WASHINGTON, Aug 16 (Reuters) - Administrative judges, the adjudicators of regulatory law at U.S. government agencies, may face a threat to their independence from political influence under a recent court ruling.

A federal appeals court ruled in July that the Copyright Royalty Board, a panel of administrative judges who set the rate broadcasters pay for copyright licenses, was unconstitutional because of the way its panelists are appointed and the job protections they are given.

Judges on the little-known, three-member royalty board are appointed by the Librarian of Congress without a confirmation vote from the U.S. Senate. Historically, they could not be fired for reasons other than misconduct. The U.S. Court of Appeals for the D.C. Circuit ruled that the judges on the panel are not entitled to such protection, akin to tenure.

The case was brought by a group of broadcasters looking for a way to overturn an unfavorable ruling from the royalty board.

Although the appeals court's decision applied only to the royalty board, legal experts said it invites challenges to the constitutionality of the independence of other administrative judges. Under the ruling, these judges could see job protections stripped, making them vulnerable to termination if they rule against the president's allies or in favor of his rivals.

"There is a serious, practical significance," Said Arti Rai, a professor at Duke University School of Law. "The political sway of [the president's] party now matters" to the judges, she said.

"If they're more worried about keeping their job and paying their mortgage than making the right decision, then people can't really get a fair hearing," said Susan Morrison, a former administrative judge in Texas.

Thousands of administrative judges work at U.S. government agencies, from the Federal Communications Commission to the Drug Enforcement Administration, dissecting the details of regulations. Their hearings replace traditional trials when regulations are at issue. They hear more cases than the entire judicial branch combined, Rai said.

Though often invisible to the public, these judges' decisions influence "billions of dollars and the fates of entire industries," the three-judge panel of the U.S. Court of Appeals for the District of Columbia Circuit wrote in a unanimous decision.

The court found that under the existing structure, the Copyright Royalty Board judges had significant authority and little oversight. In constitutional parlance, that combination rendered them "principal officers" requiring a presidential appointment and Senate confirmation. By giving the Librarian of Congress power to remove them without cause, the court effectively demoted them to "inferior officers" -- executive officials who are not confirmed by the Senate and have less decision-making power.

Administrative judges have differing degrees of oversight and protections. Both of those factors are important in weighing whether the arrangement is constitutional, the court said.

Rai of Duke University cautioned that if future cases are brought challenging the constitutionality of executive-branch judicial structures, different appeals courts could create different standards. As a result, Rai said, the fate of any one administrative judge could depend on which circuit reviews the case.

'BROAD IMPLICATIONS'

"This issue has very broad implications on a lot of different agencies," said John Duffy, a professor at the University of Virginia School of Law.

"If the Copyright Royalty Board is unconstitutional, there might be a lot of adjudicators that are unconstitutional in the executive branch," he said.

The issue may end up before the U.S. Supreme Court in its upcoming term, Duffy said.

Although the Copyright Royalty Board ruling gives the executive branch extra control over its administrative judges, the U.S. Department of Justice will likely appeal the decision, Duffy said. The Justice Department declined to comment.

"The D.C. Circuit declared a statute of Congress unconstitutional," he said. "Usually, that's the kind of case the Supreme Court will take."

(Reporting by Drew Singer)

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