Academic journal article Harvard Law Review

Independence, Congressional Weakness, and the Importance of Appointment: The Impact of Combining Budgetary Autonomy with Removal Protection

Academic journal article Harvard Law Review

Independence, Congressional Weakness, and the Importance of Appointment: The Impact of Combining Budgetary Autonomy with Removal Protection

Article excerpt

The influence of appropriations on independent agencies has long been overshadowed by the traditional focus on the consequences of removal restrictions.(1) The very definition of an independent agency is an agency with a head or board that the President can remove only for cause.(2) Constitutional and normative evaluations have also focused on the impact of limiting removal.(3) Similarly, the Supreme Court's analysis of independent agencies has focused on the constitutionality of removal restrictions.

However, this focus on removal has obscured other means of control. Indeed, some judges and scholars have recognized that removal restrictions do not render independent agencies completely independent. Rather, they argue that removal restrictions replace presidential control with increased, or at least continued, congressional control, (5) or that presidential control continues, despite removal protection, through other channels.(6) These propositions tend to be stated as self-evident conclusions, with the role of the budget in controlling independent agencies described briefly as one of many factors.(7) A separate vein of scholarship has examined how the budget controls agencies, including independent agencies.(8) While this scholarship provides a foundation for understanding the mechanics of budgetary influence, (9) thus far neglected are the effects of self-funding on independent agencies.

A complete exemption from appropriations is rare; Professor Steven Ramirez claims that "the Fed is the only regulatory agency that is totally self-funded."(11) An independent survey found several other exempt agencies, but it is a short list composed of narrowly focused agencies, including many agencies that only regulate financial institutions or make technical financial decisions. (12) These exempt agencies tend to operate in technical sectors where political insulation is generally considered appropriate, (13) and it is likely that the paucity of, as well as lack of concern over the independence of, narrowly focused agencies contributes to the lack of scholarship on combining removal protection with self-funding.

Now, however, the creation of the Consumer Financial Protection Bureau (CFPB) necessitates a deeper inquiry into the consequences of exempting an independent agency from control through appropriations. Created by the Dodd-Frank Wall Street Reform and Consumer Protection Act (14)(Dodd-Frank Act), the CFPB possesses the rare structure of an independent agency with financial independence. (15) The impact of CFPB's self-funding is important because of the agency's potential power. (16) Understanding the possible effects of combining removal protection with self-funding is necessary to explore the impact of budgetary control and the key consequences should this model be used for future agencies.

Looking at the influence of appropriations and other means of control shows that independent agencies, although somewhat insulated from presidential pressure through removal restrictions, remain accountable to the political branches, especially Congress, through appropriations. However, when the traditional independent agency model is combined with self-funding, as was done with the CFPB, control is substantially diminished, especially because of reduced congressional power. Thus, appointment becomes the primary means of control. The heightened importance of appointment is likely to create gridlock and confirmation fights unless the agency rests upon a strong political consensus.

Part f explains how independent agencies remain subject to congressional and presidential control because of the appropriations process and uses the Securities and Exchange Commission (SEC) as a case study. Part II examines the weakness of substitutes for budgetary control--when an independent agency also has financial independence, it is subject to much less congressional control and to only moderate presidential control, largely through appointments, as illustrated by the Federal Reserve (Fed). …

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