Current Legal Issues

Judge Brett Kavanaugh On Executive Powers

Judge Brett Kavanaugh On Executive Powers

In the following weeks the trial of Judge Kavanaugh will be taking place in the U.S. Senate. Expect to see the usual senators taking up most of the oxygen in the room, instead of hearing what Judge Kavanaugh may have to say. This article examines a 2008 case in which Judge Kavanaugh dissented in order to present a glimpse of his reasoning and approach. In a nutshell, the Sarbanes-Oxley Act created a new agency, the PUBLIC COMPANY ACCOUNTING OVERSIGHT BOARD [PCAOB] to oversee the Securities and Exchange Commission [SEC], yet Congress gave removal power of the principal officers of the new agency to the SEC. The SEC could in effect fire their regulators for cause and appoint new ones! The intent of congress was to allow board members of the [PCAOB] to operate independently of the SEC and serve in an oversite capacity. Only the President should have the Constitutional power to remove members of the PCAOB.

Free Enterprise Fund v. Public Co. Account. over., 537 F.3d 667 (D.C. Cir., 2008) That law case involved the powers of the president pursuant to the Appointments Clause of the Constitution. The Court’s majority decided the President would have control of the new agency even though he would be unable to remove “principal officers” of the new agency. Congress by passing the Sarbanes-Oxley Act [S-O] created a new “independent” agency i.e. PCAOB. Five members of the PCAOB are not removable, except for cause, not at will, and not by the President, but by another agency [SEC]. Allowing an agency [SEC] that is subject to the control of the PCAOB, to remove members of the board of PCAOB even for case seems wrong but was not discussed. What was discussed was granting powers to an agency [SEC] that belong to the President, and according to J. Kavanaugh that violates the Appointments Clause. J. Kavanaugh wrote: The President's power to remove is critical to the President's power to control the Executive Branch and perform his Article II responsibilities.

Never before has the removal of “principal officers” been delegated by Congress to any other agency and not to the President. Principal offices serve at the pleasure of the President. But as J. Kavanaugh wrote: The PCAOB members are not removable at will by the SEC; the SEC does not have statutory authority to remove them for failure to follow substantive SEC direction or supervision; and the SEC does not have statutory authority to prevent and affirmatively command, and to manage the ongoing conduct of, Board inspections, Board investigations, and Board enforcement actions. Moreover, as the statutory text demonstrates, the very purpose of this statute was precisely to create an accounting board that would operate with some substantive independence from the SEC, not one that would be "directed and supervised" by the SEC. In effect the PCAOB, will be totally free to act as they choose and cannot be removed except for cause, and not by the President as required by the Appointments Clause. 

Furthermore, according to J. Kavanaugh: Because PCAOB members are principal officers under the Edmond test, they must be appointed by the President with the advice and consent of the Senate. The Board members are appointed by the SEC alone; therefore, the statute violates the Appointments Clause as well. Incidentally, the President in 2008 was George W. Bush and he signed Sarbanes-Oxley stripping himself of power. J. Kavanaugh cited the congressional record to show that it was not inadvertent that Members of Congress designed the PCAOB to have “massive power, unchecked power”. Curiously at the time, the Republicans controlled the House. J. Kavanaugh went on to say:

Our constitutional structure is premised, however, on the notion that such unaccountable power is inconsistent with individual liberty. "The purpose of the separation and equilibration of powers in general, and of the unitary Executive in particular, was not merely to assure effective government but to preserve individual freedom ("Liberty is always at stake when one or more of the branches seek to transgress the separation of powers."). The Framers of our Constitution took great care to ensure that power in our system was separated into three Branches, not concentrated in the Legislative Branch; that there were checks and balances among the three Branches; and that one individual would be ultimately responsible and accountable for the exercise of executive power. The PCAOB contravenes those bedrock constitutional principles, as well as long-standing Supreme Court precedents, and it is therefore unconstitutional. [citations omitted]

