Symposium: When agency independence becomes an answer in search of a question

Adam J. White is a resident scholar at the American Enterprise Institute and an assistant professor at George Mason University’s Antonin Scalia Law School, where he directs the C. Boyden Gray Center for the Study of the Administrative State.

In “Little Gidding,” T.S. Eliot wrote: “We shall not cease from exploration / And the end of all our exploring / Will be to arrive where we started / And know the place for the first time.” Reading briefs in Seila Law v. Consumer Financial Protection Bureau, I can’t help but feel the same way.

Nearly a century after the Supreme Court decided Humphrey’s Executor v. United States, we find ourselves back to debating the first principles of agency independence and the Constitution, in terms so different from—really, at odds with—those that justified agency independence in the first place. Maybe we never really understood agency independence at all; maybe now we will.

If the court affirms the CFPB’s novel combination of single-leader structure, for-cause removal protection and immense substantive policymaking power, then its affirmance will mark the final repudiation of Humphrey’s Executor. The justifications proffered for CFPB independence are squarely at odds with Humphrey’s Executor’s justifications for agency independence in the first place.

As the court famously explained in that case, the Federal Trade Commissioners’ protection from at-will removal by the president was justifiable only because the FTC itself was not simply an “executive” agency. Considering “the character of the commission,” the court emphasized:

The commission is to be nonpartisan, and it must, from the very nature of its duties, act with entire impartiality. It is charged with the enforcement of no policy except the policy of the law. Its duties are neither political nor executive, but predominantly quasi-judicial and quasi-legislative.

The court contrasted this with the character of agencies that are “merely one of the units in the executive department, and, hence, inherently subject to the exclusive and illimitable power of removal by the Chief Executive, whose subordinate and aid he is.” Not quasi-legislative, not quasi-judicial, but energetically executive.

It would be an understatement to observe that modern commentators tend to find Humphrey’s Executor’s distinctions less than compelling—“considered by many at the time the product of an activist, anti-New Deal Court bent on reducing the power of President Franklin Roosevelt,” as Justice Antonin Scalia put it in dissent in Morrison v. Olson. For what it’s worth, I’ve also thought that such attacks on the Humphrey’s Executor court’s reasoning were unfair. The “quasi-judicial,” “quasi-legislative” distinction long predated Roosevelt and Chief Justice Charles Evans Hughes; it dated back at least 40 years, to the Interstate Commerce Commission, which Congress created in the same year that it repealed the Tenure of Office Act for executive officers.

That is why William Humphrey’s executor framed his legal arguments according to that distinction, distinguishing independent regulatory commissions from the sorts of offices at issue in Myers v. United States, in which the Supreme Court had voided a statute limiting removal of postmasters: “The Rule of Myers Case is Only Applicable to Purely Executive Officers,” he titled the argument. The doctrine of plenary presidential removal power had “no application to a Federal Trade Commissioner who performs functions as an agent not only of the executive but also of the legislature and the courts.”

In that respect, it was Roosevelt, not Humphrey’s executor, who was trying to reframe the character of independent regulatory commissions. The Justice Department urged the court to recognize that previous distinctions between executive agencies and independent commissions, if once valid, had been overtaken by history: “The so-called quasi-judicial functions of the Commission are not different from those regularly committed to the executive departments. … To ignore the extent to which these functions have been conferred upon the regular executive departments is to ignore much of the development of administrative law in this country.”

How ironic that arguments offered by Roosevelt to collapse the distinction between executive agencies and independent commissions, though unsuccessful in 1935, are now being offered once again to collapse those distinctions, though for the opposite reason. Roosevelt would have made independent commissions more like executive agencies; the CFPB’s advocates would make executive agencies more like independent ones. If the CFPB’s advocates succeed where Roosevelt failed, they will owe thanks to conservative advocates of the theory of the unitary executive, who succeeded in making clear that independent agencies, at least by the 1980s, really were substantively indistinguishable from executive agencies. (Perhaps, with a nod to Herbert Croly, we could call their efforts “Reaganite ends by Rooseveltian means.”)

