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Supreme Court Puts Independent Agencies at Risk

·6 min read

(Bloomberg Opinion) -- On rare occasions, the Supreme Court answers the most fundamental questions, going to the very heart of our constitutional system. In striking down the independence of the Consumer Financial Protection Bureau, the court today did exactly that.

Since the founding itself — and with mounting intensity over the 40 years — the United States has been divided over two visions of the Constitution.

The first insists that we have a “strongly unitary executive,” which means that the president must be in charge of all those who implement federal law. For those who believe in a strongly unitary executive, all departments, all agencies and all administrators work under one person: the commander in chief. Congress lacks the power to create “independent” agencies, headed by people whom the president cannot fire, and who are not subject to his will.

According to the second vision, we have a “weakly unitary executive,” which means that Congress has the authority to restrict the president’s power to control some officials who implement federal law.

If Congress wants to create independent regulators, such as the Federal Trade Commission, the Federal Communications Commission and the Consumer Financial Protection Bureau, it’s perfectly entitled to do that.

Sure, the president must be allowed to carry out his constitutional functions, meaning that he has to be allowed to control the secretary of State and the secretary of Defense (and perhaps the attorney general). But for those who believe in a weakly unitary executive, Congress is allowed to make some regulators independent of the president.

Among historians, there is a sharp dispute about which vision was held by the founding generation.

But in 1925, in a case called Myers v. United States, the court enthusiastically embraced the strongly unitary vision. It held that the president must be in charge of all those who implement federal law.

The court emphasized that Article II of the Constitution vests executive power in a U.S. president -- not in anyone else. It said that the founding generation sought to ensure accountability, vigor and dispatch, and that to achieve those goals the Constitution puts the president firmly in charge of all those who administer and implement federal law.

Ten years later, the court reversed course.

In a case called Humphrey’s Executor v. United States, the court upheld the independence of the Federal Trade Commission, whose five members could be discharged by the president only for “inefficiency, neglect of duty, or malfeasance in office.”

As the court saw it, the Constitution allows Congress to create independent agencies if they exercise duties that can be deemed “quasi-judicial” and “quasi-legislative.” The Federal Trade Commission sometimes acts like a court, in the sense that it decides cases — and hence it has “quasi-judicial” authorities. The FTC also compiles reports and undertakes investigations for Congress — and hence can be seen as “quasi-legislative.”

In 1935, some people (including President Franklin Delano Roosevelt) believed that Humphrey’s Executor was not merely wrong but grotesque, a clear betrayal of the Constitution. Starting in the early 1980s, that view got new traction.

The Reagan administration embraced it, as did prominent academic commentators.

It is fair to say that over the last 40 years, a belief in a strongly unitary executive, and the illegitimacy of the independent agency form, has been a defining theme in conservative constitutional thought.

No one should deny that a constitutional assault on independent agencies would be highly disruptive to American government. The Federal Reserve Board is an independent agency. The National Labor Relations Board, the Nuclear Regulatory Commission, the FTC, the FCC, the Securities and Exchange Commission and the Consumer Product Safety Commission are independent agencies.

Is each and every one of these unconstitutional?

Now let’s turn to the Consumer Financial Protection Bureau case. The main difference between the CFPB and the agencies just listed is simple: The CFPB is headed by a single director, whereas other independent agencies are headed by a multimember group (with a further requirement of bipartisan membership, so that, for example, no more than three members of a five-member commission may be from the same political party).

Does that make a constitutional difference?

Offhand, you might think that it really shouldn’t. It is true that a multimember commission might seem more constrained. No single person is in charge. But with a single head, there is greater accountability. If things go wrong, you know whom to blame.

It follows that if you’re comfortable with Humphrey’s Executor, and the basic idea of independent agencies, you’ll almost certainly be comfortable with the CFPB. That was the position of Justice Elena Kagan, who wrote today’s dissenting opinion, and she was joined by Justices Ruth Bader Ginsburg, Stephen Breyer and Sonia Sotomayor.

But the majority, led by Chief Justice John Roberts, saw things very differently. Hence Roberts’s sonorous words, toward the very start: “Under our Constitution, the ‘executive Power’ — all of it — is ‘vested in a President.’”

Hence his summary: “The President’s power to remove — and thus supervise — those who wield executive power on his behalf follows from the text of Article II, was settled by the First Congress, and was confirmed in the landmark decision Myers v. United States.”

Roberts acknowledged that the court had upheld the independent agency form in Humphrey’s Executor, and he saw no occasion to overrule that decision. But he was not at all comfortable with it.

“While we need not and do not revisit our prior decisions allowing certain limitations on the President’s removal power, there are compelling reasons not to extend those precedents to the novel context of an independent agency led by a single Director.”

In his view, “Humphrey’s Executor permitted Congress to give for-cause removal protections to a multimember body of experts, balanced along partisan lines, that performed legislative and judicial functions and was said not to exercise any executive power.”

Lacking a multimember body and partisan balance, the CFPB has few if any historical precedents. From the standpoint of the constitutional structure, it is particularly troubling to concentrate power in the hands of a single individual, in this case, the agency’s director. In the view of the court’s majority, that is an impermissible threat to liberty — and unconstitutional.

What are the implications?

For the near term, the answer is simple: The CFPB lives, but as an executive agency — subject, just like the cabinet departments, to the president’s control.

For the long term, the answer is anything but simple. It’s clear that most of the justices believe in a strongly unitary executive. They are deeply uncomfortable with the whole idea of independent agencies.

For the first time since the 1930s, their constitutional status is insecure.

This column does not necessarily reflect the opinion of the editorial board or 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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