Friday, November 20, 2009

Is the "Pay Czar" Constitutional?

That's the question that Michael McConnell (Stanford, and formerly on the 10th Circuit) and Martin Flaherty (Woodrow Wilson School, Princeton) are debating on the Federalist Society On-Line Debate Series

McConnell wrote an op-ed in the Wall Street Journal last month arguing that the Obama administration's Pay Czar violates the Appointments Clause:  Pay Czar Kenneth Feinberg is an "officer," but he was neither confirmed by the Senate nor authorized by Congress.  McConnell explains in the Federalist debate:

Mr. Feinberg is probably an "inferior" officer, defined as one subject to supervision and removal by a member of the cabinet.  Although he has substantial discretion and independence, Mr. Feinberg reports to the secretary of the Treasury, who can fire him at any time for any reason.  This means that Congress could, if it wished, vest the appointment of the pay czar in the secretary, without any need for Senate confirmation.

But Congress has not done so.

Why isn't Feinberg just an employee (and not an officer)?  McConnell's WSJ op-ed:

Mr. Feinberg signed last week's orders setting pay levels for executives at Bank of America, AIG, Chrysler Financial, Citigroup, GMAC, General Motors and Chrysler.  They have the force of law and are surely an exercise of "significant authority" pursuant to an Act of Congress.  [Quoting Buckley v. Valeo.]  He is not a mere "employee," acting at the direction of a superior.  That means his office is subject to the requirements of the Appointments Clause.

The Pay Czar is different than some (most?) other administration czars, which are presidential advisers and raise no Appointments Clause problems, in that the Pay Czar plainly exercises significant authority under the TARP and Treasury regulations.  (Treasury regs authorizing the Pay Czar to limit executive compensation of TARP recipients are here.) 

But the Pay Czar is also a temporary position, at least in theory, operating only until TARP recipients have repaid their obligations.  Under a 2007 Office of Legal Counsel memorandum, the Pay Czar therefore may well be a non-officer.  OLC Memo, at 32 (concluding that temporary and non-continuing positions are not "offices" for Appointments Clause purposes). 

SDS

http://lawprofessors.typepad.com/conlaw/2009/11/is-the-pay-czar-constitutional.html

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