Thinking Things Through IX - The FCC As An Independent Agency

On October 11, the Court of Appeals for the D.C. Circuit held that the Consumer Financial Protection Board (CFPB), as currently structured and as operated in practice, is unconstitutional. Deservedly, the decision, received considerable attention, for as Judge Brett Kavanaugh declared in the opinion’s opening sentence: “This is a case about executive power and individual liberty.”

Judge Kavanaugh’s opinion warrants close attention not only by those interested in the fate of the CFPB, but by FCC-watchers as well. This is because of what the opinion says about the way the FCC, as one of the so-called independent agencies, is intended to operate in order to be constitutional.

In short, the D.C. Circuit held that the CFPB is unconstitutionally structured because its single Director, Richard Cordray, is not accountable to the President because he cannot be terminated at the pleasure of the President. Judge Kavanaugh proclaimed that Director Cordray, operating as a one-person “independent” regulator, enjoys “more unilateral authority than any other officer in any of the three branches of the U.S. Government, other than the President.” As the court emphasized, Article II of the Constitution “lodged full responsibility for the executive power in the President of the United States, who is elected and accountable to the people.” To save the entire CFPB from being thrown out lock-stock-and-barrel as unconstitutional, the court held that Mr. Cordray must be made accountable to the President by submitting to the President’s supervision and, like other officers in the executive branch, by serving at the President’s pleasure.

I’ve long held the view that the FCC and other independent agencies, with their blend of quasi-legislative, quasi-executive, and quasi-judicial powers, and with their commissioners subject to removal by the President only for cause rather than at will, occupy a shaky position in our tripartite constitutional regime. And, like Judge Kavanaugh, I have observed many times that “the independent agencies collectively constitute, in effect, a headless fourth branch of the U.S. Government.”

But, for present purposes, I don’t want to argue about the constitutionality of the independent agencies like the FCC. That question, at least for now, has been settled by the Supreme Court’s landmark decision in Humphrey’s Executor v. United States (1935), when the Court upheld the constitutionality of the Federal Trade Commission.

Instead, I want to highlight what Judge Kavanaugh, in the D.C. Circuit opinion, said about the independent agencies by way of distinguishing them from the unconstitutional structure and operation of the Consumer Financial Protection Board. First, he pointed out that, to mitigate the risk to individual liberty from unchecked power, “the independent agencies, although not checked by the President, have historically been headed by multiple commissioners, directors, or board members who act as checks on one another.”

To put a fine point on it, Judge Kavanaugh declared: “In other words, to help preserve individual liberty under Article II, the heads of executive agencies are accountable to and checked by the President, and the heads of independent agencies, although not accountable to or checked by the President, are at least accountable to and checked by their fellow commissioners or board members.” (Last emphasis supplied.)

Second, Judge Kavanaugh observed, quoting Humphrey’s Executor, that each independent agency traditionally has been established as a “body of experts appointed by law and informed by experience.”

Third, Judge Kavanaugh emphasized that the Humphrey’s Executor Court found it significant that the FTC was intended to be “non-partisan” and to “act with entire impartiality.”

So, here’s the important point for purposes of thinking things through: All of the characteristics recited above, considered separately and collectively – that is, a non-partisan multi-member body of experts informed by experience, acting with entire impartiality, and serving as a check upon each other – presumably were crucial to the Supreme Court’s finding that independent agencies like the FCC and FTC are constitutional.

It might surprise you to learn that I don’t intend here to lay out a case suggesting that, over the last couple of years, at times the FCC has departed in significant ways from adherence to the criteria that led the Humphrey’s Executor Court to sustain the constitutionality of agencies like the FCC – even though I do think such a case can be made. You can engage in that exercise as a mind game yourself if you wish.

Instead, the point I want to emphasize now, in thinking things through, is that the more the FCC deviates from the Humphrey’s Executor criteria, the less constitutional support it enjoys for its actions. In other words, the more the FCC deviates from the Humphrey’s Executor criteria, the more the agency’s constitutional veneer, as part of the “headless fourth branch” of government, wears thin.