Independent agencies are government bodies whose leaders do not serve at the pleasure of the President or other government officials.
Although independent agencies are common creatures in our political ecosystem,
their legality and independence are hotly contested. Prominent jurists argue that some or all conflict with Article II of the Constitution, which vests “executive [p]ower” in the President and requires the President to “take [c]are” that the laws are “faithfully executed.”
Other proponents of presidential power contend that there is no constitutional problem with independent agencies because independent agencies are actually subject to a good deal of presidential control. On this view, the President already has the power under existing law to remove the heads of independent agencies for failing to follow directives or achieve White House policy goals.
Much of this debate centers on the statutory provisions that define the President’s removal authority. These provisions typically permit the President to remove independent agency heads for cause. Acts creating the Federal Reserve System,
the Postal Service,
and the Federal Housing Finance Agency (FHFA)
use precisely these words (“for cause”). But most laws specify three causes: inefficiency, neglect of duty, and malfeasance in office (INM).
Federal agencies with INM provisions in their enabling acts include the Federal Trade Commission (FTC),
the National Transportation Safety Board (NTSB),
the Office of Special Counsel (OSC),
the Federal Energy Regulatory Commission (FERC),
and the Consumer Financial Protection Bureau (CFPB).
In recent decades, courts have even read INM provisions into statutes, like the Securities Exchange Act,
that do not include them.
Yet despite the critical role these terms play in shaping the relationship between independent agencies and the President, there is no consensus about what they actually mean. Neither Congress nor the Supreme Court has ever defined INM provisions, and in recent years, appeals court judges have been unable to agree on their scope and, hence, on the extent of agency independence.
Can the President remove members of the Federal Reserve’s Board of Governors for keeping interest rates too high?
Do statutory limits on the President’s power to remove agency officials conflict with the President’s constitutional duty to take care that the laws are faithfully executed?
The Supreme Court indirectly addressed these questions eighty-five years ago in Humphrey’s Executor v. United States,
but judges and scholars alike are unsure why the Court decided that case the way that it did. Among other things, the origins of the INM standard are forgotten, as are the goals of the legislators who incorporated it into the federal code.
This Article seeks to recover this lost understanding. It reconstructs the history of INM and examines its role in federal law. In so doing, it refutes the conventional interpretation of removal provisions as “protections”—text that prevents the President from removing independent agency heads at pleasure.
Rather, it shows that the default runs in the other direction—against removal, not for it. When officers are appointed for a “term of years” with the stipulation that the President may remove them for inefficiency, neglect of duty, or malfeasance in office, the language that protects them from removal at pleasure is not INM—it is the term of years.
Since before the Founding, offices held for a term of years, in the absence of constitutional or statutory language to the contrary, were designed to be inviolable: Short of impeachment, their holders could not be removed before the end of their terms. Statutory words like “inefficiency” and “malfeasance” that qualified this protection were permissions—they authorized the removal of officers who were otherwise not removable.
Term-of-years offices, like good-behavior offices, have been a feature of English and American law since at least the eighteenth century.
They protect officials from the uncertainty and vulnerability of an “at pleasure” appointment while still ensuring regular review of their work. Removal permissions, when added to such offices, serve as a safeguard. They limit, rather than protect, officeholder independence by authorizing removal under certain discrete circumstances.
When Congress first used the now-talismanic INM phrase in 1887, it defined these circumstances using terms that were already well-known. “Neglect of duty” and “malfeasance in office” were old common law concepts employed by courts and legislators to connote an officer’s failure to faithfully execute statutory duties. Neglect of duty indicated instances of “nonfeasance”—a failure to perform one’s duties in a way that caused injury to others. At common law, neglect had been grounds for removing the officers of English towns and boroughs for hundreds of years. It also constituted a type of “misdemeanor”—or “bad behavior”—that could trigger the removal of clerks, judges, and other officers appointed for life to “good behavior” positions. “Malfeasance in office,” meanwhile, referred to a wrongful act committed in the execution of one’s duties that caused injury to others. Malfeasance was another type of misdemeanor that warranted removal from a good behavior office, and it could also lead to removal in the municipal context.
Inefficiency, by contrast, was of newer vintage: a term increasingly used over the course of the nineteenth century to describe wasteful government administration caused by inept officers who gained their positions through political connections rather than merit. Inefficient officials lacked the skills to perform their duties, rendering them incapable of doing their jobs.
Congress was not the first legislature to codify INM. All three terms appeared in state law, with neglect and malfeasance appearing in the laws of the colonies before that. As Professors Andrew Kent, Ethan Leib, and Jed Shugerman have shown, early American legislatures often required officials to take oaths to faithfully execute their duties.
