[00:00:02] Speaker 01:
Case number 17-1246 at L, Joe Fleming, individually, and as Joe Fleming Stables, petitioner, versus United States Department of Agriculture.

[00:00:12] Speaker 01:
Mr. Royals for the petitioners, Mr. Aguilar for the respondent.

[00:00:26] Speaker 02:
If it please the court.

[00:00:29] Speaker 02:
The Administrative Procedures Act, 5 USC 558B, provides a sanction may not be imposed except within the jurisdiction delegated to the agency and is authorized by law.

[00:00:46] Speaker 02:
The petitioners in this case have been assessed fines by the USDA for alleged violations of the Horse Protection Act

[00:00:55] Speaker 02:
and have been disqualified from their professions as horse trainers and boarders for periods of one to five years.

[00:01:07] Speaker 02:
The Horse Protection Act vests jurisdiction in the Secretary, and Section 1825B1 provides, no penalty shall be assessed unless such person is given notice and an opportunity

[00:01:22] Speaker 02:
for a hearing before the secretary with respect to such violation.

[00:01:29] Speaker 02:
The amount of such penalties shall be assessed by the secretary by written order.

[00:01:35] Speaker 05:
And the penalty in this case has been set aside.

[00:01:40] Speaker 05:
Everyone agrees we have to remand.

[00:01:43] Speaker 05:
Yes.

[00:01:43] Speaker 02:
No.

[00:01:45] Speaker 02:
I don't agree.

[00:01:47] Speaker 05:
Well, let's assume we're going to remand.

[00:01:49] Speaker 05:
OK.

[00:01:52] Speaker 05:
You'll get a hearing before an administrative law judge appointed consistent with Lucia.

[00:02:02] Speaker 02:
Your Honor, we'll get a hearing before an administrative law judge who is not properly appointed according to law, because the administrative law judge serves as a principal officer and has two levels of tenure protection

[00:02:19] Speaker 02:
in violation of the dual protection rules set forth in free enterprise.

[00:02:23] Speaker 02:
So no, we will not get a hearing before a lawfully appointed administrative law judge.

[00:02:29] Speaker 02:
That's our point, that our sanctions have been entered not by the Secretary and not by anybody who's lawfully appointed under the Constitution or is required by law to decide the case

[00:02:44] Speaker 02:
That's before you.

[00:02:45] Speaker 04:
So you mentioned two things that you think would be wrong with the ALJ if it were to go back on remand.

[00:02:51] Speaker 04:
One is that you think the ALJ is a principal officer, and the second is that you think there's a double layer of for-cause protections that render the removal part of it problematic under the Constitution in your view.

[00:03:04] Speaker 02:
Yes.

[00:03:04] Speaker 04:
So as to the second of those,

[00:03:07] Speaker 04:
You didn't flag that the first time you went through the administrative proceedings, as I understand it.

[00:03:12] Speaker 02:
We didn't flag anything.

[00:03:12] Speaker 02:
It was a default judgment, but that's correct.

[00:03:15] Speaker 04:
But you still had the proceeding before the JO.

[00:03:19] Speaker 04:
I mean, you did flag something because the JO... Oh, we flagged a lot of things.

[00:03:22] Speaker 02:
Yes, we did flag a separation of powers problem before the JO, but I don't want to have you take that too far.

[00:03:31] Speaker 02:
The dual tenure problem, we did not.

[00:03:34] Speaker 02:
The dual tenure problem didn't arise even before the JO.

[00:03:39] Speaker 02:
The administrative law judges, they were considered employees.

[00:03:44] Speaker 02:
Don't forget, until November of 2017, the government took the position that all ALJs were employees.

[00:03:54] Speaker 02:
Our ALJs were not appointed to 3105.

[00:03:57] Speaker 04:
But the government has also taken the position that the JOs were not principal officers, but you still flag that issue.

[00:04:04] Speaker 02:
I'm sorry.

[00:04:05] Speaker 04:
In other words, the fact that the government was taking a particular position didn't prevent you from raising the issue.

[00:04:10] Speaker 02:
Well, how would we raise the issue?

[00:04:14] Speaker 02:
Solicitor General wasn't inhibited from raising the issue before the Supreme Court, though it was not raised before this court in Lucia, because the first time it was right and became a problem was when they said that the administrative law judges must be appointed by the head of the

[00:04:36] Speaker 02:
of the department and that put them on 3105.

[00:04:40] Speaker 02:
3105 only says the agency may appoint as many administrative law judges as it needs.

[00:04:46] Speaker 02:
Our position is there were no administrative law judges appointed by the head of the department

[00:04:53] Speaker 02:
or that had the tenure protection of 3105, they were, as in the recent case out of the federal circuit, considered employees.

[00:05:04] Speaker 02:
And that was the government's position in our case, both at the administrative level.

[00:05:11] Speaker 02:
And so we can't forfeit something that didn't exist.

[00:05:17] Speaker 04:
I'm still not completely sure I follow that, because the argument still existed.

[00:05:23] Speaker 02:
Right.

[00:05:25] Speaker 02:
The argument would have been you're not lawfully appointed administrative law judges, but if you were appointed administrative law judges, you wouldn't be lawfully appointed administrative law judges because you've got two levels of tenure protection.

[00:05:44] Speaker 02:
I'm afraid as trial advocates that that's a little far.

[00:05:48] Speaker 05:
from our... You can argue things in the alternative, which is what you're doing here.

[00:05:53] Speaker 02:
There's no reason to argue in the alternative.

[00:05:55] Speaker 02:
They weren't subject to two levels of tenure protection.

[00:05:58] Speaker 02:
They weren't appointed by the secretary.

[00:06:01] Speaker 02:
They weren't appointed under 31-05.

[00:06:03] Speaker 02:
It's not in the record that says how they were appointed, who appointed them, or if they were even appointed at all, or instead... I'm sorry, what's changed?

[00:06:16] Speaker 05:
Nothing.

[00:06:16] Speaker 05:
What's changed?

[00:06:18] Speaker 02:
Oh, the administrative law judges have now been appointed, or at least have gone through a ceremony of appointment by the secretary.

[00:06:26] Speaker 05:
Post Lucia.

[00:06:28] Speaker 02:
Actually, they did it before Lucia, which is a separate problem that's not an issue here.

[00:06:34] Speaker 05:
And all of that happened after you went through

[00:06:37] Speaker 02:
All that happened after we filed our petitions to the judicial officer and of course we didn't know about that.

[00:06:45] Speaker 02:
There's no document that shows that they were appointed.

[00:06:49] Speaker 02:
There's no announcement.

[00:06:50] Speaker 02:
There's just cases subsequent to our appeals being filed in May of 2017 where the ALJs or the JO in their opinion say

[00:07:01] Speaker 02:
Well, there was a ceremony held in late July 2017 and in December 2017 where the secretary appointed us and we took an oath.

[00:07:12] Speaker 02:
So I assume from reading that, that sometime after we filed our petitions with the judicial officer, months after, they at least attempted to appoint

[00:07:27] Speaker 02:
the administrative law judges under 3105.

[00:07:32] Speaker 02:
Of course, they didn't have the authority to do that because the regulations from the Office of Personnel Management were still in existence at that time, which gave you the option of appointing one of three candidates.

[00:07:50] Speaker 02:
Those regulations weren't repealed by the president until July 10,

[00:07:57] Speaker 02:
2018 after the decision in Lucia so that the head of the department could pick who he wanted to appoint or she wanted to appoint as opposed to picking between options of the Office of Personnel Management submitted to the U.S.

[00:08:14] Speaker 02:
Department.

[00:08:14] Speaker 04:
Can I ask you this question?

[00:08:15] Speaker 04:
You do have arguments that you could win on.

[00:08:19] Speaker 04:
If it were to go back, I know you don't want it to go back, but if it were to go back, you do have arguments that you could win on and get all the way home, regardless of your constitutional challenges to either the ALJ or the JO.

[00:08:33] Speaker 02:
I don't know of any.

[00:08:34] Speaker 02:
What one?

[00:08:34] Speaker 02:
Help me.

[00:08:36] Speaker 04:
I thought you raised factual challenges to the allegations made by the agency.

[00:08:43] Speaker 02:
Oh, yes.

[00:08:44] Speaker 02:
Yes.

[00:08:46] Speaker 02:
Let me mention that.

[00:08:47] Speaker 02:
They say, yeah, we could win.

[00:08:49] Speaker 02:
Just as a matter of some interest, there's been approximately 350 initial decisions by ALJs in this century.

[00:09:03] Speaker 02:
Of those, 18 involved the Harsh Protection Act.

[00:09:08] Speaker 02:
That's initial decisions.

[00:09:09] Speaker 02:
All the rest of them were consent decisions or default decisions where the responding party, like our clients, had to pay a fine or take a disqualification.

[00:09:19] Speaker 02:
Of those 18, nine of the decisions were in favor of the USDA and nine were in favor of the respondent in those cases.

[00:09:35] Speaker 02:
The USDA didn't want at least us with nine.

[00:09:37] Speaker 02:
Of those nine, seven were appealed to the judicial officer.

