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Executive order gives federal agencies leeway on hiring of in-house judges

President Donald Trump’s executive order notes the role played by federal administrative law judges has increased.

The White House issued an executive order Tuesday that lets government agencies hire in-house judges directly, instead of going through federal hiring procedures. The order from President Donald Trump noted the role played by federal administrative law judges has increased, as has confusion created by a June 21 Supreme Court decision that judges at the Securities and Exchange Commission were not constitutionally appointed.

"I find that conditions of good administration make necessary an exception to the competitive hiring rules and examinations for the position of ALJ. These conditions include the need to provide agency heads with additional flexibility to assess prospective appointees without the limitations imposed by competitive examination and competitive service selection procedures," Mr. Trump said in the order. The change will also "reduce the likelihood" of challenges to ALJ decisions, he said.

By allowing in-house judges to be hired as "excepted service" employees, as some government lawyers and others are hired, "agencies will be free to select from the best candidates who embody the appropriate temperament, legal acumen, impartiality and judgment required of an ALJ, and who meet the other needs of the agencies," a White House fact sheet on the order said.

The Supreme Court challenge to the SEC's use of administrative law judges was brought by former investment adviser Raymond Lucia, who was banned from the industry in 2013 for alleged misrepresentations in a retirement wealth management strategy.

"The logic of Lucia casts doubt on the validity of many — if not all — ALJ appointments within the federal government," and the change will reduce that uncertainty, while "enhancing the efficiency" of administrative courts, the fact sheet said.

House Ways & Means Ranking Committee Member Richard Neal, D-Mass., saw it differently. In a statement Tuesday, Mr. Neal said the change will allow the president to appoint federal ALJs "on the basis of ideology and political orientation, rather than through a competitive examination process based on merit, neutrality and fitness for office." Mr. Neal said it could make it possible to appoint judges who are "big campaign donors, beholden to industry or otherwise unqualified." With 85% of federal ALJs working for the Social Security Administration, "politically appointed judges could result in millions of Americans being denied the benefits they've earned," Mr. Neal said.

Current ALJs are not affected by the order. Last November, after the federal government reversed its position on such challenges, the SEC ratified its prior appointment of its five current administrative law judges, "to put to rest any claim that administrative proceedings pending before, or presided over by its judges were open to challenge," the agency said.