K & R CONTRACTORS, LLC, Petitioner, v. MICHAEL KEENE; DIRECTOR, OFFICE OF WORKERS’ COMPENSATION PROGRAMS, UNITED STATES DEPARTMENT OF LABOR, Respondents. PRATIK A. SHAH, Court-Assigned Amicus Counsel.
No. 20-2021
UNITED STATES COURT OF APPEALS FOR THE FOURTH CIRCUIT
November 7, 2023
PUBLISHED.
Argued: October 29, 2021
Decided: November 7, 2023
Before HARRIS, QUATTLEBAUM, and RUSHING, Circuit Judges.
Petition for review denied by published opinion. Judge Rushing wrote the opinion, in which Judge Harris and Judge Quattlebaum joined.
RUSHING, Circuit Judge:
An administrative law judge (ALJ) working for the United States Department of Labor (DOL) ordered K & R Contractors, LLC to pay living miner‘s benefits to its former employee Michael Keene pursuant to the Black Lung Benefits Act. The Benefits Review Board affirmed, and K & R petitions this Court for review. K & R does not contest the evidence supporting the benefits award but instead challenges the constitutional authority of the two DOL ALJs who heard and decided Keene‘s claim against K & R. First, K & R contends that the ALJs were not appointed consistent with the Appointments Clause of the Constitution. Second, K & R asserts that the ALJs are insulated from removal by two layers of good-cause tenure protection, contrary to the Constitution‘s vesting of the executive power in the President.
The Director of the Office of Workers’ Compensation Programs at DOL filed a brief on behalf of the Government arguing that, to save the ALJ removal scheme from constitutional infirmity, we must impose a novel narrowing construction on one of the applicable layers of protection, see
Having now fully considered the merits of the issues presented, we hold that both ALJs were constitutionally appointed and that, even if the dual good-cause removal protections were unconstitutional, K & R is not entitled to relief because it has not identified any harm resulting from those removal provisions. We therefore deny the petition for review.
I.
Before we discuss the facts of this case, some statutory background is necessary.
We begin by describing adjudications under the Black Lung Benefits Act,
Any party then may request a hearing before a DOL ALJ.
Any party dissatisfied with the ALJ‘s ruling may appeal to the Benefits Review Board. See
B.
This appeal concerns the hiring and firing of DOL ALJs, so we describe that process next. Before 2018, DOL ALJs were hired through the competitive service. See
In 2018, the Supreme Court held that Securities and Exchange Commission ALJs are “Officers of the United States” within the meaning of the Appointments Clause,
The Secretary of Labor can remove an ALJ from office “only for good cause
C.
We now turn to the facts underlying this dispute. Claimant Michael Keene worked in coal mines for more than 34 years, the last three of which he worked for K & R. After years of coal dust exposure, Keene developed breathing problems and eventually was diagnosed with pneumoconiosis. In February 2017, Keene filed a claim for benefits under the Black Lung Benefits Act. The district director issued a proposed decision awarding Keene benefits and designating K & R as the responsible operator. K & R requested a hearing before an ALJ, and the matter was referred to the Office of Administrative Law Judges.
Around the same time, DOL‘s Chief ALJ recommended to the Secretary of Labor that he ratify the appointments of incumbent DOL ALJs in view of the Lucia case then pending before the Supreme Court. See Mem. from Hon. Stephen R. Henley, Chief ALJ, to Sec‘y of Labor (Dec. 20, 2017).2 The Secretary adopted the recommendation and issued letters ratifying the appointments of incumbent DOL ALJs, who had been hired through the competitive service. One of the ALJs the Secretary ratified was the ALJ eventually assigned to hear Keene‘s claim, ALJ William Barto. The Secretary‘s letter to ALJ Barto stated:
In my capacity as head of the Department of Labor, and after due consideration, I hereby ratify the Department‘s prior appointment of you as an Administrative Law Judge. This letter is intended to address any claim that administrative proceedings pending before, or presided over by, administrative law judges of the U.S. Department of Labor violate the Appointments Clause of the U.S. Constitution. This action is effective immediately.