[00:09:43] Speaker 02:
Of those seven, six were reversed in favor of the USDA.

[00:09:47] Speaker 02:
So you have a total of three cases out of 387

[00:09:53] Speaker 02:
ALJ initial decisions of which 18 were just the Horse Protection Act.

[00:10:01] Speaker 02:
That's a winning chance of 1%.

[00:10:04] Speaker 02:
I'm sorry, we don't think that's good.

[00:10:06] Speaker 02:
We think a better system could be employed.

[00:10:10] Speaker 02:
And we think Congress should make that decision about what the better system is and not article 3 judges.

[00:10:17] Speaker 03:
That goes to my question.

[00:10:18] Speaker 03:
So assume that we agreed with you that the double for-cause protection was unconstitutional.

[00:10:23] Speaker 03:
Yes.

[00:10:23] Speaker 03:
I mean, what exactly is the remedy that you want?

[00:10:26] Speaker 02:
I don't think there's any remedy this court can provide because this court is an Article III court and not Congress.

[00:10:34] Speaker 02:
The way it's done, apparently after free enterprise and in several cases, including from this court,

[00:10:41] Speaker 02:
is to say, well, what would Congress want?

[00:10:43] Speaker 02:
Would they want us to do away with the agency or something?

[00:10:48] Speaker 02:
You know, that's a real important question in something like the Consumer Finance Protection Bureau.

[00:10:53] Speaker 02:
But in this case, we're talking about an agency with a $105 billion budget and more than 100,000 employees.

[00:11:01] Speaker 02:
This is a teeny little part of it.

[00:11:03] Speaker 02:
If you say you can't prosecute cases under this because the ALJs have dual level of tenure, then you just don't have a lawful system.

[00:11:15] Speaker 02:
Just like it says, you don't have jurisdiction.

[00:11:19] Speaker 02:
And so if you don't have jurisdiction, either the secretary can personally hear these cases.

[00:11:25] Speaker 02:
That's an option that Lucia points out.

[00:11:28] Speaker 02:
Or Congress can fix the problem.

[00:11:31] Speaker 03:
So you don't think there's any severance remedy here?

[00:11:33] Speaker 03:
No, I do not think I am.

[00:11:34] Speaker 03:
You don't think there's any severance remedy?

[00:11:38] Speaker 00:
Let me address the severance.

[00:11:39] Speaker 03:
I mean, in the alternative, you don't think there's, I mean, do you think severance?

[00:11:42] Speaker 03:
No.

[00:11:42] Speaker 03:
You're sort of suggesting, I think, that severance cannot be a constitutional remedy, that courts can't sever parts of statutes.

[00:11:50] Speaker 03:
Am I saying that?

[00:11:51] Speaker 02:
Yes, I am, Your Honor, and I have.

[00:11:54] Speaker 05:
The Supreme Court severed in free enterprise funding.

[00:11:59] Speaker 02:
And that was a really interesting decision, if I could address that point.

[00:12:03] Speaker 02:
In free enterprise, like here, would you sever and say ALJs don't have tenure protection?

[00:12:12] Speaker 02:
Or would you say the members of the MSPB?

[00:12:16] Speaker 02:
That's where your dual tenure problem arises.

[00:12:20] Speaker 02:
In free enterprise,

[00:12:22] Speaker 02:
There was no act of Congress that the Supreme Court could declare unconstitutional and say the commissioners will no longer have protection.

[00:12:38] Speaker 02:
As Justice Breyer pointed out and did this whole appendix, the SEC was created in 1933.

[00:12:46] Speaker 02:
At that time, the governing law from the Supreme Court of the United States was Meyers.

[00:12:53] Speaker 02:
Myers said Congress couldn't do anything.

[00:12:56] Speaker 02:
It wasn't until 35 that you have Humphrey's estate.

[00:13:01] Speaker 02:
There's not any impingement by Congress in creating tenure protection for the commissioners of the SEC.

[00:13:13] Speaker 02:
There's just not.

[00:13:14] Speaker 02:
So all you had was, well, we'll sever and make these board members

[00:13:22] Speaker 02:
not have tenure pressure.

[00:13:25] Speaker 02:
I, for the life of me, can't see how.

[00:13:29] Speaker 02:
That gave the president more ability to see that the laws are effectually enforced.

[00:13:36] Speaker 03:
But that's the precedent that we have from the Supreme Court.

[00:13:39] Speaker 02:
I'm sorry.

[00:13:39] Speaker 03:
You may disagree with that remedy, but that's the... Oh, no.

[00:13:42] Speaker 02:
I think the Supreme Court gives you discretion.

[00:13:45] Speaker 02:
Does it tell you you must declare the inferior officers tenure unconstitutional?

[00:13:52] Speaker 02:
or the principal officer's tenure unconstitutional.

[00:13:56] Speaker 02:
Free enterprise doesn't answer that because there was no congressional impact.

[00:14:03] Speaker 03:
So how would you have us answer that question in this case?

[00:14:06] Speaker 03:
Huh?

[00:14:06] Speaker 03:
How would you have us answer that question in this case?

[00:14:09] Speaker 02:
We cannot provide a remedy.

[00:14:12] Speaker 02:
That's what I would have you answer the question.

[00:14:14] Speaker 02:
Congress should do it.

[00:14:15] Speaker 05:
Do you have any case

[00:14:17] Speaker 05:
in which either the Supreme Court or this court has found some structural problem in administrative adjudication, appointments, removal, something like that, and has

[00:14:36] Speaker 05:
As a result, shut down enforcement rather than fixed the appointment or removal problem that gives rise to the judgment.

[00:14:47] Speaker 02:
I can't think of one.

[00:14:52] Speaker 02:
I'm trying to think of one.

[00:14:53] Speaker 02:
I think there is one, but I can't think of it right now.

[00:14:56] Speaker 02:
And I'd like to save my 25 seconds for rebuttal.

[00:15:00] Speaker 04:
We'll give you time on rebuttal.

[00:15:02] Speaker 04:
OK.

[00:15:02] Speaker 04:
Yeah, so don't worry about that.

[00:15:04] Speaker 02:
But I need to think.

[00:15:06] Speaker 02:
I'm sure I prepared myself for an answer to that question, but I can't remember it.

[00:15:12] Speaker 02:
That's just the way it goes.

[00:15:15] Speaker 05:
One more question for me.

[00:15:17] Speaker 05:
So you ask us to address, well, I know you don't want to remand.

[00:15:23] Speaker 05:
But if we remand, you have a set of arguments for why we need to worry about

[00:15:32] Speaker 05:
the ALJs who will necessarily hear the case as soon as it goes back.

[00:15:39] Speaker 05:
Why should we also strain to reach your argument about the judicial officer, which is two steps removed and a little bit more speculative because we don't know

[00:15:56] Speaker 05:
We don't know how the case will come out before the ALJ.

[00:15:59] Speaker 05:
We don't know whether it will be appealed to the judicial officer.

[00:16:02] Speaker 05:
We don't know how these recusal issues will shake out.

[00:16:06] Speaker 05:
Seems like that part of your argument is for plowing ahead is much more tenuous.

[00:16:13] Speaker 02:
It seems to me like it's far more important.

[00:16:16] Speaker 02:
What you have is our clients have been penalized, whatever it may be, and the chances are probable, highly probable, that they're going to be back in front of the jail if you remand it.

[00:16:28] Speaker 02:
And we're going to have another situation where we come to this court

[00:16:32] Speaker 02:
And no principal officer appointed by the president and confirmed by the Senate has ever touched this case.

[00:16:39] Speaker 02:
Suppose you win.

[00:16:40] Speaker 05:
Suppose you win before the ALJ.

[00:16:42] Speaker 02:
Well, you know, talk about speculative.

[00:16:45] Speaker 05:
All right, suppose you lose an appeal and the judicial officer who has already touched this case before recuses herself.

[00:16:54] Speaker 02:
Well, they disappointed others.

[00:16:56] Speaker 05:
And the secretary decides it.

[00:17:00] Speaker 02:
And we solved the ALJ problem?

[00:17:03] Speaker 02:
No, you've solved the judicial officer.

[00:17:07] Speaker 05:
In your case?

[00:17:11] Speaker 02:
In this case, neither the ALJ nor the judicial officer, who's the alter ego of the secretary under the statute,

[00:17:22] Speaker 02:
would address whether the ALJs were lawfully appointed.

[00:17:25] Speaker 02:
They said that was for the court.

[00:17:27] Speaker 02:
You've got to understand.

[00:17:28] Speaker 05:
I understand.

[00:17:28] Speaker 05:
I'm asking you to assume we address all of your arguments about the ALJ.

[00:17:35] Speaker 02:
Uh-oh.

[00:17:36] Speaker 02:
And then we lose.

[00:17:38] Speaker 05:
We take it up.

[00:17:38] Speaker 05:
Why should we address, at this point, your arguments about the ALJ?

[00:17:42] Speaker 02:
Because there's no regulation.

[00:17:46] Speaker 02:
They can adopt the regulations, but they've had three years to do that.

[00:17:48] Speaker 02:
There are no regulations.

[00:17:50] Speaker 02:
under which rules of practice.

