Legislative Vetoes for Independent Agencies

During oral argument in Trump v. Slaughter, Justice Barrett asked Solicitor General Sauer a series of questions about the relationship between the legislative veto and independent agencies. Barrett recalled that Justice Gorsuch had raised Chadha during the oral argument in the tariff case. (I suspect Barrett is also considering a draft opinion that Gorsuch may have circulated.) Gorsuch said that Congress delegated power to the executive branch through IEEPA, subject to a legislative veto. But Chadha wiped out that check, leaving the executive with even broader authority. Would Congress have delegated such broad powers in the first place absent the veto? Probably not. Gorsuch suggested that Chadha changed the legislative “bargain.”

Here, Barrett asked about whether a legislative veto may have also been part of the legislative bargain for the FTC and other independent agencies. In other words, she said, “part of the reason Congress was willing to infuse agencies with a lot of the broad powers” was because of the availability of the veto. She asked if the original 1935 FTC Act had a legislative veto, and if so whether that veto was “part of the bargain.” If there was such a veto, Barrett suggested, Congress would have retained “some measure of congressional control,” though short of removal. Barrett said, “And if you had a legislative veto, even if Congress wasn’t exerting itself the authority to fire . . . a member [of] a multi-member board, it could override decisions that the agency made.” (I think Bowsher would prohibit Congress from having any power over removal, other than impeachment, but that is another matter.)

After Chadha, however, the “bargain was changed.” Barrett said, Congress “having lost that check, maybe these independent agencies have become something that Congress didn’t intend or anticipate even at the point that it set it up.” Barrett then connected this case back “the point that Justice Gorsuch made in the tariff argument with respect to IEEPA.”

Solicitor General Sauer replied that the original 1914 FTC Act did not have a legislative veto. He added, with some hesitation, “I believe the FTC Act, I’m not aware of it having a legislative veto at any point in its history. I could be wrong about that.”

I was curious, and checked the appendix from Chadha which lists the statutory provisions with legislative vetos. Item 34 is directly on point:

34. Federal Trade Commission Improvements Act of 1980, Pub.L. No. 96–252, § 21(a), 94 Stat. 374, 393 (to be codified in 15 U.S.C. 57a–1) (Federal Trade Commission rules may be disapproved by concurrent resolution).

I think Sauer was correct that the 1914 FTC Act did not have a legislative veto. But Congress added a legislative veto over the FTC in 1980.

Justice White’s Chadha dissent specifically referenced the FTC:

In the trade regulation area, the veto preserved Congressional authority over the Federal Trade Commission’s broad mandate to make rules to prevent businesses from engaging in “unfair or deceptive acts or practices in commerce.”FN9

FN9: Congress found that under the agency’s

“very broad authority to prohibit conduct which is ‘unfair or deceptive’ … the [Federal Trade Commission] FTC can regulate virtually every aspect of America’s commercial life…. The FTC’s rules are not merely narrow interpretations of a tightly drawn statute; instead, they are broad policy pronouncements which Congress has an obligation to study and review.” 124 Cong.Rec. 5012 (1978) (statement by Rep. Broyhill).

A two-House legislative veto was added to constrain that broad delegation. Federal Trade Commission Improvements Act of 1980, § 21(a), 94 Stat. 374, 393, 15 U.S.C. § 57a–1 (Supp. IV 1980). The constitutionality of that provision is presently pending before us. United States Senate v. Federal Trade Commission, No. 82–935; United States House of Representatives v. Federal Trade Commission, No. 82–1044.

Justice White referenced two pending cases that challenged the legislative veto of the FTC. In both cases, the D.C. Circuit found the vetoes were unconstitutional.  About two weeks after Chadha was decided, the Court decided a case called Process Gas Consumers Group v. Consumer Energy Council of America. This case summarily affirmed the FTC appeals. Justice White dissented once again:

In United States Senate v. Federal Trade Commission, the Court of Appeals struck down § 21(a) of the Federal Trade Commission Improvements Act of 1980, which provides that an FTC trade regulation rule shall become effective unless both Houses of Congress disapprove it. The Act authorizes the Commission to issue trade regulation rules which define unfair or deceptive acts or practices in or affecting commerce. 15 U.S.C. § 57a(1)(B) (Supp. IV 1980). For three years, Congress debated the breadth of the Commission’s rulemaking authority, noting that the FTC could, pursuant to the Act, “regulate virtually every aspect of America’s commercial life.” 124 Cong.Rec. 5012 (1978) (Rep. Broyhill). The two-House veto provision was settled upon as a means of allowing Congress to study and review the broad and important policy pronouncements of the Commission.

I scanned through the legislative history of this bill (start at Page 5011), and found similar statements. Representative Risenhoover, for example, said:

Our most effective control would be to have review and veto over the rules and regulations which are imposed daily upon the people of this representative democracy by a bunch of faceless, nameless bureaucrats. And of all the agencies which are running amok, the Federal Trade Commission is the absolute worst example. . . . I believe the elected Representatives of the people should review these rules and that, as Representatives, we should be able to say “no.” The people in my district and the business people of this country deserve that additional chance to talk back to the bureaucrats.

