Free Enterprise Fund v. Public Co. Accounting Oversight Board

FREE ENTERPRISE FUND LLP, Watts,

Beckstead

Appellants ACCOUNTING

PUBLIC COMPANY al., BOARD, et

OVERSIGHT

Appellees.

No. 07-5127. Appeals, Court of

United States Circuit.

District Columbia April

Argued 2008. Aug.

Decided

Freeman, Attorney, Cartwright, Brian G. Counsel, Exchange & General Securities Commission, Vollmer, Deputy N. Andrew Counsel, Stillman, Jacob H. General Solici- tor, Avery, Special and John W. Counsel. Katerberg, Attorney, De- Robert J. U.S. Justice, Craig R. partment of Law- rence, Attorney, Assistant U.S. entered appearances. on

Richard H. Pildes was the brief Cook, amici curiae G. Bradford et al. Millstein, Coleman, Gregory Ira M. S. on and Christian J. Ward were the brief for amicus curiae Council of Institutional support appellees. Investors ROGERS, Before: BROWN KAVANAUGH, Judges. Circuit Opinion Judge for the court Circuit ROGERS. argued A. Carvin the cause for Michael Dissenting opinion by Judge Circuit him on the briefs were appellants. With KAVANAUGH. Kazman, Dinh, D. Sam Hans F. Bad-

Viet ROGERS, Judge: Circuit er, and Kenneth Vergonis, G. W. Christian Starr. challenge, appellants In this facial con- Sarbanes-Oxley tend that Title I of the Gallaway P. Elizabeth and William (“the Act”), Act of U.S.C. curi- Pendley were on the brief for amicus §§ Appointments violates the Legal ae Mountain States Foundation. separation Clause Constitution Kamenar, Paul D. Hel- Popeo, Daniel J. permit it ade- powers because does Walker, McCarthy R. gi C. and Thomas quate Presidential control of the Public curiae were on the brief for amicus Wash- Company Accounting Oversight Board support ap- ington Legal Foundation (“the Board”). however, Congress, made pellants. the Board’s exercise of its duties Jeffrey argued A. Lamken the cause for comprehensive to the control of the Secu- Accounting appellees Company Public (“the Exchange rities and Commission Board, et al. With him on the Oversight Commission”). Act, Under the the Com- brief Joe Robert Caldwell Jr. and were empowered mission is to set rules Doty. James R. procedures, any sanction overturn Stern, Board, Attorney, Depart- by the and to limit or proposed Mark B. U.S. Justice, powers, id. argued ap- ment of the cause for relieve the Board its 7217(b)(2), (b)(5), (c)(3), (d)(1), (2); §§ of America. With pellee United States Bucholtz, Jeffrey may him S. Commission also remove members of on the brief were 7211(e)(6). cause, General, Attorney Jef- the Board for id. Acting Assistant Commission, turn, frey Taylor, Attorney, A. Mark R. Members of the by the President with the advice I. appointed subject to and consent of the Senate and Following the Enron and WorldCom ac- cause; by the President its counting exposed scandals that serious at the chairman is selected and serves in industry self-regulatory weaknesses re- pleasure appellants’ of the President. porting requirements publicly for certain statutory scheme vests Board view this held companies, Congress enacted the Sar- reaching members “with far executive banes-Oxley Act of 15 U.S.C. the power completely stripping while §§ seq.1 7201 et Title I of Act estab- authority appoint President of the or lished the Board “to oversee the audit of or otherwise su- remove those members public companies subject that are to the that pervise or control their exercise of securities laws ... protect order to Br. at 1. But their power.” Appellants’ pub- interests of investors and further the challenge ignores entirety facial of the lic preparation interest of informa- statutory scheme and runs afoul of the tive, accurate, independent and audit re- regarding the Supreme Court’s instruction 7211(a). ports.” § 15 U.S.C. The five nature of the President’s constitutional re- of the appointed by members Board are lationship with administrative the Commission after consultation with the as agencies. Supreme precedent Chairman of the Board of Governors of the support appellants’ have it does not we Secretary Federal Reserve and the of the singular focus on removal as the 7211(e)(4)(A). Treasury. § Id. The Act authority, Executive be-all and end-all of Board, empowers subject to the over- compels ap- but rather a more nuanced Commission, sight to, of among other myriad that of proach examines means things, firms, register public accounting Executive control. standards, auditing establish and ethics inspections conduct investigations of hold, first, that the Act does not We firms, sanctions, registered impose and set upon Appointment be- power encroach budget, its own which is funded annual cause, in view of the Commission’s com- (d). 7219(c), 7211(c), §§ fees. Id. Board, prehensive control of the Board subject authority members are to direction and su- The Commission’s over the explicit comprehensive. and thus are pervision Commission Board is Id. Indeed, extraordinary. §§ it required appoint- inferior officers not to be Second, that operations ed the President. we hold The Board could commence only upon the for-cause limitations on the Commis- the Commission’s determination it power properly organized sion’s to remove Board members was and had appropriate procedures place, and the President’s remove Com- rules and 7211(d), § id. rule of the strip missioners do not “[n]o prior ap- sufficient to influence the Board shall become effective without Commission,” separation proval and thus do not contravene id. 7217(b)(2). empow- § powers, principle embraces inde- The Commission is to, agencies pendent “abrogate, like the Commission and ered to add and delete from” their exercise of broad over their rules “to assure the fair ad- Board’s [Board], Accordingly, affirm the conform the subordinates. we ministration summary judgment by that Board to grant promulgated to the Board rules [Act], requirements and the States. of title I of the United Rep. Rep. 107-414, (2002); 1. See S. No. at 2 H.R. No. at 18-19 Act, accounting registered firm that is with the of that purposes further otherwise laws, regula subject ongoing and the rules Board and is to an formal securities to that Board.” applicable commenced in 2005. investigation tions thereunder was 78s(c). ¶ 7217(b)(5), In addition to §§ February Id. the Free Id. 79. On controls, adjudica all Board these ex ante (collectively B Enterprise Fund and & W de Fund”) Commission’s tions complaint alleging “the filed a 7217(c)(2); review, Nat’l Ass’n novo id. Ap- the Board violated the the creation of SEC, Dealers, Inc. v. 431 F.3d Sec. Clause, pointments separation powers, (D.C.Cir.2005) (“NASD”), an im upon non-delegation principles. The Fund application an for re stay mediate when declaratory injunctive relief sought by the Commis sponte view is filed or sua prohibiting carrying the Board from out its 7217(c)(2)(A). 7215(e)(1), sion, §§ 15 U.S.C. duties, “any ac- including taking further “en empowered is to The Commission against tion” B & The United States W. cancel, reduce, hance, require or modify, constitutionality intervened to defend the by the imposed of a sanction the remission of the Act. The district court denied the 7217(c)(3). § The Commis Board.” Id. complaint to Board’s motion dismiss the Board sion alone determines whether jurisdiction granted for lack of any court. Id. may and be sued” “sue summary judgment motions for of the 7211(f)(1). may § A member of the Board Board and the United States. removed from office “for be censured or appeals, and our review is de The Fund 7211(e)(6), shown,” § good upon id. cause Simpson People’s novo. See v. Socialist Commission, by the after notice finding a Libyan Jamahiriya, Arab 470 F.3d hearing, a that opportunity (D.C.Cir.2006); Pena, v. 79 359 Wilson willfully violated the Act or member (D.C.Cir.1996). n. 1 To F.3d suc authority, or failed to enforce com abused I challenge ceed its facial to Title of the standard without pliance with a rule or Appointments Act under the Clause and 7217(d)(3). § justification, id. reasonable powers,2 the Fund bears a separation by empowered, further The Commission is heavy provisions burden to show that the Board, rule, consistent with to relieve the unduly it complains of which severe interest, any public enforcement all circumstances and cannot be constitu 7217(d)(1), whatsoever, § id. as tionally applied. Grange See State Wash. order, as, by censure the Board well to — Republican Party, State U.S. Wash. and, for a opportunity after notice and —, 1184, 1190, 170 L.Ed.2d 151 upon limitations hearing, “impose (2008) Salerno, (citing United States v. functions, activities, operations 95 L.Ed.2d the Board has upon finding Board” (1987)). duties, statutory id. failed to abide its 7217(d)(2). § II. Act challenge This facial to the is The Board and the United States Fund, Enterprise a brought the Free contend, matter, a as threshold non-profit organization interest public jurisdiction taxes, district court lacked because lower “promotes growth, economic ¶ failed exhaust the Act’s statu 11. It the Fund government.” Compl. and limited members, tory procedures. permits review The Act joined by Beckstead one of its (“B W”), Watts, person “aggrieved by a a a final order of the LLP & Nevada non-delega- appeal. pursue tion claim on 2. The Fund does not its “adversely agency pursuant af- action taken person or a the chal Commission” lenged a rule of the Commission” statute or a suit that is collateral fected appeals. challenging validity in the court of 15 to one of such obtain review (b)(1) action,” (emphasis agency add- id. at 965. 78y(a)(l), Because the U.S.C. ed). “facial, provides further complaint presents systemic” “[n]o The Act or challenge, objection “as-applied, par to an order or rule Com- and not mission, ],” Elec., sought challenge[ review is under ticularized for which Gen. (internal section, may be considered the F.3d at 192 quotation this marks omitted), urged attempt court unless it was before Com- and does not to boot ground strap regarding there was reasonable other claims a Board mission or or (em- rule, Sec., § 78y(c)(l) Jersey so.” Id. der or for failure to do First Inc. v. (3d added). Cir.1979), pursue Bergen, The Fund did not phasis F.2d filing before its the Fund’s properly administrative remedies lawsuit is not viewed circumvention of the Act’s complaint. review procedures. In contrast with American text, admin statutory a matter of As Competitive Coalition Trade v. Clin available under the procedures istrative ton, (D.C.Cir.1997), 128 F.3d 761 where challenges to an “or Act are confined to granted the statute the court of appeals See, e.g., or a “rule” of the Board. der” jurisdiction all exclusive over constitutional Labor, Mining Dep’t Ass’n v. 292 Nat’l upon compliance attacks on the statute (D.C.Cir.2002); Elec. F.3d 856 Gen. requirements, with exhaustion at see id. (D.C.Cir. EPA, v. 360 F.3d 191 Co. provision the Act contains no similar 2004). challenge, by facial The Fund’s Congress as would indicate that intended attack,” contrast, advances “broad-scale the review scheme be exclusive. at Act Mining, Nat’l 292 F.3d Therefore, type Congress not “of the because the Fund’s constitu- itself is challenges reviewed within this statu tional to the Act are collateral intended to be structure,” scheme, v. to the Act’s administrative review tory Thunder Basin Coal Co. Reich, 200, 212, 114 771, 127 apply, doctrine does not S.Ct. exhaustion Basin, and we hold that the district court had L.Ed.2d 29 Thunder jurisdiction matter over the com- acknowledged that the dis Supreme Court jurisdiction plaint properly over claims denied the motion to trict court retains ‘wholly dismiss. “considered collateral’ to stat provisions review and outside the

ute’s III. 510 114

agency’s expertise.” U.S. (quoting Ringer, Heckler v. 466 Appointments provides: Clause 618, 104 S.Ct. 80 L.Ed.2d U.S. nominate, ... shall [The President] (1984)). by and with the Advice and Consent of Ambassadors, Senate, complaint appoint is shall Jurisdiction over Fund’s Consuls, by public with the distinction drawn other Ministers and consistent Court, all Judges supreme this court in Time Warner Entertainment FCC, (D.C.Cir.1996), 93 F.3d 957 other Officers of United Co. oth- “gen- Appointments that the district court has whose are not herein which held for, shall jurisdiction provided to consid- erwise and which be question eral federal Congress Law: but the challenge er a facial to a statute’s constitu- established challenge may by Appointment vest the tionality long so as that Law Officers, they think validity of such inferior challenging raised in a suit alone, cancel, reduce, fy, require in the or the remission proper, Board,” imposed by of a sanction id. Law, in the Heads of De- Courts 7217(c)(3). such, § As the Board’s disci- partments. plinary authority “ultimately belongs to II, 2,§ art. cl. U.S. CONST, [Commission], legal and the views of Appointments plain text yield to the must Commis- [Board] contemplates thus Clause law,” NASD, F.3d at sion’s view of the may lodge appointment power of infe SEC, 806; see also Gold v. 48 F.3d in entities other than the rior officers (7th SEC, Cir.1995); Shultz v. contends, however, The Fund President. (7th Cir.1980). F.2d The Com- day-to-day supervision that the absence appoints mission both and removes Board by the Commission and the of the Board (e)(6). members, 7211(e)(4)(A), §§ It id. limitation on the Commission’s for-cause may impose upon also limitations means activities, 7217(d)(2), to remove Board members id. and relieve the authority alto- that Board members are not inferior offi Board of its enforcement 7217(d)(1). gether, §id. appointed cers and therefore must be Alternatively, the Fund the President. Consequently, the Board’s work is nec- if members are contends that even Board essarily supervised “directed and some officers, they cannot appointed inferior Commission, Edmond, level” the Commission because the Commis Notably 117 S.Ct. 1573. “Department[ purposes challenge, sion is not a and the Com of this facial the Act ]” subjects greater super- Board members to missioners are not its “Head[ ].” than the judges

vision Coast Guard Edmond, A. Supreme whom the Court held though supervi- to be inferior officers even “Generally speaking, the term ‘inferior judges sion of the was fractured between a relationship officer’ connotes with some bodies, 664, two at 117 different id. S.Ct. higher ranking officer or officers below 1573, subject and their decisions were not one is an ‘inferior’ President: Whether review, 665, to de novo id. at 117 S.Ct. depends supe- officer on whether he has a Contrary suggestion, 1573. to the Fund’s States, rior.” Edmond v. United 520 U.S. charged the fact that the Board is 651, 662, 1573, L.Ed.2d 917 117 S.Ct. exercising extensive on behalf of (1997). standard, this the Board is Under not mean that United States does composed of officers inferior to the Com- by Board appointed members must be Commissioners, mission. The who serve President, for principal as well as inferior terms, five-year staggered “appointed “ officers, definition, by signifi- ‘exercis[e] by Presidential nomination with the advice authority pursuant cant to the laws of the 663, Senate,” ” and consent of the id. at States,’ CIR, Freytag United v. 501 U.S. 1573, they comprehen- S.Ct. exercise 868, 881, 2631, 115 L.Ed.2d 764 S.Ct. procedures sive control over Board (1991) Valeo, (quoting Buckley v. 424 U.S. in- decisions and Board members. For 612, 96 S.Ct. 46 L.Ed.2d 659 stance, approves the Commission all Board (1976)); Edmond, see also 520 U.S. at rules, 7217(b)(2), §§ 7211(g), 15 U.S.C. Instead, key 117 S.Ct. 1573. what un- is delete, them, may to abrogate, add id. analysis der the fact that Edmond is the 7217(b)(5). § All Board sanctions are sub- no to members “have render ject Commission, plenary by review the a final decision on behalf the United 7217(c)(2); NASD, § at id. 431 F.3d permitted States unless to do so other Edmond, enhance, officers,” “may and the Commission modi- Executive 520 U.S. 7217(b)(3). § 665, 117 Act 15 U.S.C. This provision 1573. The vests broad S.Ct. Board, not, offers, does as the Fund of duties U.S.C. establish range 7211(c), deferential, exercise of those duties is Chevron-like review but § but its re- an require the Commission at flects intent to subject to check Commission significant step. itself to determine whether Board rules every are consistent with the statutes and the are also Board members public interest. Given the Commission’s oversight Independent than the greater statutory responsibilities, several Olson, in Morrison v. 487 U.S. Counsel Fund’s approach flouting would sanction 101 L.Ed.2d 569 another, one statutory goal service of (1988). specifies the Act Whereas interpretation congressional untenable “subject of the Board is every decision goals intent where the can be reconciled. Commission,” action 15 U.S.C. Richards United 369 U.S. Cf. 7211(c), Act § the Ethics Government L.Ed.2d 492 with “full Independent vested the Counsel Moreover, in Edmond the Court authority to exer upon held that the “limitation review does investigative prosecutorial all cise judges not ... render the powers Department functions and Appeals Criminal principal officers.” 520 594(a). Justice,” 28 U.S.C. Still Su S.Ct. 1573. Fund adjudged Indepen that the preme Court ignores that the regulatory Commission’s dent was an inferior officer. Mor Counsel control does end with its review of rison, empowers Board rules. The Act the Com- ability to act independently The Board’s abrogate mission to or amend Board rules “independent discretion [of dwarfed “to the fair administration of assure to exercise the Independent Counsel] [Board], promulgated by conform the rules delegated her under the [Ethics requirements that Board to the of title I of Morrison, Act,” Government] [Act], pur- or otherwise further 671, 108 S.Ct. 2597.3 Act, laws, poses of that the securities in that suggesting The Fund is incorrect regulations appli- the rules and thereunder authority review of Commission’s cable to that Board.” 15 U.S.C. “severely regulations Board rules and is 7217(b)(5). § The itself is Commission circumscribed,” Br. at The Appellants’ 34. promulgate also to rules in empowered provides Act that the Commission “shall 7202(a). § furtherance of the Act. Id. rule, approve proposed if it finds that the powers are inimical to Chevron-like These requirements consistent with the of rule is deference. laws, Act or is this and the securities suggests that necessary public or in- To the extent the Fund appropriate for-cause limitation on the Commis- protection terest or for the of investors.” 661, significant 1573. But even presents a obstacle to 520 U.S. at 117 S.Ct. 3. Morrison dissenting colleague’s proposed our test for posi- assuming temporariness that status, Op. inferior officer Dis. linchpin Indepen- was the in view of the tion Independent because the Counsel had broad extraordinarily powers, broad dent Counsel’s decision-making authority by final unchecked suggested Supreme that Court has never any Executive officer. The dissent’s other has no relevance to the inferior offi- Morrison attempt to in to limit Morrison situations that, analysis tempo- while cer for offices not 17, temporary, id. at 709 n. which the office is rary, significantly possess that are 612, ignores 96 S.Ct. the fact that the Su- precedent Inconvenient is more constrained. rejected interpretation preme Court of has easily disposed not so of. test, Edmond, bright-line Morrison as a 674 congress, requires Board mem We have no doubt when power