Letter from R. Alexander Acosta, Sec‘y of Labor, to Hon. William T. Barto, ALJ (Dec. 21, 2017).3
Several weeks later, the Keene matter was transmitted to ALJ Barto. K & R moved to reassign the claim to a different ALJ, arguing that ALJ Barto had not been constitutionally appointed and that the two levels of ALJ removal protection violate the Constitution. At a hearing in August 2018, ALJ Barto denied the motion, noting that the Secretary had ratified his appointment
In January 2019, for reasons unrelated to this case, the Keene matter was transferred from ALJ Barto to ALJ Francine Applewhite. The Secretary of Labor had accepted ALJ Applewhite‘s request for a transfer from the Social Security Administration and appointed her to a DOL ALJ position effective October 28, 2018. The Secretary‘s letter to ALJ Applewhite stated:
Pursuant to my authority as Secretary of Labor, I hereby appoint you as an Administrative Law Judge in the U.S. Department of Labor, authorized to execute and fulfill the duties of that office according to law and regulation and to hold all the powers and privileges pertaining to that office.
U.S. Const. art. II, § 2, cl. 2 ;5 U.S.C. § 3105 . This action is effective upon transfer to the U.S. Department of Labor.
Letter from R. Alexander Acosta, Sec‘y of Labor, to Francine L. Applewhite, ALJ (Sept. 12, 2018).4
After the transfer, K & R again objected that DOL ALJ “appointments and removal protections” were unconstitutional, this time taking issue with incumbent ALJs’ retention of competitive service status. J.A. 19. ALJ Applewhite rejected K & R‘s Appointments Clause challenge, reasoning that she had been “appointed by the Secretary of Labor on October 28, 2018,” before taking any action in the case. J.A. 25. ALJ Applewhite found that Keene was entitled to benefits under the Act, designated K & R as the responsible operator, and ordered K & R to begin paying benefits.
K & R appealed to the Benefits Review Board, asserting two grounds for vacatur. First, K & R reiterated its claim that neither ALJ Barto nor ALJ Applewhite had been constitutionally appointed. Second, K & R argued that “the ALJ[s] lacked the authority to adjudicate this case because the limitations on their removal violate the separation of powers.” J.A. 61. In support of its removal argument, K & R described the Supreme Court‘s decision in Free Enterprise Fund v. Public Company Accounting Oversight Board, 561 U.S. 477 (2010), and quoted Justice Breyer‘s concurrence in Lucia, where he opined that “‘Congress seems to have provided administrative law judges with two levels of protection from removal without cause—just what Free Enterprise Fund interpreted the Constitution to forbid in the case of the [PCAOB] members.‘” J.A. 62 (quoting Lucia, 138 S. Ct. at 2060 (Breyer, J., concurring)). According to K & R, insulating ALJs “from removal by the Secretary at will” contravened “the separation of powers principle.” J.A. 62.
Keene did not respond to K & R‘s appeal, but the Government did. The Director of the Office of Workers’ Compensation Programs filed a brief responding to both of K & R‘s constitutional arguments on the merits. See
The Benefits Review Board affirmed ALJ Applewhite‘s order. The Board rejected K & R‘s Appointments Clause challenge, reasoning that ALJ Applewhite had
K & R petitioned this Court for review, challenging the constitutionality of both the ALJ appointments and the ALJ removal protections. We have jurisdiction,
II.
