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The Structure of Government and Today's Argument in the Sarbanes-Oxley Act Case

By Jack M. Balkin

As someone who has followed the important issues in this case closely, including by filing an amicus curiae brief on behalf of seven former Chairmen of the SEC in support of the government's position, there were a number of surprising comments from various Justices about central administrative law issues. I will only note the first of these here; with time, I will note a few others.

Independent agencies, like the SEC, the FCC, the FTC, have been held constitutional since the famous Humphrey?s Executor case. But today, Justice Scalia asserted -- at the very start of the government's argument -- that independent agencies are constitutional only because the President has the power to remove the Chair of these agencies. This did not seem a casual comment from Justice Scalia; it also seemed that some other Justices might share this view.

The first reason this is such a surprising position is that it has never been expressed before, at least as far as I know. Certainly, it has not been expressed in any Court opinion, including Humphrey's Executor, when the Court upheld the constitutionality of these agencies.

Second, there's a problem with the point: although the President now has authority to select the Chairman of the SEC from among the Commissioners and remove him from that position at will, that was not the way the statutes worked at the time Humphrey?s Executor was decided (for either the FTC or the SEC). In 1935, the Commissioners themselves chose the Chairman from among their own membership; the President had no greater authority over him than he had over any other Commissioner. See Humphrey?s Executor v. United States, 295 U.S. 602, 620 (1935) (?The commission shall choose a chairman from its own membership.? (quoting ch. 311, § 1, 38 Stat. 717, 718 (1914)). The President was only given authority over the Chairman in 1950. See Reorganization Plan No. 8 of 1950, § 3, 15 Fed. Reg. 3175, 3175 (May 25, 1950) (?The functions of the [Federal Trade] Commission with respect to choosing a Chairman from among the membership of the Commission are hereby transferred to the President.?); Reorganization Plan No. 10 of 1950, § 3, 15 Fed. Reg. 3175, 3175 (May 25, 1950) (same for SEC). So the Court certainly could not have thought, at the time it decided Humphrey's Executor, that the FTC was constitutional only because the President could remove the Chairman of the FTC.

To put the point another way, the position of a Chairman only exists because Congress by statute eventually decided to create one -- and Congress could eliminate the position of Chair. For example, the President does not appoint a Chairman of the Federal Election Commission; that position rotates among the six Commissioners. Does Justice Scalia believe the Constitution affirmatively requires Congress to create a Chair of an independent agency -- and that the President be given the power to remove that Chair at will?

I find it hard to believe that Justice Scalia, or any other Justice, really thinks that, once he sits down to think it through. But that would seem to be the logic of the position that independent agencies are only constitutional if the President can remove their Chairs.

This was only one of several, similarly surprising comments from the Court at today's important argument. With time, I will try to address some of the others.

Full post as published by Balkinization on December 07, 2009 (boomark / email).