[00:17:53] Speaker 02:
There are no rules of practice under which the secretary can make the decision.

[00:17:58] Speaker 02:
All of the rules of practice are directed to the judicial officer making the decision.

[00:18:03] Speaker 05:
The secretary can withdraw the delegation, prospectively withdraw the delegation.

[00:18:08] Speaker 02:
Right, and that just leaves nobody because

[00:18:11] Speaker 02:
What rules would we follow under which the secretary then could decide?

[00:18:15] Speaker 05:
If there's no specific assignment of authority, I would think the cabinet agency head would have authority.

[00:18:24] Speaker 02:
Why should we speculate about that?

[00:18:25] Speaker 02:
He simply doesn't under their rules.

[00:18:28] Speaker 02:
He does under the statute.

[00:18:29] Speaker 04:
There's just a general background default assumption that the agency can act.

[00:18:33] Speaker 04:
There's just a general background default assumptions that an agency can act.

[00:18:37] Speaker 02:
Correct.

[00:18:38] Speaker 04:
And if there's no other actor, then obviously you can go to the secretary.

[00:18:41] Speaker 02:
And that's precisely what the statute says, is the secretary does have that authority.

[00:18:46] Speaker 02:
What I'm saying is, we got to appeal.

[00:18:48] Speaker 02:
We couldn't appeal to the secretary in our case, because all of the rules that have been in effect during the whole time of this case require appeal to somebody else.

[00:19:00] Speaker 02:
There's just no rule.

[00:19:01] Speaker 02:
It doesn't tell us what to do.

[00:19:03] Speaker 05:
What happens?

[00:19:04] Speaker 05:
There's only one judicial officer.

[00:19:06] Speaker 05:
Right now.

[00:19:07] Speaker 05:
And she presumably has a recusal problem in your case.

[00:19:11] Speaker 05:
She does, yes.

[00:19:12] Speaker 05:
Okay, so what happens?

[00:19:15] Speaker 05:
Case goes back, you lose before the agency.

[00:19:19] Speaker 05:
It's an administrative appeal to the judicial officer, and she recuses.

[00:19:24] Speaker 02:
What happens then?

[00:19:24] Speaker 02:
The secretary can appoint up to two at one time, disappoint another one.

[00:19:29] Speaker 04:
But the government already says that it's... I'm sorry.

[00:19:31] Speaker 04:
Doug, go ahead.

[00:19:32] Speaker 04:
Well, the government already says that it's brief, that it might just go to the secretary.

[00:19:35] Speaker 02:
Well, why doesn't it say in its rules, which it has control over, that it will go to the secretary?

[00:19:42] Speaker 04:
But we at least know from the government's briefing that it thinks it can go to the secretary.

[00:19:48] Speaker 02:
But not under the rules.

[00:19:49] Speaker 02:
Under what rule can you go to the secretary?

[00:19:52] Speaker 02:
Under what rule of practice?

[00:19:54] Speaker 04:
Just under the background assumption that whenever an agency is created by statute, the agency head can act.

[00:19:59] Speaker 02:
I don't disagree with that.

[00:20:00] Speaker 02:
There's just no rule that allows it.

[00:20:03] Speaker 03:
Well, can I ask you a question?

[00:20:04] Speaker 03:
I mean, if it were to go to the secretary, would that satisfy your concern?

[00:20:08] Speaker 03:
Because it seems also that you raised some questions about

[00:20:12] Speaker 03:
that because there would be some due process concerns with someone who is not independent deciding the case.

[00:20:21] Speaker 02:
While I don't believe the secretary would meet the criteria of impartiality under Section 557B of the Administrative Procedures Act, I don't have any choice about that.

[00:20:34] Speaker 02:
I mean, the secretary ultimately has the authority to do this.

[00:20:39] Speaker 02:
The petition and the complaint in this case on page one of the joint appendix says, this is a proceeding before the secretary.

[00:20:48] Speaker 02:
Our complaint is, it never has been.

[00:20:51] Speaker 02:
And it never will be, because the rules as they stand don't allow it.

[00:20:56] Speaker 02:
I mean, just as courts have said, well, officers in the patent division, they will have tenure protection.

[00:21:07] Speaker 02:
And that's the law.

[00:21:10] Speaker 02:
We don't want to be before judges that we just took away their tenure protection.

[00:21:15] Speaker 02:
We don't want to be judges that don't have tenure protection.

[00:21:18] Speaker 02:
That's why we like to be before you.

[00:21:21] Speaker 02:
Not them.

[00:21:22] Speaker 02:
But the administrative agency system doesn't completely give us that.

[00:21:27] Speaker 02:
It just simply says that any person who makes a decision within the process has to be impartial.

[00:21:34] Speaker 02:
Well, OK, the secretary has that authority.

[00:21:38] Speaker 02:
But when the secretary adopts rules that delegate that authority to others,

[00:21:45] Speaker 02:
Then he gives up that authority if he wants to repeal the rules and tell me how I can appeal to him.

[00:21:51] Speaker 02:
That's quite another thing.

[00:21:53] Speaker 04:
Can I ask you this question?

[00:21:54] Speaker 04:
So a lot of your argument seems to be operating on this premise that

[00:22:00] Speaker 04:
You have an entitlement not to have to go through a proceeding before an agency where you have a constitutional objection to the way the agency proceedings constructed.

[00:22:09] Speaker 02:
I'd word it a different way.

[00:22:10] Speaker 02:
I'd say we have an entitlement, an absolute right to have our cases go through proceedings

[00:22:17] Speaker 02:
where the officers who administer it are lawfully appointed and where the agency has jurisdiction, and neither one of those apply in our case.

[00:22:28] Speaker 04:
Okay, so I'm not going to quibble with you on that.

[00:22:30] Speaker 04:
Let's just suppose that I agree with that characterization.

[00:22:32] Speaker 04:
I hope you do.

[00:22:34] Speaker 04:
My question is this, that that doesn't mean you have an entitlement not to have to go through that proceeding to begin with.

[00:22:41] Speaker 04:
It's just as long as you have judicial review at the end of the day.

[00:22:44] Speaker 04:
Because that's, for example, what happened and what happens in a lot of our cases where we say, you have to go through an agency route, even though we understand you're objecting to the agency route, you just have to go through the agency route, raise your objections, and then you get judicial review at the back end.

[00:22:59] Speaker 04:
That's what happened in the John Doe case about the CFPB director.

[00:23:02] Speaker 04:
Even though the PHH, the panel decision had already come down and there was a constitutional objection to the composition of the CFPB, the single director,

[00:23:12] Speaker 04:
Our court still said, we understand that you have that argument.

[00:23:16] Speaker 04:
We understand that you don't want to go through the agency proceedings, but you still do.

[00:23:20] Speaker 04:
You go through the agency proceedings, you always have judicial review at the back end.

[00:23:23] Speaker 02:
And I'll tell you what that's going to result in if you say that.

[00:23:26] Speaker 02:
Just what's happened in the Lucia case.

[00:23:28] Speaker 02:
Mr. Lucia was told, you got to go through the proceeding again.

[00:23:32] Speaker 02:
And he brought a suit in Los Angeles in the district court.

[00:23:35] Speaker 02:
And he said, I'm not going to go through this.

[00:23:38] Speaker 02:
I want an injunction.

[00:23:40] Speaker 02:
against having to do this futile idiotic thing of going through it again because these ALJs now properly appointed by the commission, those ALJs

[00:23:52] Speaker 02:
have a dual level of tenure protection.

[00:23:54] Speaker 02:
OK, so he got kicked out of district court under, in fact, this court's precedent that says, you've got to go through the proceeding.

[00:24:03] Speaker 02:
What he's saying is, I went through it once.

[00:24:06] Speaker 02:
I don't have to go through it twice.

[00:24:07] Speaker 02:
Where's that rule?

[00:24:09] Speaker 02:
And so he got kicked out.

[00:24:10] Speaker 02:
It's in the Ninth Circuit.

[00:24:12] Speaker 02:
Ms.

[00:24:12] Speaker 02:
Cochran, SEC case, she had her.

[00:24:16] Speaker 04:
But the result that you just

[00:24:18] Speaker 04:
accurately portrayed in Lucia, that's the point, is that they did have to go through the agency proceedings.

[00:24:27] Speaker 02:
It's because it's futile.

[00:24:29] Speaker 02:
Ms.

[00:24:29] Speaker 02:
Cochran brought the same kind of action that Mr. Lucia did, said, I went through the proceedings.

[00:24:35] Speaker 02:
I don't want to be back before another SECALJ that has dual tenure protection.

[00:24:40] Speaker 02:
She filed her case in Texas.

[00:24:44] Speaker 02:
And her case was argued last week in the Fifth Circuit Court of Appeals because they thought it was serious enough to put a stay on the SEC.

[00:24:54] Speaker 02:
They enjoined the SEC from proceeding until

[00:24:59] Speaker 02:
They made a decision of whether she had a chance of probably or possibly winning.

[00:25:05] Speaker 02:
So at least some courts are open to the question.

[00:25:09] Speaker 02:
This one should be too.

