Deconstructing Independent Agencies (and Executive Agencies)

Abstract

Volumes have been written — both by courts and commentators — about the so-called independent agencies. These agencies are thought of as distinct from executive branch agencies and constitutionally insulated from presidential influence. Yet few have taken the time to ask even the most basic question: What features make an agency “independent” as opposed to “executive?” This Article is the first to systematically survey the administrative agencies for a broad set of indicia of independence — removal protection, multi-member structure, partisan balance requirements, budget and congressional communication authority, litigation authority, and adjudication authority — to answer that question. It also examines the functional differences between independent and executive agencies. As it turns out, there is no single feature, structural or functional, that every agency commonly thought of as independent shares, not even the for-cause removal provision commonly associated with independence. We therefore reject the binary distinction between independent and executive agencies. Instead all agencies should be regarded as executive and seen as falling on a spectrum from more independent to less independent.

From this new understanding of administrative agencies flows a new and simpler theory of presidential control of agencies: A President can take an action with respect to an agency (assuming it is within his Article II powers) unless Congress has prohibited that action by statute. There is no tenable argument to justify any additional constitutional barrier to presidential interaction with agencies, and the dicta in Humphrey’s Executor suggesting otherwise is incorrect and should be abandoned. Most importantly, we believe there is no statutory or constitutional barrier to the extension of the regulatory review executive orders to all administrative agencies. These executive orders have long exempted “independent agencies." As a result those agencies perform shoddy cost-benefit analysis when promulgating regulations, when they do so at all. The Dodd-Frank reform bill requires financial agencies, almost all of which are considered independent, to promulgate over 300 regulations. This upcoming flood of regulations underscores what has been obvious for decades that independent agencies impose massive regulatory costs, just like executive agencies. This Article aims to make it clear there is no legal barrier to the extension of the regulatory review executive orders in the hopes of emboldening a future President to overcome the political barriers to doing so.

Keywords: administrative law, independent agencies, executive agencies, executive power, agency regulations, regulatory costs

JEL Classification: H1, K00, K2, K23