Tuesday, June 30, 2020

SCOTUS Erred In Seila Law But Congress Should Require A Heightened Self-Dealing Risk Before Creating Independent Agencies

By Michael C. Dorf

In his majority opinion in Seila Law v. Consumer Financial Protection Bureau, CJ Roberts summarized prior precedents on the scope of Presidential removal power as recognizing "only two exceptions to the President’s unrestricted removal power.  . . . Congress [can] create expert agencies led by a group of principal officers removable by the President only for good cause [and] provide tenure protections to certain inferior officers with narrowly defined duties." The CFBP Director is an individual, not a group, so he doesn't fall within the first exception. And the CFBP has broad and far-reaching duties, so the Director doesn't fall within the second exception either. Thus, according to the majority, the restrictions on at-will Presidential removal of the Director are unconstitutional.

Justice Kagan's dissent is very persuasive. The Constitution's text contains no removal limit at all, and there is nothing in the Court's prior cases to suggest that Congress may not combine the two kinds of limits in the CJ's exceptions or, for that matter, that establishes any general rule of the sort the Chief Justice finds. Meanwhile, she derives from history a very different sort of limit, beginning in the earliest days of the Constitution. Justice Kagan writes:
Congress took the first steps— which would launch a tradition—of distinguishing financial regulators from diplomatic and military officers. The latter mainly helped the President carry out his own constitutional duties in foreign relations and war. The former chiefly carried out statutory duties, fulfilling functions Congress had assigned to their offices. In addressing the new Nation’s finances, Congress had begun to use its powers under the Necessary and Proper Clause to design effective administrative institutions. And that included taking steps to insulate certain officers from political influence.
The history Justice Kagan cites suffices to show why the majority is wrong. Outside the area of foreign and military affairs, the Constitution leaves to Congress the decision whether to insulate the holders of offices it creates from Presidential dismissal absent good cause. But to say that Congress has (or even ought to have) unreviewable authority in some area is not to say how Congress ought to exercise it. Congress has sometimes created independent agencies without a good policy justification for doing so. And while that oughtn't affect the constitutionality of those agencies, Congress's promiscuity in this area probably plays a psychologically causal role for some of the conservative Justices who favor a stricter constitutional approach.
In the early to mid 20th century, delegations to independent agencies were frequently defended on grounds of expertise. Certain tasks of the administrative state called for judgment that was scientific or otherwise technocratic rather than political. At some point in the late 20th century, courts and commentators came to challenge the notion of apolitical expertise. Consequently, although the expertise justification never disappeared, increasingly courts and commentators came to rationalize delegation of power to agencies on other grounds.

One such ground was accountability, but that only works for agencies that are ultimately answerable to the President. My former colleague Prof. Peter Strauss described "the transformation of American rule making" as moving "from expertise to politics," and the same could be said about justification of delegation to agencies more broadly--but again, only for agencies within the executive branch, i.e., headed by personnel subject to at-will dismissal by the President. The move to political accountability as justification for delegation left independent agencies orphaned. What justifies them?

One tempting answer is suggested by the work of my current colleague (and last week's DoL guest blogger) Prof. Jed Stiglitz. In his forthcoming Cambridge U Press book The Reasoning State and in some of the work that leads up to the book, Prof. Stiglitz provides historical and empirical evidence in support of his argument that the practice of giving reasons--as reinforced by the Administrative Procedure Act--provides agencies with legitimacy and goes a long way towards explaining why Congress delegates power to them in the first place.

Yet while reason-giving partly answers the questions of how agencies can be held accountable and why Congress chooses to create them, it does not answer the question of why some particular agencies should be headed by personnel not directly answerable to the President--i.e., "independent." After all, executive branch agencies are also subject to reason-giving obligations--and Prof. Stiglitz does not claim that reason giving distinguishes independent agencies. So while reason giving should provide some comfort to those who worry about agencies running amok, it does not justify independent agencies.

Perhaps a better answer is to revive expertise as a justification. This approach is especially tempting now, when our fool-tyrant of a President leads a death-cult of a party that systematically ignores or actively suppresses much of the most vital work of apolitical scientists and other technocrats in what he and his conspiracy-minded fanboys and fangirls call the deep state. If independence means independence from Trump, then heaven knows we could use all the independent agencies we can find right now.

The difficulty is that most independent agencies are created with a substantially longer time horizon than a single administration, even one that is historically horrific. "Any port in a storm" will justify making the entire federal government independent of Trump. The question is whether technocratic expertise can justify making some agencies independent in normal times (should they ever return).

The answer is that it cannot. The shift from expertise to politics arose because of a recognition that nearly every large-scale policy question--including where Congress has set boundaries around the scope of agency discretion--will involve judgments that implicate normative and thus political questions as well as technical ones. True, politically accountable agencies will give too much weight to ideological grounds, but the notion that politically accountable actors will make bad decisions cannot be the justification for insulating any particular agency from presidential oversight, as it will insulate all agencies from such oversight. Here is how Prof. Buchanan and I put the point in our 2016 article in the Cornell Law Review, Don't End or Audit the Fed: Central Bank Independence in an Age of Austerity:
Politicians make bad decisions in many areas. They under-invest in infrastructure; they deny climate change; they subsidize industries that harm human health; they enact criminal laws that destroy the lives of nonviolent offenders and their families; and so forth. If the risk of merely sub-optimal policies emerging from the political process justifies lodging power in expert agencies subject to little or no political oversight, then there will be very little room for governance by elected officials.
We argued there that some special justification should be required for insulation from politics, beyond the risk of bad decisions. Using the federal judiciary as a model, we suggested that the best justification is one that focuses on heightened risks of self dealing. Because our focus was Federal Reserve Board independence, we explained how the Fed in particular should be independent to prevent Presidents from recklessly manipulating the money supply for short-term political gain. We did not issue a report card evaluating the strength of the case for independence of particular agencies, and I won't offer one here, but one obvious candidate is the Federal Election Commission. It has too few powers and it has been hobbled further by vacancies, but the core idea that the people who administer election rules should be nonpartisan (or at least multi-partisan) makes good sense. Elections Canada does good work. So could the FEC if--and I'm aware of the irony here--there were the political will to create a body that stands reasonably far outside politics to administer elections.

I'll conclude by reiterating that I don't think that "risk of self-dealing" is the constitutional test for the validity of restrictions on Presidential removal power. However, it's worth noting that insofar as it were to play a role in a constitutional test, it has no correlation with the rule that CJ Roberts fashions treating group-led independent agencies as permissible where individual-led ones. So there isn't even an accidental functional justification for the Court's rule.

1 comment:

Joe said...

I checked and removal here can be done on the basis of "inefficiency, neglect of duty, or malfeasance in office.” Also, there is congressional oversight, funding, ability to change the law and agency rules, pressure from lobbying and media etc. Plus, there is the overall administrative law process, which has some due process teeth.

So, I'm not sure how unlimited the lack of checks are that warrant special concern here. But, our system does follow from the executive/legislative/judicial break-down and administrative law is a somewhat uncomfortable fit. It leads me to think that in an ideal world we would amended the Constitution to address the modern administrative state. It has been explained that we always had agencies but modern day realities have moved a lot further than what was there originally as well.

As with other things, an amendment might be appropriate. That not being likely, yes, we will have to deal with the system we have in place.