Federal administrative agencies: removal power, appointments, delegation, judicial review of statutes, and agency adjudication

Black-letter propositions

1. 01

   Article II vests the executive power in the President, who generally may supervise and remove those who exercise executive power on his behalf, and Congress may limit that power only in narrow circumstances.

2. 02

   Congress may give for-cause removal protection to a multimember body of experts who are balanced along partisan lines, appointed to staggered terms, and perform only quasi-legislative and quasi-judicial functions without executive power, as in Humphrey's Executor.

3. 03

   Congress may give for-cause removal protection to an inferior officer with limited duties and no policymaking or administrative authority, as with the independent counsel in Morrison v. Olson.

4. 04

   An independent agency led by a single director with significant executive power, removable only for inefficiency, neglect, or malfeasance, violates the separation of powers.

5. 05

   Dual for-cause limits, under which a board's members can be removed only for good cause by commissioners who themselves can be removed only for good cause by the President, contravene the separation of powers, and the remedy is to make the board members removable at will by the commission.

6. 06

   Congress may vest the appointment of inferior officers in the President alone, in the courts of law, or in the heads of departments, and Congress may vest the appointment of an independent counsel in a special court without violating the Appointments Clause.

7. 07

   Congress may delegate power to an agency or commission if it lays down an intelligible principle to which the delegate must conform, and the Court has upheld broad delegations because Congress cannot do its job without the ability to delegate under general directives.

8. 08

   Under the Administrative Procedure Act courts must exercise independent judgment in deciding whether an agency acted within its statutory authority and may not defer to an agency's interpretation of a statute just because it is ambiguous, and Chevron is overruled.

9. 09

   When the SEC seeks civil penalties for securities fraud, the Seventh Amendment gives the defendant a jury trial, because the antifraud provisions replicate common-law fraud and the public rights exception does not apply.

10. 10

    A challenge to the structure of an agency is a constitutional claim outside the agency's expertise, so a federal district court can hear it even though a statute provides for review of agency orders in a court of appeals.

Use this attack sequence under time

Common wrong turns

• Humphrey's Executor does not extend to a single director with significant executive authority.
• Two layers of for-cause removal protection are invalid for a board whose members exercise executive power.
• The intelligible-principle test is very forgiving, and courts rarely strike a delegation.
• Courts no longer defer to an agency because a statute is ambiguous, although the agency's view may still be persuasive.

Worked example

Congress creates a consumer agency led by a single director who serves a five-year term, can be removed only for inefficiency, neglect, or malfeasance, and has power to seek large civil penalties in federal court.

Practice this topic

Removal and appointment

Humphrey's Executor v. United States held that when Congress provides for officers whose functions, like those of the Federal Trade Commissioners, are of legislative and judicial quality, and limits the grounds of removal, the President has no constitutional power to remove them for reasons other than those specified. Seila Law LLC v. CFPB described the two exceptions to the President's unrestricted removal power as Humphrey's Executor for a multimember body of experts balanced along partisan lines, appointed to staggered terms, and performing only quasi-legislative and quasi-judicial functions, and Morrison v. Olson for an inferior officer with limited duties and no policymaking or administrative authority.

Seila Law held that the leadership of the CFPB by a single individual removable only for inefficiency, neglect, or malfeasance violates the separation of powers. Free Enterprise Fund v. PCAOB held that the dual for-cause limitations on the removal of Board members contravene the separation of powers, and that because the Board's members were inferior officers whose appointment Congress could vest in the head of a department, the Appointments Clause was satisfied once the good-cause limits were void. Morrison v. Olson held that it does not violate the Appointments Clause for Congress to vest the appointment of independent counsel in a special court and that the independent counsel was an inferior officer.

Delegation and deference

Mistretta v. United States upheld the Sentencing Guidelines because Congress did not delegate excessive legislative power to the Sentencing Commission, applying the intelligible-principle test under which Congress lays down an intelligible principle to which the body authorized to exercise the delegated authority must conform.

Loper Bright Enterprises v. Raimondo held that the Administrative Procedure Act requires courts to exercise their independent judgment in deciding whether an agency has acted within its statutory authority, that courts may not defer to an agency interpretation of the law simply because a statute is ambiguous, and that Chevron is overruled.

Agency adjudication

SEC v. Jarkesy held that when the SEC seeks civil penalties against a defendant for securities fraud, the Seventh Amendment entitles the defendant to a jury trial, because the antifraud provisions replicate common-law fraud and the public rights exception to Article III does not apply.

Free Enterprise Fund also held that the district court had jurisdiction over the structural constitutional claims, because the statute providing review of Commission orders in a court of appeals did not expressly or implicitly limit district court jurisdiction and the claims were collateral to any Commission order and outside the agency's expertise.

Frequently asked questions