Just How Abusive Are Our Administrative Courts, Really?

In the early months of Donald Trump’s presidency, Steve Bannon thrilled legal conservatives with a declaration that the Trump administration would be committed to a “deconstruction of the administrative state.” This promise, especially as articulated by Bannon at the 2017 Conservative Political Action Conference, conjured up images of populist invaders laying waste to America’s bureaucracy as we know it.

Figuring out exactly how far Trump and his aides hoped to pursue this declaration has been difficult. Nearly two years in, their soaring rhetoric about slashing the Code of Federal Regulations down to its 1960 size has not been matched by the reality, which features the administration’s shutting down new regulation and making modest progress in undoing Obama-era regulation (though with lots of difficulties)—hardly a top-to-bottom overhaul. Meanwhile, if presidential candidate Rick Perry once aspired to eliminate the Department of Energy, at Trump’s behest, Secretary of Energy Rick Perry has looked to put the department to new regulatory uses.

The administrative state seems by and large to be in hibernation, biding its time until a new master brings it roaring back into action. But even if all the talk of deconstruction was more a matter of sloganeering than the unfurling of a clear plan, one has to admit that, as a slogan, it had some real strengths. There is a latent fear and loathing of the Washington-centric regulatory state waiting to be tapped, and promising to channel those critical feelings into a revolution gets certain American juices flowing.

Now comes Herr Doktor Professor Michael Greve, proposing, in the November Liberty Forum essay, that America emulate Germany’s Verwaltungsgerichtsbarkeit. Whatever can be said of the proposal on its merits, that ain’t much of a slogan.

And there’s the joke, of course. Greve’s essay isn’t meant to ignite some kind of mass movement against the administrative state, or even to get noticed by mainstream politics right now.[1] Greve’s immediate audience isn’t even “grass tops”; it’s the conservative legal elite. He hopes, plausibly, that he can command that elite’s attention and make its members realize that an institution-building project is the best way to grapple with and discipline the administrative state at this juncture. Indeed, he wants to get them to conjure up “an entire judicial machinery, devoted to no other purpose than to keep administration within legal bounds and off the citizens’ backs.”

That sounds pretty good, and Greve’s report of Germany’s system likewise sounds quite appealing. (Given my vast ignorance of those courts, part of me wishes we could call on some qualified critic of that system to tell us what people don’t like about it. But, for now: jawohl!) Why might selling the proposal nevertheless be difficult?

First, people on the Right tend to get antsy about building anything new that can be described as “government,” even if it is a body meant to discipline and check what executive branch agencies can do. Even when, in the context of our gargantuan federal budget, the amounts in question are a pittance (as is spending on the judiciary, which is budgeted at $7.22 billion in FY2019). The most common response remains: “You want to spend how much!? On new government employees? Earning six-figure salaries?” It won’t generally be members of the conservative legal elite themselves saying that, but they know that Republican primary voters respond powerfully to such arguments. So it’s always an uphill battle. If Greve could argue for his proposal’s being roughly cost-neutral for the taxpayer, with the new administrative court judges’ salaries being offset by elimination of some ALJ positions in agencies, he should do so. Claiming cost savings might prick up more ears.

Second, a central plank of the proposal is that legal conservatives’ current focus on deference (what he calls the movement’s “great white whale”) is misguided. Greve follows Adrian Vermeule in concluding that Article III judges will never really accomplish much as professional second-guessers of agency policymaking choices (which is how the amalgam of facts and law determined by administrative law judges ultimately presents itself to Article III judges on appeal). Even if Chevron were formally thrown overboard, deference by any other name would smell just as troubling. Adopting the proper doctrinal stance isn’t going to deliver us.

Instead, we’re going to need an institutional solution in the form of a separate system. By being confronted, in the first instance, with the question of “what did they do to you” and whether it was permissible and reasonable, the new administrative courts would end up being less deferential.

As a self-identified institutionalist, I find this argument quite persuasive. But legal conservatives generally have a hard time prying themselves away from doctrinal fights. They have invested a great deal in their campaign against Chevron and will be loath to give it up just as Trump appointees fan out throughout the appellate courts and Justice Kavanaugh begins his work. In other words, though they wouldn’t admit it, many legal conservatives have the mindset of the Federalist Party circa 1804. A more active, less burrowed-in program such as the one Greve outlines here would, in the end, be far more potent. But we’ll see if it can get traction.

Third and finally (and perhaps least importantly for real-world politics), there is the question of whether Greve’s chosen problem is as grievous as he says. In other words, is the performance of ALJ’s really as biased and arbitrary as his essay implies? Across all agencies? Systematically and pervasively? Darned if I know, but it seems that more needs to be established on this front.

It is telling that the controversies Greve describes mostly center around the Securities and Exchange Commission. The 2015 study by the Wall Street Journal that he cites, of the proceedings conducted by the commission’s ALJ’s, does feature some impressive numbers: a 90 percent win rate for the SEC in proceedings before ALJ’s, and a 95 percent win rate on appeal to the commissioners, with an increasing reliance on bringing cases internally rather than in Article III courts.

That study, though, came in for some withering criticism from Urska Velikonja, a law professor at Georgetown who undertook her own independent analysis of SEC enforcement actions. Without getting into the weeds, Velikonja wrote that the Journal’s conclusion that the SEC faces lower success rates in court compared to in ALJ proceedings is flawed, for it fails to account for summary judgments. In another analysis of the commission’s ALJ’s, Wharton’s David Zaring found that the commission won in just 70.6 percent of contested cases before ALJ’s—not so dissimilar to how they fared in federal court. Perhaps someone will rebut these findings, but for now, they make it seem much less likely that the ALJ system is operating so abusively at the commission.

Meanwhile, empirical evidence on outcomes before ALJ’s in other agencies is hard to come by.

Another area Greve points to as problematic is the administrative invalidation of patents. But rather than being a function of some longstanding structural issue with ALJ’s, this is rooted in the America Invents Act of 2011, which was passed by overwhelming bipartisan majorities in Congress. Assuming, for the sake of argument, that the particular administrative tribunal created by that law, the Patent Trial and Appeal Board, is operating badly, mightn’t the solution be to scrap it as a failed experiment and return to the status quo of a decade ago? It isn’t clear how closely related this issue is to the bulk of ALJ work across all agencies (especially since, as Greve notes, 85 percent of all ALJ’s operate within the Social Security Administration—which, as a distributor of benefits, is to be excluded from his scheme, I think).

None of this is to say that there isn’t a real problem with the work of America’s administrative law judges. Perhaps there is. I, like most people—even politically alert ones—just don’t know. It may also be that Greve’s envisioned independent administrative courts would correct agency-caused miscarriages of justice that are not caused by ALJ’s. But he has more work to do in describing the precise nature of the problem before he can go on to justify his ambitious solution.

[1] This is in contrast to Charles Murray’s By the People: Rebuilding Liberty Without Permission (Crown Forum, 2015), which does envision rallying the mass electorate to the project of combating the excesses of the regulatory state. I expressed my skepticism on this front in a review.

This piece originally appeared in Law And Liberty

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