Indeed, Representative Eckhardt tied the expansion of the FTC’s powers to the new-found rulemaking authority:

I think there is no agency in the entire Government which is more needing and more deserving of having a congressional veto than the Federal Trade Commission, because with the broad mandate it has and the broad rulemaking power, the broad legislative power it has exercised to this date, we as Congressmen, as elected officials, have abrogated our responsibility. 124 Cong.Rec. 5014.

The FTC did not have this rulemaking power in 1914 and it did not have this power when Humphrey’s Executor was decided. But the D.C. Circuit bestowed this power on the FTC in 1973. Several years later, Congress determined the FTC had acquired too much power, and tried to claw back that power through a legislative veto. Justice Barrett didn’t know this sort of veto existed, but her intuition was exactly on point. I think Justice White’s position is consistent with Barrett’s question in Slaughter, as well as Justice Gorsuch’s question in the tariff case. Indeed, until this moment, I hadn’t really considered how White’s Chadha dissent may have affected his future clerk’s understanding of the bargain and the non-delegation doctrine. Gorsuch has extremely well-developed thoughts on this point.

I think we can speculate that veto was added in recognition of how much the FTC has evolved from the agency at issue in Humphrey’s Executor. Eli Nachmany’s excellent article, which was cited in the briefing traces the FTC’s history, leading up to this 1980 change. In particular, the FTC’s powers over rulemaking were vastly expanded by the D.C. Circuit in the 1970s. Eli explained:

Before Congress could clarify whether the FTC even had legislative rulemaking power, the D.C. Circuit opined that it indeed had such power all along. In National Petroleum Refiners Association v. FTC (1973), the court decided that the FTC had always had legislative rulemaking power—under Section 6 of the original FTC Act. . . . Eschewing that understanding of the law, the D.C. Circuit decided “liberally to construe the term ‘rules and regulations'” and hold that Section 6(g) “permit[s] the Commission to promulgate binding substantive rules.

This ruling, Eli notes, was a vast expansion of the FTC’s powers;

Commentators have criticized the decision as contrary to congressional intent358 and inconsistent “with the universal belief of the FTC, Congress, courts, and scholars for the first 48 years of the existence of the agency that it lacked that power.” Moreover, as Richard Pierce opines, the case’s “method of statutory interpretation . . . was never embraced by the Supreme Court . . . and no court has used it in decades.”

Congress responded with the Magnuson-Moss Act of 1975 to regulate the rulemaking process.

Would the Congress of 1914 have given the FTC Commissioners tenure protections if those members could engage in substantive rulemaking–effectively the power to write laws? I think the answer is no. Yet the D.C. Circuit appears to have made up that power in 1973. And in 1980, when Congress tried to give itself the power to override a rule through a concurrent resolution, the Supreme Court took that power away under Chadha. Justice Barrett was quite right. The bargain that was struck was altered, first by the D.C. Circuit, and later by Chadha.

The Chadha appendix references another legislative veto of another independent agency: the Federal Election Commission.

28. Federal Education Campaign Act Amendments of 1979, Pub.L. No. 96–187, § 109, 93 Stat. 1339, 1364, 2 U.S.C. 438(d)(2) (Supp. III 1979) (Proposed rules and regulations of the Federal Election Commission may be disapproved by resolution of either House).

In Buckley v. Valeo, Justice White argued directly that Congress could impose a legislative veto over an independent agency:

I am also of the view that the otherwise valid regulatory power of a properly created independent agency is not rendered constitutionally infirm, as violative of the President’s veto power, by a statutory provision subjecting agency regulations to disapproval by either House of Congress. . .  Under s 438(c) the FEC’s regulations are subject to disapproval; but for a regulation to become effective, neither House need approve it, pass it, or take any action at all with respect to it. The regulation becomes effective by nonaction. This no more invades the President’s powers than does a regulation not required to be laid before Congress. Congressional influence over the substantive content of agency regulation may be enhanced, but I would not view the power of either House to disapprove as equivalent to legislation or to an order, resolution, or vote requiring the concurrence of both Houses.

In Process Gas, Justice White cited his Buckley concurrence.

I cannot agree that the legislative vetoes in these cases violate the requirements of Article I of the Constitution. Where the veto is placed as a check upon the actions of the independent regulatory agencies, the Article I analysis relied upon in Chadha has a particularly hollow ring. In Buckley v. Valeo, 424 U.S. 1, 284-285 and n. 30, 96 S.Ct. 612, 757 and n. 30, 46 L.Ed.2d 659 (1976), I set forth my belief that the legislative veto as applied to rules promulgated by an independent regulatory agency fully comports with the Constitution.

Justice White’s position did not carry the day in Chadha, but he is likely right about the legislative bargains that Congress struck with regard to the Federal Trade Commission, and the Federal Election Commission.

The Chadha appendix lists one other independent agency–the Federal Reserve.

49. Act of December 31, 1975, Pub.L. No. 94–200, § 102, 89 Stat. 1124, 12 U.S.C. 461 note (Federal Reserve System Board of Governors may not eliminate or reduce interest rate differentials between banks insured by Federal Deposit Insurance Corporation and associations insured by Federal Savings and Loan Insurance Corporations without concurrent resolution of approval).

It does not appear this provision was ever litigated. I will let other people figure out how the impact of this legislative veto affects the status of the Federal Reserve.