P., 134 S. Ct. 1584, 1610 (2014) (Scalia, J., dissenting).

383 See Bandimere, 844 F.3d at 1201 (McKay, J., dissenting).

384 PHH Corp. v. CFPB (PHH I), 839 F.3d 1, 6 (D.C. Cir. 2016), vacated and remanded en banc, 881 F.3d 75 (D.C. Cir. 2018).

385 Id. at 5.

386 Id. at 6.

387 See Lucia v. SEC, 138 S. Ct. 2044, 2064 (2018) (Sotomayor, J., dissenting).

388 Bandimere, 844 F.3d at 1199 (McKay, J., dissenting).

389 Id.

390 See Lucia, 138 S. Ct. at 2053–55.

391 See id. at 2055.

D.  Lucia’s Unanswered Question and the Next Constitutional Crisis for the Appointments Clause

Many have predicted that the next constitutional crisis shall arise from the question deliberately left unanswered by the high Court in Lucia: do statutory restrictions upon the President’s power to remove administrative law judges violate the Appointments Clause?392 Recall the respondent SEC urged the Justices to resolve this query, but the high bench declined.393

Certainly, we acknowledged the existence of the question at an earlier point in this Article but did so in a deliberately understated manner. Our rationale was since the Supreme Court did not formally embrace

the issue, it would be unwise for us to elevate it from subtext.

Until now. To be quite sure, we concur that Lucia was not the appropriate vehicle to decide if Article II is violated when the President’s power to remove an administrative law judge is constrained by statute. All the government’s protestations to the contrary, the Court was indisputably correct to avoid that constitutional question on the day it accorded Mr. Lucia victory. But there is another reason, one far more just and powerful.

The Lucia Court was right not to decide the removal question because, in all likelihood, it shall soon find its own way to the high bench. However, the vehicle for that next constitutional adjudication has yet to be determined. At least one prime contender did not answer the bell, but other possibilities now loom in the lower courts.

With respect to the former, a most worthy candidate would have been PHH II, a D.C. Circuit decision we alluded to previously herein.394 That bifurcated controversy touched upon many of the Article II points raised in Lucia, most especially the constitutionality under an Appointments Clause analysis of a statutory bar to the President removing an agency official from office.395

At an earlier stage, a three-judge panel of the D.C. Circuit declared that the Director of the Consumer Financial Protection Bureau (the CFPB) held office unconstitutionally because he could not be removed by the President.396 In a forceful opinion rendered by then–Circuit Judge Kavanaugh, the tribunal found the statutory provisos insulating the CFPB’s Director from removal by the Chief Executive were an irremediable violation of the Appointments Clause.397

Subsequently, a sharply divided D.C. Circuit, sitting en banc, reversed the panel, and declared that the sanctity of the Appointments Clause was unmolested by the ability of the agency’s chief to retain office without fear of removal by the Chief Executive.398

PHH II, most especially its dissent, deals with many of the same issues addressed in Lucia, among them, the Appointments Clause, the accountability of Executive Branch functionaries to the President and, therefore, the People, and the liberty interest preserved by that same accountability.399

In hindsight, one might speculate that the Lucia Court deliberately left the removal question for another day because there was some supposition that PHH II would eventually find its way to the high Court’s docket. Yet such musings are futile. As fate would have it, neither side petitioned for Supreme Court review of the D.C. Circuit’s fractious opinion.400

Yet there is no need for disappointment; rather, anticipation, albeit measured, is in order. For while PHH II never proved to be the vehicle for the Supreme Court to resolve Lucia‘s unanswered question, other controversies are looming on the horizon, and may yet arrive before the Justices in due course.