[00:25:10] Speaker 02:
You should not make our clients.

[00:25:14] Speaker 02:
These are people that clean stables, that board horses.

[00:25:18] Speaker 02:
You should not make, we're not here on a, by some,

[00:25:23] Speaker 02:
not-for-profit corporation, we represent these people at the ground level.

[00:25:28] Speaker 02:
And they just shouldn't have to go through a futile exercise to say, well, we've raised these.

[00:25:35] Speaker 02:
Do you think that the Secretary of Agriculture has authority to say that the ALJs are not lawfully appointed because they violate the separation of powers?

[00:25:48] Speaker 02:
Absolutely not.

[00:25:49] Speaker 02:
Why should we have to go before somebody that's the head of an agency that can't possibly give us the relief to come back to a court?

[00:25:59] Speaker 04:
That's been true in a lot of our cases.

[00:26:01] Speaker 02:
That's too bad, isn't it?

[00:26:03] Speaker 02:
Let's rethink that then.

[00:26:05] Speaker 02:
Let's wonder about why.

[00:26:07] Speaker 04:
But you're asking us to rethink something that we've already established.

[00:26:11] Speaker 04:
There's other cases in which the exact same arguments have been made, maybe not perhaps as forcefully as you're making them, but the exact same arguments have been made to the effect that

[00:26:25] Speaker 04:
It doesn't make any sense to require going through the agency because there's no way the agency itself was going to declare itself to be in violation of the Constitution.

[00:26:32] Speaker 04:
It's going to have to come back up for judicial review anyways.

[00:26:35] Speaker 04:
And we've had cases, Jarkese, the entire Thunder Basin line of cases, they all say,

[00:26:40] Speaker 04:
you still have to go through the agency process.

[00:26:42] Speaker 02:
Utility waste, this court's decision.

[00:26:45] Speaker 02:
I'm sorry, Your Honor, this answers your question too.

[00:26:48] Speaker 02:
In utility waste, this court refused to remand a case back to an agency.

[00:26:54] Speaker 02:
I forget which one, but it's cited in my brief.

[00:26:57] Speaker 02:
until they had decided the jurisdictional issues.

[00:27:02] Speaker 02:
They also agreed to decide a statutory issue.

[00:27:07] Speaker 02:
So they decided whether or not, because it would have been futile to send it back, utility waste is one of the main cases that we cite from this court that says this court ought to take up the jurisdictional questions

[00:27:26] Speaker 02:
before they remanded.

[00:27:31] Speaker 02:
How's that for luck?

[00:27:33] Speaker 04:
Why don't we hear from the government and then we'll give you some time for rebuttal.

[00:27:37] Speaker 04:
Thank you very much.

[00:27:40] Speaker 02:
I went a little over.

[00:27:42] Speaker 04:
It's all right.

[00:27:43] Speaker 04:
We were asking you questions.

[00:27:45] Speaker 04:
Excuse me.

[00:27:53] Speaker 06:
May it please the Court, Daniel Aguilar, for the U.S.

[00:27:56] Speaker 06:
Department of Agriculture.

[00:27:58] Speaker 06:
We agree with petitioners that their initial adjudications were held before an ALJ who had not been appointed by the head of department.

[00:28:05] Speaker 06:
And after Lucia, we agree that that ALJ is an officer of the United States who needed to be appointed consistent with the Appointments Clause.

[00:28:12] Speaker 06:
And consistent with Lucia, we agree that the remedy is remand for a new proceeding.

[00:28:16] Speaker 06:
To an ALJ.

[00:28:18] Speaker 06:
Well, you usually ask us how it works in the regulations, and as we've noted that the department's ALJs have been appointed by the secretary.

[00:28:26] Speaker 05:
So the Lucia problem is solved.

[00:28:30] Speaker 05:
Yes, Your Honor.

[00:28:31] Speaker 05:
But the double forecast removal problem

[00:28:37] Speaker 05:
is still present?

[00:28:38] Speaker 06:
Well, so two things on that.

[00:28:40] Speaker 06:
One, we think that the result in any event is remand, regardless, so that remand's appropriate.

[00:28:46] Speaker 06:
But just going forward, too, I note that they can win on the merits because we're not going to rely on the default on proceeding.

[00:28:54] Speaker 06:
We'll ignore the default.

[00:28:55] Speaker 06:
They're allowed to present affirmative defenses if they want to and present evidence and have a hearing and all of the normal rights that they're associated with in a judicative proceeding.

[00:29:04] Speaker 05:
Just on the question whether we reach the removal issue, how is this case in its current posture different from PHH, where we had an alternative ground for resolving a question before us, and then we went on to say, well, we're not going

[00:29:30] Speaker 05:
not going to remand to an agency that may be unconstitutionally structured.

[00:29:36] Speaker 05:
We're going to decide the constitutional issue to avoid that.

[00:29:39] Speaker 06:
So I think a couple of things.

[00:29:40] Speaker 06:
One, as I understand it, the challenge from PHH was preserved before the agency, and here it wasn't, right?

[00:29:46] Speaker 06:
They've conceded that they didn't raise the removal challenge before the agency.

[00:29:49] Speaker 06:
And by statute and regulation, you're required to exhaust all issues before the agency.

[00:29:55] Speaker 06:
Put aside preservation

[00:29:57] Speaker 06:
for a second.

[00:29:58] Speaker 06:
Is there anything else?

[00:29:59] Speaker 06:
The second thing that I would point to is as I believe it was the case in PHH, the petitioners were contending that because the directors removal restrictions were unconstitutional,

[00:30:12] Speaker 06:
The remedy would be that the agency could not act at all, which as I understand it is why the court said you needed to reach that because although you're entitled to a remand on the first part, it's questionable about whether a remand is even appropriate under the second part.

[00:30:25] Speaker 06:
And here, I think that they haven't identified any cases.

[00:30:28] Speaker 06:
where a remand would be inappropriate if the ALJ's remote protections were at issue, right?

[00:30:34] Speaker 06:
The statute vests the adjudicative authority in the Secretary.

[00:30:38] Speaker 06:
The Secretary has the authority to act, and if necessary, I mean, the Secretary could just hear the adjudication himself.

[00:30:44] Speaker 04:
In other words, on that distinction, the point you're making is, in CFPB, in the CFPB context,

[00:30:50] Speaker 04:
Anything that would have happened would have arguably been invalid if the single director structure was constitutionally problematic.

[00:30:58] Speaker 06:
I understand petitioners making that point, and that was their request for remedy, if I'm remembering it correctly, yes.

[00:31:03] Speaker 04:
Whereas here, if you're talking about the ALJs, it's that you're talking about a particular officer performing a particular function, not that the agency structure had been issued.

[00:31:11] Speaker 04:
is problematic.

[00:31:12] Speaker 06:
Correct.

[00:31:13] Speaker 06:
And I don't understand them to be making any argument that the secretary somehow lacks authority to conduct these adjudications.

[00:31:19] Speaker 06:
And the statute vests that adjudicative authority in the secretary.

[00:31:22] Speaker 06:
It says, before you go and find a violation of Bookworth Protection Act or impose civil monitor penalties or disqualification, the respondent is entitled to notice and hearing before the secretary.

[00:31:32] Speaker 06:
And then by regulation, the secretary has delegated that down.

[00:31:34] Speaker 03:
Those regulations are still in place, right?

[00:31:36] Speaker 06:
Yes.

[00:31:37] Speaker 06:
And so to the extent that they were saying there's no regulation that would allow the practices or procedures to occur before the secretary, I don't think that's true.

[00:31:44] Speaker 06:
If you look to 7 CFR 1.132, that's a definitional section.

[00:31:51] Speaker 06:
So it defines a judge to be an ALJ.

[00:31:53] Speaker 06:
It also says the judicial officer is somebody who has been appointed to be the judicial officer or the secretary when performing the acts that have been delegated to the judicial officer.

[00:32:03] Speaker 06:
And then 7 CFR 2.12 says that the Secretary can obviously revoke a delegation to anyone, including the judicial officer at any time.

[00:32:12] Speaker 05:
Do you think that's realistic, that the Secretary of Agriculture would personally adjudicate

[00:32:21] Speaker 05:
a case about whether this particular horse was mistreated?

[00:32:28] Speaker 05:
I think the secretary certainly has that power, and to the extent that the claims here are ones about whether... But, I mean, you have regulations in place that would direct the remand back to an ALJ, which happens all the time, and you have a theoretical but

[00:32:49] Speaker 05:
a seemingly wildly implausible possibility that the secretary would say, oh, I want to do this adjudication myself.

[00:32:59] Speaker 05:
That doesn't seem like much of a reason.

[00:33:02] Speaker 06:
I disagree, Your Honor.

[00:33:05] Speaker 06:
If I can take a step back.

[00:33:06] Speaker 06:
If we're talking about the judicial officer issue, their claim is that.

[00:33:10] Speaker 05:
No, no, I'm talking about the ALJ.

[00:33:11] Speaker 05:
Just the double for cause.

[00:33:15] Speaker 05:
Sure.