The Appointments Clause prescribes the exclusive means of appointing “Officers of the United States,” a “class of government officials distinct from mere employees.” Lucia, 138 S. Ct. at 2049. Only the President, with the advice and consent of the Senate, can appoint “‘principal’ officers,” United States v. Arthrex, Inc., 141 S. Ct. 1970, 1979 (2021) (quoting Edmond v. United States, 520 U.S. 651, 659 (1997)), while Congress may vest the appointment of “inferior Officers” in “the President alone, in the Courts of Law, or in the Heads of Departments,”
The parties agree that DOL ALJs are inferior officers in light of the Supreme Court‘s decision in Lucia. Like the SEC ALJs in Lucia, DOL ALJs “hold a continuing office established by law,” exercise “significant discretion” when carrying out “important functions” on behalf of the executive branch, and “issue decisions” that can become the “last[]word” in agency proceedings. Lucia, 138 S. Ct. at 2053–2054 (internal quotation marks omitted); see also Carr v. Saul, 141 S. Ct. 1352, 1357 (2021). DOL ALJs, like their SEC counterparts, conduct trial-like hearings, receive evidence, examine witnesses, issue subpoenas, rule on procedural and dispositive motions, and render decisions. See Lucia, 138 S. Ct. at 2053 (citing Freytag v. Comm’r of Internal Revenue, 501 U.S. 868, 881–882 (1991));
Congress can vest the appointment of inferior officers like DOL ALJs in the “Heads of Departments“—here, the Secretary of Labor.
K & R nevertheless contends that the Secretary‘s actions were ineffective because both ALJs were originally appointed through the competitive service and allegedly remain in the competitive service. As an initial matter, we reject K & R‘s assertion that ratification by a department head cannot prospectively cure a prior unconstitutional appointment. Courts have recognized that, in some circumstances, a department head can by ratification remedy defects in agency action initially taken without lawful authority. See, e.g., Decker Coal Co. v. Pehringer, 8 F.4th 1123, 1127 n.1 (9th Cir. 2021); Wilkes-Barre Hosp. Co. v. NLRB, 857 F.3d 364, 371 (D.C. Cir. 2017); cf. Edmond, 520 U.S. at 654–655, 666 (concluding that the ratified appointments in that case were valid). Here, the Secretary‘s express ratification of ALJ Barto‘s appointment cured any constitutional defect in his original hiring by DOL. And ratification wasn‘t necessary for ALJ Applewhite, because the Secretary himself appointed her as a DOL ALJ in the first instance. Her prior employment as an ALJ in another executive agency is irrelevant. Both ALJs, therefore, had been constitutionally appointed by the time they took any action in this case.
We likewise reject K & R‘s unsupported contention that retaining incumbent ALJs in the competitive service after their valid appointment poses an Appointments Clause problem. Whether these ALJs remained in the competitive service after the Secretary appointed them is neither here nor there; because they were appointed in accordance with the Constitution before they took action in this case, K & R‘s Appointments Clause challenges fail.
III.
We next consider K & R‘s objection that the DOL ALJs are unconstitutionally insulated from the President‘s removal authority. Before proceeding to the merits, we must first address the threshold question of exhaustion.
A.
By regulation, issue exhaustion is required in an administrative appeal to the Benefits Review Board. Edd Potter Coal Co. v. Dir., Off. of Workers’ Comp. Programs, 39 F.4th 202, 209 (4th Cir. 2022); see
Courts reviewing agency action “regularly ensure against the bypassing
The Director has waived K & R‘s forfeiture and has instead urged us to resolve the constitutional question on the merits. In their briefs, neither the Director nor Keene raise issue exhaustion or forfeiture as a ground for denying the petition. When asked about the Government‘s position on forfeiture at oral argument, counsel for the Director confirmed, “We have not pressed that argument on appeal. . . . [The removal issue is] a pure question
of law that‘s certainly been briefed,” and “it‘s an important issue that this Court can reach.”6 Oral Arg. at 29:42–29:54, 30:25.
The respondents’ reluctance to rely on K & R‘s forfeiture before the Board as a ground to avoid judicial review of the removal issue is well founded, because its objection to the ALJ removal provisions is a facial constitutional challenge about which the Board has “no special expertise and for which [it] can provide no relief.” Carr, 141 S. Ct. at 1361; see McCarthy v. Madigan, 503 U.S. 140, 147–148 (1992). The Supreme Court has recognized time and again that “agency adjudications are generally ill suited to address structural constitutional challenges, which usually fall outside the adjudicators’ areas of technical expertise.” Carr, 141 S. Ct. at 1360; see Free Enter. Fund, 561 U.S. at 491. What‘s more, the Board has no authority to remedy the alleged separation-of-powers violation. K & R seeks to invalidate the statutes governing removal of DOL ALJs. While each of the three branches of our federal government has an obligation to interpret the Constitution, only the judiciary possesses the power to enjoin enforcement of statutes inconsistent with the Constitution. See Marbury, 5 U.S. (1 Cranch) at 177–178.