sion’s officers, law, it inferior principal appointment vests the of to be deemed bers removal au in it importance departments, of officers the heads of overinflates power of re- thority. Recognizing may “[t]he limit and restrict powerful public ... tool for officers moval as it deems best for remove 664, control,” authority in Edmond U.S. interest. The constitutional 1573, Court has indicat Supreme congress appointment to thus vest the S.Ct. limit, restrict, authority consider removal implies ed that courts should in determining factor regulate as one the removal such laws as officer, an inferior id. in congress may an official is enact relation to the whether 666, has 1573.4 Court The head of a appointed. 117 S.Ct. officers so Judges Guard in department pre- held that both Coast has no constitutional Edmond, Judge to the rogative appointment were of to offices inde- who at-will removal author pendently legislation congress, Advocate General’s 1573, 664, 117 S.Ct. and the ity, legislation gov- 520 U.S. at such he must be Morrison, erned, in who Independent only making Counsel not appointments, cause, only for subject to removal was but all is incident thereto. 2597, 663, were inferior U.S. at 108 S.Ct. Perkins, United States v. Here, the Act vests removal au officers. 21 Ct.Cl. 29 L.Ed. Commission, providing that thority in the (1886). In Myers v. United may the Board be removed member of “[a] (1926), U.S. 71 L.Ed. 160 office, in from accor by the Commission “Congress, the Court reaffirmed that [107(d)(3)], good dance with section committing the appointment such inferi- 7211(e)(6).5 15 U.S.C. cause shown.” departments, officers the heads Morrison, “the fact that [Board as in Just may prescribe regulations incidental con removed the [Com can be members] trolling restricting the latter [they to some are] indicates mission] removal,” exercise of the id. at authority,” in rank and degree ‘inferior’ point although S.Ct. 671, 108 S.Ct. removals, requiring approval Senate 21; id. at expressly per- S.Ct. see also Bowsher Synar, 478 limitations on legislatively-imposed mitted authority: 92 L.Ed.2d executive officers’ removal 107(d)(3) colleague's reading provides dissenting of Ed- 5. Section that the Commis- Our authority mond to mean that at-will removal may upon remove a sion Board member find- key question,” Op. Dis. at is "the initial ing that the member light the Court's is curious in (A) willfully any provision has violated cursory consideration of this factor in deter- Act, Board, this the rules of the or the judges mining Coast Guard were that the laws; (B) officers, Edmond, willfully securities the U.S. at has abused inferior member; (C) 117 S.Ct. 1573. As the dissent acknowl- authority of that or without authority edges, is not the excuse, at-will removal justification reasonable or has failed rather, analysis; linchpin an officer is provi- compliance any to enforce such “statutorily subject long he to inferior as rule, any professional sion or or standard significant supervision and in all direction registered accounting by any public firm or Op. every sig- activities.” Dis. at 710. Here any person associated thereof. signifi- Board function is nificant 7217(d)(3). § 15 U.S.C. oversight. supra pp. See cant Commission 672-73. Moreover, regarding no the Board’s decisions point “inspec- Fund can case tions, in which ways investigations, and prescribing enforcement ac- removal of principal a officer’s can restrict cannot “prevent[ed][,] tions” affirma- of the Justice opinion inferiors. The his command[ed], tively and manage[d]” by Legal Counsel Office of Department’s Commission, Op. First, Dis. at 709. (“OLC”), Op. Legal Off. Counsel requires the Act inspect the Board to all Fund, (1998), by the relied on 156-57 registered public accounting firms in ac- only “jointly” vesting re- concluded schedule, predetermined cordance with a secretary in and authority a cabinet moval 7214(b); § the Board lacks 15 U.S.C. dis- members were them- the council whose inspect particular cretion not to a firm. pose could con- subject to removal selves yields inspection inspection Each re- Attorney problems. Like the stitutional § port, 7214(g), 15 U.S.C. and each firm Judge Advo- in Morrison and the General may inspec- seek Commission review of its Edmond, in the Commission cate General 7214(h). Therefore, § report, tion id. authority under the Act. has sole removal inspection report the extent the forms the challenge, of this facial purposes For subsequent investigation by basis for a restrictive for-cause remov- arguably more Board, the Board’s determination is sub- because, as the dispositive al cannot be Second, ject approval. to Commission al- concluded, the court Commission district so, though it to do see id. broadly interpret, its removal author- could 7202(a), § the Commission need not “affir- to ensure that the Board con- ity order matively investigation, command” an Dis. policies. forms to its 709, given at Act Op. preserves colleague’s two- Finally, dissenting our authority Commission’s own take inferior officer part determining test for disciplinary administrative action status, Op. up Dis. sets new 7202(c)(3). firm, § against a 15 U.S.C. in order to reach a desired re paradigm investiga- The fact that the Commission’s suggests Nothing sult. Edmond authority tive remains intact is consistent supervision] lev “direction] some a specialized with the role of the Board as el,” 663, 117 (empha S.Ct. 1573 component the Commission exercis- added), “managing] necessitates sis purposes efficiency es conduct,” every Dis. ongoing Op. Third, usurp convenience but cannot it. Surely both the day-to-day function. important, and most because and the judges Coast Guard Edmond procedures must establish rule “fair would Independent Counsel Morrison investigation disciplining” of ac- But even have failed such narrow test. individuals, id. counting firms test, Act under the terms of this novel 7215(a), § rule of the Board shall “[n]o Indeed, scrutiny. the Act com survives prior approval effective become without Board’s duties are mands that all of the Commission,” 7217(b)(2), id. “subject to action the Commission.” 15 modify empowered to Commission 7211(c). Edmond, any § U.S.C. As authority as it investigative Board’s sees imposed by the Board are sanctions “sub may fit and mandate that all decisions ject to review the before [Commission] ac- regarding investigation or enforcement accused,” the decisions effect on the t[ake] against approved tions a firm be 706; 15 U.S.C. Op. Dis. 7271(d)(2). § 7217(c)(2). also id. Commission. See 7215(e)(1), Additionally, §§ may adjust inspection While the authority broad under the Commission’s rule, schedule, may only by id. that it do so position Act contradicts the dissent’s of the Executive Board rules are sub- subdivision 7214(b)(2), and all § convenient for the more departments, too for into approval. So ject to Commission power.” that United States v. authority, exercise of see id. investigative the Board’s Germaine, L.Ed. 7215(b)(1). Certainly the Commission’s § Supreme In Court Freytag, such rules and “promulgate authority to necessary ap- Departments being as “like may described regulations[ ] departments,” interest or for the public Cabinet-level propriate in investors, added), (emphasis and in furtherance 111 S.Ct. 2631 protection of 7202(a), Act,” provides ample easily §id. are “limited in number and which th[e] tighten identified,” to its Although for the Commission the Court did not room id. authori- investigative on the Board’s characteristics identify precise reins challenge, facial of this ty.6 purposes For departments reserved “Cabinet-like” has not chosen that agencies Commission the issue of whether not mean that it steps does take these n. departments, id. at 887 S.Ct. anything, If to do so. lacks urged “Depart four Justices that far the Board has so acted suggests it encompass be understood to ments” should policy. in accordance Commission immediately the Presi agencies “all below organizational structure of the dent pow- Board’s exercise of its Because the Branch,” indepen “all including Executive comprehen- Act is under the ers establishments,” executive id. at 918- dent and Board control the Commission sive (Scalia, J., joined by 111 S.Ct. 2631 to and remova- are accountable members Souter, JJ, O’Connor, Kennedy, and con Commission, we hold that Board by the ble (here curring part judgment) and in the officers. are inferior members “Concurring Op.”). They reasoned inafter ‘Depart- the word that the Framers “chose B. ... or function not to connote size men[t]’ contention, The Fund’s alternative (much status), separate less Cabinet but members are inferior offi assuming Board organization that still en connotation —a cers, depart not a that the Commission is colloquial usage today.” Id. dures even are not the ment the Commissioners Noting S.Ct. 2631. Commission, unpersua is also head of the reference to the Constitution makes no sive. “Cabinet,” id. at term S.Ct. Clause, and that the has not held that Appointments 1. As used in the “ “ Departments’ Heads of are Cabinet Departments’ ... ‘the ‘Heads of phrase members,” id. at referred to suggests Departments that the concurring justices observed that even the Executive Branch or are themselves sparse history Appointments Clause some connection with at least have creating the 1792 Act a Post 96 included Buckley, branch.” General, who, Master while not a cabinet Court has ex 612. member, appoint had an assistant refers to “the “Departments” plained 7211(a), U.S.C. and therefore con- suggesting that the Commission is some- statutory obligation pro- how limited its templated goals the Act and the that the Act,” mulgate "in furtherance of this rules go public would hand in hand. If the interest dissenting colleague ig- Op. at our Dis. public interest demands increased microman- establishing purpose in that the Act's nores empowers aging operations, the Act of Board protect the interests of the Board was "to respond accordingly. to Commission interest," public investors and further Congress group has contin- 2. The Commissioners as a id. As exer- deputies, authority cise the same final in officers to as is vested empower to non-Cabinet ued officers, single department. head of an executive inferior id. appoint Congress has vested “the Commission” justices cau- concurring S.Ct. rulemaking, investigative, adjudi- conclude such action violated tioned to See, catory authority. e.g., 15 U.S.C. “cast[] Clause would Appointments § independent agencies 7202. Just as are validity many appoint- into doubt the “Departments” capable receiving ap- statutory and a number of explicit ments pointment powers they even though are appoint,” authorizations to id. give structured to the President con- less is be- The Commission “Cabinet-like” trol over their functioning, see Freytag, authority it cause exercises executive over (Concur- 111 S.Ct. 2631 major aspect government policy, and ring Op.), the heads of independent agen- principal appointed by its officers are wholly cies need not be controlled consent of President with the advice and long they President as principal 78d(a), Senate, § 15 U.S.C. (with appointed officers the advice and President, to removal SEC v. Blind- Senate) consent and removable Co., er, & 855 F.2d Robinson the President. All gov- three branches of (10th Cir.1988). Given the constitutionali- agreement ernment are in that the head of ty independent agencies, see Hum- agency body. be a can multi-member phrey’s Ex’r v. 295 U.S. United Attorney opinion General’s in 1933 (1935), 602, 55 79 L.Ed. 1611 acknowledged that the Civil Service Com- such entities must be able to constitution- by” mission is “headed its commissioners. authority to ally appointment per- exercise Att’y 37 U.S. Gen. at Op. At- proper functioning. mit their As the Reorganization enacted the Act of torney opined concluding General § that a providing U.S.C. Presidential was a “De- the Civil Service Commission plan Congressional “pro- can approval Appointments under partment! ]” agency vide that the head of an be an Clause, the here is “not a Commission individual or a commission or board with attached to one of subordinate Commission more than one The Ninth Cir- member.” but is departments the so-called executive cuit held Silver v. United States Postal independent itself an division (9th Service, Cir.1991), that 951 F.2d 1033 Executive Branch of the Government with governors the nine of the Postal Service certain duties and functions.” “Head[],” concluding constituted its (1933). Att’y Gen. Op. not fact that the Postal Service is “[t]he 1996, the further stated that Con- OLC government a traditional structured like gress may appoint “vest the infe- imply that agency need not its structure rior officers in the heads of the so-called constitutionally permissible,” id. at independent agencies.” Op. Legal Off. appointment, and that as to Congress has Counsel carefully decisionmaking, “Congress appoint offi- authorized the Commission authority of vested ultimate control and 4802(b), § employees, Governors,” cers and 5 U.S.C. Postal id. at Service handicap it illogical Congress, and would be its 1038. The same is true here. ability statutory mandate to effectuate its Act as the Ex- as well Securities 1934,15 very seq., et independence change because of the Act of U.S.C. 78a necessary and the in “the Congress has deemed vested Commission” rules, investigations, initiate promulgate Court has deemed constitutional. Moreover, laws, Act ad- Reorganization of securities enjoin violations sue to sanctions, appoint mandated that the head dressed Silver disciplinary review members, posi- Board rules and either a civil service approve agency of an Board subject appointment and censure and re- budget, tion or to Presidential the Board’s Senate, move Board members. with the advice and consent 904; neither, § is 5 U.S.C. Chairman on sources relied The historical as the President alone selects Chairman lodging of the “benefits regarding Fund Reorga- among from the Commissioners. single individ- appointment 3,§ nization Plan No. Stat. ual,” (citing Br. at 39 Appellants’ The FED- Additionally, although Joseph StoRY, and 3 ERALIST No. 76 COMMEN- authority appoint has Chairman (1833)), § the Constitution TARIES on Reorgani- supervise personnel pursuant to namely question, address a different Plan of the Chairman zation No. 10 principal appointment to vest decision authority appointment does not have sole President, Framers in the and the officers Plan; appointment under the rather “[t]he II, in Article preference entrenched major by the of the heads of Chairman no pointed § 2. The Fund has cl. administrative units under the Commission Framers foreclosed authority wherein the approval shall be to the multi-member granting from Reorganization Plan No. Commission.” inferior appoint commissions 1(b)(2), (1950); see 64 Stat. dictionary of no assistance officers. The is (6 Wall) Hartwell, States v. 73 U.S. United as “one a definition of a “head” because 385, 393-34, (1867); 18 L.Ed. 830 Nat’l place,” Appel- the first rank or who has Treasury Employees Reagan, v. Union (quoting Br. at lants’ 39-40 Webster, Noah (D.C.Cir.1981). F.2d 246 n. 9 Dictionary English An American (1828)), does not resolve wheth- Language are inferior of- Because members person rather er the “one” must be one Commission, ficers of the which is a “De- than one committee. partment whose consists ]” “Head[]” Commissioners, several we hold that

Finally, urging that the Chairman of creating Title I of the Act the Board does and there- “Head[ ]” is its Commission Appointments not violate the Clause. ap- grant fore the Act’s of Commission invalid, the Fund’s au- pointment power is IV. support not its conclusion. thorities do Although expressly in Silver included the Postmaster General While itself, principle re- appointed was an inferior officer Constitution separation implicit is in the first governors, movable the nine three articles of the that de F.2d at the Chairman is not inferior Constitution simply separate legislative, roles for the exec to the but rather fine Commission utive, judicial ad- branches. See Nat’l one who additional commissioner v. Tidewater Trans functions. Just as the Chair- Mut. Ins. Co. D.C. ministrative Co., 582, 591, 1173, 93 remove another com- 337 U.S. man has no fer (1949); missioner, may Thompson, L.Ed. 1556 Kilbourn v. the Commission as a whole (1880).7 one of its own. 103 U.S. 26 L.Ed. 377 appoint nor remove neither —, (2008); recently principle reaf 171 L.Ed.2d 41 has been more This Rumsfeld, Court in a series of firmed v. Hamdan interpreting opinions (2006); the President’s Article II 165 L.Ed.2d 723 Hamdi v. —Bush, powers. See Boumediene

679 just govern- inefficiency, neglect duty, of a President for of a bulwark Considered (James office,” in ment, 47 or malfeasance rather The Federalist No. than at however, 623, Madison), “by no President’s will. 295 U.S. at principle, this S.Ct. 869. The of Court observed that “to contemplates separation total means ... hold that the members of the [Federal of of these three essential branches each Trade in Commission] continue office at Government,” Buckley, 424 U.S. President,” mere will of the id. at assert that 612. The Fund does not S.Ct. Congress’s S.Ct. would thwart in- judiciary directly have Congress or the “nonparti- tention that the be commission Branch’s ap- encroached on the Executive “independent san” and of executive author- removal, decisionmaking or au- pointment, (internal 624-25, ity,” id. at S.Ct. thority powers. their own by aggrandizing omitted). marks quotation Instead, separation powers the Fund’s of challenge premised on the contention later, Several decades the Supreme an excessive atten- that the Act constitutes expanded upon analysis its Hum uation of Presidential control over the Executor, phrey’s concluding the stat crux of the Fund’s chal- Board. The establishing ute Independent Counsel the double for-cause limitation lenge principle separation did violate the of —-that impossible makes it for the on removal powers. of The Court considered the “two ques- a perform President to his duties'—-is related issues” of restrictions on the Presi as neither the impression tion of first Su- impact dent’s to remove and the this court has considered preme Court nor Ethics Government Act as a whole a where a restriction on removal situation question” in order to the “real address But through two levels of control. passes ability “whether ... the President’s categorical, bright-line ap- Fund’s perform duty,” constitutional his Morri Supreme proach conflicts with the Court’s son, 108 S.Ct. Morrison, reasoning in which case-specific faithfully “take Care the Laws be emphasized that there are “several means executed,” II, 3,§ Const., U.S. art. was supervising controlling or [Presidential] impeded. Noting Attorney General’s powers,” 108 S.Ct. 2597. powers request appointment of the In operate The removal thus does not Counsel and to remove her for dependent vacuum; in a rather it is one of several jurisdiction alongside cause her limited assessing criteria relevant to limits on the lack policymaking and tenure and au ability to exercise Executive President’s thority, id. at 108 S.Ct. power. Court held that restrictions on the supervision,” “amount of control or id. at

