As 2016 wound down, the administrative law judges (ALJs) at the Securities and Exchange Commission had issued more than 150 decisions. The year before, they racked up more than 200 decisions before celebrating New Year’s Eve. These individuals work hard, and they are fine exemplars of the devoted people who serve in a judicial capacity within federal agencies.
Exactly what they do, however, deserves more attention. When the SEC charges an individual with securities fraud, it can choose to proceed in the courts—by bringing a civil-enforcement action or by referring the case to the Justice Department for criminal prosecution. Either way, the defendant enjoys the full range of the Constitution’s procedural protections. But the commission also has the option to charge defendants administratively, before its administrative law judges. And when it thus pursues a case in-house, rather than in the courts, the defendant doesn’t get a jury, a real judge, or the real due process of law.
In fact, at a host of agencies, administrative adjudication bypasses some of the most basic procedural rights. The Constitution protects a handful of substantive rights—famously, the freedoms of speech and religion. Most of its guarantees of liberty, though, secure judicial procedures—such as juries, the privilege against self-incrimination, and the due process of law. Any one of the procedural rights may seem a mere technicality. But taken together, they are the primary constraint on how the government proceeds against Americans in particular instances—forming a crucial barrier to government misconduct in all spheres of life. It is therefore sobering to consider how much administrative adjudication evades them.
Procedural rights have a long history. Already at common law, the English developed a wide range of procedural protections in their courts, and eventually they elevated them as constitutional rights. Jury trials, for example, were not a right when they emerged in the thirteenth century; but by the eighteenth century, the English widely valued them as an ancient constitutional liberty. Americans learned the contemporary value of procedural rights in the struggles that preceded their revolution, and they enumerated them in detail—initially in their state constitutions and then in the U.S. Constitution.
The circumvention of procedural rights came only much later, with the growth of administrative power. Late-nineteenth-century American progressives had an elitist disdain for representative government and individual claims of rights, and they adopted German ideas about administrative power to avoid republican institutions and the procedural rights protected in the courts. By shifting lawmaking and adjudication into administrative agencies, progressives enabled the government to avoid the paths that the Constitution established for binding lawmaking and adjudication, including the Constitution’s procedural limits on such adjudication.
As a result, administrative tribunals have become parallel court systems. Whereas the U.S. Constitution vests the judicial power of the United States in the courts, Congress has declared that most administrative agencies can enforce their dictates through their own tribunals, with their own procedures. Of course, agencies can lawfully rely on their own proceedings to distribute benefits, such as Social Security. But when agencies venture into binding adjudications—those that impose legal obligation—they sidestep the courts and the Constitution’s procedural rights.
Administrative adjudication is most familiar from the Internal Revenue Service. Informally, the IRS can ask a taxpayer to attend an audit of his returns; more formally, it can summon him for an examination and thereby demand attendance, testimony, and records without a summons, subpoena, or other order from a judge. Serving as prosecutor, jury, and judge, an IRS examiner can accuse and question the taxpayer, find him in violation of IRS regulations, and demand back taxes and impose penalties.
Unlike the IRS, most agencies offer pale imitations of at least some of the Constitution’s procedural rights. For example, though agencies don’t use juries and real judges, many provide hearings, employ more or less independent ALJs, and otherwise adopt procedures that resemble those of regular courts. Yet these agency procedures tend to be impoverished half-measures, falling far short of the Constitution’s protections.
This loss of one right after another has become so commonplace that it often goes unnoticed. It is obvious enough to someone fined by an agency that he does not get the sort of justice that he could expect from a court. What is less well understood is that administrative adjudication systematically evades the Constitution’s procedural rights.
No right was more insistently protected by the Constitution than trial by jury. Article III guarantees a jury in the “trial of all crimes,” and the Sixth Amendment echoes this, stipulating that the accused shall enjoy a jury in “all criminal prosecutions.” The Seventh Amendment, moreover, preserves the right of trial by jury in “suits at common law”—meaning all civil cases outside of equity, admiralty, and military jurisdiction. Thus, with these exceptions, juries were guaranteed, regardless of whether a case was criminal or civil.
