Deciding Without an Appointment: Examining the Appointments Clause and Administrative Arbitration

• Author: Matthew Calabrese
• Position: My deep appreciation to Professor Josh Chafetz for his invaluable guidance in developing this Note
• Pages: 343-380

NOTE

Deciding Without an Appointment: Examining

the Appointments Clause and Administrative

Arbitration

MATTHEW CALABRESE*

Through its recent Appointments Clause and administrative law jurispru-

dence, the Supreme Court has applied a formalistic view of the separation

of powers that is rapidly remaking the administrative state. Specifically, the

Court has spearheaded an important debate on what level of executive

accountability is constitutionally required in agency adjudications. Still, de-

spite these updates in constitutional and administrative law, it has been

over two decades since any significant scholarly discussion of agencies’ use

of binding arbitration under the Administrative Dispute Resolution Act

of 1996. This Note analyzes the Court’s appointments jurisprudence and

whether administrative arbitrators constitute an Appointments Clause viola-

tion. This Note further investigates the policy merits of administrative arbi-

tration and calls for legislative and administrative reforms to the system.

TABLE OF CONTENTS

INTRODUCTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 344

I. WHAT IS ADMINISTRATIVE ARBITRATION? .. . . . . . . . . . . . . . . . . . . . . 349

A. ADMINISTRATIVE ARBITRATION 101 . . . . . . . . . . . . . . . . . . . . . . . . . . 350

B. THE LEAD-UP TO THE ADMINISTRATIVE DISPUTE RESOLUTION ACT . . 353

C. THE ESCAPE CLAUSE AND THE FIRST ADMINISTRATIVE DISPUTE

RESOLUTION ACT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 355

D. RESCISSION OF THE ESCAPE CLAUSE . . . . . . . . . . . . . . . . . . . . . . . . . 358

* Georgetown University Law Center, J.D. expected 2023; Articles Editor, The Georgetown Law

Journal, Volume 111; University of Arizona, B.A. 2015. © 2022, Matthew Calabrese. My deep

appreciation to Professor Josh Chafetz for his invaluable guidance in developing this Note. I am also

grateful to Dani Schulkin and the staff of the Administrative Conference of the United States (ACUS)

for introducing me to this topic and the important work of the agency. Thank you to Meredith Keenan,

Madeline Emmett, Alex Hammer, Lafayette Matthews, David Offit, Radiance Campbell, and the editors

and staff of The Georgetown Law Journal for your thoughtful suggestions and review of this Note. Most

importantly, thank you to my wife, Ashton Calabrese, for the love and support throughout my time in

law school.

343

II. THE APPOINTMENTS CLAUSE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 360

A. WHAT’S AN OFFICER? YOU’LL KNOW IT WHEN YOU SEE IT . . . . . . . . 361

B. PRONG ONE: THE OFFICE OF THE ADMINISTRATIVE ARBITRATOR . . . 368

C. PRONG TWO: WHO’S BINDING WHOM? . . . . . . . . . . . . . . . . . . . . . . . . 370

1. The Case for Constitutional Compliance . . . . . . . . . . . . 371

2. The Current Court and Administrative Arbitration . . . . . 372

D. THEORETICAL CONSTITUTIONAL VIOLATION . . . . . . . . . . . . . . . . . . . 373

III. DOES ADMINISTRATIVE ARBITRATION SERVE THE PUBLIC GOOD? . . . . . 374

A. TRANSPARENCY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 375

B. CONGRESSIONAL OVERSIGHT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 376

1. Administrative Arbitrators: A Wolf in Sheep’s Clothing? 378

2. Are Administrative Arbitrators Neutral? .. . . . . . . . . . . . 379

CONCLUSION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 380

INTRODUCTION

There has been extensive litigation and scholarship related to legal, political,

and constitutional issues surrounding administrative agency adjudication of indi-

vidual disputes.

1

Notably, through its recent Appointments Clause and adminis-

trative law jurisprudence, the Supreme Court has spearheaded a significant

debate on what level of executive accountability is constitutionally required in

agency adjudications.

2

The Court appears to be interested in clarifying the

1. See, e.g., Lucia v. SEC, 138 S. Ct. 2044 (2018) (holding SEC Administrative Law Judges’ (ALJs)

appointment violated the Appointments Clause when ALJs were appointed by SEC staff members);

United States v. Arthrex, Inc., 141 S. Ct. 1970 (2021) (holding Administrative Patent Judge (APJ)

decisions must be reviewable by an agency head to comply with the Appointments Clause); Jack M.

Beermann, Administrative Adjudication and Adjudicators, 26 GEO. M ASON L. REV. 861, 861 (2019)

(providing “a holistic understanding of where non-Article III adjudicators are situated within the federal

government”); William Baude, Adjudication Outside Article III, 133 HARV. L. REV. 1511, 1514 (2020)

(“[A]djudication outside Article III [is] generally consistent with the text and structure of the

Constitution.”).