A. 2597, that Supreme long recognized ultimately Court has exercised over the functions of types Independent that some of restrictions on Presi- Counsel were constitu given super dential within the Executive tional the “several means of vising controlling the ... permissible, especially Branch are wielded,” 696, 108 may id. independent agencies. case of Hum- Executor, Court re- phrey’s B. jected constitutionality to the challenge matter, independent agen- initial independent agencies principal which As an “subject such the Commission definition officers were to removal cies Rumsfeld, L.Ed.2d 578 good will” to ob- autonomy conducting ally require “presidential enjoy degree legislative support, id. affairs, opera- budgetary tain and including staffing their at 594-95. Various administrative tools independence is not with- this tions. Yet provide additional influence to the Presi- ability to addition to the limits. In out dent; include centralization of con- these Commissioners, 15 U.S.C. appoint tracting, personnel requirements, cause, 78d(a), remove them for § at property “[A]ny allocations. Id. 587. 681; Blinder, at see also Wiener F.2d assumption agencies that executive and in- v. United dependent regulatory commissions differ (1958), which removal 2 L.Ed.2d 1377 function, significantly systematically or in interpreted has Court Supreme procedures, internal or external or rela- possesses signifi- broadly,8 the President government is tionships with the rest of influence. levers of Most cant additional at misplaced.” Id. 596. obviously, by appointment Commis- chairman, pleasure at the who serves sion turn, enjoys both Commission “dominate[s] and often of the President powers and removal over appointment the President policymaking,” commission and, significantly, Board members most policy and con- Commission can influence “Congress sweeping has mecha- provided of “the administrative side trol who directs guarantee nisms to substantive control staff, business, most select[s] commission of the Board’s use of its [Commission] as a policy, and conse- budgetary set[s] powers under the Act.” Intervenor’s Br. loyalties.” Peter staff quence command[s] for the at United States 49-50. The Strauss, Agencies Place L. Gov- status, heavily Board’s as a controlled and the Separation Powers ernment: component independent agency, of an is Branch, Fourth 84 Colum. fully congruent paradigm L.Rev. with the laid out Executor,9 (1984) David M. WelboRN, (citing No Humphrey’s Gover- Board rule Agencies Regulatory promulgated and no sanction is Federal nance (1977)). connec- “Here the White House imposed stamp without the Commission’s generally less direct and more Indeed, tion is often approval. any policy decision subtle, consultation and coordination but being made the Board is policy issues of national interest general on overruled the Commission. The Act (footnotes omitted). naturally occurs.” Id. provides authority also for the Commission although statutory as well as Additionally, limit authority and to remove Board may political prevent 7217(d)(1), §§ constraints Presiden- altogether. 15 U.S.C. decisions, specific Additionally, fully tial Act preserves dominance stripped authority regulate of overall influ- ac- is not Commission’s standards, agencies gener- counting profession, ence because set Indeed, premise that the re- n. 9. with that 8. The held dissent's of Com- strictions on the President's removal conclusion that the Board’s structure is un- “inefficiency, neglect duty, missioners for conveniently But re- constitutional follows. "very in office” are broad or malfeasance peatedly referring indepen- to the Board as an any ... for number ... could sustain removal see, agency, e.g., at & n. 697- dent id. perceived transgressions.” or of actual 98, 698-99, 701 n. 708 & n. does Bowsher, 106 S.Ct. 3181. explained not make it so. As in Part III above, by statutory design the Board is com- dissenting colleague wholly misreads Our posed entirely of inferior officers who are opinion and the Board’s brief the court’s both and whose subordinate to Commission indepen- suggest the Board is itself an 685-86, 686-87, governed by agency. Op. the Commission. dent Dis. any take against action company or indi- S.Ct. (1982 2597 (citing § 28 U.S.C. ed, 7202(c). § vidual. Id. “Because the V)), Com- Supp. and defined her jurisdiction, id. mission can withdraw preempt any as- Whereas the Board cannot appear in court pect of the Board’s regulatory substantive without the permission, Commission’s ' any time to effectuate the U.S.C. 7211(f)(1), Independent “ Commission’s own understanding ‘pur- Counsel’s powers included ‘initiating and poses of Act laws,’ th[e] and the securities conducting prosecutions any court of no functional concern or di- constitutional competent jurisdiction, framing sign- mension should be ‘good raised the ing indictments, filing informations, and cause’ restrictions on ability its to remove handling aspects case, all any of particular ” officers.” Intervenor’s Br. name of the States,’ United Morrison, the United States at 50 (quoting 15 U.S.C. 487 U.S. at 108 S.Ct. 2597 (quoting 28 7217(d)(1)). § Thus the Act ensures that 594(a)(9)) U.S.C. (emphasis added), and all Board subject functions are perva- to hiring so, staff to do id. (citing 28 U.S.C. control, sive Commission including approv- 594(c)). Most importantly, while the Com- al of its budget annual and supporting mission retains its full authority under the fees, (d). § 7219(b), 15 U.S.C. Act, 7202(c), 15 U.S.C. the Ethics in Government Act divested the Attorney

When assessed in the context of the General of his pre-existing authority and restrictions on Presidential power upheld it invested entirely the Independent Morrison, the powers President’s under Counsel: “[WJhenever a matter has been the Act extend comfortably beyond the to an referred independent counsel under minimum required to “perform his consti- the [Ethics in Act, Government] the Attor- tutionally assigned duties,” Morrison, 487 ney General and the Justice Department U.S. at 108 S.Ct. 2597. Although the required all suspend investigations President directly does not select or su- and proceedings regarding matter,” the pervise members, the Board’s the Presi- Morrison, dent possesses significant influence over 2597.10 As Commission, designed by Congress,

the which the In- possesses in turn dependent comprehensive Counsel possessed significant control over the Board. By contrast, independence from neither the President, the but the nor the Attorney Supreme Court General had found no separation the of ap- point Independent powers the violation. Counsel or The statutorily the more power to control her investigatory constrained authority Board, pros- the when ecutorial authority. Instead, set three- beside the Independent Counsel’s judge appointed court the Independent broad powers independence, falls well Counsel, Morrison, 108 within constitutional bounds.11 Thus, Independent er, the "possessed Counsel 10. Op. Dis. because the Board is largely core and prosecuto- unchecked federal greater to much Executive control powers, effectively rial displacing Attorney the Counsel, Independent than the the Board General the Department Justice within would withstand scrutiny constitutional if the the jurisdiction, counsel's court-defined which Independent "sky had Counsel not. The necessarily was not specific limited falling” approach to the separation Board’s matter that had prompted appoint- [her] powers implications exaggerated is an re- Op. Counsel, ment.” Legal Off. at *34 sponse insignificant to a relatively innovation. 16, 2007). (Apr. mountain; proverbial Morrison was the viewing case, Even authorizing present as Morrison comparison, is a molehill. "significant intrusion” on the pow- Executive attenuation directly, the Act’s More tenure the limited points Fund of Board the President’s Coun- Independent jurisdiction mean, con- the Fund as does not members justification as in Morrison sel carry ability to tends, the President’s but position,

unchecked is there- responsibility his Executive out nor its office the duration neither Al- unconstitutionally restricted. fore significant as operated scope prescribed in Morrison— officer principal though Counsel's Independent on constraints plea- at the Attorney General —served Although powers. broad of her exercise President, nothing in Morrison sure tempo- awas Counsel Independent re- restrict Congress cannot suggests President, neither the rary position, inferior officers moval of statute General, nor even Attorney agencies.12 well as executive agencies tenure; of her length limited itself underscored instead deter- Counsel rather, Independent the Court’s of animating concern that the were statutory duties her when mined but formal cases is not removal-power The 664, 108 S.Ct. 2597. at id. complete, functional: office, time in Counsel’s Independent de- not to designed ... is analysis expected indefinite thus, was “rather those officials of categories rigid fine Op. Off. years.” multiple to last for will be removed at may may not who 2007). (Apr. Counsel, *34 at Legal President, to ensure but by the Counsel’s Independent Moreover, the the not interfere Congress does than delimited arguably less were powers pow- of “executive exercise President’s request she could as insofar the Board’s constitutionally appointed his er” and jurisdic- prosecutorial her of expansion the laws “take care that duty to 667, 108 Morrison, at See tion. Article II. under faithfully executed” 593(c). only is § Not 2597;28 U.S.C. S.Ct. 689-90, 2597. at 487 U.S. statutorily-defined Board the that, an inferior regards as Court stated boundaries, also but jurisdictional imposition officer, say that “we cannot limit to further empowered is Commission by for removal cause’ standard ‘good aof functions, 15 U.S.C. the Board’s au- executive on unduly trammels itself Fund 7217(d)(2). the extent To So 691, 108 S.Ct. 2597. at thority.” Id. Inde- of the the breadth maintains not, the Fund here, the President too justified was powers Counsel’s pendent abil- of his contends, stripped” “completely circumstances, the circum- by exceptional Like-mind- members: Board ity to remove the enactment leading appointed stances can be ed Commissioners far from statute removed Independent they can be Counsel President Board, Con- cause, of the members the case and Board inas unique; entity for cause for an removed the need appointed identified can be gress Although level deter- Branch Executive Commissioners. within re- the Board over on Presiden- Presidential control limitations mined that some to insulate intention Congress’s n. supra flects See advisable. tial were statutory forces, this partisan Board from 1. 12. Our establish purport did colleague's assertion dissenting "completely would issue the removal restrictions what removal but resolves Morrison “all authority, “required invalidation removal as to strip[]” this case” so the President [Board],” Op. is remarka- Dis. Morrison that in light the fact ble preserves scheme sufficient Executive in- broad rulemaking authority to circum- fluence over the Board through the Com- scribe the investigative Board’s actions be- so as not to mission the President render cause “such authority would all but de- ” perform unable his constitutional stroy ‘independence’ the for- duties.13 cause removal provision might otherwise allow, dissenting colleague why 710;

Our asks id. at see id. at 703-04 (citing cause, Board only is removable Dis. legislative history), such is the statute as Op. at concluding that it is to written Congress.

preserve the independence Board’s The Fund’s contention that the Act vio- But Commission. for-cause removal is not separation lates powers because the re- the end of the constitutional inquiry. We moval go beyond restrictions the “good return, might ask in why cause” standard approved Morrison granted pervasive such Commission au- fares no better. The Fund contends that thority over the Board if not to preserve under the Act “the cannot [Commission] Indeed, the means Executive control? remove a Board who incompetent- member why would Congress deny the Commission ly pursues wrong-headed policies, per- but removal authority at-will on the one hand mits, most, only of those mem- provide and then the Commission with the bers egregiously who and deliberately authority to abolish on flout their duties or other, engage in serious mis- essentially granting at-will removal conduct.” Appellants’ Br. at 21. power The Su- over Board if functions not Board preme Court has specified never that Certainly members? the power latter “good greatest cause” is the blunts the restriction impact constitutional of for- Congress may impose on removal. removal of cause Even if inferi- statutory these fact, officers. provisions may the Court has legislative broadly reveal a compro- mise, stated that “may the Act as a provides whole limit and re- ample strict the If, Executive control over the Board. removal as it as deems Perkins, best for posits, public the dissent the the for-cause removal interest.” provision U.S. at Furthermore, reflects Congress’s intention to 449. it grant degree “some is far from clear of substantive inde- that the Commission pendence” Board, to the id. at would share that cramped interpre- Fund’s independence is undercut the vast de- tation of its removal authority. supra Cf. gree of Commission every signif- control at n. 8. While the Fund points to the fact that step. icant To the extent the dissent of- two of provisions the three that authorize fers Commission cannot have removal of Board members refer to actions suggestion Commission, 13. The Fund’s pointed Board’s gov- whereas the represents creation an effective diminution of plays ernment no role formal in the selection Executive unprecedented Branch or an of SRO board members—means that Congressional unavailing. innovation is also grant governmental authority Board’s wide-ranging oversight Commission’s duly accompanied by government accounta- over the Board was modeled after the rules bility. Consequently, the Fund’s character- regarding authority self-reg- Commission over ization of the review of Commission’s ("SROs”) ulatory organizations in the securi- deferential,” "highly "severely action as re- industry, ties which have existed for sev- over stricted,” circumscribed,” "severely Ap- NASD, enty years, 431 F.3d at such as pellants' Br. is difficult to reconcile the New Exchange York Stock and the Na- Act, with the much Dealers, less with this court’s anal- tional Association of Securities 7217(a); ysis § statutory provisions U.S.C. of the same S.Rep. No. review 12. NASD, A main ap- difference —Board members are for SROs in F.3d at 806. scope regarding concern mitigating the mean- n. supra “willfully,”see taken addi- The Act influenced the restrictions. removal being often word “is ing of that all of the Commission’s 317 tionally preserves context,” v. United Spies by its Ex- enhancing field while 87 L.Ed. 492, 497, 63 S.Ct. left previously no basis for area to in an (1943), points Fund ecutive control n. supra would view control. See private the Commission assuming largely 7217(d)(3) necessarily defin- 15 U.S.C. colleague’s dissenting our Nor does in which circumstances ing exclusive either undermine approach philosophical estab- may be cause” “good removal While of the law. logic or view the court’s Bowsher, lished, see Appoint- purposes the fundamental SEC, 205 3181; Wonsover cf. separa- principle ments Clause (D.C.Cir.2000). 408, 413-14 F.3d consti- undisputed, the tion of requires court for this question tutional V. from we take instruction pre- are disfavored” challenges “[F]acial and under- we find it precedent as Ex- permit they do cisely because precise prece- aof the absence stand that “implement ] attempt to to Branch ecutive inquiry dent is neither end —the with consonant in a manner [statutes] Morrison, exam- statutory scheme Grange, 128 Constitution,” State Wash. fail- grounds for novel—nor ple, was also challenge the Fund’s S.Ct. at statutory scheme Congress’ ing address court occasion for present the does not colleague’s dissenting Our as it is written. regarding rule bright-line to announce garb, con- analysis, cloaked textualist Consistent restrictions.14 sup- precedent Supreme Court strues statutes duty construe the court’s acknowledging theory instead port his Commodity infirmity, avoid constitutional limits; example, the intrusion its Schor, 478 v. Trading Comm’n Futures au- removal the President’s Congress upon L.Ed.2d 106 S.Ct. from what Myers is far removed thority in to conclude (1986), no basis there is here, multi- the Court’s is at issue authority that Commission’s the fit the does not analysis Edmond factor requirements, II satisfy Article does not cf. paradigm. two-step novel dissent’s 2597. Morrison, at 487 U.S. postulates that the absolutes dissent limita- —es- the removal focus on The Fund’s have must sentially, either President context, statutory which tions ignores act- Congress has power or at-will removal only to the Commission empowers unconstitutionally inconsistent ed activities significant Board all —are oversee nuanced more Court’s with post ex de ante through ex controls on the addressing limitations approach “withdraw also to but novo review authority appointment President’s sub- the Board’s any aspect of preempt In the face powers. separation authority,” Interve- regulatory stantive pro- statutory scheme that comprehensive thus the United States nor’s Br. for p. supra 670- constitutionally applied, see colleague, dissenting Dis. Contrary to our determination, the court making is a facial fact that this Op. 704 n. 71. In analysis, for challenge significantly affects of the Commission’s at the must look extent heavy to demon- burden bears Act, the Fund not to whether under the the Pres- unduly Act constrains that the strate authority, Dis. see exercised that it how has are faithful- ability to laws see ident’s Op. n. 23. at 711 and cannot ly in all circumstances executed vides exhaustive means of Executive con- the Board as to it render unconstitutional. oversight, trol and misrepre- dissent Because of reality of the President’s the Board agency sents broad-ranging authority Act, under the final Executive authority, supra n. Fund’s challenge facial fails. 9, interprets the Commission’s Accordingly, we hold that the Fund’s oversight narrowly, Op. see Dis. facial challenge to Title I of the Act fails to n. and the limitations attendant to reveal violations of the Appointments broadly, for-cause removal see id. at 701- Clause or separation of powers, and we OS,divorced from their statutory context in affirm grant of summary judgment to a manner to problems create constitutional the Board and the United States. none; where there are and misreads Su- Court preme precedent portend doom KAVANAUGH, Circuit Judge, unitary for the Executive. But those fears dissenting: basis, statutory have no for our dissenting This case raises questions fundamental colleague can cite to no instance which about the scope the President’s consti- the Board can policy make that the Com- tutional power appoint and remove offi- mission cannot override.15 cers in the Executive Branch. Article II Given the constitutionality of indepen- begins: “The executive Power shall be agencies dent and the com- Commission’s vested in a President of the United prehensive Board, over control the States of America.” II, Under Article Fund cannot the statutory show possesses the sole power scheme so restricts President’s control and responsibility to Care “take that the the Board as to separation over violate of Laws be faithfully executed.” To assist powers. The bulk of the duties, Fund’s challenge his the President has authority, to the Act was fought lost—over sev- within limits, certain textual appoint —-and enty years ago when the Supreme Court and remove executive Myers officers. Humphrey’s decided Executor. At that United

time, the concluded the concept 71 L.Ed. 160 Disputes over unitary aof Executive embodied scope appointment President’s require Constitution does not the Presi- and removal powers sporadi- have arisen (i.e., to ego dent have an alter an official cally throughout history. American This serving at pleasure the of the chapter latest involving the Public Com- will) and removable within independent pany Accounting Oversight Board is the agencies. The Court reiterated the con- most important separation-of-powers case clusion that neither for-cause nor removal regarding the President’s appointment independent substantial discretion eviscer- and powers removal to reach the courts ates Executive control Morrison. The years. the 20 last Morrison v. Ol- Cf. key question Supreme son, the Court requires 487 U.S. 108 S.Ct. 101 this court to answer is whether the (1988); Act so L.Ed.2d 569 Synar, v. Bowsher limits the ability President’s to influence 478 U.S. 106 S.Ct. 92 L.Ed.2d 15. To the dissenting extent colleague 699-700, our as- approach generally, for-cause id. at overturning serts both that again ignores the Act would statutory he the scheme in a have impact independent no agen- other singular on power. focus on the removal If that cies, Op. Dis. failing and that to Supreme is to be approach, the Court’s then it produce overturn the Act parade would a precedent of say must so for its is more nuanced horribles adopt were to a double- and takes account of the statute as whole. and se- ‘liberty the threat to fundamental Valeo, 424 U.S. v. (1986); Buckley separation (1976); governed’ curity of the L.Ed.2d pre- to designed were principles v. United Executor

