In an earlier blog post, Francesca Oliveira discussed the points made in the article she co-authored with Alex Joel on the redress problem which has been a major sticking point in efforts to preserve transatlantic data flows in the wake of the Schrems II ruling. As explained in the article, the Court of Justice of the European Union (CJEU) focused on whether the redress mechanism established in Privacy Shield was sufficiently independent and had the ability to issue binding rulings. In pursuing the independence prong, the article referred to the recent Supreme Court ruling in Seila Law v. Consumer Finance Protection Bureau, which held that, with two exceptions, it was not consistent with the Constitution for Congress to protect senior Executive Branch officials from being removed by the President. One of those exceptions applies to “expert agencies led by a group of principal officers removable by the President only for good cause.” This principle was first established by the Supreme Court in Humphrey’s Executor v. United States, a case from 1935 that found it was constitutional for Congress to make the Federal Trade Commission independent. Although the FTC is not involved in national security oversight, it plays a prominent enforcement role with respect to privacy requirements in the United States, and it may be instructive to take a closer look at how the FTC was structured to achieve independence within constitutional parameters.
In Humphrey’s Executor, the Supreme Court found that whether it was constitutional to limit executive influence over an agency official, either by imposing term limits or bestowing immunity from removal, depends on the character of the office. The Court determined the FTC to have qualities that meant it could not “in any proper sense be characterized as an arm or an eye of the executive”; it was a multi-member commission; it was composed of an apolitical, non-partisan, body of experts; and it performed a quasi-legislative or quasi-judicial function. It is not clear whether the Court today would rely on an analysis premised on the exercise of “quasi-judicial” or “quasi-legislative” functions. What is clear is that in Seila Law, the Court continued to recognize the ability to establish the independence of “multimember expert agencies that do not wield substantial executive power.”
As set forth in the FTC’s governing statute, the Commission is composed of five members who each serve seven-year terms, which are staggered to avoid multiple appointments within a single year. No more than three members can be of the same party, and members are restricted from engaging in any other business, vocation, or employment. A Commissioner may be removed by the President for “inefficiency, neglect of duty, or malfeasance in office.”
As the Court stated in Humprhey’s Executor, “[T]he language of the act, [and] the legislative reports… demonstrate the congressional intent to create a body of experts who shall gain experience by length of service; a body which shall be independent of the executive authority, except in its selection, and free to exercise its judgment without the leave or hindrance of any other official or any department of the government.”The Court pointed out that the FTC’s mission was “to carry into effect legislative policies embodied in the statute in accordance with the legislative standard therein prescribed, and to perform other specified duties as a legislative or as a judicial aid.” It also took note of the Interstate Commerce Commission and the Court of Claims, and then stated that “[w]e think it plain under the Constitution that illimitable power of removal is not possessed by the President in respect of officers of the character of those just named.”
It should therefore be possible to establish an entity within the Executive Branch that is “independent of the executive authority.” Under the Humphrey’s Executor line of reasoning, such a body would need to be a non-partisan multi-member expert agency that performs specific duties in the nature of a “legislative or … judicial aid” and does not exercise core executive power.
In my research, I have also been examining the structure of the Privacy and Civil Liberties Oversight Board. There are obvious similarities. The PCLOB is a multi-member expert agency that Congress expressly established as an “independent agency” within the Executive Branch. There is a bipartisan selection process for members, who have staggered terms. And in providing reports to Congress that have been relied on by the Foreign Intelligence Surveillance Court, it might be thought of as performing functions along the lines of a “legislative or judicial aid.”
In subsequent articles, the PAB team will take a closer look at the second approach cited by Seila Law for insulating a senior Executive Branch officials from arbitrary removal by the President: the independent counsel provision under Morrison v. Olson.