Indeed, it would seem the same administrative agency at the eye of the storm in PHH II abounds with such possibilities for further testing of the demands of the Appointments Clause. One such instance involving the embattled Consumer Financial Protection Bureau is C.F.P.B. v. RD Legal Funding, LLC.401 There, Senior District Judge Loretta J. Preska dismissed an agency enforcement action “because [the CFPB’s] composition violates the Constitution’s separation of powers.”402

Presuming RD Funding remains controversial, the Supreme Court may eventually find this case to be the proper vehicle to respond to the removal question so ardently posited by the SEC in Lucia, and thereby extend Appointments Clause analysis set forth in that new landmark.403

In sum, and no matter if the chosen vehicle for resolution is RD Funding or another controversy, we respectfully submit Lucia shall be the touchstone for the high Court’s eventual decision regarding the Appointments Clause and the removal power. Moreover, Lucia‘s safeguarding of liberty by imposing accountability will, we steadfastly believe, dictate the very pattern and outcome of the Supreme Court’s next addition to the Article II pantheon.

What we are most assured of is the following. Lucia, in its brevity, in its forthrightness, in its certitude, made it absolutely clear that inhabitants of administrative agencies who hold a certain degree of power are officers of the United States.404 Thus, they must attain office in manner strictly compliant with the Appointments Clause.405 Only in this way can the precept “[l]iberty requires accountability” be met.406

Given that the new landmark known as Lucia has memorialized the foregoing as a constitutional truth, can the congruent removal question be decided any differently? Respectfully, we think not.

Rather, we are of the firm opinion that impediments to the President’s power to remove a bureaucrat exercising significant decision-making power are just as violative of the Appointments Clause as deficiencies in the Chief Executive’s authority to appoint such office-holders in the first instance. And given the parallels therein, our expectation is that Lucia will unequivocally shape the next permutation of the Supreme Court’s Appointments Clause jurisprudence.

392 Id. at 2059–60 (Breyer, J., dissenting); see Steven D. Schwinn, Lucia v. SEC and the Attack on the Administrative State, AM. CONST. SOC’Y SUP. CT. REV. 1, 256 (2017–18).

393 See Brief for Respondent at 21, Lucia v. SEC, 138 S. Ct. 2044 (2018) (No. 17-130).

394 See supra notes 51–68 and accompanying text.

395 PHH Corp. v. CFPB (PHH II), 881 F.3d 75, 101 (D.C. Cir. 2018); id. at 156–57 (Henderson, J., dissenting).

396 PHH Corp. v. CFPB (PHH I), 839 F.3d 1, 31, 36 (D.C. Cir. 2016), vacated and remanded en banc, PHH II, 881 F.3d 75 (D.C. Cir. 2018).

397 Indeed, then–Circuit Judge Kavanaugh described this offense against Article II in the most egregious of terms. Id. at 7–9.

398 PHH Corp. II, 881 F.3d at 137.

399 Id. at 164, 183 (Kavanaugh, J., dissenting).

400 See Barbara S. Mishkin, No U.S. Supreme Court review sought in PHH, BALLARD SPAHR LLP: CONSUMER FINANCE MONITOR (May 4, 2018).

401 CFPB v. RD Legal Funding, LLC, 332 F. Supp. 3d 729, 745–46 (S.D.N.Y. 2018).

402 Id. at 785.

403 Ever so briefly, we note also CFPB v. All Am. Check Cashing, Inc., No. 3:16-CV-356, argued No. 18-60302 (5th Cir. Mar. 12, 2019), where the agency’s constitutionality is challenged.

404 Lucia v. SEC, 138 S. Ct. 2044, 2053–54 (2018).

405 Id. at 2055.

406 Dep’t of Transp. v. Ass’n of Am. R.R., 135 S. Ct. 1225, 1234 (2015) (Alito, J., concurring).

E.  Liberty, Accountability, and Lucia

From the outset of this Article, we have maintained that Lucia is not a mundane instance of challenging administrative agency power via questioning the authority of administrative law judges. Rather, it encompasses a true test of the very bedrock principles of our ordered system of liberty, specifically the preservation of that liberty by maintaining the accountability of government to the People.

Let us commence this section of our commentary with the fundamentals. From the founding to the present day, the American people can boast of a government which functions by the consent of the governed.407 This is so because the national government so constructed derives all of its sovereign power from the People.408

The Appointments Clause of Article II contributes mightily to preserving the consent of the governed.