These laws authorized suit against officials who violated their oaths. Often, these oath violations were liquidated as “neglect of duty” or “malfeasance in office.” Over the course of the nineteenth century, state legislatures also used neglect of duty and malfeasance in office in removal provisions to define the behavior that might forfeit an office. Sometimes, they made these words removal grounds for officers otherwise granted tenure for a term of years, using the security of term-tenure to insulate proficient administrators from partisan political pressure while employing neglect of duty and malfeasance as a safety valve. This approach became increasingly common as legislators created offices to oversee ambitious infrastructural projects such as prisons, canals, banks, and railroads—offices for which term-of-years administrators who neglected their duty or engaged in malfeasance could cause immediate and significant harm.
In 1843, Indiana became the first state to combine neglect and malfeasance with “inefficiency.” Confronting a massive public finance crisis caused by defaulting railroad and canal projects, the state included inefficiency as a ground for removing government officers who were incapable of performing their duties promptly and effectively.
Over the next thirty years, New York, Ohio, and several other states incorporated inefficiency into removal statutes as well.
When Congress imported INM into federal law in 1887, it used the terms to establish the Interstate Commerce Commission (ICC), a federal railroad regulator. It empowered the new commissioners to serve for terms of six years, but it also authorized the President to remove them for INM.
As the country’s economy grew increasingly technical and complex, Congress drew repeatedly on this structure, creating “independent commissions” to regulate the activities of private companies, especially those providing public infrastructure. Legislators thought of these entities as “arm[s] of the Congress” operating in a quasi-legislative, quasi-judicial manner.
They gave the President removal power, not so the President might direct the commissions, but so there would be a ready alternative to impeachment, especially when Congress was out of session. This was how judges and scholars understood removal statutes when the Court decided Humphrey’s Executor. And this was how legislators continued to understand these provisions when they drafted the Federal Reserve Act, created the Maritime Commission, designed the Civil Service Merit Systems Protection Board, and set up the FEC.
Two conclusions follow from the history. First, the law was not designed to permit the President to remove the heads of independent agencies for inefficiency or neglect of duty if they do not follow presidential policy directives or if they depart from the President’s agenda. INM permits removal only in cases where officials act wrongfully in office, fail to perform their statutory duties, or perform them in such an inexpert or wasteful manner that they impair the public welfare. In reaching this conclusion, this Article looks beyond evidence regarding early understandings of INM. It interrogates legislative intent, statutory design, and the relevant case law. Its results are largely consistent with 150 years of practice by Presidents, legislators, and agency officials. To accept this Article’s definitions of INM, one need not accept meanings from centuries ago, frozen in time. On the contrary, the evidence suggests that the understandings recovered here were widely shared until relatively recently.
Second, there is no need to expand the concept of neglect of duty, or to rely on the concept of inefficiency at all, to square independent agencies with the Take Care Clause, as some scholars have argued. Neglect of duty and malfeasance in office, as traditionally interpreted, encompass what we call a failure of “faithful execution”: the official misbehavior that the Take Care Clause purportedly obliges the President to prevent. In other words, even assuming that the Take Care Clause creates a role for the President in overseeing independent agency officials, most existing independent agency statutes already allow Presidents to perform this role by permitting them to remove those who engage in malfeasance or neglect.
The Court’s recent decision in Seila Law v. Consumer Financial Protection Bureau raises the salience of the analysis presented herein. In that case, Chief Justice Roberts, writing for a divided Court, held that the design of the CFPB—with a single director appointed to a five-year term, removable by the President only for INM—violates the Constitution’s “separation of powers.”
In reaching this conclusion, five Justices cast doubt on the idea that INM allows the President to remove officials on the basis of policy disagreements and stated that the Court had not been presented with “any workable standard derived from the statutory language.”
This Article supplies such a standard.
This Article also provides support for Justice Kagan’s suggestion in her dissent that there is an equivalence between neglect and malfeasance, on the one hand, and a failure of faithful execution, on the other. Explaining that INM provisions permit the President to remove for “incompetence” and a “failure to ‘faithfully execute’ the law,”
Justice Kagan concluded that statutes limiting the President’s authority to remove domestic officers who execute the laws do not conflict with the Take Care Clause so long as the President can remove such officers for cause.
The potential implications of the dissent’s interpretation of Article II—including the extent to which it would permit statutory restrictions on the President’s power to remove principal officers outside of the independent agency context—are beyond the scope of this Article. But the majority’s unwillingness to adopt a broad reading of INM, coupled with the dissent’s conclusion that INM permits removal for incompetence and a failure of faithful execution, underscores the significance of this Article’s analysis—analysis that offers legally grounded definitions of these terms and provides historical ballast to the hypothesis that neglect and malfeasance correspond to a failure to faithfully execute the law.
This Article proceeds in three Parts. Part I reviews recent scholarly and judicial treatments of for-cause removal statutes and identifies unsettled questions. Part II excavates the lost history of removal law and examines the origins and function of INM. Part III returns to the questions Part I raises and examines them in light of the evidence Part II uncovers.