The right to a jury, moreover, whether civil or criminal, has long been understood as a barrier to administrative proceedings. When the English barons in 1215 famously secured from King John the stipulation, in Article 39 of Magna Carta, that “no free man shall be . . . imprisoned or disseised . . . except by the lawful judgment of his peers or by the law of the land,” they weren’t narrowly alluding to trial by jury. They nonetheless were enunciating a widely familiar principle about trial by peers that would soon acquire substance in juries, and were asserting this principle in opposition to what we would call administrative adjudication. John had tended to act against the barons and their retainers not through the courts but through what we would call administrative action; and the barons therefore sought the king’s assurance about trial by the law of the land or at least by their peers. As J. C. Holt—the leading historian of Magna Carta—puts it, Article 39 was aimed primarily against “arbitrary disseisin at the will of the king,” against “summary process,” and against “arrest and imprisonment on an administrative order.” King John’s biographer, W. L. Warren, even more bluntly explains that Article 39 targeted “executive action.” Though interpreted more narrowly in later centuries, Article 39 remains suggestive, for it reveals that, already at the beginnings of the common law, the guarantee of trial by one’s peers not only set a standard for the courts but also, at least as significantly, took aim at adjudication outside the courts.
Governments always feel tempted to escape lawful paths of power and associated procedural rights, and the British government in the Stamp Act Crisis was no exception. When Parliament in 1765 required Americans to pay a stamp duty on paper used for legal documents, it understood that this might provoke opposition from juries. It therefore authorized enforcement of the duties in admiralty courts, which held non–common law and jury-less proceedings. Americans were outraged by this evasion of one of their central constitutional rights as British subjects. Congress protested that “trial by jury is the inherent and invaluable right of every British subject in these colonies.”
A little over a decade later, the states themselves were tempted to skirt jury trials. In 1778, when the revolution had devolved in some New Jersey counties into a sort of civil war, the legislature tried to discourage trading with the enemy by permitting any individual to seize goods transported across enemy lines and secure title to them in a proceeding before a justice of the peace acting with only a six-person “jury.” A jury, however, was traditionally understood to mean a body of 12 qualified persons. Accordingly, the next year, in Holmes & Ketcham v. Walton, the state’s supreme court held the statute unconstitutional.
Similar cases occurred in New Hampshire. In 1785, amid a financial crisis caused by poor harvests and a shortage of specie, the New Hampshire legislature attempted to facilitate the collection of small debts by authorizing justices of the peace to hear claims for debts of up to ten pounds without a jury. Though the statute permitted defendants to appeal these administrative proceedings to the Inferior Courts and thereby get full de novo jury trials, these courts in 1786, in what are known as the Ten Pound Cases, repeatedly held the statute unconstitutional for violating the right to a jury. The Inferior Courts explained that the New Hampshire statute was “manifestly contrary to the constitution of this state.” These early constitutional decisions make clear that the right to a jury barred proceedings outside regular courts.
Nowadays, the Supreme Court allows the administrative evasion of jury rights. It recognizes the conflict between administrative procedure and the Seventh Amendment’s guarantee of juries in civil cases. But rather than let this amendment bar administrative adjudication, the Court simply declares that the government interest in adjudication always trumps the right to a jury. In the Court’s strange locution, where the government acts administratively, it is asserting “public rights,” which defeat the merely private constitutional right to a jury trial.
The Court traditionally had used the term “public rights” as a label for the lawful sphere of executive action. Nonetheless, in 1977, in Atlas Roofing v. Occupational Safety and Health Review Commission, the Court unmoored the phrase from its traditional usage and used it to dispense with the Seventh Amendment’s right to a jury in agency proceedings against Americans. An ALJ (acting, of course, without a jury) heard charges against Atlas Roofing and fined it $600 for violating safety standards, after which Atlas appealed to the Occupational Safety and Health Review Commission and then to the courts—each time being told that the ALJ’s findings of fact, as adopted by the commission, displaced Atlas’s right to a jury.
