SpaceX Says US Illegally Tried to Patch Regulatory Hole in Spat on ALJ's Review of Its Hiring Practices

A SpaceX lawsuit challenging an export control-related hiring discrimination case against the company would succeed if not for a "late-breaking development" in the form of an interim final rule imposed "seemingly in direct response" to SpaceX's preliminary injunction motion, the company argued. SpaceX said that even the government admits that it would lose the case without the interim final rule, which SpaceX told a federal district court in Brownsville, Texas, is illegal (Space Exploration Technologies v. Carol Bell, S.D. Tex. # 23-00137).

The interim final rule, published two weeks after the PI motion, subjects rulings from administrative law judges under the DOJ Office of the Chief Administrative Hearing Officer to administrative review. Without this rule, the U.S. admits that the administrative judges' ability to issue final decisions without the chance for further review is "incompatible with their appointment ... to an inferior office," the brief said.

In addition, the government "does not dispute that" there is "no logical way" to drop this unconstitutional part of the statue and fix the resulting Appointments Clause problem, given that a "constellation of provisions" bars further review within the Executive Branch.

The U.S. alleged that SpaceX engaged in illegal hiring practices by claiming it could only hire U.S. citizens and legal permanent residents because of export control laws (see 2308250041). DOJ said these laws impose no such restrictions, adding that the company's hiring and recruiting practices amounted to discrimination. SpaceX took to the Texas court to say that the administrative proceedings are unconstitutional since the administrative law judge presiding over the proceeding was "unconstitutionally appointed," is "unconstitutionally insulated from Presidential authority," and is illicitly attempting to adjudicate SpaceX's rights in a place other than a federal court (see 2309210015).

Instead of arguing that its use of the judges comports with the Appointments Clause, the U.S. "belatedly tried to patch" the problem with a "regulatory band-aid," the brief said. The interim rule hastily imposed by the government says the Attorney General can review the administrative law judges' orders, though it also says that "no party will have the right to seek or request such review," SpaceX said. The space exploration company said that "there is no dispute that DOJ has been enforcing an unconstitutional statute for decades" and only bothered to do something about it when SpaceX forced the issue instead of "capitulating to DOJ's demands" like most other similarly situated defendants.

Concurrently with its reply brief, SpaceX asked the court for leave to amend its complaint and add a count addressing the interim rule. This motion said it "would make no sense to require SpaceX to file a separate lawsuit challenging" the rule given that the company's claims are "interrelated with SpaceX's constitutional claims."