No, Jarkesy Did Not Get Rid of DOT ALJs

We have received several inquiries from MARPA members asking about the effect of last week’s opinion out of the U.S. Court of Appeals for the Fifth Circuit, Jarkesy v. SEC, and what that opinion might mean for Department of Transportation Administrative Law Judges (ALJs) that companies and persons regulated by the FAA interact with from time to time.

There has been quite a bit of media coverage about this opinion, but for those unfamiliar, the 5th Circuit vacated a judgment by a Securities and Exchange Commission ALJ imposing monetary civil penalties and other remedies for securities fraud on the grounds that:

(1) the SEC’s in-house adjudication of Petitioners’ case violated their Seventh Amendment right to a jury trial; (2) Congress unconstitutionally delegated legislative power to the SEC by failing to provide an intelligible principle by which the SEC would exercise the delegated power, in violation of Article I’s vesting of “all” legislative power in Congress; and (3) statutory removal restrictions on SEC ALJs violate the Take Care Clause of Article II.

Each of these holdings is subject to its own extensive legal analysis, but for our purposes, as can be seen from the plain text of the holding, the court’s opinion applies only to SEC ALJs. Additionally, this holding is now the law only in the the courts of the 5th Circuit–Federal courts in the states of Texas, Louisiana, and Mississippi.

It is possible that the court’s analysis could be applied to DOT ALJs as well, but to the best of our knowledge no such case is yet making its way through the courts challenging DOT ALJs on any of these grounds. Even if such claims were made, it is far from clear that DOT ALJs are subject to the same deficiencies the 5th Circuit found against the SEC ALJs. For now, DOT ALJs remain unchanged and retain their full authority.

This opinion will very likely be subject to an en banc review by the 5th Circuit and potentially an appeal to the United States Supreme Court as well, so we are a long way from this opinion being the law of the land with respect to even SEC ALJs, let alone DOT ALJs. In the event a similar opinion is rendered against DOT ALJs, we will be sure to write about the effects on our industry.