[00:33:16] Speaker 05:
I mean, the case

[00:33:18] Speaker 05:
The case for our resolving these issues seems to me much stronger with regard to ALJ issues than judicial officer issues.

[00:33:27] Speaker 05:
So that's what I'm focusing on.

[00:33:28] Speaker 06:
Sure.

[00:33:29] Speaker 06:
I would disagree with that, primarily also based on the fact that here you have a statute that says you must exhaust all the administrative remedies according to the practices established by the Secretary.

[00:33:39] Speaker 06:
So that's the forfeiture argument.

[00:33:40] Speaker 06:
That's a forfeiture.

[00:33:41] Speaker 06:
And then the regulation of hearings before the judicial officer says, argument before the judicial officer is limited to those issues that you raised before the judicial officer or that the judicial officer, him or herself, identifies and asks for briefing and argument on.

[00:33:55] Speaker 06:
And everybody agrees here.

[00:33:56] Speaker 06:
I mean, they conceded during their opening argument that they did not raise a removal challenge at any point during the administrative process.

[00:34:02] Speaker 04:
What's your response to their argument that

[00:34:04] Speaker 04:
Well, there was no occasion to raise that challenge.

[00:34:07] Speaker 06:
Yeah, I don't think that, I mean, so the fact that they say we couldn't raise it, I believe, because there had been no holding that ALJs were officers yet.

[00:34:17] Speaker 06:
I don't think that's an impediment to making a removal argument.

[00:34:20] Speaker 06:
I mean, I would note, in the Seventh Circuit, there was a case called Bevo v. SEC, which I believe this court cited in its Starkeese decision about, you know, a jurisdiction

[00:34:29] Speaker 06:
whether or not somebody can sue in district court to enjoin SEC proceedings.

[00:34:33] Speaker 06:
And in the Seventh Circuit, the plaintiff there had raised a removal challenge to the ALJs, arguing that there were multiple layers of court-caused removal protection, which was unconstitutional.

[00:34:42] Speaker 06:
As I recall it, there was no accompanying appointments clause claim.

[00:34:45] Speaker 06:
And so the fact that you can raise a removal claim even without saying that this person has or has not been properly appointed goes to show that you can raise this argument or argue in the alternative.

[00:34:55] Speaker 06:
I mean, they were making an argument

[00:34:56] Speaker 06:
that the ALJs had not been properly appointed, right?

[00:34:59] Speaker 06:
That was preserved.

[00:35:00] Speaker 06:
They made it repeatedly.

[00:35:01] Speaker 04:
Do you think that the provisions you're relying on for the proposition that the issue needed to have been raised before the agency, do you think that that's a jurisdictional exhaustion requirement?

[00:35:12] Speaker 04:
No.

[00:35:12] Speaker 04:
Or did you make that argument?

[00:35:14] Speaker 06:
No, this court held, I think it was in Munsell versus... I think we held it's not.

[00:35:17] Speaker 05:
Yes, this court held that it's not.

[00:35:19] Speaker 05:
So you have a mandatory

[00:35:21] Speaker 05:
statutory rule.

[00:35:24] Speaker 05:
Yes, it's a mandatory claims processing rule.

[00:35:26] Speaker 05:
But we also have fry tag, which says precisely with respect to that category of rule that we excuse preservation, we excuse failure to preserve to decide, and that was an appointments clause issue, but we did something similar in Noel Canning with respect to a removal issue.

[00:35:51] Speaker 06:
If I can, I think that the issue here is different because of the way that the statutes work here.

[00:35:56] Speaker 06:
In Frytag, there was no statute of regulation that imposed forfeiture.

[00:36:00] Speaker 06:
That was just the backdrop rule of forfeiture, which is judicially created and there are judicial exceptions for it.

[00:36:05] Speaker 06:
In Noll-Canning, the question was whether or not the NLRB could act at all, right, whether it had a quorum, and so therefore it was an exceptional circumstance, which the statute recognized that you can excuse forfeiture in exceptional circumstances.

[00:36:18] Speaker 05:
The phrase I jotted down in my notes is they were talking about what they described as a category of errors that are structural but non-jurisdictional.

[00:36:30] Speaker 06:
And that describes this case, this removal claim to a T. Well, if I could, Your Honor, again, in Freitag, there was no statute or regulation that enclosed forfeiture.

[00:36:39] Speaker 06:
And what the Supreme Court held in Ross v. Blake

[00:36:42] Speaker 06:
is that in the case about the PLRA and whether or not you have to exhaust administrative appeals before you can bring a suit there, what the Supreme Court said is you look to whether or not the statute has built in exceptions to an exhaustion requirement.

[00:36:57] Speaker 06:
If the statute doesn't, then you do not have judicially created exceptions to that forfeiture requirement.

[00:37:05] Speaker 06:
I think there, the Fourth Circuit has held, we will excuse forfeiture because of special circumstances.

[00:37:10] Speaker 06:
And the Supreme Court said, the statute doesn't talk about special circumstances.

[00:37:13] Speaker 06:
You can't excuse forfeiture on that basis.

[00:37:16] Speaker 06:
And so here, there's nothing within the statute that allows for an excusal of forfeiture.

[00:37:20] Speaker 06:
It says you have to raise these issues.

[00:37:22] Speaker 04:
But you don't just, if it's not jurisdictional, then we can't excuse forfeiture.

[00:37:25] Speaker 06:
Right.

[00:37:26] Speaker 06:
Not if it's a mandatory claims processing rule.

[00:37:28] Speaker 06:
If it's a mandatory claims processing rule, what the Supreme Court has said in cases, I think, like Ross versus Blake or United States versus Manrique,

[00:37:36] Speaker 06:
is that once a mandatory claims processing rule is properly and timely invoked saying you forfeited this, you didn't exhaust your administrative remedies, it is mandatory to apply.

[00:37:48] Speaker 05:
What's the difference then between a non-jurisdictional claim processing rule and a jurisdictional bar?

[00:37:58] Speaker 05:
You're saying as to both, we have no discretion

[00:38:01] Speaker 05:
Excuse the forfeiture.

[00:38:03] Speaker 06:
No, Your Honor, if I could.

[00:38:04] Speaker 06:
I think that there is a meaningful difference.

[00:38:06] Speaker 06:
So, for example, if it's a jurisdictional issue, one, you have to reach it, right?

[00:38:12] Speaker 06:
You have to determine whether or not the court has jurisdiction.

[00:38:14] Speaker 06:
Two, even if it's non-jurisdictional, oftentimes statutes will include, like in the NLRB statute, it says you're required to raise issues before the board except for in exceptional circumstances.

[00:38:26] Speaker 06:
And then that's obviously allowing for some category of claims to be excused, and then the court can interpret that and say whether or not... That's because it's built into the rule to begin with.

[00:38:34] Speaker 04:
Exactly.

[00:38:34] Speaker 04:
And here, your argument is that there's nothing built into the rule to begin with.

[00:38:37] Speaker 04:
But I guess the difference is the one you flagged earlier, which is that with the jurisdictional one, it doesn't matter if it's been flagged.

[00:38:43] Speaker 04:
With the non-jurisdictional one, at least the party has to have flagged it.

[00:38:46] Speaker 04:
Yes, I think that's correct.

[00:38:47] Speaker 04:
I suppose that's a distinction.

[00:38:52] Speaker 04:
Fry tag means that it can be reached.

[00:38:55] Speaker 04:
Nothing says that you have to reach it.

[00:38:57] Speaker 06:
And that's correct.

[00:38:58] Speaker 06:
And there the court exercised its discretion in a particular case where there wasn't a statute of regulation imposing for it.

[00:39:04] Speaker 04:
Are you aware of a situation in which if we assume that one of the discretionary box and the question is whether as a matter of discretion we should reach something that we can,

[00:39:14] Speaker 04:
putting aside your argument that we can't even reach it because it's mandatory claims processing.

[00:39:18] Speaker 04:
Let's assume we're in the box where we say, we can reach it if we want to, we can excuse the forfeiture, and we can reach it if we want to, and the question is whether we should.

[00:39:27] Speaker 04:
Are you aware of a situation in which a court has exercised discretion to reach something when the proceedings were going to be remanded anyway?

[00:39:38] Speaker 06:
I can't recall one off of the top of my head.

[00:39:41] Speaker 06:
They cite the utility waste case for this proposition.

[00:39:45] Speaker 06:
As I understand that case, the EPA had agreed to a voluntary remand to essentially reconsider actions that it had already taken.

[00:39:53] Speaker 06:
And the court noted that there was a, not that it was discretionary, but that

[00:39:58] Speaker 06:
Because that wasn't a mandatory claims processing rule, right?

[00:40:01] Speaker 06:
That was just a request for a remand.

[00:40:03] Speaker 06:
And there I think it was that the court said, there are still some statutory issues that constrain exactly what you could even do on remand, and that would work to the prejudice of particular parties.

[00:40:16] Speaker 06:
And so therefore, we will decide those issues now.

[00:40:18] Speaker 06:
I don't think that that reasoning applies here for the reasons that we laid out at the beginning of our brief while we're saying that remand is appropriate.

