US Independent Agencies Are under Threat

The coronavirus crisis has raised public concerns about the effectiveness of government in the US. It is too soon to make definitive judgments, but the right-wing element now dominating the US Supreme Court appears ready to make management of the federal government much more difficult in the future.

Dissenting opinions in two cases decided last June and comments made during a pending case heard in early March indicate a strong desire to significantly restrain the legislative role of Congress and reduce the effectuality of a frequently used institution of the modern US government: the independent agency.  Doing so would also likely deepen the political conflict between the President and the Congress as well as the deep divide between the two major political parties.

The first June decision came in a challenge to a 2006 federal law requiring convicted sex offenders to register in states where they lived and worked. Faced with some practical problems, Congress did not make the Sex Offender Registration and Notification Act (SORNA) retroactive, but it did authorize the US Attorney General to decide when and if that would be feasible.  In February 2007, the attorney general did so. Herman Gundy, who had been convicted of a sex offense in 2005 failed to register and was subsequently prosecuted.

With newly seated Justice Brett Kavanaugh recused, the Supreme Court in a 5-3 decision rejected Gundy’s argument that it was unconstitutional for Congress to allow the attorney general to decide when to apply the registration requirement to sex offenders convicted prior to enactment of SORNA.  Justice Elena Kagan wrote the opinion for the majority asserting that “... if SORNA’s delegation is unconstitutional, then most of Government is unconstitutional—dependent as Congress is on the need to give discretion to executive officials to implement its programs.”

Being more specific, Kagan pointed out that feasibility issues are frequently left to executive officials, citing as an example a statute authorizing the Secretary of Housing and Urban Development to “require to the greatest extent feasible, the employment of new and improved technologies, methods, and materials in housing construction under (HUD) programs.”

In a lengthy and sharply worded dissent Justice Neil Gorsuch claimed the SORNA gives “the nation’s chief prosecutor…the power to write his own criminal code governing the lives of a half-million citizens.” He was joined in his dissent by Chief Justice Roberts and Justice Clarence Thomas.  Although Justice Samuel Alito voted in support of the majority opinion, he indicated a willingness to revisit the question of congressional delegation of it legislative powers if the issue arises in another case, a prospect heightened by Kavanaugh’s apparent views.

The second June decision came in a case involving James Kisor, a Vietnam veteran suffering from post-traumatic-stress disorder. Kisor’s request for VA benefits had been rejected because of an interpretation by the Department of Veterans Affairs of its own regulations. His appeal to the US Circuit Court had been denied on the basis of a long standing deference doctrine which directs courts to defer to an agency’s reasonable reading of its own regulations. 

Again, the majority opinion was written by Justice Kagan, but this time it consisted of several parts. With regard to the basic question of Kisor’s request for benefits, it was unanimous that the case be returned to the circuit court for further proceedings with the inference that the lower court had given unwarranted deference to the VA’s interpretation of its regulations. But the deference doctrine itself barely survived by a 5-4 vote.

In her opinion Kagan argued that the Supreme Court had in the past made it clear the doctrine, known as the “Auer deference,” based on the Auer v. Robbins (1997) decision, has limits and should not apply in every scenario. She also added that the principle of stare decisis (precedents should not be overruled unless there was a good reason to do so) was relevant in this case, pointing out that overruling Auer would impact a long line of precedents. Justices Stephen Breyer, Ginsburg and Sotomayor joined all of Kagan’s opinion, while Chief Justice Roberts supported much of it in a concurring opinion.

Justice Gorsuch disagreed with the majority’s willingness to stand by the deference doctrine. In his concurring opinion, joined in full by Justice Clarence Thomas and in part by Justices Alito and Kavanaugh, he wrote, “it should come as no surprise that several members of this court, along with a great many lower court judges and members of the legal academy, have questioned Auer’s validity and pleaded with this court to reconsider it.”

An indication of the root of the dissenters’ concern was Gorsuch’s declaration, “The explosive growth of the administrative state over the last half-century has exacerbated Auer’s potential for mischief.” Obviously, Gorsuch and his colleagues see reining in the authority of government agencies as a means of restraining congressional legislative initiative.

The pending case heard in March addresses the structure of the Consumer Financial Protection Bureau, an independent agency set up under the Dodd-Frank Act in the aftermath of the Great Recession. Sen. Elizabeth Warren originated the idea while a professor at Harvard Law School. In its nine-year history the bureau has retrieved about $12 billion for consumers.

As has been true with most independent agencies, Congress intended to shield the bureau to some degree from politics. Generally, this has involved creating a commission of several members with staggered terms of more than four years to provide oversight of the agency in question. Commission members are nominated by the President with advice and consent of the Senate. The President can only remove commission members for cause, not political preference. The Federal Reserve, the Securities and Exchange Commission and Federal Communications Commission are among the many agencies that operate in this manner.

With CFPB, Congress assigned governance to a single administrator, appointed by the President with advice and consent of the Senate for a five-year term, removable only for cause. While Republicans and major financial institutions have argued this arrangement is an infringement of presidential authority, lower courts have upheld the agency’s structure, citing Supreme Court precedents.

The pending case, Seila Law v. CFPB, was brought by a California law firm under investigation for abusive telemarketing practices in its debt-relief business. Plaintiff’s attorneys are arguing that the bureau's structure unconstitutionally insulates it from the President’s control and should be shut down. Although the Trump administration has endorsed the investigation of Seila, the Solicitor General is not defending the CFPB design. This has required the Supreme Court to appoint for that purpose Paul Clement, a well-respected lawyer with considerable experience before the court.  

During the March hearing Clement used the example of the Federal Reserve to explain the intent of Congress in creating independent agencies, “…we don’t want the president to juice up interest rates right before a presidential election.” He also offered a more immediate example, observing that some “are trying to make a political football out of dealing with a pandemic disease. So maybe Congress decides…let’s have the head of the CDC (Center for Disease Control) be protected by for-cause removal because that’ll make sure people get good advice and it doesn’t become political.”

 

Based on what we know about the viewpoint of the right-wing bloc on the Supreme Court, Clement’s arguments may fall upon deaf ears. Justice Kavanaugh probably summarized their perspective, “The problem really reveals itself when a new president is stuck with a holdover CFPB director who may have ‘a wildly different conception of consumer financial protection.’”

Who knew that in a modern Western economy dependent upon consumer spending that there would be “wildly different conceptions of consumer financial protection.”

Since 1887, with the creation of the Interstate Commerce Commission, the federal government has relied more and more upon independent agencies to manage matters of national importance. Under laws passed by Congress these organizations have been charged with both regulation and enforcement in significant areas of public concern . If the Supreme Court imposes blanket prohibitions upon Congress in the exercise of its power to legislate through delegation, it will severely reduce the effectiveness and efficiency of our government and open the door to constant and capricious challenges to responsible governance.