This dissenting opinion by J. Kavanaugh conforms to his reputation as a constitutionalist judge who has great regard for the language of the Constitution and Supreme Court precedent generally. To quote J. Kavanaugh: The text and original understanding are particularly significant in this case: They properly inform our analysis of the Board's arguments for extending the Supreme Court's 1935 opinion in Humphrey's Executor to cover this novel agency structure. I therefore will discuss the text and original understanding at some length. He then proceeded to give a very lengthy and detailed history of court opinions beginning in 1789. Summarizing, ultimately the President can delegate “duties” but not the ultimate responsibility to supervise. The power of the president to appoint at least the heads of departments requires the consent of the Senate in order to avoid appointing “unfit characters”. The appointment of “inferior” executive officers does not require Senate approval. The power to appoint includes the power to remove. If the president should lose the confidence of anyone in an executive agency he should have the authority to remove them. In other words,according to J. Kavanaugh, if Congress could unduly limit the President's ability to remove executive officers, the result would be a fragmented, inefficient, and unaccountable Executive Branch that the President would lack power to fully direct and supervise. J. Kavanaugh exhaustively cited authority which included Washington, Madison, Andrew Johnson, Marshall, First Congress's Decision of 1789, and Rehnquist to name a few. 

J. Kavanaugh is for maintaining a clear separation of powers as between the executive and legislative branches. Commenting a prior Supreme Court decision. Humphrey's Ex'r v. United States, 295 U.S. 602, 55 S.Ct. 869, 79 L.Ed. 1611 (1935) which limited the power of the President to remove a principal officer, and the line of cases that followed, J. Kavanaugh wrote:

For that reason, those cases have long been criticized by many as inconsistent with the text of the Constitution, with the understanding of the text that largely prevailed from 1789 through 1935, and with prior precedents such as Myers and Parsons. ("Humphrey's Executor, as commentators have noted, is one of the more egregious opinions to be found on pages of the United States Supreme Court Reports."); Morrison, 487 U.S. at 733-34, 108 S.Ct. 2597 (Scalia, J., dissenting) ("Today's decision ... fails to explain why it is not true that — as the text of the Constitution seems to require, as the Founders seemed to expect, and as our past cases have uniformly assumed — all purely executive power must be under the control of the President.").

I suspect that J. Kavanaugh’s dissenting opinion will be fodder for legislators and others who desire to limit the power of the executive and enhance the powers of the bureaucracy. J. Kavanaugh should be commended for his eloquence, attention to every detail, scrupulously and exhaustively relying on precedent; finally, upholding legislative intent when it is warranted. J. Kavanaugh is likely to be a justice in the mold of C.J. Roberts. They are true nonpartisan conservatives who will not decide the law based upon political considerations, but rather upon what will preserve our constitution.  Like C.J. Roberts before him I can almost hear J. Kavanaugh saying we are not here to strike down ill-conceived laws that are constitutional.  If the electorate does not like the law that Congress passed, then look to Congress for the solution. The most that can be expected of the Supreme Court is to render advice to the electorate and the legislature on how a law that is unconstitutional may be cured by the legislature. Quite properly, in his dissenting opinion J. Kavanaugh set forth how Congress might amend the Sarbanes-Oxley in order to satisfy the requirements of the Constitution. 

On June 28, 2010, the United State Supreme Court issued a 5-4 decision and adopted J. Kavanaugh’s dissenting opinion that Congress delegated unconstitutional authority to the SEC while the Justices upheld the other provisions of Sarbanes-Oxley. C.J. Roberts delivered the opinion of the court with a tip-of-the-hat to J. Kavanaugh writing: Judge Kavanaugh dissented. He agreed that the case was one of first impression, but argued that “the double for-cause removal provisions in the [Act] ... combine to eliminate any meaningful Presidential control over the [Board.  Judge Kavanaugh also argued that Board members are not effectively supervised by the Commission and thus cannot be inferior officers under the Appointments Clause. [page references omitted] J. Kavanaugh is already respected by his future colleagues. What better endorsement can there be?