[00:40:25] Speaker 06:
Because they forfeited the removal clause claim, the judicial officer will not hear their case on appeal, and as to whether or not there need to be separate proceedings before imposing a disqualification order, we agree that they're entitled to remand, the initial decision is vacated, and so that question doesn't even need to be reached because there's been no finding yet of a violation or an imposition of a civil monetary penalty.

[00:40:47] Speaker 04:
What about the argument that the ALJ is a principal officer's?

[00:40:50] Speaker 04:
So that I don't think is true at all.

[00:40:53] Speaker 04:
On the merits.

[00:40:54] Speaker 04:
On the merits, you don't think it's true.

[00:40:55] Speaker 04:
But in terms of whether we should address it.

[00:40:57] Speaker 04:
So you have the argument.

[00:40:59] Speaker 04:
So there's three arguments I think that are before us, if I'm counting them correctly.

[00:41:02] Speaker 04:
Sure.

[00:41:02] Speaker 04:
ALJs are principal officers.

[00:41:04] Speaker 04:
ALJs are protected by double layers of foreclosed removal, which creates a problem under free enterprise.

[00:41:10] Speaker 04:
And then the judicial officer is a principal officer.

[00:41:12] Speaker 04:
As to the one that says that the ALJs are principal officers,

[00:41:17] Speaker 04:
on the question of whether we reach that argument, what's the government's view about that?

[00:41:21] Speaker 06:
I don't think you need to reach it, again, because still the result is a remand to the agency for further proceedings.

[00:41:28] Speaker 06:
And to the extent that you're still going to be agnostic about the result of that, we obviously think that they are inferior officers and we can discuss the merits of that if necessary, but the result is still a remand.

[00:41:38] Speaker 06:
And if they prevail on the merits, which we've noted they're entitled to present defenses, they're entitled to make their case,

[00:41:43] Speaker 06:
And if the agency finds them in favor or if the parties reach a settlement, which as we've noted has happened in a lot of cases that have been remanded under similar circumstances, I mean, that resolves the issue and this court doesn't need to address those.

[00:41:54] Speaker 04:
I mean, the possibility of settlement doesn't seem like that advances the ball a great deal because that's true in any case in which a court could remand.

[00:42:02] Speaker 04:
So that would have been true in PHH.

[00:42:04] Speaker 04:
That would have been true in Noel Canning.

[00:42:06] Speaker 04:
There's a lot of situations in which a settlement could occur.

[00:42:10] Speaker 06:
That's true, Your Honor, but that's also just showing that there can be a favorable resolution of the case where the court doesn't need to pass on particular claims that have been raised.

[00:42:19] Speaker 05:
And yet, those cases exercise discretion to reach issues.

[00:42:24] Speaker 06:
Not that I recall, so I note in this court's order in Timbervest versus SEC, there the petitioners raised an Appointments Clause claim to the ALJ.

[00:42:33] Speaker 06:
The SEC agreed that that was meritorious and they deserved a remand.

[00:42:37] Speaker 06:
They had also raised an argument that the adjudicative proceedings couldn't proceed because the statute of limitations had run and that there was a removal challenge to the ALJ similar to the ones made here.

[00:42:48] Speaker 06:
And here, the court remanded that case and said, we don't need to address those issues, primarily based on the SEC's argument on the motion that they could prevail on remand.

[00:42:58] Speaker 06:
And on remand, the parties ended up settling.

[00:43:00] Speaker 06:
A similar posture happened in the Sixth Circuit in Henry Blackburn, which was a force protection act proceeding out of the Sixth Circuit.

[00:43:06] Speaker 06:
There, they raised an appointment clause challenge to the ALJ, and they also raised an argument about the judicial officer not being properly appointed.

[00:43:13] Speaker 04:
Do you know in Timbervest, do you know?

[00:43:15] Speaker 04:
So in Timbervest, I went back and looked, and I think it's right that

[00:43:18] Speaker 04:
the challengers raised the same, effectively the same removal challenge that's being raised here.

[00:43:24] Speaker 04:
Yes.

[00:43:25] Speaker 04:
For the Court of Appeals, and we remanded anyway.

[00:43:27] Speaker 04:
Do you know whether that was preserved before the agency?

[00:43:29] Speaker 06:
Yes, it was.

[00:43:30] Speaker 06:
And the agency issued a decision, as I recall, rejecting that on merits.

[00:43:35] Speaker 06:
Okay.

[00:43:36] Speaker 06:
And saying that, I think the analysis was something along the lines of, we've held that our ALJs are employees, and even if they weren't, it fails for several reasons.

[00:43:44] Speaker 06:
And so that was preserved for judicial review.

[00:43:47] Speaker 04:
Can I ask a question about the judicial officer principle?

[00:43:51] Speaker 04:
On preservation, or are we at the merits yet?

[00:43:55] Speaker 04:
I'm happy to address anything.

[00:43:57] Speaker 04:
I think this straddles preservation and the merits.

[00:44:02] Speaker 04:
Then we can go to the merits.

[00:44:04] Speaker 04:
The judicial officer, principal officer, so in your brief you say that it's not going to be an issue on remand because the person who is now the judicial officer won't

[00:44:15] Speaker 04:
sit in judgment of this case on remand.

[00:44:17] Speaker 06:
That's correct.

[00:44:18] Speaker 04:
So what's going to happen?

[00:44:20] Speaker 06:
If it goes back down to the ALJ and there is an adverse finding against petitioners and they choose to appeal, then it's a decision for the secretary about whether to hear the case personally or whether to appoint another judicial officer to hear the case.

[00:44:36] Speaker 06:
And I think that's a decision within the secretary's discretion, and I don't want to bind his discretion.

[00:44:41] Speaker 04:
So if it goes to another judicial officer, then obviously the same claim remains that the judicial officers... That's a possibility, but it rests on a couple of contingents, right?

[00:44:49] Speaker 06:
They have to go back down to the ALJ, the ALJ has to find against them, there has to be a timely petition for review, and then the secretary... So I take your point that it wouldn't necessarily come up again, but at least...

[00:44:59] Speaker 04:
there's a possibility that it will come up again.

[00:45:02] Speaker 06:
There is a possibility, but I don't think that that's a reason.

[00:45:06] Speaker 06:
Because it rests on a series of contingents, I don't think that that's a reason that the court needs to reach it.

[00:45:11] Speaker 03:
So if we were to reach the double layer for cause protection, your argument seems to be largely a statutory one about how we should interpret the good cause provision.

[00:45:21] Speaker 03:
But that's an argument that was rejected in free enterprise fund, so.

[00:45:25] Speaker 06:
I don't think it was rejected, Your Honor.

[00:45:28] Speaker 06:
What the court said is that the removal question is distinct from the appointments question.

[00:45:32] Speaker 06:
The appointments question was decided by the DC Circuit.

[00:45:36] Speaker 06:
The removal question has not yet been litigated in the other courts, and we are declining to exercise our discretion to add that, essentially, as a question presented in the case.

[00:45:44] Speaker 03:
Can you cite any cases where courts have interpreted the good cause provisions narrowly in the way that you suggest?

[00:45:50] Speaker 06:
I don't believe that that's come up because these challenges to 5 U.S.C.

[00:45:56] Speaker 06:
7521 have been more recent and in the cases in which they've been raised either the court has not reached them because sometimes the case has not been jurisdictionally proper or because the remand has been granted on other grounds such as on the appointments clause ground.

[00:46:11] Speaker 06:
So I don't, because this argument is relatively new, I don't know of any court that has yet construed 7521 and what it means.

[00:46:17] Speaker 06:
It's true, but it is new.

[00:46:19] Speaker 03:
I mean, there are, I mean, in a number of these cases, I mean, and more read for cause provisions narrowly, right?

[00:46:24] Speaker 03:
I mean, you know, in free enterprise fund, they say the removal restrictions set forth in the statute mean what they say.

[00:46:31] Speaker 06:
Well, in there, it was because it was an unusually high level of protection.

[00:46:35] Speaker 06:
It was more than just regular for-cause, and the Supreme Court noted that multiple times in its opinion.

[00:46:40] Speaker 06:
But to the extent that free enterprise fund is relevant here at all, I think it's relevant in footnote to saying that our holding today doesn't bear on a class of adjudicators known as ALJs.

[00:46:50] Speaker 03:
It doesn't say that it doesn't bear on it.

[00:46:52] Speaker 03:
It says they're declining to reach those questions, I think, in footnote 10.

[00:46:55] Speaker 06:
Right.

[00:46:55] Speaker 06:
And so it's saying that because we think that they might be different.

[00:46:58] Speaker 06:
And so before you reach that constitutional question about whether or not you think that they might be different or whether the same reasoning applies, what the canon of constitutional avoidance means is that you should read the statute reasonably.

[00:47:10] Speaker 06:
And if it can be so reasonably interpreted to avoid reaching a constitutional question, then that's the reading that should be adopted.

[00:47:17] Speaker 03:
I mean, isn't it reasonable to interpret a statute that provides

[00:47:21] Speaker 03:
for cause removal protections to essentially mean something much closer to at-will removal protections?

[00:47:27] Speaker 06:
I don't think that it's at will removal protections.