Given the Director‘s waiver of any argument that K & R forfeited its removal-protections claim by failing to exhaust it, Keene‘s decision not to raise the issue, and the nature of the facial constitutional challenge K & R presses, we agree with the parties that we can and should consider K & R‘s objection to the DOL ALJ removal protections.
B.
Article II of the Constitution vests “[t]he executive Power” in “a President,” who must “take Care that the Laws be faithfully executed.”
The Supreme Court has “recognized only two exceptions to the President‘s unrestricted removal power.” Seila Law, 140 S. Ct. at 2192. First, Congress can “create expert agencies led by a group of principal officers removable by the President only for good cause.” Id. (citing Humphrey‘s Executor v. United States, 295 U.S. 602 (1935)). Second, Congress can provide for-cause “tenure protections to certain inferior officers with narrowly defined duties.” Id. (citing United States v. Perkins, 116 U.S. 483 (1886), and Morrison v. Olson, 487 U.S. 654 (1988)). If these inferior officers are appointed by “Heads of Departments,”
In Free Enterprise Fund, the Supreme Court held that these “separate layers of protection” may not be combined. Id. at 483–484. Specifically, the Court held that the President may not be “restricted in his ability to remove a principal officer, who is in turn restricted in his
K & R contends that the same problem afflicts the removal restrictions Congress imposed for DOL ALJs. They also “exercise significant executive power” yet are insulated from the President by “two levels of protection from removal.” Id. at 514. The Secretary of Labor can remove a DOL ALJ “only for good cause.”
whom is subject to the President‘s direct control.” Free Enter. Fund, 561 U.S. at 495. Only the MSPB can “establish[] and determine[]” whether good cause exists to remove a DOL ALJ.
The Supreme Court in Free Enterprise Fund foresaw the possibility that its holding would implicate the statutory removal protections for ALJs. See 561 U.S. at 507 n.10; id. at 542–543 (Breyer, J., dissenting). In a footnote, the Court declined to address “that subset of independent agency employees who serve as [ALJs],” but noted several potential distinctions: whether ALJs are “Officers of the United States” was disputed; unlike the PCAOB, many ALJs “perform adjudicative rather than enforcement or policymaking functions“; and some ALJs “possess purely recommendatory powers.” Id. at 507 n.10.
K & R responds that the potential distinctions highlighted by the Court in Free Enterprise Fund do not distinguish DOL ALJs from the constitutional principles driving the Court‘s separation-of-powers holding. To begin with, eight years after Free Enterprise Fund, the Supreme Court held that SEC ALJs are inferior officers of the United States, because they exercise significant discretion when carrying out important executive functions. See Lucia, 138 S. Ct. at 2053. As explained above, DOL ALJs similarly are “inferior Officers” in an executive department, not employees of an independent agency.
The Director adds that the Black Lung Benefits Act incorporates the procedures used in the Longshore and Harbor Workers’ Compensation Act, see
The courts of appeals are divided about whether the dual for-cause limitations on the removal of ALJs—specifically,
“Notwithstanding this debate, it is a well-established principle governing the prudent exercise of this Court‘s jurisdiction that normally the Court will not decide a constitutional question if there is some other ground upon which to dispose of the case.‘” Bond v. United States, 572 U.S. 844, 855 (2014) (quoting Escambia Cnty. v. McMillan, 466 U.S. 48, 51 (1984) (per curiam)); see also Ashwander v. Tenn. Valley Auth., 297 U.S. 288, 347 (1936) (Brandeis, J., concurring). Here, regardless of how we answer the constitutional question presented by the removal provisions, we would be required to deny the petition because K & R has not asserted any harm resulting from the allegedly unconstitutional statutes, as explained below.
