On Monday, the Supreme Court ruled in United States v. Arthrex that Administrative Patent Judges (APJs) lack the supervision that the Constitution requires for those who have not been nominated by the president and confirmed by the Senate. Arthrex was the first Supreme Court decision addressing the amount of supervision necessary for non-Senate confirmed officers in 24 years, which means lower courts will study the opinion closely for guidance on how to address future challenges alleging inadequate supervision of other officers.

My colleague William Yeatman has already identified several other executive-branch adjudicative bodies whose members are likely insufficiently supervised under the reasoning of Arthrex. And although the Arthrex Court declined to “address supervision outside the context of adjudication,” courts will continue to be confronted with Appointments Clause challenges in other contexts. This post will address the potential effects of Arthrex on one such context in particular: the controversial practice of agency rulemaking by non-Senate-confirmed officers.

First, a brief overview of the constitutional provision at issue. Arthrex was about the “Appointments Clause” of the U.S. Constitution, which requires that all “officers of the United States” must be nominated by the president and confirmed by the Senate. The Appointments Clause provides one potential exception to this rule, however: an exception for “inferior officers.” The clause allows Congress to decide that a particular inferior officer can be appointed by the president, a department head, or a court unilaterally, without Senate consent. But, as the Supreme Court had previously explained in Edmond v. United States (1997), inferior officers are limited to “officers whose work is directed and supervised at some level by others who were appointed by” the president.

In Arthrex, the Court held that APJs are not adequately “directed and supervised” for one key reason: when deciding whether to cancel a patent, their decision “is the last stop for review within the Executive Branch.” By statute, neither the director of the Patent and Trademark Office nor any other nominal superior of the APJs can review such a decision; it can only be appealed to the federal court system. Put simply, APJs have “the final word within the Executive Branch on the validity of a challenged patent,” which means that “the buck stops with the APJs.”

To fix this constitutional defect, the Court modified the statutory scheme to allow the PTO director—an officer nominated by the president and confirmed by the Senate—to review every decision of the APJs. As I explained in a previous post, it is crucial that the Court chose to remedy the constitutional problem by making APJ decisions reviewable rather than by making APJs themselves removable. The Court’s choice of remedy calls into doubt whether simply making an officer removable at will is enough to make that officer “directed and supervised.” The Court instead strongly suggested that an officer cannot be inferior so long as that officer continues to have “the final word within the Executive Branch.” And if indeed removability is not enough to establish adequate supervision, that has serious implications for the way lower courts approach agency rulemaking cases.

As I and Angela Erickson of the Pacific Legal Foundation have previously recounted, agencies in recent decades have frequently subdelegated the authority to issue final rules down to subordinate officials neither nominated by the president nor confirmed by the Senate. When a subordinate exercises that subdelegated rulemaking power, there are two crucial consequences: (1) The rule is issued without the signature or approval of any Senate-confirmed superior; and (2) The rule cannot be reviewed or revoked by any superior. In other words, subdelegating rulemaking power allows a subordinate to have “the final word within the Executive Branch” on both the text of the rule and the decision to issue it.

Given the emphasis that Arthrex placed on non-reviewable decision-making, the subdelegation of final rulemaking authority to subordinates neither nominated by the president nor confirmed by the Senate is in severe tension with the Appointments Clause, whether or not those subordinates are removable at will. (Indeed, Justice Samuel Alito wrote in a 2015 concurrence that “inferior officers can do many things, but nothing final should appear in the Federal Register unless a Presidential appointee has at least signed off on it.”).

Still, there is one potentially relevant difference between most rulemaking scenarios and the situation in Arthrex, and that difference will likely be at the center of the dispute in litigation going forward. In Arthrex, the inability of any superior to review the APJs’ decisions was mandated by statute (until, that is, the Supreme Court invalidated that aspect of the statute). In many rulemaking scenarios, by contrast, the superior has voluntarily subdelegated final rulemaking authority to the subordinate official. In most instances, those subdelegations could be modified or revoked at will by the superior so that final rulemaking authority once again rests only in the superior. Does that fact make a difference to the constitutional question?

The government will certainly argue that it does. Indeed, it already has. In litigation challenging one such subdelegation of rulemaking power (full disclosure, in my prior job I was one of the Pacific Legal Foundation attorneys representing the plaintiffs in the early stages of that litigation) the government argued that a subordinate’s status as a properly-supervised inferior officer “turns on all of her superiors’ supervisory authority—not only their self-imposed restraints, but also their ability to lift those restraints.” The government stressed that the superior could have altered the terms of the subdelegation at any time to make final rules contingent on the superior’s approval before they take effect. That mere potential, the government argued, amounted to adequate supervision because every rule issued by the subordinate was effectively issued by permission of the superior.

In the wake of Arthrex, however, similar arguments from the government will face significant challenges. Prior to Arthrex, the most recent Supreme Court case concerning the level of supervision necessary for inferior officers was Edmond. In finding the officer at issue to be inferior, Edmond had described it as “significant” that the officer at issue had “no power to render a final decision on behalf of the United States unless permitted to do so by other Executive officers.” In Edmond, that lack of “power … unless permitted” derived from the statutory ability of executive-branch superiors to review each individual decision of the officer at issue. But Edmond left open whether a lack of “power … unless permitted” could also be established solely by the ability of superiors to institute a system of review in the future, should they begin to lose faith in the decisions of the subordinate.

But Arthrex strongly suggests that the mere potential to institute review in the future is not sufficient supervision. Arthrex’s reasoning focused squarely on the present lack of formal review for each particular APJ decision. The fact that a superior might influence a decision behind the scenes is no substitute for formal review, the Court explained, because even if successful “such machinations blur the lines of accountability demanded by the Appointments Clause. The parties are left … [without] a transparent decision for which a politically accountable officer must take responsibility.” And the fact that an APJ might be punished in various ways for a decision, including through the loss of future decision-making assignments, is also inadequate because this gives the superior “no means of countermanding the final decision already on the books.”

Arthrex’s focus on formal review rather than behind-the-scenes influence suggests that the threat of instituting review or revoking rulemaking power is no substitute for a system of formalized rule-by-rule review. Until such review is actually instituted, a superior who has subdelegated rulemaking power can plausibly avoid responsibility for each particular rule issued by a subordinate. And just like the threat of reassigning APJs, the threat of revoking or limiting a subdelegation gives “no means of countermanding” any final rules issued before the threat is followed through.

The key holding of Arthrex is that when it comes to final executive-branch decisions, the buck needs to stop with someone nominated by the president and confirmed by the Senate. Whether the buck was passed voluntarily shouldn’t change that analysis. If anything, courts going forward should be even more skeptical when the executive branch itself has chosen to “blur the lines of accountability demanded by the Appointments Clause.” When final rules are issued without a clear chain of democratic accountability, it’s the people themselves who suffer.