Thursday, May 21, 2009
I spoke this afternoon with Professor Rick Pildes (NYU) about Free Enterprise Fund v. Public Company Accounting Oversight Board, the D.C. Circuit case upholding the PCAOB against Appointment Clause and separation-of-powers challenges. The Supreme Court granted cert. on Monday. (I posted on the case, with links to the opinion and my edited version of the opinion, here.)
Pildes filed an amicus brief in the D.C. Circuit on behalf of seven former SEC chairmen, arguing in support of Congress's authority to create the PCAOB under the control of the SEC (itself an independent agency) and to vest appointment of its members--who, Pildes argued and the D.C. Circuit ruled, are "inferior officers"--in the SEC.
We discussed the role of the PCAOB in the Sarbanes-Oxley Act, the plaintiffs' arguments in Free Enterprise, and implications of the case beyond the PCAOB. The entire interview is here (about 15 minutes, MP3 format). Here are some highlights:
On Presidential Control Over Executive Agencies and the Unitary Executive Theory:
[The plaintiffs are] certainly opening up much larger questions about how much control the President has to have under Article II of the Constitution over the regulatory state, over all the administrative structures of government. And as you know, this has been an on-going battle certainly since the New Deal, at the very least, but a battle that really revived during the 1980s, when arguments in favor of what’s called the Unitary Executive Branch vision of Article II became much more pronounced. And proponents of the Unitary Executive Branch view of Article II argue that the independent agencies are in fact unconstitutional, that the President has to have everybody who is implementing or executing federal law under his direct control, which means that he has to have the ability to fire them at will as a way of influencing the performance of their duties. Now as you say, the plaintiffs in the case don’t purport to be challenging the 70-year old principle . . . that independent agencies are constitutional, but at the bottom of their case I think you’re right to recognize that there are very fundamental questions about how exactly the Court understands the President’s Article II powers and how the Court understands how much control the President must have over agencies, or contrarily how much independence Congress can give administrative agencies. . . . There’s some concern about independent agencies that drives all of this at some deep level of this case.
On the Larger Implications of the Case:
On the Larger Implications of the Case:
As we all know, cases that are framed in narrow terms often implicate much larger principles. And I think that’s exactly what’s going on here. I think the plaintiffs, as plaintiffs or petitioners typically want to do, want to present their case as a very narrow challenge that doesn’t require the Court to revisit big principles of presidential power over agencies. But I think anybody looking at this case will recognize that the Court will have to address those kinds of issues to some extent in resolving this case. So there will be implications for these bigger issues, however the Court resolves this case.
One implication is to understand what agency independence means as a matter of statutory law. So independence of [independent commissions] has always been tied to Congress protecting the commissioners by saying that they cannot be removed by the President from office except for good cause. So inevitably this case raises questions about How big a constraint is that? What does good cause mean? And that will have implications for a lot of the agencies. So the more the Court waters down what the good cause removal constraint means, the more that will give the President more control over the independent agencies than under an understanding of independence and of good cause protection that is much more robust.
Second, if they strike the Board down, they will inevitably say things about the amount of power and control the President has to have over the officials who implement and execute federal law. Whatever is said about those questions will have implications for the power relationships between the President and what we think of as the independent agencies.