The Supreme Court issued a major separation-of-powers decision this morning, which may have more long-term ripple effects than the internet sales-tax case. In Lucia v. Securities and Exchange Commission, the Court rule 6.5-2.5 – I’ll explain shortly – that SEC administrative law judges are “officers of the United States” and thus must be appointed by the president or the “department head,” in this case the SEC itself (rather than being selected by commission staff). This is important because it makes ALJs, who make decisions with significant monetary and regulatory impact, more accountable to the political process – instead of being mere creatures of the bureaucratic blob.
It’s gratifying that the Supreme Court takes constitutional structure seriously, at least with respect to the president’s appointment of inferior officers. Justice Elena Kagan’s majority opinion powerfully and concisely explains what was clear all along: ALJs are powerful officers with significant discretionary powers rather than mere clerks. That power and discretion is what sets officers apart from mere employees, as the Supreme Court explained in Freytag v. Commissioner (1991). Accordingly, ALJs should indeed be part of the executive branch’s chain of command instead of a nebulous part of the “fourth branch” administrative agencies. This ruling will increase accountability for these executive officers even as they perform quasi-judicial tasks and often represent the last real chance for those caught in the SEC’s investigatory clutches to defend themselves.
Read more at https://www.cato.org/blog/high-court-reads-applies-constitution
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