[00:47:30] Speaker 06:
I mean, we've explained in a brief that we think that the good cause, poor cause removal protection here encompasses things to failure to lawfully follow a directive or poor conduct in your proceedings, poor adjudications, and that the MSPD has a role to play in it.

[00:47:45] Speaker 06:
But I think that the reason that argument there is fairly brief is because of the reason that it's been forfeited and that forfeiture is mandated by statute and regulation.

[00:47:54] Speaker 06:
And so this court ought not reach it.

[00:47:56] Speaker 05:
Is it on your theory, would it be a lawful directive for the Secretary of Agriculture to instruct the ALJ?

[00:48:09] Speaker 05:
I've looked at this case and I want the plaintiff to win, or I want the enforcing authority to win.

[00:48:21] Speaker 05:
I think that if that's based on a reasoned interpretation of the record and evidence and legal arguments... Let's assume the evidence is genuinely disputed and the secretary says, I think the enforcer should win.

[00:48:35] Speaker 05:
I'm directing the ALJ to decide the case that way.

[00:48:38] Speaker 06:
I think the secretary has statutory authority to do that, whether or not that's a lawful directive.

[00:48:43] Speaker 05:
And if the ALJ disobeys that directive,

[00:48:47] Speaker 05:
the ALJ can be removed for cause.

[00:48:49] Speaker 06:
No, that's where I was hesitating.

[00:48:51] Speaker 06:
I don't want to go out further to say what is or is not a lawful directive in a particular circumstance, because as I've noted, this construction of it, I think that there needs to be some amount of judicial development about what a lawful directive actually is.

[00:49:03] Speaker 06:
But so long as that is encompassed within the forecast removal protection, we believe that that's adequate to preserve the executive's authority to control the executive branch.

[00:49:13] Speaker 05:
I mean, it seems like it's a pretty big fudge, right?

[00:49:16] Speaker 05:
Because either the secretary can make that directive, in which case you've solved the removal concern, but you've basically overruled Humphrey's executor.

[00:49:30] Speaker 05:
Or the secretary can't make that directive, in which case we're right back to two levels of independence.

[00:49:41] Speaker 05:
Well, we're not asking this court to reverse Humphrey's executor.

[00:49:45] Speaker 05:
What we are saying- Is there anything distinctive about this removal, this for-cause formulation from run-of-the-mill administrative law ones?

[00:49:58] Speaker 05:
Or let me ask you, is there anything distinctive about this for-cause protection from the one that protects FTC commissioners?

[00:50:06] Speaker 05:
I don't know.

[00:50:07] Speaker 05:
I haven't looked at the FTC statutes.

[00:50:10] Speaker 05:
Let's assume there's not.

[00:50:12] Speaker 05:
I mean, under your theory, the president can direct the FTC commissioners to pass a regulation that's within the scope of their statutory authority.

[00:50:24] Speaker 05:
And if they don't, he removes them for cause.

[00:50:26] Speaker 06:
Well, I think that the analysis here is a little different.

[00:50:29] Speaker 06:
On the FTC analysis, there's one layer of for-cause removal protection.

[00:50:35] Speaker 05:
Your statutory theory is that for-cause removal is supported when a

[00:50:46] Speaker 05:
superior political officer directs the putatively insulated adjudicator to come out a certain way.

[00:50:54] Speaker 06:
Our claim is, again, I don't know that that necessarily follows as a lawful directive, but if you assume that it does and you're concerned about what would happen at the FTC level, our argument here is that 7521 should be interpreted in a particular way because, as petitioners are alleging, there is a double layer of forecast removal protection, which would not be true in the FTC realm.

[00:51:19] Speaker 05:
To the extent the report has questions.

[00:51:21] Speaker 05:
Going down the same road that I think Judge Rao was, which is this kind of reading of the statute would seem to unravel all of the removal jurisprudence back to Humphrey's executor.

[00:51:37] Speaker 05:
Because it is an understanding of four cause removal that has nothing to do with the existence of two layers.

[00:51:44] Speaker 06:
Well, to the extent that you have hesitancy or questions on the merits of our statutory instruction or even going further what the constitutional resolution of this question should be, that just shows that this is the kind of thing that ought to be preserved before it's properly presented before a court.

[00:51:59] Speaker 06:
And to the extent that you're concerned that this might not come up, I can allay that concern.

[00:52:03] Speaker 06:
People are properly raising removal challenges in various administrative proceedings.

[00:52:07] Speaker 06:
that I know of and I know that those will eventually reach the courts of appeals and very likely this court.

[00:52:13] Speaker 04:
We also don't have anybody who's defending the merits of, if you think that the four cause protection is more robust than you're saying it is.

[00:52:25] Speaker 04:
then we don't have anybody who's defending the constitutionality of that.

[00:52:30] Speaker 06:
Well, we haven't briefed the constitutionality of that.

[00:52:33] Speaker 06:
That's correct.

[00:52:33] Speaker 06:
We haven't briefed that portion of the argument.

[00:52:35] Speaker 04:
But the argument's been made.

[00:52:36] Speaker 04:
I mean, there's Supreme Court justices who think that there's a distinction that's meaningful.

[00:52:41] Speaker 04:
And so it still might be valid, even if you don't construe for a cause in the way that you are.

[00:52:46] Speaker 06:
There are a number of arguments that could be made.

[00:52:48] Speaker 06:
And if this court wants to consider them, it should do so in a properly preserved case.

[00:52:51] Speaker 05:
Do you have a position

[00:52:54] Speaker 05:
Assuming for cause protection means that the ALJ, the secretary can't direct a decision by the ALJ.

[00:53:06] Speaker 05:
Can't remove because the ALJ decides the case a certain way.

[00:53:11] Speaker 05:
Do you have a position on the constitutionality of this structure, notwithstanding the double layer of protection?

[00:53:21] Speaker 05:
I know you didn't brief it,

[00:53:23] Speaker 05:
Does the government have a position?

[00:53:25] Speaker 06:
Not that I know of.

[00:53:26] Speaker 06:
I don't know of a position that we have on that to the extent that there would be some analysis necessary on it.

[00:53:32] Speaker 06:
I note that Meyer says that even if you're not permitted to remove a decision maker before they make a decision, the principal officer can obviously consider that decision in evaluating whether or not that person should later be removed.

[00:53:46] Speaker 06:
For example, if they clearly misapplied the law or ignored relevant facts or otherwise conducted their adjudication in a particularly bad way.

[00:53:52] Speaker 03:
What if they just didn't like the outcome?

[00:53:56] Speaker 06:
Again, that's not something that I'm prepared to make a statement on.

[00:53:59] Speaker 06:
I know this is a position that's been vetted by the Solicitor General in our Merits Brief in Lucia, and I don't want to get out of any decisions that the Solicitor General might need to make.

[00:54:08] Speaker 04:
As I understand it, the government isn't taking a position on the question that Judge Katz has raised.

[00:54:12] Speaker 04:
And I'm not.

[00:54:13] Speaker 06:
I was just noting a relevant analysis that you might want to consider when doing that.

[00:54:18] Speaker 04:
Can I get back to the—I don't want to stop— No, go ahead.

[00:54:22] Speaker 04:
On the ALJ principal officer one.

[00:54:25] Speaker 04:
So are you making an argument that the ALJ principal officer objection that's been raised, that that was forfeited?

[00:54:35] Speaker 06:
I can't recall whether or not that was raised below.

[00:54:38] Speaker 06:
If it was forfeited, we've noted it in our brief.

[00:54:41] Speaker 06:
I noted everywhere where the argument had not been raised before the judicial officer.

[00:54:44] Speaker 04:
Okay, so as to that one, your view is that we still don't need to get to it because there's still the argument that, well, they could win anyway on remit on other grounds.

[00:54:53] Speaker 04:
That's correct.

[00:54:54] Speaker 04:
But that's what you're resting on with respect to that issue.

[00:54:56] Speaker 06:
I think that's correct.

[00:54:57] Speaker 06:
And to the extent that you want to get into the merits on it, I mean, they're clearly subject to supervision and control, right?

[00:55:03] Speaker 06:
Their decisions can be revisited and reversed by both the judicial officer and the secretary.

[00:55:08] Speaker 06:
They have to follow directions that the secretary promulgates.

[00:55:11] Speaker 06:
I mean, those are all the same factors that were present in Edmund, which show that those intermediate military court judges were inferior officers.

[00:55:19] Speaker 05:
Just one last question at the end of the analysis remedy.

[00:55:24] Speaker 05:
Suppose we reach

[00:55:26] Speaker 05:
the removal issue, find that the double for cause structure is unconstitutional.

[00:55:37] Speaker 05:
Do you have any suggestion for us on what the remedy should be?

[00:55:43] Speaker 06:
Assuming that the court were to overlook the statutes and regulations on forfeiture and reject our statutory construction, then yes, I believe that the position that the Solicitor General made in the Lucia Merits brief was that section 7521 should be severed.

[00:55:59] Speaker 06:
I'm sorry, is that the, which one is that?

[00:56:02] Speaker 06:
That's the forecast removal protections for the administrative law judges.

[00:56:05] Speaker 06:
For the ALJ.