Binding agency adjudication is not within the scope of the Constitution’s grant of executive power.
As it happens, binding agency adjudication, including fact-finding, is not within the scope of the Constitution’s grant of executive power; but even if it were, it would not defeat the Seventh Amendment, for the Constitution’s rights are limits on government power. In other words, rights trump power. Understanding this obstacle, the Supreme Court in Atlas Roofing recast administrative power as a right—indeed, as a “public right”—which, by implication, trumped any private claim of right, even if, as here, based on the Constitution. Might defeats right.
Due process reveals an even more serious circumvention of procedural rights. As with juries, the underlying principle for due process dates back to Magna Carta and Article 39’s assurance that “no free man shall be . . . imprisoned or disseised . . . except by the lawful judgment of his peers or by the law of the land.” Like the guarantee about judgment by one’s peers, the alternative guarantee about the law of the land was a response to the king’s tendency to act against men outside his courts, in administrative decisions. The principle that the king should act against Englishmen only through the law of the land eventually became the more familiar principle of due process, the central assurances of which appeared in two statutes during the reign of Edward III. These enactments remain significant, for they confirm that due process, from its formation, posed an obstacle to administrative adjudication.
In addition to calling his subjects to account in the courts of law, Edward also summarily called them before his council for questioning and punishment. In 1354, Parliament therefore enacted: “No man of what estate or condition that he be, shall be put out of land or tenement, nor taken, nor imprisoned, nor disinherited, nor put to death, without being brought in answer by due process of the law”—meaning the process of the courts of law.
King Edward failed to live up to this statute, and within a decade, he once again was hauling men into his council, instead of working through the courts. Parliament therefore passed another due-process statute, in 1368. After making clear that the efforts to hold subjects accountable “before the king’s council” were “against the law,” this statute provided that “no man be put to answer without presentment before justices, or matter of record, or by due process and writ original, according to the ancient law of the land.” As summarized on the margin of the Parliament roll, “None shall be put to answer without due process of law.” Thus, any move to bind subjects in the king’s administrative proceedings—even just to summon them to answer questions—was unlawful. The guarantees of due process precluded any attempt at binding administrative adjudication.
The practical implications were immediate. In 1368, after a commission established by Edward imprisoned a man and took his goods, the judges held the commission void, saying that it was “against the law” because it authorized the commissioners “to take a man and his goods without indictment, suit of a party, or due process.” Adjudication outside the courts was contrary to due process, and therefore unlawful.
For Americans, the role of due process as a barrier to adjudication outside the courts remained familiar because of its role in the constitutional controversies of the seventeenth century. Due process was a foundation of the 1628 Petition of Right (a predecessor of our Bill of Rights) and of the 1641 statute abolishing the Star Chamber (one of the enactments that, at least for a while, largely ended centralized administrative power in England). Studying this history, Americans learned that the evasion of the courts was a recurring danger. They also learned that due-process guarantees were not just standards for the courts but, more prominently, were barriers to adjudication outside the courts. And this matters for the U.S. Constitution. When the Fifth Amendment guaranteed the due process of law, it continued in the tradition of Magna Carta, the due-process statutes, the Petition of Right, and the statute abolishing the Star Chamber.
The Fifth Amendment’s words reveal its breadth: “No person shall . . . be deprived of life, liberty, or property, without due process of law.” If the amendment merely aimed to limit what the courts could do, it would have stated (in the active voice): “No court shall deprive any person of life, liberty, or property, without due process of law.” Like other procedural clauses, however, it also had to bar adjudication outside the courts. Such adjudication was an old, recurring threat, and guarantees of due process and other procedural rights would be meaningless if the government could avoid them simply by sidestepping the courts. Therefore, like so many procedural rights, the Fifth Amendment’s due-process clause was written in the passive voice, and, like those other rights, it thereby limited all parts of government.