Humphrey’s (quoting Br. at 10-11 Plaintiffs’ vent.” 79 L.Ed. 602, 55 S.Ct. 295 U.S. Airports Auth. Citizens 21, Metro. Wash. 52, 47 S.Ct. (1935); Myers, Inc., Noise, Abatement 160. 71 L.Ed. of Aircraft 115 L.Ed.2d Accounting Over- Company Public The (1991)). executive independent is an sight Board issue, majority opin- the theOn removal Sarbanes-Oxley Act by the agency created Execu- Humphrey’s this case as an ion views considered is The PCAOB Humphrey’s But this is redux. case five tor the agency because “independent” is a world squared. There Executor removable PCAOB are the members of Hum- legion between the difference PCAOB cause, at will. The only for Executor-style agencies and phrey’s independent just another as itself portrays Humphrey’s heads of FTC, FCC, PCAOB: agency executive —like are remov- agencies independent under Executor permissible and the NLRB —that President, by the whereas able for cause decision Court’s are removable of the PCAOB Plaintiffs, members includ- Executor. Humphrey’s agency, independent only by another cause regulated accounting firm ing a Nevada Exchange Commission. chal- the Securities disagree and Board, strenuously critical power to remove is ob- President’s constitutionality. Plaintiffs lenge its to control the President’s fact that members ject Article his perform Branch and Executive removable appointed PCAOB statute, this Yet under responsibilities. II agency, independent by another for cause Commission, is two levels for-cause the President Exchange the Securities members, pre- away from Board They argue President. than rather on and at- viously unheard-of restriction structure, independent agency that this authority over of the President’s tenuation only for cause by and removable appointed effec- (i) structure officers. This executive inter- agency: by another power to any tively Presidential au- eliminates II Article the President’s feres with PCAOB, notwithstanding that officers, and control the remove executive thority to regulatory numerous performs the Board executive thereby exercise core law-enforcement functions exe- faithfully laws be take care far as the So power. (ii) executive specific terms cuted; and violates in- including the States United parties, II Article Clause of Appointments tervenor, determine have been able ap- the President’s regarding in their exhaustive reflected the research Executive the “principal officers” point briefs, Amer- before in never “vesting and excellent contend that Plaintiffs Branch. an independent there history ican has been with coercive agencies government by and appointed heads are agency whose simultaneously de- citizenry, and over the inde- by another only for cause removable ability to con- citizenry any the priving Presi- by than the rather pendent agency, poten- exercising such those check trol or case But that is the ego.1 alter the dent or his authority, precisely tially tyrannical Treasury. Secretary of the the General or ego,” mean the I "alter By the President’s recognized when Supreme Court The has who is removable department of a head appoints department inferior President, Attorney of a the head the such as by the will members, with PCAOB who are removable remove them for failure to follow substan- only by for cause the SEC—and it is un- tive SEC supervision; direction or and the disputed independent the SEC as SEC does not statutory have authority to agency ego. is not the President’s alter prevent affirmatively command, and to goes beyond The PCAOB thus well what manage ongoing of, the in- conduct Board practice Humphrey’s historical Execu- spections, investigations, Board and Board tor authorize. enforcement Moreover, actions. as the only statutory demonstrates, PCAOB’s structure not ex- text very pur- Humphrey’s ceeds boundaries of Exec- pose of this precisely statute was to create utor, it specific also contravenes criti- an accounting board that would operate language cal in the Supreme Court’s 1988 with some independence substantive from decision in Morrison Olson. The Su- SEC, not one that would be “directed preme allowed Court for-cause removal of supervised” See, e.g., the SEC. only counsel Morrison 7211(c), §§ 7214, 7215, 7217; U.S.C. because the through President his alter (2002) (“The also S.Rep. No. at 6 (the General) ego Attorney still retained operation successful depends authority to remove the independent Cong. upon independence.... ”); its Therefore, counsel. empha- S6327, 2002) (daily S6331 July ed. Rec. sized, Morrison was “not a case which (statement Sarbanes) (“[W]e of Sen. need to remove an executive official to establish this oversight board ... stripped has been from completely provide an guarantee extra indepen- of its President, providing thus no means for the ”). dence .... Because PCAOB members President to ensure the ‘faithful execution’ principal officers under the Edmond of the laws.” test, they must be appointed by the Presi- 2597. This is such case. The President dent with the advice and consent of the ability no the PCAOB mem- remove Senate. The Board appoint- members are bers, directly either through or an alter alone; therefore, ed the SEC the stat- ego. ute Appointments violates the Clause as The statute’s violation of Appoint- well. ments Clause is also plain. Under Article The two constitutional flaws in the interpreted II as in Edmond v. United PCAOB statute are not matters of mere etiquette protocol. By restricting the (1997), L.Ed.2d 917 the PCAOB members Board, President’s over the are principal officers who must appoint- Act renders this Branch agency Executive ed the President with the advice and unaccountable and from consent of the divorced Presi- They are not Senate. infe- dential control degree previously rior to a not they officers because are not “directed supervised” by SEC, countenanced our id. at constitutional struc- inadvertent; ture. 1573: PCAOB This was not members are Members SEC; removable at Congress designed will the PCAOB to have SEC does not have statutory authority power, “massive power.” unchecked department, officers in that (describing Attorney 108 S.Ct. 2597 General

technically exercises his removal ego as President's alter of inferior through over those inferior officers his alter General); by Attorney parte officer Ex Hen ego, department Myers, head. See 272 nen, 230, 259-60, 230, 38 U.S. 13 Pet. 10 133, (referring U.S. at 47 S.Ct. 21 to "alter (1839). L.Ed. 138 Morrison, President); 692, ego” of 688 members, like that the PCAOB (statement example,

Cong. of Sen. S6334 Reo. appointed be agencies, other is the heads of Gramm). structure constitutional Our and con- the advice however, notion that such President with on the premised, with be re- is inconsistent therefore the Senate and sent of unaccountable Housing liberty. purpose “The by the President. movable individual Cf. in 2008, Recovery Act of equilibration and separation and Economic (2008) unitary Executive 110-289, and of 2654 general, 122 Stat. No. Pub.L. effec merely to assure not regu- was particular, federal (creating “independent” new individual preserve to but government tive Freddie Mac Mae and Fannie lator of Morrison, 108 freedom.” advice with and by President appointed J., dissenting); also (Scalia, 2597 S.Ct. removable of Senate and consent York, 524 U.S. New City v. Clinton President). Alternatively, Con- cause (1998) 393 141 L.Ed.2d 450, 118 S.Ct. part make the Board gress could is al J., (“Liberty concurring) (Kennedy, remova- -directed, and supervised, SEC— or more when one ways at stake just like by the at will Commission ble separation transgress branches seek In the mean- in the inferior officers SEC. Framers of our Consti powers.”). The however, vio- time, structure Board’s pow care to ensure great tution took United lates the Constitution three into separated system in our was er States. Legisla Branches, concentrated and Branch; that there were checks tive I Branches; and three among the balances ultimately would be individual that one indicated, it Supreme Court As exer for the and accountable responsible of this sort to always important in a case is con The power. PCAOB of executive cise text begin the constitutional prin constitutional those bedrock travenes are essential understanding, which original long-standing well as ciples, as enduring of our interpretation to proper un and it is therefore precedents, City New See Constitution. Clinton constitutional. 438-40, York, 118 S.Ct. U.S. violations Although the constitutional (1998); Edmond v. Unit 141 L.Ed.2d serious, important are points are two here 651, 658-64, ed U.S. First, finding in mind. bear (1997); v. Cha L.Ed.2d 917 INS itself would not unconstitutional PCAOB 945-59, dha, U.S. indepen- many other question call into Valeo, (1983); Buckley v. 77 L.Ed.2d 317 D.C. Washington, dot agencies that dent appoint- are agencies heads of those original text L.Ed.2d 659 by the for cause by and removable ed significant understanding particularly President, structure the precise They inform our properly case: this and that is upheld Executor Humphrey’s for ex arguments the Board’s analysis of missing from PCAOB conspicuously opinion Supreme Court’s 1935 tending words, the is PCAOB In other statute. this Executor to cover nov Humphrey’s structured, holding judicial and a uniquely will dis I therefore agency el structure. uniquely limited invalidating it would understanding original cuss the text Second, relatedly, the PCAOB. length. some eas- here could be flaws the constitutional principle our Constitu- “If there Congress could ily quickly corrected. another, it is than tion more sacred require, for ... amend statute simply

689 separates Legislative, authority that which Exec- to take care that the laws be powers.” Myers faithfully v. executed.2 utive and Judicial States, 52, 116, 272 United U.S. The Framers established a single Presi- (1926) (quoting 71 L.Ed. 160 ANNALS by design: dent A single head of Ex- Congress (Madison) (1789)). “The ecutive Branch enhances efficiency and principle separation was not energy in the administration of the Gov- simply generalization an abstract ernment. single And a head furthers ac- minds of the Framers: it was woven into countability by making person one respon- they the document that drafted in Phila- sible for all decisions made and in the delphia Buckley, the summer of 1787.” Executive Branch. As the noted, protect U.S. 96 S.Ct. 612. To the “insistence of the Framers upon unity in the liberty, individual Federal Framers did not Executive—to ensure vigor accountability both adopt parliamentary system with a —is well known.” Printz v. United Prime dependent Legisla- Minister on the U.S. 138 L.Ed.2d ture but instead created a President inde- (1997); see also The Federalist Nos. pendent Legislative from the Branch: The 69, 70, 72, (Hamilton); Sierra Club President is not selected Congress Costle, (D.C.Cir.1981); 657 F.2d (except in the rare cases when no Presi- Kagan, Elena Presidential Administra- dential a majority candidate wins of the tion, (2001) 114 Haev. L.Rev. votes); state electors’ the President’s sala- (“The. Presidency’s unitary power struc- ry protected against any congressional is ture, visibility, its ‘personality’ its all diminution; and the President’s term in peculiarly apt render the office to exercise fixed, except impeach- office is cases of power ways public that the can identify ment the House and conviction two- evaluate.”). thirds of the for high Senate crimes and Breyer succinctly Justice summarized misdemeanors. provision the Constitution’s for a single Article II of the Constitution addresses President: “Article II a single makes Presidency. Its first 15 words are responsible President for the actions of the definitive: “The executive Power shall be way Executive Branch in much the same vested in a President of the United States responsible that the entire is Const, II, 1,§ of America.” art. cl. 1. Branch, Legislative the actions of the II grants Article also the President Judiciary the entire for those of the Judi- authority sole duty to “take Care cial Branch.... The Founders created this faithfully the Laws be executed.” Id. art. equivalence by consciously deciding to vest II, Constitution, § 3. the text of our Under person Executive in one rather single possesses entirety They than several. did so order to (whatever power” focus, “executive spread, rather than to Executive be) scope power may of that and the entire responsibility thereby facilitating aceount- important distinguish It question Legal Academy dan v. Goes to Rumsfeld: responsible exercising Practice, who is the execu (2006) 120 Harv. L.Rev. 69 n. 16 power question scope tive from the (“The unitary theory merely executive means power. single executive The fact that a Presi truly power executive is concentrated in responsible dent is and accountable for exer President; theory spec alone does not cising power the executive does not mean that ify what counts as executive in the first scope of executive is broad or place.”). Cf., e.g., Katyal, narrow. Neal Kumar Ham See of the Senate. objec advice and consent constitutional ability_ [T]hese CONST, II, 2,§ 2. In other art. cl. President, though able U.S. why a explain tives words, the possess President does not the others, dele cannot to delegate to duties Secretary appoint the power unilateral active or the responsibility ultimate gate General, for exam- Attorney of Defense or goes with it.” supervise that obligation to only with Senate concur- ple, but can do so Jones, 520 U.S. Clinton helps prevent the approval rence. Senate (1997) (concur 1636, 137L.Ed.2d 945 S.Ct. charac- of “unfit appointment Presidential ring judgment). (Hamilton). The FEDERALIST No. 76 ters.” un- course, alone and “the President Of all execu- confirmation of Because Senate He the laws. could not execute aided cumbersome, how- prove tive officers could assistance them the must execute ever, pro- also Appointments Clause the at Myers, 272 U.S. subordinates.” may by law vest the vides the understood since 21. It has been S.Ct. officers of “inferior” executive appointment “Article II Republic that beginning of the the heads of in the President alone or pow- President the executive grants to the for Senate departments, without the need Government, i.e., general the er of the Const, II, 2,§ cl. 2. art. approval. U.S. executing control of those administrative executive help supervise direct and To laws, including power appoint- the the the “ex- thereby to exercise officers—-and executive ment and removal officers—a Power” and “take Care ecutive obligation to confirmed his conclusion faithfully executed”—the Presi- Laws be faithfully exe- that the laws be take care ap- just power possesses dent at Buckley, cuted.” U.S. execu- power also the to remove point, but 163-64, 47 Myers, 272 U.S. at (quoting under the responsible officers. “Made tive added). 21) (emphasis enforcement for the effective Constitution II, thus the President Under Article law, as an indis- the President needs necessarily power appoint possesses disciplinary it the aid to meet pensable exercise executive executive officers who act under him of upon influence those who authority delegated the President Myers, 272 power of removal.” a reserve the Presi- otherwise advise and assist who moment that at 47 S.Ct. 21. The Const, II, § cl. dent. art. 2; See U.S. in- confidence the President “loses (President II, “may re- cl. id. art. loyalty ability, judgment or telligence, princi- quire Opinion, writing, them, power he must have the any one of Depart- executive pal Officer in each of the delay.” him Id. to remove without ments, to the any Subject relating upon 21; also The FedeRálist No. Offices”); see respective their (executive Duties of (Hamilton) “ought to officers Amar, Opinions on Akhil Reed Some also deputies as the assistants or be considered Clause, Opinion ought ... Magistrate L.Rev. Chief 82 Va. Framers’ Reflecting the “The superintendence”). to his 660-68 balances, officers, recog- to checks and we have careful attention to remove power nized, Ed- the text constrains tool for control.” powerful of the Constitution is a mond, in certain 117 S.Ct. 1573. appointment power President’s Ap- to remove important respects. particular, The reason that to control is that the Presi- into the pointments provides will translates Clause it is appointed, an officer is executive evident: “Once may “principal” dent appoint him, authority that can remove only at least category officers—a that includes him, appointed not the departments only the heads of — and, performance in the President plenary power that he must fear to remove execu- functions, obey.” Synar, officers, of his Bowsher v. tive making the reference in the 714, 726, 478 U.S. 106 S.Ct. 92 unnecessary bill and misleading surplus- (1986) (quoting Synar L.Ed.2d 583 age. Madison and his allies “dwelt at States, 626 F.Supp. United 1401 length upon necessity there was for (D.D.C.1986)). If the President were construing give Article II to the President over, plenary power stripped removal power sole of removal in responsi- his say, Secretary of Defense or the Attor- bility for the conduct of the executive General, ney longer then the President no branch, and emphasizing enforced this fully and could control be accountable for duty expressly his declared the third power, the exercise of executive as the section of the Article to ‘take care that the words, Constitution demands. In other if faithfully laws be Myers, executed.’” 272 unduly limit Congress could the Presi- U.S. at (quoting S.Ct. 47 21 1 Annals officers, ability dent’s to remove executive Congress (Madison)). As Mad- 497 fragmented, the result would be a ineffi- explained, ison “If the President should cient, and unaccountable Executive Branch possess alone the power of removal from power the President would lack office, employed those who are in the exe- fully supervise. and direct cution of the law will proper be in their power appoint, Unlike the President’s situation, dependence and the chain of power President’s remove officers officers, preserved; the lowest the middle Branch is the Executive not limited grade, highest, and the will depend, as subject text of the Constitution. And the they ought, President, on the and the removing officers Executive President on community.” Id. at Branch “was not discussed in the Constitu- CongRess 21 (quoting 47 S.Ct. 1 Annals of Myers, tional 272 Convention.” U.S. (Madison)). Madison added: “Is the 499 21.3 The issue of removal power of displacing power? Executive “pre- of executive officers instead was first I that if any power conceive whatsoever is early in the sented first session of the Executive, in its nature it is the Congress,” during First consideration of appointing, overseeing, controlling establishing certain bill Executive Branch those who execute the laws.” Annals of 1 providing offices and the officers Congress (Madison). This Presiden- 463 would be to Senate confirmation preserve tial removal would “that and “removable the President.” Id. at great principle unity responsibility 109, 111, 47 S.Ct. 21. “Then ensued what department.” Myers, the Executive 272 many times been described as one of (quoting S.Ct. 1 Annals the ablest constitutional debates which has CongRess (Madison)). Congress place adoption taken since the ultimately The House concurred with of the Constitution.” Parsons v. United Madison’s States, 324, 329, understanding deleted the 167 U.S. 32 Ct.Cl. (1897). express bill’s reference to the manner of Represen- L.Ed. 185 removing imply not to Virginia tative James Madison of and oth- officers so as argued provided power “might ers that Article II that the President’s provides removing 3. The Constitution that all executive method for executive officers other judicial officers of the Federal Govern- than the President and Vice President. See through impeach- ment can be removed v. United Shurtleff II, 4, process, ment U.S. Const art. but that 47 L.Ed. 828 has never been understood to be the exclusive ques- Clause legis Appointments of a consider by virtue to be exercised appear only.” Id. (quoting at tion. grant lative 579). CONGRESS