The proviso is elegant in the simplicity of its operation, as follows: the President is accountable to the People, and officers of the United States are accountable to the Chief Executive.409 A citizen aggrieved by the actions of a member of officialdom brings her complaint to the President, who then requires the appointee to justify his actions.410

Not only does this assure the continued sovereignty of the People, it also comports neatly with the President’s sworn duty to “take Care that the Laws be faithfully executed.”411 To fulfill her own oath of office, the Chief Executive shall be compelled to commission competent and trustworthy individuals as the sworn officers of the United States.412

Thereafter, and for as long as she holds office, the President is free to call upon her appointees for an accounting.413 Conversely, all true officers of the United States are keenly aware that they are answerable to the Chief Executive, and, thereby, the People, the ultimate holders of the sovereign power.414 In sum, this accountability guarantees liberty.

Lucia is further premised upon the fact that “[t]hose who exercise the power of Government are set apart from ordinary citizens.”415 Precisely to forestall this tiny fraction of the population from standing apart and aloof from the general citizenry, the Supreme Court has declared it essential that “[t]here should never be a question whether someone is an officer of the United States.”416

By its robust and fair application of the Appointments Clause to the matter set before it, the Lucia Court assured that those who hold office, and are entrusted with sovereign authority by the President, are easily classified.417 Once properly categorized, the Appointments Clause assures their accountability to the Chief Executive who appointed them, and, thereby, to the People who elected that same chief magistrate.

Lucia is a sterling example of these vaunted precepts in action. The petitioner therein was aggrieved by the actions of the SEC and its in-house adjudicator, each an ostensible part of the Executive Branch.418 Under normal circumstances, as envisioned by the Appointments Clause, a citizen such as Mr. Lucia would have brought his complaint to the President, who is accountable to the People, and the Chief Executive would have called to account the agency and its jurist.

Yet that was a pointless exercise here, because the ALJ had never been appointed by the President.419 Lacking appointment by the Chief Executive meant a corresponding lack of accountability, an affront to the very raison d’etre of the Appointments Clause. Thus, could the Supreme Court’s finding that the Clause

had been violated come as a surprise to anyone familiar with the essence of the Article II proviso?

Moreover, if Lucia had been decided differently, it would have fostered, not only a lack of accountability by the SEC’s ALJs, but an evasion of accountability by the President. Notwithstanding that the President is accountable to the People, how can she answer for the actions of those who have no cause to account to her?420

It must be said that the erosion of the accountability of the President to the People is no less dangerous than the accretion of power to the Chief Executive. Nor does it matter if that reapportionment comes swiftly or at glacial pace.421 Strange but nevertheless true, diminishing the need for the President to account increases the power of the Chief Executive. Either outcome is antithetical to the People’s liberty interest.

Another truism is that any dispersion of responsibility within government only engenders more of the same.422 That is why the accountability mandated by the Appointments Clause is so vital to our ordered system of liberty. Implicit in Lucia is a stern warning regarding the danger to freedom offered by nonchalance towards accountability, and the even greater danger of severing the chain of accountability in its entirety.423

By means of its unswerving enforcement of the process for appointment mandated by the Appointments Clause, Lucia keeps faith with the long line of high Court precedent which has staunchly defended the prerogative of the elected President to oversee the unelected bureaucracy and prevent the latter from retreating into a limbo of unaccountability.424

Lucia is invigorated from the Supreme Court’s prior declarations that we cannot permit the contemporary Administrative State to “slip from the Executive’s control, and thus from that of the people.”425 This latest Supreme Court landmark fully acknowledges that the consent of the governed degenerates into mere theory unless those appointed to execute the laws are compelled to account to the Chief Executive in a meaningful way.426

For our coda, we repeat that Lucia did not merely adjudicate a dispute centered upon federal securities law. This new landmark is so much more. It is truly a reaffirmation of the core precept that liberty requires accountability, and that the Appointments Clause is one of the most important tools in assuring the reality of that accountability to the People.

