The Fourth Branch: Executive v. Independent Agencies

By: Miles Pringle

November 2016


In October, the D.C. Circuit Court of Appeals ruled that the Consumer Financial Protection Bureau (“CFPB”) was “unconstitutionally structured” because it’s head officer, Director Richard Cordray, could only be removed for cause, as opposed to at will by the President.  PHH Corp. v. Consumer Fin. Prot. Bureau, No. 15-1177, 2016 U.S. App. LEXIS 18332 (D.C. Cir. Oct. 11, 2016).  In reaching its decision, the Court provided a lengthy analysis of federal administrative agencies, which distinguished between executive agencies and independent agencies.

Executive agencies are ones which do not have a for-cause removal provision contained in their organizing statute(s), and, therefore “the President can supervise, direct, and remove at will the heads of those agencies.”  Conversely, an agency is "independent" if the agency head(s) is removable by the President only for cause, and not at will.  “Examples of independent agencies include well-known bodies such as the Federal Communications Commission, the Securities and Exchange Commission, the Federal Trade Commission, the National Labor Relations Board, and the Federal Energy Regulatory Commission.”

The D.C. Circuit Court of Appeals explained that independent agencies constitute “a headless fourth branch of the U.S. Government” and that their powers are significant.  “They exercise enormous power over the economic and social life of the United States. Because of their massive power and the absence of Presidential supervision and direction, independent agencies pose a significant threat to individual liberty and to the constitutional system of separation of powers and checks and balances.”

As such, the Court opined that independent agencies must be headed by multi-member groups, whether a board or commission, and not a single individual.  “[T]o help preserve individual liberty under Article II, the heads of executive agencies are accountable to and checked by the President, and the heads of independent agencies, although not accountable to or checked by the President, are at least accountable to and checked by their fellow commissioners or board members.”

The Court was limited in its opinion, and determined that the remainder of the CFPB’s organizing act, the Dodd-Frank Act of 2010, was constitutional.  The Court, luckily for the CFPB, took the least intrusive action it could and simply severed the for-cause provision from the statute.  Thus, “the CFPB now will operate as an executive agency.  The President of the United States now has the power to supervise and direct the Director of the CFPB, and may remove the Director at will at any time.”

Oklahoma does not have this clear distinction regarding its government agencies. Some agencies are created by the Oklahoma Constitution, and headed by elected officials (e.g. Insurance Commission and Corporation Commission).  Some agencies are comprised of boards appointed by the governor, but can only be removed for cause (e.g. Abstractors Board).  Some agencies are comprised of office holders.  For example, the Commissioners of the Land Office is comprised of the Governor, Lieutenant Governor, State Auditor, Superintendent of Public Instruction and the President of the Board of Agriculture.

Placing an interesting wrinkle into the removal of officials by the Governor for cause, officials seeking reinstatement may seek a writ of mandamus in Oklahoma District Court.  However, the removed official has the burden of proof, and must demonstrate that the removal was not within statutory grounds.  See e.g Chandler (U.S.A.), Inc. v. Tyree, 2004 OK 16, ¶ 27, 87 P.3d 598, 605; see also Hall v. Tirey, 1972 OK 118, 501 P.2d 496.

Administrative agencies have become a ubiquitous part of our modern society.  In order to keep up with technological and other changes, governmental functions have become very complex.  While most, if not all, officials at these agencies do their best not to abuse power(s) delegated to their agencies, it is important to properly fit agencies into our system of checks and balances. 


©PRINGLE® 2016

This Article was originally published in Oklahoma County Bar Association’s Briefcase Vol. 49 No. 11A in November 2016.