ÁNNALS of Washington bill, passed A Washington President it into law. signed above, the constitutional explained As use the removal proceeded to assert understanding, in- original and the text Presidency in order his throughout power of established cluding the Decision control over and personal to ensure his power possesses the President Branch. See the Executive direction of Article II remove officers of the under and Tenure Prakash, Removal Saikrishna original Branch at will. That Executive Office, 1779, 1827-29 in L.Rev. 92 Va. widely accepted understanding became (2006). years 60 of the Nation. during the first as the Congress’s decision —referred States, See, e.g., Myers v. United 272 U.S. contempora- “provides “Decision of 1789”-— (1926) 71 L.Ed. 160 evidence of the Consti- weighty neous (“[T]he to the given construction Constitu- many of the Mem- meaning since tution’s may in ... now be considered as tion 1789 part had taken First bers of the settled, firmly definitely and there is Bowsher, instrument.” framing in utility in the con- good practical sense and (internal 723-24, 3181 struction.”) (citing 1 Kent, Commen- James omitted). As Chief Jus- marks quotation 14, at Law, Lecture Amerioan taries on the Decision of explained, Marshall tice 310). questions Yet over the extent of a full considered as “has ever been 1789 not end. power President’s removal did the legislature the sense of expression of in the wake of The issue came to the fore part of the American important on this of prompted the Civil War and House Marshall, constitution.” 5 John The Life Representatives’s impeachment of Presi- Washington (1807). of GeoRGe in part Andrew Johnson 1868. As of dent short, original un- plain Reconstruction, text struggle a bitter over Article II establish the derstanding Tenure of Act Congress enacted the Office appoint- President’s scope broad eh. 154. That law Stat. leading As a powers. ment and removal removing the President from prohibited aptly text has scholar of the Constitution’s Executive Branch officers without certain II did make em- observed, Article “What concurrence. Senate’s to finish was phatically clear from start un- the Act was Johnson contended re- personally Act, would be president constitutional; that the he defiance of the sponsible for his branch.” Secretary without removed his of War Akhil Reed Biography A Amar, approval. Represen- The House of Senate Amerioa’s Constitution: (2005). responded by impeaching Presi- tatives Johnson, by a which was followed dent II acquittal. The contentious narrow Senate episode way ended in a that dis- in the constitution- Johnson grounding With restrictions on the Congress’s couraged congressional Decision al the First text and helped pre- 1789,1 key President’s removal Supreme turn to the Court’s over the Execu- text and to serve Presidential control interpreting that precedents Act Branch. The Tenure of Office in this tive analysis questions presented II, repealed Johnson I will address the was itself case. In this Part impor- III, as one of the most acquittal In Part I will stands issue. it, history in main- Government ques- tant events American under had settled the alteration.”). separation beyond any power ordained tion taining See by the Constitution. H. William In Myers v. United REHNQUIST, GRAND HISTORIC INQUESTS: thoroughly addressed scope Impeachments op Justice Samuel Chase the President’s removal power. See 272 215-16, and President Andrew Johnson (1926). S.Ct. L.Ed. 160 (1992); see also Raines v. extraordinarily In an opinion by detailed 811, 826-28, Byrd, 521 U.S. Taft, Chief Justice who previously had 138 L.Ed.2d 849 served as President and had keen under- standing of the realities of Executive A few decades later in the Su- governance, Branch the Court reaffirmed considered a case that arose preme Court the Decision agreed of 1789 and with Pres- Cleveland fired a holdover when President ident Johnson’s view in 1868 that restric- Attorney from the Adminis- U.S. Harrison tions on the President’s power removal tration. See Parsons v. United were unconstitutional. Id. at 880, 42 U.S. 32 Ct.Cl. dispute S.Ct. 21. The in Myers arose L.Ed. 185 The relevant statute after President Wilson had removed a four-year term for At- established postmaster without Senate in approval, vi- torneys. A unanimous Court held covering olation of 1872 statute the Post preclude from law did the President Department. postmaster Office The sued. will, removing Attorney the U.S. at based upholding the President’s removal au- largely backdrop on the constitutional thority rejecting postmaster’s and necessarily interpretation informed of the claim, the Court examined the text and The said the debates and statute. Court history II of Article and outlined the broad opinions power on the removal from the reach of appointment the President’s and of 1789 onward showed a “contin- Decision powers: removal uninterrupted unlimit- practice” ued and of vesting in power The of the executive power. ed Presidential removal Id. essentially grant the President was of “Considering the construc- S.Ct. power to execute the laws.... As he regard tion of the Constitution in this as charged specifically to take care given Congress having executed, they faithfully the reason- in mind the constant uniform practice implication, able even in the absence harmony of the Government with such words, express part was that as of his construction,” the act Court construed the power executive he should select those “providing absolutely expiration for the who were to act for him under his di- the term of office at of four the end rection in the execution of the laws. years, giving and not as a term that shall be, implication further must last, events, all for that time.” Id. at any, express absence of limitation re- accordingly S.Ct. 880. Court removals, specting that as his selection recognition held that the officials of administrative officers is essential to pleasure “were removable from office at him, the execution of the laws so a recognition was but of the construction power removing must be his those universally thus almost adhered to and respon- whom he can not continue to be acquiesced power as to the of the Presi- sible. Id.; dent to remove.” see also id. at (“[T]he Congress Myers 21. The

17 S.Ct. 880 decision of Id. S.Ct. Court practice power and the universal said that the President’s of removal B was “essential officers over executive him.” Id. The laws the execution in this case were If the removal issue the President’s added that Court text, the constitutional decided based on appointed to officers power extended understanding of that text prevailing throughout the Executive drafting time of and ratification at the Branch, to officers who are including the historical during Congress, the First regulations or charged promulgating understanding of and common practice duties, such as exercising “quasi-judicial” years our during the first 146 that text Id. at tribunals.” “members of executive Government, leading and the constitutional Myers 21. And Myers Court decisions play could no clear that made Parsons, easy face an decision. we would executive officers. role in the removal.of flatly unconstitu- The PCAOB would be restricts tional because the statute text with the constitutional Consistent to remove PCAOB President’s holding Decision of and the thereby at will and to direct members day prohibit any continues to this Myers supervise the exercise of executive in the removal congressional involvement faithfully take care that the laws are In its 1986 decision of executive officers. executed. example, the Synar, in Bowsher v. holding. precise this See Court reaffirmed Any quite easy, It’s not however. 3181, 714, L.Ed.2d 106 S.Ct. 478 U.S. in this area decision this Court makes held that Con- The Bowsher Court importance of recognize must the central “intruded into the impermissibly gress had in Court’s 1935 decision by preventing the States, executive function” Humphrey’s Executor v. United officer removal of an executive 602, 869, President’s 55 S.Ct. 79 L.Ed. 1611 U.S. (the (1935). as his duties Comptroller General The there did not overrule defined) congressional by then without precise holding Myers allowing were of 734, The 106 S.Ct. 3181. approval. congressional Id. involvement removal of re- “Congress cannot But in tension with Court stated executive officers. uphold congression- removal of an Myers, for itself the of the Court did serve on the ally imposed good-cause with the execution of restrictions charged officer removal of certain executive by impeachment.” Id. President’s except laws The officers. Id. at 55 S.Ct. 869.4 106 S.Ct. 3181. authority is dif- questioned persuasiveness of diminishment of Presidential have 4. Some (ii) Congressional from diminishment distinction drawn in remov- ferent the constitutional (i) requir- authority and en- generally of Presidential concurrent a statute al cases between authority. good-cause of its own As Justice ing meet stan- hancement the President to Court, Kennedy that theo- Humphrey's has written for the an as in dards to remove officer (ii) entirely summary congres- ry an accurate of requiring is not a statute Executor principles: "Even separation of when approval particular removal deci- sional itself, cases, arrogate power to Myers. a branch does not In both Presi- sions as moreover, separation-of-powers doctrine Act dent’s to remove is restricted impair another in approach arguably requires that a branch not Congress; the for-cause warned, shows, performance its constitutional duties.” just as Madison States, “mask, Loving complicated v. United and indirect can under (1996); measures, 135 L.Ed.2d 36 which it makes 116 S.Ct. the encroachments Jones, 520 U.S. departments.” also Clinton on the co-ordinate Feder- (1997) (quoting (Madison). theory 137 L.Ed.2d 945 apparent alist No 48 (i) approval). language Loving with Congressional this from is that behind the distinction permitted Congress case arose after a decision indepen- establish Roosevelt, upon taking Franklin office in dent agencies that “cannot in any proper Humphrey’s resignation to ask for sense be characterized as an arm eye or an from the Federal Trade Commission. the executive.” 869; Id. at President Roosevelt wrote a letter to see also Wiener v. United 349, 355-56, Humphrey, appointed by who had been 2 L.Ed.2d 1377 (1958) “I your President Hoover: do not feel that (relying on Humphrey’s Executor my go mind and mind along together upholding on and removal restrictions on Commission).5 policies administering either the or the of’ members of War Claims the FTC. Id. at 55 S.Ct. 869. When Humphrey’s thereby Executor blessed Humphrey resign, refused to President Congress’s creation of the so-called “inde- him. Humphrey challenged Roosevelt fired pendent” agencies where “at in- least one removal as violation of the Federal appointed by dividual is the President ato Act, Trade provided Commission which full-time, fixed-term position with the ad- that the President could remove commis- vice and consent of the Senate and has during statutory sioners their term of of- protection against summary only “inefficiency, neglect duty, fice some form of ‘for cause’ restriction on the or malfeasance office.” Id. President’s authority.” Marshall J. Bre- ger Edles, The Solicitor General defended Gary Presi- & J. Established Prac- dent Roosevelt’s decision on constitutional Theory tice: The and Operation Inde- grounds by citing Myers. pendent Yet the Court Agencies, Federal 52 AdmiN. Humphrey. ruled for In an opinion by L.Rev. Today, this col- Sutherland, upheld Justice independent lection of agencies is com- statutory on monly include, limits the President’s removal understood to among many power, allowing body others, CFTC, the “a FCC, FTC be the the the Federal Reserve, FTC, independent FERC, NLRB, which shall be of executive the the selection, authority, except in its and free the SEC. As the cases and statutes illus- trate, judgment to exercise its without the leave what makes an agency “indepen- any or hindrance of other any official or dent” is the for-cause removal restriction department government.” at ability Id. that limits' the President’s to re- omitted). 625-26, (emphasis 55 S.Ct. 869 move the agency typically heads — inefficiency, The Court stated that neglect duty, Constitution cases of or Silberman, 2245, (2001) ("As Judge writing And as for himself 2271 n. 93 a Harv L.Rev. Williams, Judge recognized, matter, the fac- practical successful insulation of ad- tual basis for the distinction is dubious: “If ministration from President —even if ac- authority the President's ... diminished complished ‘independence’ — n in the name of Congress' political power necessarily must in- Congress’s will tend to enhance own crease Case, vis-a-vis President." In re Sealed activities.”). over the insulated 476, (D.C.Cir.1988), F.2d 838 508 rev'd Olson, 654, sub nom. Morrison v. 487 U.S. Wiener, 5. "The rationale of which is essential- 2597, (1988); 108 S.Ct. 101 L.Ed.2d 569 ly implied that must have a for-cause Case, 50, also In re Sealed 829 F.2d 65 n. 3 removal restriction when the Court believes (D.C.Cir.1987) (Williams, J., concurring in agency that the functions of demand such (“Power part dissenting part) a abhors protection, tenure 357 U.S. at 78 Unhitching Independent vacuum. Coun- 1275, questionable.” S.Ct. seems The Consti- may sel from executive make the office Separation tutional Powers Between the naturally prone to domination the branch Congress, Legal Op. President and 20 Off. represents primary competitor.”); its Counsel 168 n. 115 Administration, Kagan, Elena Presidential 114 696 Attorney See, as the General ego alter such e.g., U.S.C. in office.

malfeasance 3502(5) good for “independent” removing an executive officer for (listing Case, Act Reduction Paperwork In re purposes of cause. See also Sealed Edles, Breger (D.C.Cir.1988) (R.B. & agencies); particular F.2d 528 n. 30 Practice, 52 Admin. By Established L.Rev. J., (Attorney Ginsburg, dissenting) Gener (cataloging at 1236-94 app. at 1114 n. in taking of the President al “is the hand agencies”). “independent ... care that the laws of the United States executed.”) (internal faithfully quotation be Humphrey’s lines as Along the same omitted) (alteration original), marks Executor, deci Court’s 1988 Morrison, nom. 487 U.S. rev’d sub upheld good- a v. Olson sion Morrison 2597, 101 an L.Ed.2d 569.6 removal of 108 S.Ct. restriction on cause inferior department officer a head executive By permitting good-cause restriction (that ego of the President who was an alter officer on the removal of executive is, department removable by a head of ego, the President or the President’s alter President). 487 U.S. bywill See Humphrey’s Execu- there is no doubt par L.Ed.2d 569. S.Ct. significant tor and Morrison authorize ticular, upheld the Court Article II au- intrusion on the President’s of the Ethics Govern provisions counsel thority to exercise the executive 1978, including the restriction Act ment faithfully exe- take care the laws to re Attorney General’s on the Morrison, cuted. See (the independent move an inferior officer (“It that the Act S.Ct. 2597 is undeniable counsel) cause.” Id. at only “good supervi- reduces the amount of control Morrison Court’s 2597. In the and, Attorney sion General view, ego alter the President’s because him, exercises over through the President General) (the the au Attorney retained prosecution of a cer- investigation independent counsel thority to remove alleged activity.”); tain criminal class cause, to re “power the President’s Executor, Humphrey’s stripped.” Id. “completely move” was (independent agencies are not for-cause re 2597. The executive”). eye “an arm or an of the therefore of the statute provision moval reason, long For that those cases have “unduly on trammel[ ] not to was deemed by many inconsistent been criticized any more than authority” executive Constitution, with the with the text of the 691, 108 Executor. Id. Humphrey’s largely pre- understanding of the text con thus found no S.Ct. 2597. The Court through vailed from 1789 and pur difference for stitutionally significant (i) Par- prior precedents Myers such as poses Humphrey’s Executor between See, Miller, Geoffrey P. Inde- e.g., sons. an executive offi removing the President Sup.Ct. (ii) Agencies, 1986 93 pendent a Presidential good cer for cause and Rev. officers, Morrison, generally movability and unex- of inferior the Court's short Like Century plained Manning, Independent decision in United States 19th John F. The Counsel appeared to restrictions v. Perkins also allow Reading Light "Good Cause" in Statute: by the head of officers II, on removal 1332-33 n. Article inferior Minn. L.Rev. agen- agency, where the at least an executive (1999), goes than Monison it no further cy by principal officer remova- was headed allowing re- restrictions on President's (there, the Secre- the President ble will See Mor- moval of inferior executive officers. 483, Ct.Cl. tary Navy). See 116 U.S. rison, 487 U.S. at 689 n. 690 n. As- 29 L.Ed. 700 S.Ct. 2597. suming good law on the re- Perkins remains Executor, as commentators the United States is two levels of (“Humphrey’s for-cause PCAOB, noted, away removal egregious is one of the more from the notwith- have pages standing performs to be found on of the Unit- the PCAOB nu- opinions Supreme Reports.”); regulatory Court merous ed States law-enforcement Morrison, functions at the heart of the executive J., (Scalia, (“Today’s dissenting) power. deci- explain why ... fails to it is not true sion 1935 and that —as the text Constitution seems found that the President retains at least require, as the Founders seemed to some to remove for-cause execu- past our have uni- expect, and as cases tive officers degree and thus some of con- formly purely pow- assumed—all executive trol over them. The Court further said under the control of the Presi- er must be that the President’s remove ei- dent.”). directly through ther or an ego alter was cannot, not, But we need and do re- constitutionality essential to the of the for- cases For litigate those two here. this Morrison, cause removal statutes. See Court, precedents binding those cases are By con- S.Ct. 2597. question. question on the removal The trast, the double provi- for-cause removal Sarbanes-Oxley whether the Act’s restric- Sarbanes-Oxley sions in the Act complete- on the President’s removal over tion ly strip ability the President’s to remove is unconstitutional under the PCAOB members, directly PCAOB either Executor and Morrison. As Humphrey’s through ego, alter and combine to elimi- below, I contravenes explain PCAOB any meaningful nate Presidential control precedents those and violates Constitu- over the PCAOB. As one commentator tion. stated, cogently “defenders PCAOB’s structure will have their work

