In an order issued on November 30, 2017 (the Order), the SEC ratified the prior appointment of Chief Administrative Law Judge Brenda Murray and four other administrative law judges (ALJs). The ratification comes on the heels of a brief filed at the U.S. Supreme Court by the U.S. Department of Justice, which argued for the first time that ALJs are “inferior officers” for purposes of the Appointments Clause and thereby subject to formal appointment by the head of the SEC. The brief signals a shift by the Justice Department, which under the previous administration had maintained that ALJs were merely employees who were not subject to formal appointments. 

The Order “put[s] to rest any claim that administrative proceedings pending before, or presided over by, Commission administrative law judges violate the Appointments Clause” by ratifying the previous appointments. The Order further requires the ALJs to reconsider the records of and actions taken in all pending administrative proceedings and set forth determinations regarding the ratification of those records and decisions by February 16, 2018 (which deadline may be extended upon a showing of good cause). The Order similarly remands for ratification all proceedings on internal appeal before the SEC in which an ALJ had issued an initial decision. Finally, the Order lifts the stays on those proceedings pending before an ALJ in which a respondent has the option to seek review in the Tenth Circuit. These stays were imposed in response to a prior Tenth Circuit decision holding that ALJs are inferior officers subject to the Appointments Clause. 

The Order is available at: https://www.sec.gov/litigation/opinions/2017/33-10440.pdf