2. See Arthrex, 141 S. Ct. at 1988 (Gorsuch, J., concurring in part and dissenting in part) (agreeing

with the Court that “Article II vests the ‘executive Power’ in the President alone” and that “[t]his

admittedly formal rule serves a vital function. If the executive power is exercised poorly, the

Constitution’s design at least ensures ‘[t]he people know whom to blame’—and hold accountable”

(quoting Morrison v. Olson, 487 U.S. 654, 729 (1988) (Scalia, J., dissenting))); Lucia, 138 S. Ct. at 2057

(Thomas, J., concurring) (making an originalist argument that “[t]he Founders considered individuals to

be officers even if they performed only ministerial statutory duties . . . . [Thus,] [a]pplying the original

meaning here, the administrative law judges of the Securities and Exchange Commission easily qualify

as ‘Officers of the United States’”); Free Enter. Fund v. Pub. Co. Acct. Oversight Bd., 537 F.3d 667, 687

344 THE GEORGETOWN LAW JOURNAL [Vol. 111:343

meaning of the Appointments Clause by laying out the constitutional difference

between principal officers (requiring presidential and Senate confirmation), infe-

rior officers (requiring appointment from the President, federal courts, or agency

heads without Senate confirmation), and governmental non-officers (for example,

employees or contractors).

3

Yet, despite these updates in constitutional and

administrative law, it has been over two decades since any significant scholarly

discussion of agencies’ use of binding arbitration.

4

A new examination of binding

arbitration is needed because the Administrative Conference of the United States

(ACUS) is “undertaking a project to study how federal agencies use and might

better use different types of ADR [(alternative dispute resolution)].”

5

ADMIN. CONF. OF U.S., REQUEST FOR PROPOSALS—JUNE 19, 2020 ALTERNATIVE DISPUTE

RESOLUTION IN AGENCY ADJUDICATION (June 19, 2020), https://www.acus.gov/sites/default/files/

documents/ADR_RFP_61920_0.pdf [https://perma.cc/6NLF-FDLH].

The last

time ACUS undertook such a project, the agency largely influenced the drafting

and ultimate passage of the Administrative Dispute Resolution Act (ADRA),

6

which authorized administrative agencies to enter into arbitration in lieu of tradi-

tional agency adjudication proceedings.

7

See Administrative Dispute Resolution Act, ADMIN. CONF. U.S.: FED. ADMIN. PROC. SOURCEBOOK,

https://sourcebook.acus.gov/wiki/Administrative_Dispute_Resolution_Act/view#Administrative_Dispute_

Resolution_Act_of_1990 [https://perma.cc/GF9M-G8RA] (last visited Oct. 12, 2022) (highlighting that

the “ADRA reflects numerous ACUS recommendations” and the ADRA of 1996 “reflect[s] numerous

suggestions made in ACUS’s 1995 reports to Congress on implementation of the ADRA”);

Administrative Dispute Resolution Act sec. 4, § 585, 104 Stat. at 2742 (providing for “Authorization of

arbitration”).

This Note examines administrative agencies’ use of binding arbitration (an

ADR technique this Note refers to as “administrative arbitration”

8

) and the

(D.C. Cir. 2008) (Kavanaugh, J., dissenting) (understanding the Appointments Clause to require that

members of the Public Company Accounting Oversight Board (PCAOB) “be appointed by the President

with the advice and consent of the Senate[,] [and that] [t]hey are not inferior officers because they are

not ‘directed and supervised’ by the SEC” (quoting Edmond v. United States, 520 U.S. 651, 663

(1997))), aff’d in part, rev’d in part, 561 U.S. 477 (2010).

3. See U.S. CONST, art. II, § 2, cl. 2; Arthrex, 141 S. Ct. at 1985–86.

4. Although I do not claim to be the first to examine this issue, most of the scholarship related to the

topic dates to the 1980s and 1990s when Congress first debated and passed the Administrative Dispute

Resolution Act (ADRA) or soon after the passage of the ADRA of 1996. The notes and articles that

examine the ADRA, without the hindsight of time, do not consider how agencies have used

administrative arbitration over the last twenty-five years, nor do they examine whether administrative

arbitration meets constitutional muster after recent Supreme Court decisions such as Lucia and Arthrex.

See, e.g., David Seibel, To Enhance the Operation of Government: Reauthorizing the Administrative

Dispute Resolution Act, 1 HARV. NEGOT. L. REV. 239 (1996); Robin J. Evans, Note, The Administrative

Dispute Resolution Act of 1996: Improving Federal Agency Use of Alternative Dispute Resolution

Processes, 50 ADMIN. L. REV. 217 (1998); Jonathan D. Mester, Note, The Administrative Dispute

Resolution Act of 1996: Will the New Era of ADR in Federal Administrative Agencies Occur at the

Expense of Public Accountability?, 13 OHIO ST. J. ON DISP. RESOL. 167 (1997); Harold H. Bruff, Public

Programs, Private Deciders: The Constitutionality of Arbitration in Federal Programs, 67 TEX. L. REV.

441 (1989).

5.

6. Pub. L. No. 101-552, 104 Stat. 2736 (1990) (amended 1992 and 1996) (current version at 5 U.S.C.

§§ 571–584).

7.

8. This term has also been used by numerous government agencies and scholars when discussing

agency use of binding arbitration under the ADRA and ADRA of 1996. See, e.g., Philip J. Harter, Points

on a Continuum: Dispute Resolution Procedures and the Administrative Process, in ADMIN. CONF. OF

2022] DECIDING WITHOUT AN APPOINTMENT 345