C arguing cut out for them in that the Con- issue in arises stitution allows the five mem- this case PCAOB’s because, from Humphrey’s unlike Executor bers be even more Morrison, than federal neither the President nor a the President the members of Nagy, ego independent agencies.” Presidential alter can remove the Donna M. Rather, Playing members of the Peekaboo with Constitutional PCAOB. only Board is removable the Securities Law: The PCAOB and Its Public/Private Commission, Status, Exchange only 80 Notre DaME L.Rev. (2005); Strauss, way, L. cause. Put another the PCAOB is an see also Peter independent agency Separa- appointed by Agencies and re- Place in Government: Branch, by movable for cause tion Fourth independent another Powers and the (1984) (“Whatever agency.7 This means that the President of Colum. L.Rev. sharing independent agency political oversight As an whose Commis exercise of sioners are considered removable the Pres accountability people— President's to the cause, (unlike only ident for the SEC namely, independent regulatory agencies such ) Attorney General in Morrison is not Pres as the Federal Trade Commission and the ego, point ident's alter not contested Exchange Frey Commission.” Securities Board or the United States as intervenor. See Revenue, tag v. Comm’r Internal Blinder, Co., SEC v. & Robinson 855 F.2d L.Ed.2d 764 (10th 1988); 3502(5). Cir. 44 U.S.C. (1991) (Scalia, J., (inter concurring part) in agencies “specifically designed Some are omitted). quotation alteration nal marks and quality being subject ... to have the to the Second, made, Court Morrison one must remain

arrangements already specifically required that the President as the to characterize able authori- ego possess accountable head of all President or his alter unitary, politically ”). ty protected an executive officer law-administration.... to remove provision: removal for-cause presents what the This case therefore a constitu- opinion rightly labels majority cause” “good Nor do we think that the ques- impression. of first tional issue imper- provision at issue here Humphrey’s is whether to extend tion the President’s missibly burdens uphold the re- and Morrison to Executor supervise independent to control or Act—in in this other moval restrictions official, counsel, as an executive words, precedents those interpret her duties under the execution of his or just independent agencies permit not which the Act. This is not a case in for cause are removable whose heads power to remove an executive official in- ego, but also the President or his alter completely stripped has been from are re- dependent agencies whose heads President, no means providing thus indepen- only by cause other movable for exe- the President to ensure “faithful I would not so stretch agencies. dent Rather, cution” the laws. because and Morrison. Humphrey’s Executor may termi- counsel my inform conclusion. points Four Executive, cause,” “good nated for General, text,

First, through Attorney retains lengthy recitation of that the coun- understanding, history, prece ample to assure original following principle: competently performing to the sel is his or her dent above leads rep statutory and Morrison in a manner Humphrey’s responsibilities Executor up to now have been the out comports provisions resent what with the permissible constitutional limits of ermost Act. on the Presi congressional restrictions Morrison, 108 S.Ct. 2597 Therefore, given a power. dent’s removal added). (emphases drawing the line at the

choice between all but Humphrey’s language Executor and That from Morrison holdings au issue in this case. extending those cases to resolves the removal Morrison recognizing passage such as the No doubt this’ thorize novel structures submission, the that further attenuate the Presi from Morrison dooms its PCAOB officers, executive we Board tries to dismiss it as “dicta.” dent’s control over Br. at 43. I think not: This opt should for the former. We should PCAOB questions scope resolve about the of those discussion contains the Morrison Court’s why the inde- precedents light explanation of and the direction essential pendent constitutional counsel statute’s restriction on text and constitutional Bowsher, Hum- history. permissible at 724-26 removal was under See 3181; language If that from phrey’s n. Hein v. Free Executor. & cf. , —U.S. Found., —, meaning Morrison has the Court Religion dom Inc. —and 2553, 2571-72, re- clearly 168 L.Ed.2d 424 indicated that it would—it 127 S.Ct. (2007). ease, Here, principle quires In this that sensible invalidation PCAOB. Morrison, re- “power the line and not allow unlike in that we hold dictates com- removal move an executive official has been encroachments on President’s Humphrey’s pletely stripped Executor from the President.” power beyond what 692, 108 S.Ct. 2597. already permit. and Morrison 487 U.S. Third, Bowsher, 4, agency. reminded us that at 725 n. Justice Holmes U.S. Cf. (“Appellants S.Ct. 3181 have referred history is worth a volume page “a independent agency us to no Eisner, whose mem- Trust logic.” New York Co. by bers are Congress removable for 506, 65 L.Ed. 963 S.Ct. U.S. impeachable certain causes short of of- (1921). Perhaps telling the most indica- General.”).8 fenses, Comptroller as is the problem constitutional tion of the severe The lack of for precedent the PCAOB is the lack of historical with the PCAOB great by Judiciary counsels restraint ma- entity. for this Neither the precedent approving before additional this incursion nor jority opinion nor the PCAOB powers. on the President’s Article II as intervenor has located United States any analogues for this novel Fourth, historical upholding PCAOB here They any have not identified structure. green-light Congress would to create a other than independent agency Congress host of similar entities. could appointed by and remova- thereby splinter PCAOB executive to a de- only by gree previously permitted, for cause another not in serious ble laws); regard all the laws enacted since it is out to civil service see also Yoo, always possible that created an- Christopher Steven G. Calabresi & S. exercises other structure like the PCAOB that Unitary Perspec- Executive in Historical yet traditional executive functions and is two tive, Reg. (2005). & 31 Admin. L. News 5-6 away of for-cause removal from the levels Although the Board and the United States though President —even the research point as intervenor did not to them as a parties and the Court has not found such a precedent, judges administrative law haystack. Even an ex- needle in the if such independent agencies only are removable uncovered, ample "indepen- were this kind of agency cause at the initiation of the that em- agency appointed and removable for dent ploys approval them and with of the Merit only by independent agency” cause another Board, Systems Protection see 5 U.S.C. has been rare best. § whose members in turn are remova- parties acknowledge, any As the civil ser- President, only ble cause see id. employees indepen- tenure-protected vice 1202(d). good § But there are reasons the agencies precedent no for the dent constitute and the States did cite United not ALJs First, text PCAOB. consistent with the First, precedent. agency as a has the Clause, Appointments the Article II removal hearings, choice whether to use ALJs for see 5 precedents have focused on President's 556(b); Congress imposed § U.S.C. has not "employees,” over "officers”—not control Second, ALJs on the Executive Branch. typically who are "lesser functionaries” exer- many employees, ALJs are not officers. See Valeo, cising Buckley v. ministerial duties. FDIC, Landry v. 204 F.3d 1132-34 126 n. (ALJs (D.C.Cir.2000) employees in FDIC are any L.Ed.2d 659 And civil servants in they possess only recommendatory because independent agencies employees, offi- subject that are to de novo review cers, "significant they because do not exercise Third, agency). perform only adjudica- ALJs authority pursuant to the the United laws of tory review functions that are 612; Id. at In re States.” cf. officials, 557(b), § agency 5 U.S.C. Case, (“[C]ivil Sealed 838 F.2d at 497 servants arguably would not be considered "cen- thought policy- are not to be the President’s functioning of the Executive tral to the Morrison, makers.”), rev’dsub nom. purposes Branch” for of the Article II remov- 101 L.Ed.2d 569. Sec- 691-92, Morrison, precedents. al event, ond, any recognize civil service laws Nothing dissenting in this 108 S.Ct. 2597. authority agency of the President or head opinion is intended to or would affect pro- exempt employees tenure certain from See, employees independent agencies status necessary appropriate. tection as 2302(a)(2)(B), congressionally have mandated civil ser- §§ who e.g., 5 U.S.C. 7511(b)(2); protection express vice tenure or the status of admin- (giving id. 4802 SEC cf. judges. employees with- istrative law to hire officers and 700 MWAA, pre- when conception of a As demonstrated Article II’s

tension with can control his subor- President who for “the kind of single arguments sented with pow- of executive the exercise dinates and Leg- accommodation between the practical have license to create a would Congress er. islature and the Executive should ” bipartisan boards series of in a id. permitted government,’ ‘workable agencies and re- by independent appointed has strict- S.Ct. Court by indepen- cause such only for movable ly adhered to the constitutional text and an Price Imagine Energy agencies. dent Myers Humphrey’s the limitations of by appointed and re- Board Enforcement flatly forcefully no Executor and said FERC, an Inde- only for cause movable correspond- policy to novel inventions and appointed Board cency Enforcement II. ing structures that contravene Article FCC, only for cause and removable 2298; Bowsher, 276-77, See id. S.Ct. Regulatory appointed Mortgage 3181; Buckley 106 S.Ct. U.S. only for cause by and removable Valeo, 424 U.S. 96 S.Ct. under permissible Fed. All are (1976); 46 L.Ed.2d 659 see also Clin- But in such theory of the ease. PCAOB’s York, 417, 438, City New ton v. U.S. President, in system, is the whom where (1998); 141 L.Ed.2d 393 pow- vests the “executive the Constitution Chadha, 919, 945, 103 INS v. 462 U.S. er”? (1983); S.Ct. 77 L.Ed.2d 317 cf. past, In when faced with novel cre- 898, 922, Printz v. United sort, has ations of this (1997) 138 L.Ed.2d 914 slope slippery down the looked —and (striking Brady part sepa- down Act on ordinarily steps to take even a few refused it grounds ration of because effec- Stevens stated down the hill. As Justice tively transferred President’s law enforce- invalidating the structure for the Court responsibility ment officials to state “who Washington Airports Metropolitan implement program are left to without Authority’s Board of Review: statu- “[T]he (if meaningful Presidential control indeed today tory challenged provides a scheme possible meaningful Presidential control is expansion blueprint extensive appoint without and re- beyond its constitutional- legislative power move)”). here, should do the same lest We could, if this ly confined role.... give we rise to a new “Fifth Branch” of the valid, were use similar Board of Review Strauss, Federal Government. pres- As James Madison expedients.... Cf. Agencies Separa- Place in Government: observed, legislature ‘can ciently Branch, complicated under tion Powers and the Fourth greater facility, mask measures, the and indirect encroachments L.Rev. Colum. depart- the co-ordinate

which it makes on sum, Sarbanes-Oxley Act created warning legisla- his Heeding ments.’ entity an that is inconsistent with the text nature,’ encroaching an we ‘power tive is of II, history of Article that the Hum- conclude that the Board of Review is phrey’s Executor Court did not confront Metro. impermissible encroachment.” endorse, much express- less that Morrison Auth. v. Airports Wash. Citizens for ly rejects, apparently unprecedent- that is Noise, Inc., Abatement of Aircraft history, in our and that could well lead ed 115 L.Ed.2d on the (1991) to serious additional encroachments (quoting The FebeRalist No. 48). authority. President’s from the President. Id. at II.9 violates Article PCAOB provi- 2597. The double for-cause removal completely strips sion issue here D and, power President’s removal as Morri- Underlying my conclusion anticipated, poses greater son restriction is precedents violates removal PCAOB on the President’s constitutional for-cause removal that this double premise single provision. than a for-cause attenuates the President’s con- structure direction, From the other rather than typical than the trol over the more argue that the President’s well of execu- restricts single provision for-cause power already tive removal is drained independent agen- control over President’s single for-cause restriction allowed (whose are removable for cause cies heads (so Humphrey’s Executor and Morrison President). explained As directly by the two?), what’s the harm with some alterna- text, above, history, logic precedent, and tively might contend that the President’s premise demonstrate that this is correct. independent agency control over an ac- sure, argue that might To be some tually significantly not affected a for- II over President’s Article removal (so provision again, cause removal what’s already crip- so independent agencies is two?). majority the harm with opin- and Morri- pled by Humphrey’s Executor theory, ion seems to latch onto this further dis- son that this statute does no 679-80, that, Maj. Op. posits which not- any damage. problem cernible withstanding provi- two for-cause removal however, suggestion, is that the Su- such sions, the President can control the SEC the for-cause restric- preme upheld just and the PCAOB as well as the Presi- Humphrey’s at issue in Executor and tions control, example, can dent the Secre- precise assump- on the factual Morrison tary of Ambassador to State and U.S. they permit still the President tion Iraq. suggestion fully But that does not degree limited of control over execu- some statutes, account for the text of for-cause that a tive officers. The Court concluded Branch the realities of Executive decision- unduly single for-cause restriction did making, longstanding interpreta- and the with the President’s exercise of “interfere Congresses, understandings tions and power’ the ‘executive and his constitution- Presidents, regarding indepen- and courts ally appointed duty to ‘take care agencies. dent faithfully laws be executed’ under Article Morrison, at- The for-cause removal restrictions II.” independent agencies typically tached to Importantly, the Morrison Court prohibit except cases of ineffici- distinguished the situation there from a (like one) duty, or malfeasance. ency, neglect this where the case significant impact restrictions have “completely stripped” remove had been Those majority majority opinion argue at 724 n. S.Ct. 3181. The seems to 9. The actually independent the PCAOB is not an try argue opinion can that this agency. Maj. Op. See 684-85. constitutionally permissible agency is under traditionally term that But that is the precedents. Supreme Court's But its at- Court, applied been the Con tempt is not even an to claim that the PCAOB gress, agencies and the Executive Branch to long-accepted independent agency defies ter- heads are not remova like the PCAOB whose minology mean- and does not account for the See, e.g., at will. Lebron v. Nat’l R.R. ble ing removal restric- and effect of for-cause Passenger Corp., tions. Bowsher, (1995); 130 L.Ed.2d 902 702 (“The 133, in in practice. Freytag in and See at 96 S.Ct. 612 [Hum-

both law Revenue, phrey’s carefully emphasized v. Internal 501 U.S. Executor Comm’r 1 2631, 868, 916, agencies ... the members of such 111 S.Ct. 115 L.Ed.2d 764 (1991) (“in- (Scalia, J., independent concurring part) were to be of the Executive ”); day-to-day operations.... their Hum- agencies dependent regulatory such as the Executor, phrey’s 55 S.Ct. Federal and the Securi- Trade Commission any (independent agencies 869 “cannot Exchange “spe- ties and Commission” are proper sense be characterized as an arm cifically designed quality not to have the executive”). eye or an of the being subject ... the exercise political oversight sharing and the Presi- plain language, Consistent with the (inter- accountability people”) to the dent’s precedents, interpretation and common quotation nal marks alteration omit- Presidents, provisions, those for-cause ted); Mistretta v. United 488 U.S. Congresses, and in independent officials 109 102 L.Ed.2d 714 S.Ct. agencies work under the real-world under- (1989) (good-cause provisions “specifically standing “indepen- that the heads of the prevent crafted President from ex- agencies possess degree dent” some ercising indepen- ‘coercive influence’ over congressionally conferred substantive au- agencies”). Humphrey’s dent Executor tonomy (although from the President ex- demonstrate, example, and Wiener actly autonomy much always how is not “for requirements cause” removal forbid clear). understanding why That is Con- President lack dismissal due to of gress continues to include for-cause re- administrator, trust in the at 295 U.S. moval restrictions when it wants to create 625-26, policy differences in independent officer with some substan- outlook, id., or the mere desire to install autonomy yet tive it again did a few —as choosing, administrators President’s ago. Housing weeks See and Economic 357 U.S. 78 S.Ct. 1275. In Morri- 110-289, Recovery Act of Pub.L. No. son, given the Court therefore took it as a (2008) 122 (creating Stat. 2654 new “inde- degree that “the of control exercised pendent” regulator federal of Fannie Mae the Executive Branch over an appointed by and Freddie Mac clearly counsel is diminished relation to with advice consent of Senate and President). prosecutors, exercised over other such removable for cause Attorneys, as the short, United States who are the double for-cause removal re- appointed by the President justified theory striction cannot be termination at will.” n. 487 U.S. that for-cause removal restrictions have no 2597; Buckley, see also meaning real and effect.10 respected support problems, There is some academic tional the Court will construe the reading typical the text of the for-cause problems statute to avoid such unless such removal restrictions to be all but indistin- plainly contrary construction is intent to the guishable from removal at will. But that Congress.”); Kelley, Avoiding William K. conclusion is not obvious as matter of ordi- Questions Constitutional as a Three-Branch nary statutory interpretation, and it is not Problem, 86 Cornell L.Rev. If evident, therefore, approach that this would problem statutory there is a with the for-cause comfortably scope fall even within the removal restrictions on the President's remov- constitutional avoidance doctrine. See Ed- independent agency al of so-called heads— Corp. ward J. DeBartolo Florida Coast Gulf be, see, many may e.g., think there Steven Council, Bldg. & Constr. Trades Prakash, G. Calabresi & Saikrishna B. (1988) 99 L.Ed.2d 645 Laws, Power Execute the President's ("[WJhere acceptable an otherwise construc- (1994) problem Yale L.J. —the tion of a statute would raise serious constitu- S.Rep. text, companies.”); history, prec- Notwithstanding that No. (2002) (Act strong independent re- “a