The location of the procedural rights is revealing, too. To bar adjudication outside the courts, the Fifth Amendment and the other procedural rights could not simply modify Article III of the Constitution, for they then would have limited only the courts. Instead, they also had to limit the executive, established in Article II. They additionally had to confine the Congress, established in Article I, lest that body authorize adjudication outside the courts. The drafters of the Bill of Rights therefore changed how they wrote it. They originally drafted amendments that would have rewritten particular articles of the Constitution—altering their wording article by article, section by section. Ultimately, the drafters decided instead to add their amendments at the end of the whole Constitution. This proved crucial, for it enabled the procedural amendments to limit all parts of government.
These two drafting techniques—using the passive voice and putting amendments at the end—gave the procedural rights their breadth. The implication for due process was recognized by one of the earliest academic commentaries on the Bill of Rights. St. George Tucker—a Virginia judge—taught constitutional law at William and Mary in the 1790s. Among his bound notes are loose pages from 1796, in which he quotes the Fifth Amendment’s Due Process Clause and then concludes: “Due process of law must then be had before a judicial court, or a judicial magistrate.” As later put by Chancellor James Kent, the due process of law “means law, in its regular course of administration, through courts of law.”
This was particularly clear because, though the due process of law increasingly has been understood to include all of a court’s proceedings, it most centrally was a matter of legal process: the original process by which individuals were brought into court, the mesne process employed by courts during litigation, and the final process by which judgment was carried out. On this basis, it was inescapable that the due process of law could be had only in court. The Fifth Amendment thus generally bars the government from holding Americans to account—from imposing any legally obligatory adjudication on them—outside the courts. This was the breadth of the principle from its very beginnings; this was how the Fifth Amendment was drafted; and this was how it was understood in the 1790s.
Today, the Supreme Court assumes that most adjudication outside the courts does not violate due process. When the Court recognizes the need for administrative due process, it usually reduces it to a mere administrative hearing—and even this faux process is no longer predictably required. As the Court explained in 1976 in Mathews v. Eldridge—a disability-payments termination case—a hearing is guaranteed only when needed to prevent an erroneous government deprivation of a private interest and when not outweighed by the government’s interests, including any fiscal and administrative burdens.
For example, under the Comprehensive Environmental Response, Compensation, and Liability Act—more familiarly known as CERCLA—the Environmental Protection Agency adjudicates by issuing “unilateral administrative orders.” As landowners, large and small, have learned, to their surprise, the EPA can simply order individuals or businesses (even those without negligence or other fault) to clean up their land. The EPA thereby adjudicates and commands private action without so much as a hearing. The underlying point, as the Court noted in Morrissey v. Brewer—a parole-revocation case—is that “due process is flexible and calls for such procedural protections as the particular situation demands.” From this flexible and contextual perspective, administrative process (always without a jury, and sometimes without even a hearing) is “all the process that is due.”
If administrative tribunals offered extra procedural guarantees that were especially reassuring, it might seem reasonable to accept some diminished due process. But the Constitution does not allow such rebalancing of gains and losses, and, in any case, there are only losses, no gains. The dilution of due process is part of a sweeping evasion of procedural rights that rewards violations of the Constitution. The government’s circumvention of the courts is rewarded with the opportunity to avoid procedural rights, and the government’s escape from procedural rights is rewarded with the assurance that this is all the process that is due.
This evasion, which once tempted kings, has thus returned on a greater scale than ever before—this time as a temptation for legislatures. Though the due process of law developed as a constitutional right to bar administrative adjudication, it now is rephrased as “the process that is due” in order to excuse such adjudication. Far from preventing the evasion, due process now legitimizes it.
One of the most common and disturbing types of administrative adjudication is licensing: the requirement that one get prior permission. Prototypically, Americans are free, except where the law prohibits something harmful and the government or another plaintiff persuades a judge and jury that one has violated the prohibition. A licensing system inverts this approach. It sweepingly bars an entire category of acts and then requires one to get a license or permission before one does such things. Licensing thereby displaces more than judge and jury: it also supplants a presumption of freedom with one of restraint. As a result, licensing proceedings lend themselves to a reversal of the usual burdens of proof and persuasion guaranteed by the Fifth Amendment.
