We Can Only Hope

The editors of the Wall Street Journal point to two recent appellate court cases on the role of federal agencies:

Elizabeth Warren touts her creation of the Consumer Financial Protection Bureau as a major accomplishment, and expect regulatory agencies shielded from accountability to proliferate in a Warren Administration. But as a recent appellate ruling suggests, the courts may prove an obstacle to such bureaucratic entrenchment.

An en banc Fifth Circuit Court of Appeals ruled this month that the design of the Federal Housing Finance Agency is unconstitutional, with 12 of 16 judges agreeing (Collins v. Mnuchin). The agency, created amid the financial crisis to manage Fannie Mae and Freddie Mac, is controlled by a single director who cannot be removed by the President except “for cause.” The CFPB has a similar structure, suggesting it too may be vulnerable.

Judge Don Willett ’s majority opinion said the FHFA director’s independence violates the separation of powers, the Constitution’s “most essential attribute.” The Constitution provides for power divided between a legislative branch, the executive and the judiciary. Too often the bureaucracy has become a kind of fourth branch, shaping policy but lacking political oversight. “The Constitution bounds Congress’s power,” the majority writes, “to create agencies, draw their structure, and grant them authority.”

The Sixth Circuit also grappled with the limits of agency power in an en banc order Aug. 28, though 9 of 16 judges deferred to the agency. The plaintiff wanted to challenge certain IRS reporting rules; the IRS said its rules couldn’t be challenged pre-emptively (CIC Services v. IRS).

The IRS prevailed, but Judge Amul Thapar wrote for seven dissenters highlighting the importance of judicial review of agency decisions. He noted that the Founders deliberately gave the taxing power to Congress but now an executive agency exercises it “in ways that the Founders never would have envisioned.”

He added that courts “accepted this departure from constitutional principle on the promise that Congress would still constrain agency power.” But Congress has not followed through, surrendering legislative responsibilities to agencies.

Judge Jeffrey Sutton wrote in a concurrence that he was inclined to rule against the IRS but Supreme Court precedents “plausibly point in opposite directions.” He suggested the High Court is in a better position to decide the question. The Justices effectively punted on two major separation-of-powers decisions last term, Gundy v. U.S. and Kisor v. Wilkie.

We can only hope. Our political system was not designed to grant legislators lifetime sinecures with plenty of time for fundraising, create an all-powerful executive, or allow a federal bureaucracy that operates without supervision. We have evolved in that direction over a century. It will take a long time to reverse it but reverse it we must if we are to make our political system function as designed. Or at all for that matter.

3 comments… add one
  • steve Link

    OTOH, allowing the POTUS to remove anyone they want for any reason, without cause, means that there is no effective check on the power of the presidency. The president can fire anyone Congress put in that position, and if IIRC, replace them with anyone they want. If powers are to be divided between the congress and the executive branch, where is the power of Congress in this set up? In general, the trend in our governance is to make the executive branch stronger and stronger.


  • Cabinet-level appointees require confirmation by the Senate. Treaties are concluded with advice and consent of the Senate. The Congress has the power of the purse and the House has the power of impeachment.

    One of the sources of the executive’s power is the very large number of things the Congress has wanted to accomplish that are beyond the Constitutional authority of the federal government of which many are actually responsibilities of the states.

    The Congress is bipolar on this subject. A desire for the United States to play more of a role in world affairs inherently grants more power to the president.

  • Andy Link

    Given gridlock in Congress and extreme partisanship, I think the pattern will be to gain power, implement as many preferred actions as possible, then utilized the judiciary vigorously when out of power to defend them.

    I think that’s one big reason why both parties see that control of the judiciary is so critical now – it’s needed to legitimize power-plays and make them enduring.

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