edent, that for-cause creates logic show (“The board”); significant opera- have id. at 6 successful generally provisions moval arguing that effects, persists depends upon the Board tion of the Board its inde- ”). at issue restriction second for-cause .... removal pendence The for-cause remov- on the SEC’s restriction supplies here —the the basis for the tren- provision meaningfully al of the Board —does supporters chant of observation one Board mem- over restrict SEC’s legislation of this that the PCAOB has that Board mem- suggestion is bers. The power.” power, “massive unchecked from inferior officers no different Cong. bers are (statement of Sen. S6334 Rec. General Coun- the SEC in the SEC—like Gramm).11 by at will are removable sel—who argument dismissing The Board’s for removal But for-cause Commission. provi- impact of this second for-cause elsewhere) (as carries real provision here in this case particularly sion is far-fetched pos- It that the Board meaning. ensures statutory restriction on because inde- degree of substantive sesses some is far more removal of the Board SEC’s particular, from the SEC: pendence typical than the for-cause remov- stringent supervise and no direct SEC has designed al restriction. The Board investigations, and en- inspections, Board independent more from the SEC be even cannot actions. SEC forcement And critical activities performing when certain any follow failing Board remove the for than, SEC is example, direction attempted substantive permits President. statute from the The inspec- Board respect specific SEC with only when a Board member has removal deci- tions, investigations, enforcement law, “willfully has “willfully” broken the disputes. never point sions—a authority, or her or “without abused” his result, removal restric- the for-cause As justification or excuse” has reasonable establishes, just congressional as the tion “failed to enforce U.S.C. compliance.” intended, the PCAOB sponsors that 7217(d)(3)(A)-(C). This is more restric- independence guarantee of its “an extra than the traditional language tive removal with this authority to deal plenary and its inefficiency, neglect language Cong. for-cause situation.” important Rbc. provision duty, or malfeasance. This 2002) (state- S6327, (daily July S6331 ed. clearer the SEC’s sub- makes it even Sarbanes). The for-cause of Sen. ment disagreements with the Board’s stantive ensures, in other removal restriction in- specific inspections, regarding decisions words, as a operates the PCAOB actions do not vestigations, or enforcement id. at “strong independent board.” Cf. Sarbanes) (“Title point critical (statement justify removal for cause—a S6330 Sen. contests and the Board never strong independent I the bill creates a argument uphold- its public badly undermines auditors of board to oversee the design of the PCAOB as that the text's likely statutes contra- because the for-cause principles, protect- not because the independent agency vene constitutional heads are whose judicial political actors have mis- relevant ex- against except for cause was ed decades to interpreted the for seven statutes legislative reports actly consistent with the plain language their be more restrictive than statements, inter- contrary to the strained actually requires contemplates. Maj. majority opinion. pretation of the Cf. Op. at 680-85. legislative alter materials not to 11. I cite these text, interpretation but to demonstrate for-cause removal restric- III ing the double tion.12 Accounting Board also violates the Appointments Clause of Article II of the statutory language history Constitution. show, short, purpose that the effect and were to wall off the this statute PCAOB A control, comprehensive from SEC not to eye” make the “an arm or an PCAOB reiterate, To Appointments Clause Executor, Humphrey’s President; the SEC. 295 provides that Cf. U.S. at 55 S.Ct. 869. The Board’s nominate, shall and and with the counter-factual, argument counter-textual Senate, Advice Consent of the shall ignores reality the double for-cause of this Ambassadors, appoint other Min- public statutory scheme. Consuls, isters and Judges of the su- Court,

preme and all other Officers States, Appointments the United whose * * * for, are provided not herein otherwise sum, neither the President and which shall be established Law: ego United States nor a Presidential alter Congress may by but the Law vest the possesses any power Appointment Officers, to remove PCAOB of such inferior they think proper, the President members for cause or otherwise. The alone, Law, in the Courts of or in the unique apparently unprecedented dou- Departments. Heads of ble for-cause removal statute —an indepen- agency dent whose heads are removable Const, II, 2,§ U.S. art. cl. 2. only by cause another text, By plain its Appointments agency the boundaries set —overruns governs appointment Clause of all “Of- Supreme precedents Humphrey’s Court ficers of the United States.” The PCAOB respect

Executor and Morrison with dispute does not its members are congressional encroachment on Presiden- “officers” of the United rather than authority. tial removal I would hold it employees mere who are “lesser function- unconstitutional as a violation of Article II Valeo, Buckley aries.” 424 U.S. impermissibly because it restricts (1976). n. 96 S.Ct. 46 L.Ed.2d 659 President’s remove executive offi- This concession was sound: PCAOB mem- cers.13 bers have extraordinarily broad un- result, 12. The Board notes that this case involves a as a the doctrine of constitutional challenge. facial But that does not affect the help analyz- avoidance does not the Board in analysis; this is not the kind case where a ing the removal Corp., issue. See DeBartolo might applied constitutionally statute 108 S.Ct. 1392. some instances but not in others. See United Salerno, States v. 107 S.Ct. majority opinion claims that this dis- Here, (1987). L.Ed.2d either theory sent articulates a that the President structured, unconstitutionally the PCAOB is power.” Maj. Op. "must have at-will removal or it is not. The Board also invokes the Obviously at 684. that is an inaccurate read- doctrine of constitutional avoidance and ing dissenting opinion. Humphrey’s of this suggest interpreting seems to the statute so as permit Executor and Morrison certain for- provision to minimize if not eliminate the My argument cause removal statutes. on the restricting the SEC’s removal of the Board. provision removal issue is that the statute But the for-cause removal at issue here cannot statute; legitimately entirely be read out contravenes those two cases. the Presi- appointed by to, are not members of 2002 Sarbanes-Oxley Act der rules, ini- the advice consent dent with things, promulgate other among in- Senate, appointed are investigations and but instead and conduct tiate impose testimony, and compel SEC. spections, “signifi- exercise They plainly

sanctions. to the removal is- with respect Unlike laws of the to the authority pursuant cant sue, relatively few there are of- therefore States,” they United versus “principal precedents on in the man- appointed who must “be ficers Appointments officer issue inferior” Appointments by” the prescribed ner Case, In re purposes. See Sealed Clause 612; also Id. at Clause. (“Two (D.C.Cir.1988) 476, 481 838 F.2d Revenue, Internal Freytag v. Comm’r of adoption after the years hundred 2631, the federal United States Constitution L.Ed.2d time, are, first essentially for the courts provides II of Article plain text As the closely appoint- to construe required recog- long Supreme Court as the II.”), rev’d sub of Article clause ments of purposes “for nized, the Constitution 654, Olson, v. Morrison nom. its clearly divides all very appointment (1988); 2597, L.Ed.2d 569 108 101 States United two classes.” officers into Note, Congressional Restrictions see also 25 L.Ed. 482 Germaine, 99 U.S. Power Appointment on President’s the offi- (1879). executive important most The Longstanding Practice the Role of officers,” that a term “principal cers—the Interpretation, Constitutional Haev. depart- “heads of least includes (2007). The dearth of L.Rev. Presi- by the nomination require ments” — a matter explained easily as precedent is by the Senate. dent and confirmation Congress pro- history. When of text however, foresaw, ad- that Framers office specific to a appointment that vides “might be incon- process vice-and-consent appointment Presidential requires numerous, “offices became venient” when confirmation, versus “principal Senate necessary.” Id. sudden removals because is irrelevant question inferior” therefore Clause Appointments 510. The constitu- procedure is appointment that ap- for provide can Congress says principal for both tionally permissible by either of “inferior officers” pointment the heads example, officers. For inferior and Senate confir- nomination Presidential ap- all agencies alone, are “in the President mation or advice with the Depart- Law, by in the Heads of pointed Courts Const, Senate, not II, § so does cl. it art. ments.” and consent U.S. considered are officers whether the

matter B Moreover, in most or inferior. principal historically Congress where situations this issue in Clause Appointments of an executive appointment provided members PCAOB turns on whether case it Department, of a by the Head officer officers or “inferior” “principal” are inferior to was officer was clear and have been are understood those terms principal officer—because If decisions. Supreme explained from principal officer prevent the did not principal the PCAOB the members will. See officer at removing that inferior officers, then inferior rather than Hennen, U.S. parte Ex generally violation unconstitutional (1839). L.Ed. 138 259-60, 13 Pet. because Board Clause Appointments The Supreme recently Court most greater magnitude.” Id. at thoroughly analyzed most the distinction S.Ct. 1573. The Court succinctly stated principal between and inferior officers in the test for discerning the difference be- Edmond v. United tween the two: Inferior officers “are offi- 137 L.Ed.2d 917 cers whose work is super- directed and case, service challenged members vised at by some level others who were affirmance of their court-martial convic- appointed by Presidential nomination with tions the Coast Guard Court of Crimi- the advice and consent of the Senate.” Id. Appeals, nal an intermediate Executive added). (emphasis judicial Branch tribunal within Depart- Applying the “directed and supervised” ment Transportation. That Coast test to the Coast Guard Court of Criminal Guard Court decisions of reviewed courts- Appeals judges, the Edmond Court con martial, and its decisions were reviewed they cluded that were inferior officers. the U.S. Court of Appeals the Armed See id. at 117 S.Ct. 1573. The Court Forces. The service argued members described two ways different the Coast among things judges other that the judges Guard were super “directed and Coast Guard Court of Appeals Criminal First, vised.” the Coast Guard judges “principal were officers.” This created a were supervised” “directed and problem, contended, constitutional they be- (who Coast Judge Guard cause the Advocate General judges been appointed by had is ex officio the Secretary General Transportation, Counsel of Department the President with of Transportation) the advice and consent because of 655-56, they the Senate. See id. at were by JAG, S.Ct. at will removable the 1573. and “[t]he to remove ... officers is powerful a tool for control.” Id. at

In an opinion by Justice Scalia for eight (citing S.Ct. 1573 Bowsher v. Synar, Justices, the rejected 106 S.Ct. argument. Acknowledging that previous (1986); L.Ed.2d 583 Myers v. United cases had not “set an forth exclusive crite States, 272 U.S. 47 S.Ct. 71 L.Ed. rion for distinguishing between principal (1926)). noted, As the Court also the and inferior Appointments officers for prescribed JAG of procedure rules for the purposes,” Clause id. at 117 S.Ct. Second, court. the Coast Guard judges the Court stated that “the term ‘infe were supervised” “directed and by rior the officer’ a relationship connotes Appeals Court of the some for Armed higher ranking Forces officer or officers be because, by statute, judicial low the their President: decisions Whether one is an ‘in were by ferior’ officer to review depends on whether the Court he has a of superior” Appeals before other the than President who decisions took effect on was by nominated the President accused. The and con Coast judges Guard by 662, 117 firmed Id. at thus had Senate. “no to render a final deci 1573. But it enough” is identify “not sion on behalf of the United States unless other formally officers “who maintain a permitted to do so other Executive higher rank, possess or responsibilities 665, 117 of officers.” Id. at S.Ct. 1573.14 reveals, 14. As analysis Edmond of whether inquiry factual things into how work in differ- an supervised” officer is agencies “directed and de- ent superiors with different and sub- pends express language on the analysis the statutes ordinates. The thus does not turn on governing question. vagaries officer The Ed- particular supervisory rela- mond contemplate test does discovery tionships personalities or might or result in ordinari- officer department, head of

C purposes inferior may be considered ly case relatively easy was a Edmond And Con- Clause. Appointments super- and “directed apply which to appointment may provide in turn gress were removable The officers vised” test: the head alone by the President always will, removal and at-will through Pres- rather than department, con- tool for powerful been considered advice with Senate appointment idential And id. at trol. See and consent.15 adjudicato- intermediate involved case whose Branch in the Executive officers ry contrast, officer remov- an executive By high- by a subject to review were decisions designed ordinarily cause is only for able effect, taking body before adjudicatory er significant from to be free understood and more performed who officers not executive supervision and direction substantive as con- such functions executive typical Indeed, point the whole that’s superiors. taking enforcement investigations, ducting Humphrey’s See removal. of for-cause laws executing actions, and otherwise v. United Executor Congress. passed (1935); 79 L.Ed. 1611 (“[I]t one evident that quite id. at 629 apply is to in this case The task cf. plea- only during the test to his office supervised” who holds and “directed Edmond upon depended perform who another cannot be officers executive sure traditional functions, independence such executive maintain attitude quintessentially will”). inspec- investigations and Because conducting the latter’s against actions. tions, bringing enforcement for-cause effect of purpose measure some give the officer are to under- principles basic Edmond from direction independence substantive key initial that the II teach lying Article ordi- officers for-cause supervision, execu- whether an determining question supervised” “directed narily are not officer is whether is inferior tive officer Instead, they of Edmond. purposes at will Removability at will. is removable princi- considered should be presumptively to direct it the inherent carries with by the appointed must be who pal officers appoint- an officer is “Once supervise: and of and the advice consent President with remove authority that can ed, only the it is (as indepen- heads of are the the Senate appointed authority him, not PGAOB). other than agencies dent and, perform- him, must he fear Ed- therefore, applying to key, The Bowsher, functions, 478 obey.” ance his officer, executive a for-cause mond test to (quoting Synar U.S. therefore, that for-cause appreciate tois F.Supp. v. United generally inconsis- nature is by its removal Therefore, if executive (D.D.C.1986)). being “directed notion with the tent and is not at will removable officer is therefore, President; than the superior other supervision and actual degrees of different contrast, the By Rather, analysis principal officers. they are constitutional direction. the ex- up by statuto- officers remaining set removable-at-will on the structure focuses ultimately agencies ry departments text. ecutive President, but also only to the report not offi- executive removable-at-will 15. Whether in the Executive superior officers other depends on their principal or inferior cers Therefore, they of command. chain Branch organizational Branch place the Executive inferior officers. properly be considered may departments have no heads chart. The supervised” by a superior officer.16 will the JAG. The pointed Court also out that the intermediate adjudi- appellate sure, To be if a expressly statute pro- catory body at issue in Edmond could not vides that a for-cause officer could be re- decision; issue a instead, final all of its moved for disobeying any direction or or- decisions were pre- review and ders a superior, that officer would be approval by a superior court if requested subject to supervision direction and via the by the accused or the JAG. The Court power, removal much like at-will officers. therefore stated that the officers in ques- But the majority vast agency statutes tion had “no to render a final deci- specify do not that for-cause officers can sion on behalf the United States unless be removed for disagreement, such no permitted do so other Executive doubt point of allowing because remov- officers.” 520 117 S.Ct. 1573. only al for cause would not be clear in that Although Edmond adjudi- involved at-will situation. Elena Kagan, Presidential Cf catory officers, it logical to assume that Administration, HaRV. L.Rev. even executive officers per- who for-cause (2001) (“[A] for-cause provi- form traditional executive functions —in- sion buy would little indepen- substantive vestigations, actions, enforcement and the President, dence if the though unable to might like —still be considered “directed official, fire an or, could command if neces- supervised” if a superior other than sary, decision.”). supplant every his statutory President has authority to above, As noted in finding the Coast prevent and affirmatively command, and to judges Guard to be Ed- manage the ongoing officers, inferior of, conduct signifi- all mond did only refer the fact cant exercises of authority by executive the Coast judges Guard were removable at the officer.17 Presuming princi- for-cause officers to be to set forth a definitive test for whether an pal great officers makes sense when one con- office is Appointments 'inferior' under the purposes siders the Appointments Clause. contrary, To the explicitly it stated: Clause. Because for-cause officers are de- 'We attempt need not here exactly to decide signed relatively to be immune from direction where the line falls types between the two supervision, it important is all the more officers....'" 520 U.S. at at the front end to scrutiny ensure full Morrison, (quoting qualifications. officers' character and 2597). explain critical facts that combination of Presidential nomination and Morrison—and that also it make an unusual Senate confirmation is the constitutionally case on the inferior officer issue—are that the preferred way to goal. achieve that See Lau- office temporary was and the counsel’s duties rence H. 1 American Constitutional Tribe, Law jurisdiction and were considered limited. (3d § ed.2000); at 684 Freytag, see also temporary nature of the is the office same (“The 111 S.Ct. 2631 Fram- acting reason that departments heads of are understood, however, ers by limiting that the permitted authority to exercise without Sen- appointment power, they could ensure that ate Eaton, confirmation. See United States v. those who wielded it were accountable to 42 L.Ed. 767 political and the people.”). force will of the (1898) ("Because the subordinate officer is That, indeed, system is how the works for the charged performance duty independent (other agencies PCAOB) than superior for a limited time and under existence; now in appointed their heads are special conditions, temporary and he is not by the with the President advice and consent thereby superior transformed into and of the Senate. permanent official.”); Designation see also 17. The independent Acting counsel Dir. Mgmt. in Morrison Budget, was Op. & of Off. of Counsel at 3-4 considered inferior though Legal (2003). an officer even Off. Had the only removable for cause. independent But as the Court counsel pemanent been a office in Edmond stated: purport “Monison did not investigation prosecution for and of crimes and investigations, inspections, portantly, only for Therefore, removable an officer actions. enforcement and su- “directed ordinarily not cause is Edmond, at least purposes pervised” it bears mention regard, again In that provides (1) expressly the statute unless this statute —as point of the whole that failing removed can be the officer that statutory text and histo evidenced and su- direction supervisor’s a to follow Accounting Board an to create ry—was (2) pro- expressly the statute pervision, and not part of the SEC be that would not than the other officer superior vides supervision direction and subject to and prevent inspec to Board respect the SEC with command, manage the and affirmatively act enforcement tions, investigations, and exer- of, all of the officer’s conduct ongoing Rather, the text Sarbanes- ions.18 authority against executive cises of legislative the deliberate Oxley Act reflects investigations conducting (such as public entity pro an choice to create actions). enforcement taking and in from SEC removal by for-cause tected re statutory text As the terference. D shows, did not want peatedly to this analysis the Edmond Applying subservi to have “here-and-now PCAOB offi- principal are case, members PCAOB Bowsher, 478 U.S. at to the SEC. ence” cers. 5, 106 727 n. with, judges at issue unlike begin To re- Edmond, members are PCAOB E remove SEC can will. The movable only for cause. members