But with independent agencies and executive agencies eventually converging in both the substantive issues they tackle and the procedural means by which they tackle them, perhaps there truly are no more inherent differences in the “character” of multimember commissions justifying their independence. The court-appointed amicus, defending the CFPB director’s for-cause removal protection, emphasizes how little substantive difference there is between the CFPB and independent multimember financial regulatory commissions, and between executive agencies and independent regulatory commissions in general after Morrison. The court in Morrison downplayed the old “executive” and “quasi-judicial/legislative” categories; maybe these distinctions had become little more than legal fictions that outlived their original justification. Perhaps independent regulatory commissions long ago ceased to exemplify the quasi-judicial and quasi-legislative character that originally was the basis for their special protection. But if all this convergence reflects the evaporation of the fundamental differences in agency character that justified agency independence in the first place, then which way do these arguments about convergence cut?

Advocates for CFPB independence, including the court-appointed amicus, argue that the CFPB’s independence is less constitutionally problematic than the FTC’s independence, because it is easier for the president to control one CFPB director than five FTC commissioners—especially when the FTC commission is bipartisan. There is some instinctual appeal to this argument, but it fades when one considers the practicalities of principal-agent relationships. Which kind of agent would have an easier time stretching beyond the will of the principal, and evading detection while doing so: one that can move swiftly, or one that moves slowly?

The former, of course. And the CFPB director has a capacity for swiftness and secrecy that multimember commissions can only envy, for the reasons that Alexander Hamilton famously identified in Federalist No. 70:

That unity is conducive to energy will not be disputed. Decision, activity, secrecy, and despatch will generally characterize the proceedings of one man in a much more eminent degree than the proceedings of any greater number; and in proportion as the number is increased, these qualities will be diminished.

A multi-member commission is the “diminished” one. Its commissioners must debate with one another, grapple with their arguments and at least respond to those arguments in the agency’s final decisions. Yes, a multimember commission will have bipartisan members, and thus some who disagree with the president; but the commission as a whole will still reliably support the president’s policy preferences—it will just require more process to do so.

An independent single-leader agency, by contrast, will have energy that commissions lack. When a CFPB director wants to make policy not directly in line with the administration, he will have at least some advantage over independent commissions. And when the CFPB director serves under a president who did not appoint him—like Director Richard Cordray under President Donald Trump, a pattern that will repeat itself given the CFPB director’s five-year term—this problem of CFPB “energy” will become particularly significant. In at least those circumstances, the CFPB’s energy detracts from the president’s.

In any event, if the traditional justifications for special independence of multimember commissions have evaporated, then the best constitutional outcome would be to reconsider the doctrines justifying multimember-commission independence in the first place, not to conjure up new doctrines to justify the independence of single-leader agencies. The CFPB director’s immense powers—his broad policymaking and enforcement jurisdiction, his freedom to spend money untied to Congress’ power of the purse—put this office well beyond the bounds of Morrison’s independent counsel, “an inferior officer … with limited jurisdiction and tenure and lacking policymaking or significant administrative authority.”

There remains one last question: Can the court decide the constitutional question presented in Seila Law without first determining whether the CFPB’s for-cause removal statute allows the president to remove the CFPB director over policy disagreement? Or, stated another way, can the court adjudicate the CFPB’s independence without first determining how independent the CFPB actually is?

I raised this question recently, because it seems to me that to apply the fact-sensitive Morrison test to the CFPB director would require at least some inquiry into how much protection the statute actually gives the CFPB director against the president. The court has offered contradictory dicta on this over the years; perhaps Seila Law will be the case that finally settles that matter—either in the course of deciding that the CFPB’s structure is unconstitutional, or in the course of avoiding the constitutional question by construing the agency’s independence in a way that does not detract from the president’s constitutional power.