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Wow, we don't regularly get questions from people so knowledgeable about federal administrative law. I really appreciate the focus you brought to this!
Of course, I can't read the ALJ's mind or know what his or her analysis shows. But in general, from my experience with federal administrative law, it is not unusual to cite to court opinion in an administrative law proceeding. Circuit courts are a valid source of law -- and the citation would be appropriate (just as a Supreme Court ruling would be). ALJ decisions are not self-referential. If there is, what the judge believes to be a more authoritative interpretation, he or she is supposed to apply the law, not just refer to what the board itself said in prior cases.
But you raise another interesting question: if the ALJ erred in application of the citation, then that would be a decisional error that could be appealed (as any judicial error could be appealed, whether made by an ALJ or a court judge).
If there is a right for a de novo hearing, then the appeal issue is somewhat mooted -- but not irrelevant. Often, in federal cases, there are circuit splits where one circuit disagrees with another's interpretation or application. Its the stuff many lawyers live for (or at least make a living off!) Ultimately, circuit splits remain until the Supreme Court adjudicates (if ever, since, as you know, there are limited number of cases the Supremes will take).
Additionally, while the DoJ may order its regulators and prosecutors to follow a certain procedure, ALJ's are, like judges in court, bound by law and regulation -- not directives from political and policy
managers. The basic concept of adjudication
in administrative law settings is really no different than that required in court. An ALJ, for the limited purpose of the board's proceedings, is like a judge -- bound by law, not by politics or policy (as other employees
I hope this helps frame the issue. If there are internal appeals still available within the administrative adjudicative system, then decisional error is certainly at issue (even if a court will treat the case de novo). Some sort of petition for reconsideration could be one thing to consider, with citation and proof so the ALJ may get a chance to see the error and correct it, for instance. Since each administrative agency has procedural rules of its own, it is important to look closely at that board's procedural rules to see what process might be available for this type of appeal at the ALJ level.
I wish you every success in resolving this matter.