PCAOB cites a scatter- nonetheless The Board that, suggests, it show shot of authorities the condi- satisfy does statute Nor super- and Board is “directed can for-cause officer which a under tions mem- that Board and by the SEC vised” for- inferior. statute’s qualify still But inferior officers. therefore bers allow the does not provision cause removal unavailing. The are all arguments those for fail- members remove PCAOB SEC to authorities cited None of the key is this: supervi- direction SEC ure to follow affir- prevent power to gives the SEC provide does not the statute sion. And on- command, manage the and to matively can affirmative- prevent SEC inves- of, inspections, going conduct ongoing con- command, manage the ly actions. enforcement tigations, im- functions-—-most of, all PCAOB duct overwhelmingly a bill voted for officers, 18. The House the stat- and had high-level executive Oxley would by Representative re- sponsored for-cause same ute included accounting oversight enti- striction, counsel that the evident it seems have authorized Cong. Morrison been 107th have considered See H.R. ty would within SEC. ap- requiring principal officer passed to be 2(b) Senator But the Senate advice by the with pointment bill, provided for proposed which Sarbanes’s event, any for of the Senate. and consent oversight protect- board of a new creation later deci- temporary, are not offices by of for- means interference ed from SEC Morrison, Edmond, controls not sion in 2673, 107th S. provisions. See cause removal analysis: Appointments Clause inferior-officer Com- Conference Cong. § Morrison, Edmond, pur- expressly did unlike por- effectively preserved the relevant mittee test for inferior port forth definitive to set H.R.Rep. No. See bill. Senate tions of the such governing future cases status officer (2002) (Conf.Rep.). 24at this one. First, the Board contends that after-the- exercising, over, taking or limiting the fact review of Board sanctions the SEC Board’s responsibilities does not amount to suffices to show that the SEC directs and directing and supervising the PCAOB. supervises the Board with respect to its For example, Congress can juris- alter the inspections, investigations, and enforce- diction of particular courts, federal but ment actions. That makes little sense. that does not judges make inferior to Con- One would say, not for example, that a gress, or “directed supervised” and U.S. Attorney is directed supervised and Congress. Congress may switch regulato- by a federal district court in his or her ry authority from one agency another, to investigative just decisions because a court but that does not make the initial agency ultimately would have an opportunity to “directed supervised” and by Congress. any review indictment or subpoena chal- Again, point the critical is this: The SEC’s lenge. So too here. judicial After-the-fact power theoretical to alter ju- the Board’s quasi-judicial review of enforcement de- risdiction equate does not power to pre- to following cisions investigation an does not vent and affirmatively command, and to remotely equate to direction supervi- manage ongoing of, conduct in- Board sion purposes of Edmond. spections, Board investigations, and Board Second, the argues Board that the SEC enforcement actions.19 has power to review Board rules before they take effect. That is true —and if the Fourth finally, the Board seems to statutory Board’s sole power were rule- argue only in one oblique single- —albeit making, then it might be reasonable to sentence footnote—that the actually SEC conclude that the Board was “directed and has statutory authority to issue rules supervised” purposes of Edmond. But which the SEC could give power itself to problem argument this is that the direct and supervise all Board inspections, power Board also has to inspec- conduct investigations, and enforcement actions. tions, investigations, and enforcement ac- See PCAOB Br. at n. 3. There is a tions without SEC direction and supervi- reason this bootstrapping argument ap- sion. Being supervised directed and pears in the only Board’s brief in a single- only one slice of portfolio an officer’s does sentence footnote. It is incorrect. The not render the officer inferior if the officer statute give does the SEC that kind of is not directed supervised in other authority; indeed, such authority significant all would To qualify activities. as inferi- but or, destroy the independence officer must be statutorily subject statutory direction text supervision and that significant all mandates activities. sought to ensure the possess. Board would Section 7211 states oper- Board

Third, points Board out that ates “subject to action SEC, the Commission circumstances, certain can exer- under section 7217.” cise, over, 7211(c); § U.S.C. take or limit some investigative 7211(f). § also enforcement Section responsibilities turn assigned gives the Board if power the SEC SEC to do review only chooses so (after hearings). on-the-record rules they See 15 before take effect. But § 7217 7217(d)(l)-(2). U.S.C. But the SEC’s give does not SEC to direct or 19. The SEC release, also has the to "censure” and thus is not relevant "di- 7217(d)(2). § the Board. But this has no supervised” rected and question. more impact substantive than a press critical

7H and to direct su- power giving itself investiga- rules inspections,20 Board supervise investigations, inspections, Board pervise addi- In actions. tions,21 and enforcement Finally, the actions.22 and enforcement may that the SEC tion, provides § 7202 Board rules to amend related SEC’s necessary or may be rules “as promulgate of grant a constitute backdoor does not or for interest public appropriate supervi- and to exercise direction authority investors, in further- and of protection the investigations, inspections, Board sion over 7202(a). phrase § Act.” of this ance actions.23 and enforcement means, of this Act” of furtherance “in together to short, further Board cobbles have the course, rules In SEC that justify to statutory no- the Act text disparate pieces Act. But the aspect of some over the control to direct the SEC’s authority that its mantra SEC the gives where pervasive” and investiga- “comprehensive Board is inspections, Board supervise and are therefore members Board §So and that actions. tions, and enforcement cannot But the Board officers. inferior provi- bootstrapping aas be read cannot complete- that key questions three answer authority issue to the SEC grants that sion Moreover, give Act not the does vestigations. inspections at conduct must PCAOB 20. The ongoing manage authority to the years the (or every SEC three year once a once least investigations. of Board firms), requirement conduct frequency a for smaller approv- SEC by rule with alter Board can the has no 7214(b)(l)-(2). the SEC general But § must issue See the Board al. fact that 22. The and affirmative- authority prevent that such statutory investigations, to and governing rules inspection SEC, anof the initiation approval of the ly command subject to the rules are even Id. And given time. at a given authority prevent firm a to SEC give the does not statutory no command, the SEC has importantly, manage to more affirmatively ongoing manage the PCAOB's authority to investigations. There ongoing conduct firms. particular inspections of (i) approving conduct between distinction ais critical emphasizes contrary, statute (ii) On the pre- investigations and general rules for of in- "[c]onduct discretion Board’s commanding, and man- affirmatively venting, Similarly, fact 7214(d). § spections." any particular ongoing conduct aging the inspection re- an produces the PCAOB power is essential The latter investigation. and to state to SEC port that submitted is supervision. for direction true SEC mean the does not regulatory authorities authorities, for (or regulatory the state problem reliance separate is a 23. There manage the authority matter) statutory has at all clear not § 7217. It is § 7202 and on inspections. of Board ongoing conduct bootstrapping statutory grant of a whether agency to issue agency for authority to an investiga- Board majority asserts 21. The power over supervisory itself granting rules approval,” "subject to Commission tions officer, statuto- a direct opposed to another report inspection [an] the extent least "to authority, suf- supervisory grant of such ry investiga- subsequent the basis forms supervision direction to constitute fices majority's Op. at 675. But Maj. tion.” it Even if test. the Edmond purposes because its assertion undermines qualification suffice, Edmond that the doubtful is it could to under- discretion has absolute Board satisfied unless test would inferior-officer whether an regardless of investigations take and took issued rules were such and until content, any particular report inspection such rules as (the no has issued SEC effect See report exists. whether such even event, not ad- PCAOB). I any need specifies that 7215(b)(1). statute this case questions theoretical dress those in- to "conduct Board retains give Sarbanes-Oxley Act does because regard- practice ... any act or vestigation of issue rules statutory SEC act, practice, or omission less of how supervision authori- direction giving itself Id. Board.” brought the attention investigations, and inspections, ty Board over authority to not have thus does The SEC actions. enforcement in- affirmatively command prevent and 712

ly undermine its mantra: How say can we IV that the Board is directed and supervised Momson, In Supreme Court not by the given SEC that the Board has only considered the appointment and re- plenary statutory authority to conduct its moval issues separately, but also asked most critical inspections, inves- functions — whether the combination of the appoint- tigations, and enforcement actions —-with- ment and removal mechanisms “taken as a out any opportunity for to pre- SEC whole” violated “the principle of separation vent and affirmatively command, and to of powers by unduly interfering with manage the ongoing of, conduct those ac- role of the Executive Branch.” U.S. 487 tivities? are What the purpose and effect 101 L.Ed.2d 569 of stringent statutory for-cause remov- (1988).25 The Court thus seemed to con- al provision if the Board is simply a subor- (albeit template a scenario somewhat diffi- dinate of the SEC subject to the SEC’s cult to imagine) whereby a statute com- “comprehensive pervasive” control? plied with Article II removal principles why And should we accept the Board’s and with the Appointments Clause, but characterization of part itself as of the nonetheless violated the sep- constitutional when, SEC as both statutory text and aration of powers of because restrictions history reveal, Congress specifically con- on the appointment President’s and remov- sidered —and rejected proposals to make powers. al In case, course, this — of I need part SEC and not address that possibility because I find expressly decided to create the Board as a constitutional problem on both ap- an independent entity? pointment and removal issues.26 sum, the PCAOB structure violates In considering the combination of the the Appointments Clause Article II.24 appointment and removal problems posed 24.Because I would hold that the Act Examiner, Op. violates a 37 Att'y Gen. Chief Appointments Clause, I need not address plaintiffs’ argument alternative that SEC Although the independent heads of agencies appoint cannot inferior officers in the SEC are principal officers and depart- heads of because it is not "Department” and its five purposes ments for Appointments collectively Commissioners are not its “Head" Clause, it (lest pointing worth out there be Appointments purposes. Clause On those any future misunderstanding) they that issues, however, two generally agree I principal not purposes officers for of the 25th the majority opinion plaintiffs' submis- Amendment. The 25th Amendment refers sion is inconsistent with current majority of the “principal precedents. officers of the On the former issue of departments” executive may who what vote on a departments, entities constitute Freytag President’s incapacity; nominally open left formulation was whether SEC is a not department; intended to and does not but as include the explained Justice Scalia heads persuasive so-called independent his agencies. concurrence four Jus- tices, it would not make much sense to hold 25. The Court cited Nixon v. Adm’r Gen. agencies are depart- Servs., U.S. ments long so Humphrey’s good Executor is (1977), L.Ed.2d 867 law. as the Freytag, See basis for conduct- ing (Scalia, J., this “taken as a analysis. whole” concurring part). See On the Morrison, latter issue of who is a head of a department, S.Ct. 2597. both Nixon text was a case longstanding about privilege, Executive executive Branch interpretation not the appointment confirm President’s head of a de- partment powers. can multiple consist persons. See The Separation Constitutional Powers Between the Congress, President and Op. I do not read Morrison contemplate Legal Off. (1996); Counsel 151-53 Au- converse—that a statute that violates the re- thority Civil Service Appoint Commission To precedents moval or the Appointments Clause (1935) independent that (noting L.Ed. 1611 PCAOB, only point: one I add by the the of President accountability perspective, would be agency an From ”). than the sum is statute worse in its selection “except of this whole President the neither parts because appoint- problem Act is a on the This ap- in the any has role ego alter nor his And on the removal front. ment front and or Board members pointment whole, ex- unprecedented this taken as a Printz v. members. removal of Board Cf. a violation stew is clear tra-constitutional 922-23, States, 521 U.S. United text, understanding, original of Article II’s (1997). Each L.Ed.2d 914 Supreme prece- history, and of other, as Profes- the compounds problem dents. when de- suggested perceptively sor Tribe accountability issue II the Article scribing V par- the “[I]n of structure: this kind officer an inferior which ticular situation important about this points Three final are them- by persons who appointed comment. case warrant ongo- ... accountable politically selves First, repre- Department the Justice accountable by politically ing supervision intervenor States as senting United official, by the President whether constitutionality of this has defended the plea- the President’s serving at someone sure, has the defense To be statute.27 In sure, important. particularly seems tentative; argument, at oral rather been circumstances, is little or there where such refused to from DOJ superb counsel the front end accountability at political no PCAOB the structure of the say that officer, a ‘for cause’ the choice of sit- any analogous permissible would political limitation on removal renders uation, that the Execu- implying strongly troubling appears impossible supervision good for is a ticket position tive Branch’s accountability perspective.” from Lau- event, only. any day this this train and Tribe, 1 AMERICAN H. Constitutional Rence Branch has defended Executive (3d ed.2000); see also 4-8, at 684 Law II.28This Article as consistent with statute Humphrey’s Executor United consideration. respectful 79 is reason hand, objection offered no other Lincoln under some be allowed could nonetheless limiting prin- legislation Congress enacted overriding separation of when kind of sense, Comptroller and the make ciple. would little to remove That Lincoln's Buckley and in cases such as Currency....”). decisions "taken no such suggest that there is Bowsher that could excuse override as a whole” argued States as intervenor 28. The United principles or of Article II removal violation of Presidential is better from a that the PCAOB Clause. Appointments self-regu- private perspective than control previous- accounting organizations that latory pre- Branch History tells us that Executive industry. accounting regulate the ly existed to instances, have, taken a rogatives some argument of consti- as a matter This is an odd more imme- President's other backseat The fact tutional law. political priorities. legislative, or policy, diate organi- private over a control would have less Yoo, Christopher S. Calabresi & See Steven G. entity Branch an Executive zation than over During the Second Unitary Executive certainly It and irrelevant. is both obvious Half-Century, 26 Harv. J.L. & Pol’y Pub. Article II’s compliance with does not excuse (2003) ("Lincoln’s parti- vigorous 734-36 appointment regarding principles Presidential power ... indicates san use See executive officers. and removal of of the execu- the unitariness his firm belief in Between Separation Powers Constitutional con- importance presidential tive and the Legal Op. Congress, Off. President and On throughout the executive branch. trol request But Court has stated Commissioner’s this Court de before, when this has arisen the fer to the situation Executive Branch’s decision that Judiciary cannot defer to the Executive there has been no legislative encroachment justiciable affecting Branch in cases indi on Presidential prerogatives.... The rights simply principles Ap vidual because the Executive structural embodied in the pre pointments Branch does not assert its Article II speak only, Clause do not or reason, rogatives. primary primarily, as the even of prerogatives Executive time, explained time after simply they Court has is because are located in Article separation powers protects that the of not II.... protected The structural interests officeholders, simply the office and the but the Appointments Clause are not those rights. Kennedy any also individual As Justice of one branch of Government but of stated, “Liberty always Republic.” has is stake the entire Freytag v. Comm’r Revenue, 868, 879-80, when one or more of the branches seek to Internal 501 U.S. of transgress separation 2631, 115 powers.” of 111 S.Ct. L.Ed.2d 764 So York, 417, City Clinton v. New 524 U.S. too here. of (1998) 450, 2091, S.Ct. L.Ed.2d 393 Second, in the wake accounting of scan J., (Kennedy, concurring); see also Metro. dals, Congress enacted the Sarbanes-Ox- Airports Wash. Auth. v. Citizens for ley Act and created the PCAOB to serve Noise, Inc., Abatement of Aircraft important policy goals. Courts must re 252, 272, 2298, 115 L.Ed.2d spect Congress’s policy objectives. But as (1991) (“The purpose ultimate of this the Supreme repeatedly separation powers protect of is to the lib stressed, importance policy of a does erty security governed.”); Mis Judiciary ignore license the to or v. tretta United 488 U.S. weaken constitutional arising limits out of (1989) 109 S.Ct. 102 L.Ed.2d 714 (sep separation powers. “[P]olicy of argu powers pres aration of is “essential to the ments supporting ‘political even useful in liberty”); ervation of Synar, Bowsher v. ventions’ are to the demands of the 714, 721-22, 730, 478 U.S. and, Constitution which powers defines (1986) (separation pow L.Ed.2d 583 of respect subject, just this sets out liberty”); ers is “critical preserving INS powers how those are to be exercised.” Chadha, v. 462 U.S. 963 n. 103 S.Ct. Chadha, 103 S.Ct. 2764. (1983) (Powell, J., 77 L.Ed.2d 317 assuming statutory Even that the scheme concurring judgment) (discussing con structuring the PCAOB is an effective cern “Congress exercising is un regulate means accounting industry, judicial checked expense at the of given efficient, “that a law procedure individual stating liberties” and it was convenient, and useful in facilitating func “precisely prevent arbitrary such action alone, of government, standing tions will adopted the Framers the doctrine of not it if contrary save it is to the Constitu separation powers”). of 944, 103 tion.” Id. at S.Ct. 2764. Over the point captured years, was well Justice Court thus has struck Blackmun in opinion his for the Court in down as inconsistent with the constitution Freytag: conclusion, “In reaching this al separation original we meth note persuaded by that we are not appointing od of the Federal Election (1996) (Congress ....’’) may corporate Counsel 148 n. 70 (quoting to the form Lebron obligations’

not “evade Passenger the 'solemn Corp., Nat’l R.R. (1995)). separation powers by resorting doctrine of 130 L.Ed.2d 902 Mae and Freddie Mac veto, lator of provi- Fannie Commission, legislative President with advice appointed congressional sion for and removable for cause General, consent of Senate the structure Comptroller President). Alternatively, Author- Airports Washington Metropolitan Review, problem by making and the Line-Item fix the could ity’s Board at least truly part which subordinate Act—several of were PCAOB a Veto terms of by giving the PCAOB in ex- important example, as SEC SEC—for fearing Congress, objectives. supervise all policy their to direct and press meltdown, may have accounting another and to fire Board members Board actions creating structure, reason” good “had In the Board at will. such rational, fears, PCAOB, however but “such any other would not from inferior differ warrant a distortion meantime, themselves do in the SEC. officers Valeo, Buckley Framers’ work.” Board’s structure vio- my judgment, L.Ed.2d of the United States. lates Constitution reiterate, Third, the PCAOB structured, judicial holding and a

uniquely I would hold that the PCAOB’s struc- limited to uniquely invalidating it would be unconstitutionally the Presi- ture restricts easily And could the PCAOB. powers. I appointment and removal dent’s example, by, for constitutional flaws fix the respectfully dissent. Presi- subject to members making PCAOB the advice appointment dential re- and therefore Senate

consent Housing the President.

movable Cf. Recovery Act and Economic (2008) 110-289, 122 Stat. 2654 No.

Pub.L. regu- “independent” federal

(creating new

Case Details

Case Name: Free Enterprise Fund v. Public Co. Accounting Oversight Board

Court Name: Court of Appeals for the D.C. Circuit

Date Published: Aug 22, 2008

Citation: 537 F.3d 667

Docket Number: 07-5127

Court Abbreviation: D.C. Cir.