C.
The relief K & R seeks for the alleged constitutional violation is vacatur of the agency‘s decision and remand for new hearing before a different ALJ who is properly accountable to the President. See Seila Law, 140 S. Ct. at 2196 (“[W]hen [a removal] provision violates the separation of powers it inflicts a here-and-now injury on affected third parties that can be remedied by a court.” (internal quotation marks omitted)). Unfortunately for K & R, the Supreme Court has recently clarified that vacatur is not automatically warranted when a court concludes that an executive branch decisionmaker was subject to unconstitutional removal restrictions. See Collins v. Yellen, 141 S. Ct. 1761, 1787–1789 (2021).
An executive officer who was properly appointed may lawfully exercise the power of his office. A constitutional defect in the procedure for removing that officer—unlike a defect in his appointment—is “no basis for concluding” that he “lacked the authority to carry out the functions of the office.” Id. at 1788. As the Supreme Court explained in Collins, “the unlawfulness of the removal provision does not strip [the officer] of the power to undertake the other responsibilities of his office,” which he lawfully fills. Id. at 1788 n.23. Rather, the actions of a lawfully appointed executive officer fulfilling the duties of his office are legitimate and enforceable, even if the President‘s authority to remove the officer was unconstitutionally limited during his tenure.
The Court nevertheless acknowledged the “possibility” that an unconstitutional removal provision could “inflict compensable harm.” Id. at 1789. It gave two “clear-cut” examples: suppose “the President had attempted to remove [the officer] but was prevented from doing so by a lower court decision holding that he did not have ‘cause’ for removal,” or suppose “the President had made a public statement expressing displeasure with actions taken by [the officer] and had asserted that he would remove [him] if the statute did not stand in the way.” Id. “In those situations,” the Court explained, “the statutory [removal] provision would clearly cause harm.” Id.
Collins instructs that a party who has successfully challenged an unconstitutional removal restriction is not entitled to have the underlying agency action set aside absent reason to believe that the unconstitutional removal provision itself inflicted harm. The courts of appeals have followed the Supreme Court‘s guidance and denied relief on removal claims when the challengers have not shown that the constitutional violation caused them harm. See CFPB v. Law Offices of Crystal Moroney, P.C., 63 F.4th 174, 179–181 (2d Cir. 2023); Cmty. Fin. Servs. Assoc. of Am., Ltd. v. CFPB, 51 F.4th 616, 631–633 (5th Cir. 2022), cert. granted, 143 S. Ct. 978 (2023); Integrity Advance, LLC v. CFPB, 48 F.4th 1161, 1170–1171 (10th Cir. 2022); Calcutt, 37 F.4th at 316–317; Kaufmann v. Kijakazi, 32 F.4th 843, 849–850 (9th Cir. 2022).
K & R has not asserted any possible harm resulting from the allegedly unconstitutional limitations on the President‘s ability to remove DOL ALJs. And nothing in the record suggests the Secretary of Labor attempted or desired to remove ALJ Applewhite or ALJ Barto. Therefore K & R is not entitled to vacatur of the Board‘s decision affirming ALJ Applewhite‘s order regardless of whether the removal protections for DOL ALJs are constitutional.
In sum, the Secretary of Labor properly appointed ALJ Applewhite and ratified the appointment of ALJ Barto consistent with their status as inferior officers of the United States under the Appointments Clause. The Secretary made these appointments before the ALJs took any action in the Keene matter, therefore the ALJs lawfully possessed the authority to adjudicate the case and render the decision holding K & R responsible for paying black lung benefits to Keene. Because the ALJs were exercising the lawful authority of their offices, and K & R does not claim that the allegedly unconstitutional removal provisions caused it any harm, K & R is not entitled to any relief on its removal protections claim. That is true even if we agreed with K & R that the dual for-cause limitations on removal unconstitutionally insulate DOL ALJs from the President‘s authority. Accordingly, we do not decide that constitutional question and deny K & R‘s petition for review.
PETITION FOR REVIEW DENIED