It is an unfortunate fact that since the 1930s, much of the sovereign power has been delegated to a plethora of administrative agencies (including their administrative law judges), “making accountability more elusive and more important than ever.”427

That is why Lucia represents such an important contribution to the Supreme Court’s Appointments Clause jurisprudence. Since the founding of the nation, the Constitution, in all its aspects, has been the solemn mechanism by which the People govern themselves, through their duly elected leaders.428

And even as difficult as it might be in the vast ocean of the Administrative State, the People remain firmly on the course of self-government by keeping the bureaucracy accountable, via bulwarks of liberty such as the Appointments Clause. Liberty does require accountability, and Lucia shall henceforth play a

role in that vital exercise, by first clearly defining who stands as officers of the United States and utilizing the strictures of the Appointments Clause to assure their accountability, thereby preserving liberty.

407 See W. Va. State Bd. of Educ. v. Barnette, 319 U.S. 624, 641 (1943).

408 U.S. CONST. pmbl.

409 Free Enter. Fund v. PCAOB, 561 U.S. 477, 513–14 (2010).

410 Id. at 497–98.

411 U.S. CONST. art. II, § 3.

412 See U.S. CONST. art. II, § 3, cl. 6; U.S. CONST. art. VI, cl. 3.

413 See PHH Corp. v. CFPB (PHH II), 881 F.3d 75, 142 (D.C. Cir. 2018) (Henderson, K., dissenting); Dep’t of Transp. v. Ass’n of Am. R.R., 135 S. Ct. 1225, 1238 (2015) (Alito, J., concurring).

414 See PHH II, 881 F.3d at 142 (Henderson, J., dissenting).

415 Dep’t of Transp., 135 S. Ct. at 1235 (Alito, J., concurring).

416 Id.

417 Lucia v. SEC, 138 S. Ct. 2044, 2053–55 (2018).

418 Id. at 2049–50.

419 Id. at 2050.

420 See Free Enter. Fund v. PCAOB, 561 U.S. 477, 498 (2010).

421 See PHH Corp. v. CFPB (PHH II), 881 F.3d 75, 157 (D.C. Cir. 2018) (Henderson, J., dissenting).

422 See Free Enter. Fund, 561 U.S. at 497.

423 Id. at 495–96.

424 Id. at 498–99.

425 Id. at 499.

426 See PHH II, 881 F.3d at 137 (Henderson, J., dissenting).

427 Id.

428 Free Enter. Fund, 561 U.S. at 499.

CONCLUSION

When all is said and done, we are confident that Lucia is the beginning, not the end, of a fresh epoch of constitutional challenges to executive power. Lucia is the next forthright postulation of the plain meaning of Article II, and the procedures it mandates, all purposed to assure accountability to the People.

Moreover, while Lucia is forceful in its own right, it garners further strength from its classification of Freytag‘s leading principles, and, to a slightly lesser extent, reinforces landmarks of an older vintage, such as Germaine. To be sure, even while Lucia does not overtly reference Free Enterprise Fund, implicitly the former incorporates the latter’s fundamental holdings as to Article II’s basic protection of our ordered system of liberty.

In the preceding pages, we have candidly predicted that Lucia shall be the progenitor of a new generation of Appointments Clause challenges to agency power. Utilizing the new landmark as a template and guided by its axioms as to the process for the constitutional appointment of officers of the United States, parties subject to in-house adjudications can assure that the presiding jurist holds her office in conformity with the constitutional mandates decreed by Article II.

Far more important, citizens can be confident there exists an accountability of government which, in turn, safeguards their liberty.

Are more Appointments Clause cases for the good? Unequivocally yes. The proviso, along with the rest of Article II, cabins executive power, simultaneous with establishing the prerogatives of the Executive Branch. It assures a process by which the nondescript functionaries of the Fourth Branch of government must answer to the People, through the person of the Chief Executive.

We conclude this Article with the concise, yet eloquent, words of Justice Alito. “Liberty requires accountability.”429 Lucia now stands at the apex of the Appointments Clause jurisprudence which guarantees that vital precept shall continue to safeguard our precious liberties.

429 Dep’t of Transp. v. Ass’n of Am. R.R., 135 S. Ct. 1225, 1234 (2015) (Alito, J., concurring).