[00:56:06] Speaker 06:
Not for the MSB.

[00:56:08] Speaker 05:
So you want to preserve,

[00:56:12] Speaker 05:
the for-cause protection at the MSPB level and you want to preserve MSPB review?

[00:56:21] Speaker 05:
Yes, that's the position.

[00:56:22] Speaker 05:
And just excise the ALJ protection?

[00:56:27] Speaker 05:
Yes.

[00:56:27] Speaker 05:
Okay.

[00:56:28] Speaker 03:
So what would that mean then for the MSPB to review an at-will removal

[00:56:34] Speaker 03:
of an ALJ.

[00:56:36] Speaker 03:
So if you're keeping the MSPB there, what would the MSPB be doing?

[00:56:40] Speaker 03:
Because if the Secretary can remove the ALJ at will, why go to the MSPB at all?

[00:56:47] Speaker 06:
Well, I know that there are usually still protections against high-person employment actions, even for Apple employees.

[00:56:52] Speaker 03:
Well, but that would be after the fact, right?

[00:56:54] Speaker 03:
The way the statute is currently structured, the Secretary essentially goes to the MSPB in order to get the removal.

[00:57:02] Speaker 03:
So what would be the determination that the MSPB would make in advance of removal, if there was an at-will standard?

[00:57:11] Speaker 06:
There are still statutes and regulations that prohibit adverse employment actions for invidious reasons, such as on national origin, race, sex, religion.

[00:57:20] Speaker 06:
And so the MSPB clearly there has a role to play, even in a regime where 7521 has been severed.

[00:57:26] Speaker 06:
For all the reasons that we've explained, though, we don't think that the court needs to get that far.

[00:57:32] Speaker 04:
Thank you, counsel.

[00:57:33] Speaker 04:
Thank you.

[00:57:36] Speaker 04:
Give you two minutes for rebuttal.

[00:57:42] Speaker 02:
I've got two minutes.

[00:57:43] Speaker 02:
It'll be hard.

[00:57:45] Speaker 02:
Maybe you'll be patient with me.

[00:57:48] Speaker 02:
Let me start in the middle.

[00:57:51] Speaker 02:
In a letter that was written just a few days ago to this court by the government,

[00:58:01] Speaker 02:
It for the first time stated or it stated that under 7 U.S.C.

[00:58:07] Speaker 02:
6912E, we were precluded from bringing this issue about tenure.

[00:58:18] Speaker 02:
And it cited the D.C.

[00:58:20] Speaker 02:
Circuit case.

[00:58:21] Speaker 02:
This letter just arrived a few days ago.

[00:58:26] Speaker 02:
Read 67 U.S.C.

[00:58:28] Speaker 02:
6912E.

[00:58:32] Speaker 02:
Please read it.

[00:58:32] Speaker 02:
It just says, before a person can bring a lawsuit against the secretary, an agency, or an officer, it must exhaust administrative remedies.

[00:58:50] Speaker 02:
And surely you recognize we have not brought a lawsuit.

[00:58:56] Speaker 02:
The case that is cited from this court

[00:59:02] Speaker 02:
that recognizes 6912E is a case where the parties wanted to bring a Bevin's action, and they had not exhausted in remonstrative remedies.

[00:59:23] Speaker 02:
That statute does not act as a preclusion statute or a forfeiture statute in this case.

[00:59:32] Speaker 02:
Rule 1.145 does say that you cannot, in oral argument, raise issues that you have not raised in your petition before the judicial officer.

[00:59:53] Speaker 02:
That is not a preclusion statute.

[00:59:56] Speaker 02:
That is a direction about oral argument.

[01:00:00] Speaker 02:
That's a long rule.

[01:00:03] Speaker 02:
But it does not preclude you from saying anything in your petition.

[01:00:09] Speaker 02:
You can not say something outside your petition, but let me assure you, as to one of the questions, we certainly raised that the judicial officer acts as a principal officer.

[01:00:22] Speaker 02:
There's not a preclusion statute, and there's not a preclusion rule.

[01:00:28] Speaker 04:
But I don't think the government's even arguing that that claim was forfeited.

[01:00:33] Speaker 02:
No, but we didn't forfeit the ALJ claim, because we didn't raise it.

[01:00:40] Speaker 02:
But it's not forfeited because of that rule or those statutes.

[01:00:43] Speaker 02:
That's what I'm saying.

[01:00:45] Speaker 02:
All right.

[01:00:46] Speaker 02:
As to PHH, it was important.

[01:00:50] Speaker 02:
Thank you for reminding the court of that, Judge Katz.

[01:00:57] Speaker 02:
What the remedy is going to be in that is before the Supreme Court in Syria.

[01:01:02] Speaker 02:
It's granted review of that case.

[01:01:05] Speaker 02:
But when the Supreme Court granted review, it added an issue.

[01:01:09] Speaker 02:
And that issue was, what do we do if we find that the

[01:01:15] Speaker 02:
The director, that's one director.

[01:01:17] Speaker 02:
If they say, well, you're not constitutionally appointed, does the whole agency go?

[01:01:22] Speaker 02:
Or is there a way we can constitutionally or lawfully sever some portion of the statute?

[01:01:31] Speaker 02:
So that issue's up for grabs now, precisely on PHH.

[01:01:36] Speaker 02:
It is the CFPB.

[01:01:44] Speaker 02:
Let me look at my other notes.

[01:01:45] Speaker 02:
Blackburn and Timbervest, neither one, as we said in our brief, support remanding when the issue has been raised.

[01:01:54] Speaker 02:
Judge Sinterwassen, you asked, well, did they raise it in Timbervest?

[01:02:00] Speaker 02:
As I pointed out in our brief, in Timbervest, early in the proceedings, they did point out 7212, and they made an objection.

[01:02:09] Speaker 02:
But after Lucia was decided,

[01:02:13] Speaker 02:
They made a motion to manage the case, and then the government responded with a motion to remand the case.

[01:02:21] Speaker 02:
And in their motion to manage the case, they wanted this court to retain jurisdiction and decide before remand whether or not the statute of limitations barred the case.

[01:02:33] Speaker 02:
They did not raise 7212 again.

[01:02:38] Speaker 02:
It was not before the panel that remanded that case.

[01:02:48] Speaker 02:
There was kind of a mix-up sometimes in answer to your question about can the secretary tell the JO what to do.

[01:02:57] Speaker 02:
It reverted to or became what can the secretary tell the ALJ what to do.

[01:03:05] Speaker 02:
Let me start with the ALJ.

[01:03:08] Speaker 05:
I meant ALJ.

[01:03:09] Speaker 05:
I said ALJ.

[01:03:10] Speaker 02:
Did you mean ALJ?

[01:03:12] Speaker 05:
I meant ALJ.

[01:03:13] Speaker 02:
Oh, OK.

[01:03:14] Speaker 02:
I may have misheard it then also.

[01:03:17] Speaker 02:
5 USC 54D deals with the ALJ, and it says that under 556, the ALJ shall make the initial decision, I mean, sorry, yeah, and such employee may not, one, consult a person or party on a fact in issue,

[01:03:43] Speaker 02:
unless notice and opportunity is given for another hearing to the other parties.

[01:03:50] Speaker 02:
The ALJs are different from the JOs.

[01:03:53] Speaker 02:
Their authority arises under 556, 557, and 558 of the Administrative Procedures Act.

[01:04:02] Speaker 02:
None of the ALJ's authorities were ever vested in the Secretary, so he doesn't have those authorities.

[01:04:09] Speaker 02:
He simply designates under 7 CFR 2.25 that they shall perform the functions set forth in the Administrative Procedures Act.

[01:04:22] Speaker 02:
He has no authority over them whatsoever.

[01:04:26] Speaker 02:
As for the JO, since that I thought came up, of course, once the secretary delegates the authority to make the final decision in a case to the judicial officer,

[01:04:37] Speaker 02:
7 USC says that the secretary's functions are vested in the JO and not in the secretary.

[01:04:50] Speaker 02:
So the JO becomes the principal officer.

[01:04:54] Speaker 02:
The secretary can stop him, remove the delegation, but anything that the JO does up to that point is, in fact,

[01:05:07] Speaker 02:
the decision of the secretary.

[01:05:09] Speaker 02:
He does not have the authority of nullification.

[01:05:14] Speaker 02:
And the leading case on that is Utica Packing Company versus the secretary out of the Sixth Circuit, where the secretary tried to manipulate a decision in

[01:05:28] Speaker 02:
Just like he said, I want us to win this.

[01:05:31] Speaker 02:
I don't want them to win it.

[01:05:33] Speaker 02:
So he discharged the JO from those duties about that one case, gave them to another person, designated that person to jail, filed a motion for reconsideration, and they won.

[01:05:52] Speaker 02:
So in any event, that was a violation of due process.

[01:05:55] Speaker 02:
I tell from your looks, my time is up.

[01:05:58] Speaker 04:
Thank you very much.

[01:05:59] Speaker 04:
I appreciate it.

[01:06:01] Speaker 04:
Thank you counsel.

[01:06:01] Speaker 04:
The case is submitted.