In criminal cases, the government must prove the defendant guilty beyond a reasonable doubt. Even in civil actions, the defendant typically is protected by the plaintiff’s burden to show a preponderance of the evidence. Though judges, in a narrow range of civil actions, shift the burden of proof to the defendant after the plaintiff makes a prima facie showing, the burden of proof in judicial proceedings generally lies on complainants. That’s not how it works in licensing proceedings. Here, Americans must seek permission to act and, in so doing, often must undertake the burden of proving their innocence—of persuading the licensers of the harmlessness of what they have done or intend to do. For example, when the Federal Communications Commission considers whether to renew a broadcasting license, it requires licensees to certify their compliance during the prior licensing term with all the agency’s regulations.
Less formalized but more egregious is the reversal of burdens by Institutional Review Boards. Under the regulations of the Department of Health and Human Services, universities must establish such boards to license “human-subjects research.” Faculty and students must submit their human-subjects research proposals to these boards for prior review, including details of what the faculty or students can read, whom they can interview or talk with, what they can say to such persons, and what they can share or publish. Leaving aside that this licensing unconstitutionally focuses more on speech and publication than on legally cognizable harms, a professor or student has the burden of convincing the Institutional Review Board that he will not ask questions in the course of research, or afterward publish information, that might cause distress or harm.
Many justify administrative adjudication by saying that it is fair. After all, it frequently comes with ALJs, most of whom are very conscientious. It also frequently comes with hearings and a formal record.
But do the adjudicators really have independent judgment? Many administrative adjudicators aren’t ALJs and thus lack any independence. Even ALJs are not really independent, for they can find themselves demoted or have their salary docked if they reject administrative regulations as unconstitutional. In a 1992 survey of ALJs, 15 percent complained of threats to their independence, with 8 percent saying that this was a frequent problem. In fact, in 2015, the Wall Street Journal published the complaint of Lillian McEwen—a former ALJ at the Securities and Exchange Commission—that she had been pressured to reach decisions favoring the commission. The Journal also revealed that one of the commission’s ALJs had never, in any of his cases, failed to uphold at least one charge against a defendant—an astonishing record of fealty to his agency. Further, the decisions of ALJs are often subject to review (or being finalized) by agency heads—political appointees who do not hear the witnesses or arguments in the cases, do not need to read the record, and usually lack even the pretense of independence.
The process itself is equally worrisome. Agencies rely on subpoenas for discovery without usually allowing the same discovery for defendants. The agencies also can introduce hearsay, preclude counterclaims, and bar motions to dismiss. And even when agency proceedings are criminal in nature, juries are absent. An agency can take as long as it wants to prepare its cases, but it can force respondents to defend themselves at hearings for which they have had little time to get ready. The SEC, for example, recently gave a company about four months to prepare its defense, though the investigative file was “larger than the entire printed Library of Congress.” The burdens of proof and persuasion, moreover, are often reversed, so that defendants have to prove their innocence—not only in many licensing proceedings but also whenever an adjudicator takes “official notice” of facts. Most broadly, it occurs (as McEwen suggested) in the quiet agency assumption that “the burden was on the people who were accused to show that they didn’t do what the agency said they did.”
In sum, neither the personnel nor the process justifies the conclusion that administrative adjudication is fair. Even if it were, it’s a mere shadow of due process.
Of course, if one does not get one’s procedural rights initially, in an administrative hearing, one sometimes can get them later, by appealing to the courts. But delayed procedural rights aren’t enough.
