Supreme Court Should Mend, Not End, Independent Agencies

(Bloomberg Opinion) -- The Supreme Court heard oral arguments on Tuesday in the most important separation-of-powers case in several decades.

The central issue is simple: Did Congress violate the Constitution in making the Consumer Financial Protection Bureau independent of the president when it created that agency in 2009? Under the law as it now stands, the president can fire the bureau's director only for “inefficiency, neglect of duty, or malfeasance in office.”

Whether that restriction is constitutional bears on the entire structure of the U.S. government.

Many federal agencies are “executive,” in the sense that their heads work for the president and can be discharged for whatever reasons he likes. That's true, for example, of the Departments of State, Defense, Transportation, Agriculture, Justice, Education, Energy, Labor, Interior, Treasury and Commerce. It's also true of the Environmental Protection Agency.

But Congress has also created numerous independent agencies whose heads are not removable for whatever reasons the president likes. These agencies include the Federal Reserve Board, the Federal Communications Commission, the National Labor Relations Board, the Federal Trade Commission, the Nuclear Regulatory Commission and the Securities and Exchange Commission.

In a case called Humphrey's Executor v. FTC, decided in 1935, the Supreme Court ruled that independent agencies are constitutional. To the dismay of President Franklin Delano Roosevelt, the justices held that nothing in the Constitution forbids Congress from creating an independent Federal Trade Commission. That's long been settled law.

But in recent decades, many scholars and some lower-court judges, have suggested that the court got the Constitution wrong. After all, Article II, Section 1 vests executive power in one person: “a president of the United States.” In addition, the Constitution grants the president, and no one else, the power “to take care that the laws be faithfully executed.”

According to the critics, the Constitution creates a “unitary executive,” which means that Congress cannot give authority to a headless fourth branch of government, operating independently of the president.

The current constitutional challenge to the Consumer Financial Protection Bureau includes two separate arguments.

The first and more modest is that even if Congress can create independent agencies, they must be multimember commissions like the FTC and the Fed. They cannot be headed by just one person, like the director of the CFPB. The logic here is that a multi-member commission is less threatening to liberty because its members can constrain one another. The real threat, or so it is argued, comes when a single person has broad authority — and is not controlled by the president.

The second and more radical argument is that the Humphrey's Executor decision was a mistake and that it should be overruled. That would, of course, be a gift for President Donald Trump (and his successors).

If we favor stability in the law, and think that the justices should have a presumption in favor of respecting their own precedents, the radical argument should be rejected. It would unsettle American government and disrupt longstanding arrangements on the basis of a constitutional theory — the strongly “unitary executive” — that lacks clear historical support.  

Rejecting this theory would leave the court with three options, none of which would be unreasonable.

The first would be to strike down the restriction on the president's power over the consumer protection bureau's director without questioning independent agencies like the Fed and the FTC, and without casting doubt on Humphrey's Executor. That would almost certainly mean that other single-headed independent agencies are unconstitutional. But there aren't a lot of those; the most important is the Social Security Administration.

A second option would be to say that under long-settled law, Congress can create independent agencies, and to rule that for constitutional purposes, it doesn't make a difference whether such agencies are headed by multiple people or by just one. That conclusion would fit well with settled law, and it would be perfectly sensible.

But a third and somewhat more complicated option would be even better, because it would preserve the president's power under the “Take Care” clause. Recall that a president can discharge the heads of independent agencies for “inefficiency, neglect of duty or malfeasance in office.”

The court has never interpreted those words. But it would be easy to read them to say that the heads of supposedly independent agencies are not all that independent.  After all, the president retains the power to discharge them not only for corruption (“malfeasance”) but also for ineffectiveness (“inefficiency”) and for failing to do as the law requires (“neglect of duty”). If the president believes that the director of the bureau has violated the law, or acted arbitrarily, he can fire him.

To be sure, this approach would not give the White House complete control over the heads of independent agencies. The president could not fire them for whatever reason he likes, or simply because he disagrees with them as a matter of policy. He would have to go beyond mere disagreement and explain publicly his conclusion that they have neglected their duty.

But if the president has the authority to ensure that the heads of independent agencies do as the law mandates, he retains a lot of supervisory power. That's probably all that the Constitution requires.

To contact the editor responsible for this story: Jonathan Landman at jlandman4@bloomberg.net

This column does not necessarily reflect the opinion of Bloomberg LP and its owners.

Cass R. Sunstein is a Bloomberg Opinion columnist. He is the author of “The Cost-Benefit Revolution” and a co-author of “Nudge: Improving Decisions About Health, Wealth and Happiness.”

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