One problem is that juries, due process, the privilege against self-incrimination, and other procedural rights are constitutional rights in the first instance, not merely rights enjoyed on review. In the Ten Pound Cases, though the statute authorizing the administrative proceedings let losing defendants appeal to the courts and thereby get a trial de novo, with a jury, the courts nonetheless held the statute unlawful. A delayed jury trial did not cure the denial of a jury in the earlier administrative hearings. From this perspective, administrative adjudication already violates procedural rights, regardless of any review in court.
The delayed access to procedural rights causes further harm because of the doctrine of exhaustion of administrative remedies—requiring persons suffering administrative injuries to pursue all their administrative remedies before they seek relief in the courts. Taking advantage of this doctrine, an agency will often exhaust a defendant’s finances in administrative proceedings, after which he cannot afford to appeal effectively to the courts. The doctrine of administrative exhaustion often operates in reality as a means of exhausting defendants.
The delayed procedural rights theory is ultimately farcical because even when defendants get to court, they still do not get jury rights or due process. When a defendant appeals an administrative decision to the courts, the judges review and largely defer to the government’s administrative record—in other words, the government’s version of the facts. Thus, even in court, defendants do not get a jury. The judges also defer under the Chevron doctrine to the government’s interpretation of the law—that is, to its legal position. As a result, judges begin their analysis with a predetermined bias in favor of the government on both the facts and the law. What, then, is left for the unbiased judgment required by due process?
The denial of due process continues after judges hold an agency action unlawful, for they then often hesitate to declare it void—instead remanding it to the agency. And when a district or circuit court interprets a vague statute administered by an agency, the Supreme Court, under the Brand X doctrine, allows the agency in subsequent matters to disregard the judicial precedent and follow its own interpretation—thereby denying Americans the benefit of securing precedent through litigation.
All this is especially disturbing because one ordinarily would expect the administrative evasion of courts and of procedural rights to be met with heightened judicial scrutiny. Instead, they are rewarded with deference and other judicial accommodation of agencies. Later court proceedings, rather than simply offering delayed procedural rights, are gross violations of such rights, which reinforce the original administrative evasion. The result is a dual deprivation of rights—both administrative and judicial.
The evasion of procedural rights ultimately changes the very nature of such rights. Procedural rights traditionally were assurances against the government. Now, they are just one of the choices for government in its exercise of power.
Defenders of the administrative status quo protest that there are currently more than 10,000 administrative adjudicators and that the courts could not handle all their work. Yet the vast bulk of such decision making does not impose legal obligation and thus is not administrative power but simply the ordinary and lawful exercise of executive power—for example, in determining the distribution of benefits or the status of immigrants.
When one examines the agency adjudication that actually imposes legal obligation, the workload is very manageable. For example, the SEC has only five administrative law judges, the Occupational Safety and Health Review Commission has 12, and the National Labor Relations Board has 34. Thus, at many prominent agencies, administrative adjudication could easily be taken over by the courts, with only a minor expansion of the judiciary.
The nearly 800-year struggle to establish procedural rights was a remarkable achievement in the history of law. Unfortunately, history is not a steady march toward freedom. During the past century, the judiciary largely permitted, even facilitated, the evasion of procedural rights, and the judges have thus far shown little remorse. The Constitution’s procedural rights remain available in court (even if not always in the review of administrative proceedings), and judges therefore tend to believe that they have not gutted them. Even when judges recognize the circumvention and their role in enabling it, they tell themselves that they are bound by precedent—as if they may depart from the Constitution to shred rights but not depart from precedent to restore them. No wonder so many Americans despair of recovering what the judiciary has failed to preserve.
Yet it would be wrong to give up on procedural rights. They matter too much as a structural limit on government and as a source of security for individuals to yield them without a fight. It’s therefore fortunate that many judges still see themselves as guardians of due process and other procedural rights. On this basis, Americans can remind these judges of how far they have drifted. Many judges will be unmoved by such appeals, but at least some will try to live up to their ideals.
Top Photo: Administrative agencies conduct their own private tribunals, dispensing with the fundamental right to a trial by jury. (FRANKLIN MCMAHON/CHICAGO HISTORY MUSEUM/GETTY IMAGES)