Free Enterprise Fund v. Public Co. Accounting Oversight Board

United States Court of Appeals
FOR THE DISTRICT OF COLUMBIA CIRCUIT

Argued April 15, 2008 Decided August 22, 2008

No. 07-5127

FREE ENTERPRISE FUND AND BECKSTEAD AND WATTS, LLP,
APPELLANTS

v.

PUBLIC COMPANY ACCOUNTING OVERSIGHT BOARD, ET AL.,
APPELLEES

Appeal from the United States District Court
for the District of Columbia
(No. 06cv00217)

Michael A. Carvin argued the cause for appellants. With
him on the briefs were Viet D. Dinh, Sam Kazman, Hans F.
Bader, Christian G. Vergonis, and Kenneth W. Starr.

Elizabeth Gallaway and William P. Pendley were on the
brief for amicus curiae Mountain States Legal Foundation.

Daniel J. Popeo, Paul D. Kamenar, Helgi C. Walker, and
Thomas R. McCarthy were on the brief for amicus curiae
Washington Legal Foundation in support of appellants.

Jeffrey A. Lamken argued the cause for appellees Public
Company Accounting Oversight Board, et al. With him on the
 2

brief were Joe Robert Caldwell Jr. and James R. Doty.

Mark B. Stern, Attorney, U.S. Department of Justice, argued
the cause for appellee United States of America. With him on
the brief were Jeffrey S. Bucholtz, Acting Assistant Attorney
General, Jeffrey A. Taylor, U.S. Attorney, Mark R. Freeman,
Attorney, Brian G. Cartwright, General Counsel, Securities &
Exchange Commission, Andrew N. Vollmer, Deputy General
Counsel, Jacob H. Stillman, Solicitor, and John W. Avery,
Special Counsel. Robert J. Katerberg, Attorney, U.S.
Department of Justice, and R. Craig Lawrence, Assistant U.S.
Attorney, entered appearances.

Richard H. Pildes was on the brief for amici curiae G.
Bradford Cook, et al.

Ira M. Millstein, Gregory S. Coleman, and Christian J.
Ward were on the brief for amicus curiae Council of
Institutional Investors in support of appellees.

Before: ROGERS, BROWN and KAVANAUGH, Circuit Judges.

Opinion for the court by Circuit Judge ROGERS.

Dissenting opinion by Circuit Judge KAVANAUGH.

ROGERS, Circuit Judge: In this facial challenge, appellants
contend that Title I of the Sarbanes-Oxley Act of 2002 (“the
Act”), 15 U.S.C. §§ 7211-19, violates the Appointments Clause
of the Constitution and separation of powers because it does not
permit adequate Presidential control of the Public Company
Accounting Oversight Board (“the Board”). Congress,
however, made the Board’s exercise of its duties subject to the
comprehensive control of the Securities and Exchange
Commission (“the Commission”). Under the Act, the
 3

Commission is empowered to set Board rules and procedures,
to overturn any sanction proposed by the Board, and to limit or
relieve the Board of its powers, id. §§ 7217(b)(2), (b)(5), (c)(3),
(d)(1), (2); the Commission also may remove members of the
Board for cause, id. § 7211(e)(6). Members of the Commission,
in turn, are appointed by the President with the advice and
consent of the Senate and subject to removal by the President
for cause; its chairman is selected by and serves at the pleasure
of the President. In appellants’ view this statutory scheme vests
Board members “with far reaching executive power while
completely stripping the President of the authority to appoint or
remove those members or otherwise supervise or control their
exercise of that power.” Appellants’ Br. at 1. But their facial
challenge ignores the entirety of the statutory scheme and runs
afoul of the Supreme Court’s instruction regarding the nature of
the President’s constitutional relationship with independent
administrative agencies. Supreme Court precedent as we have
it does not support appellants’ singular focus on removal
powers as the be-all and end-all of Executive authority, but
rather compels a more nuanced approach that examines the
myriad means of Executive control.

We hold, first, that the Act does not encroach upon the
Appointment power because, in view of the Commission’s
comprehensive control of the Board, Board members are subject
to direction and supervision of the Commission and thus are
inferior officers not required to be appointed by the President.
Second, we hold that the for-cause limitations on the
Commission’s power to remove Board members and the
President’s power to remove Commissioners do not strip the
President of sufficient power to influence the Board and thus do
not contravene separation of powers, as that principle embraces
independent agencies like the Commission and their exercise of
broad authority over their subordinates. Accordingly, we affirm
the grant of summary judgment to the Board and the United
 4

States.

I.

Following the Enron and Worldcom accounting scandals
that exposed serious weaknesses in industry self-regulatory
reporting requirements for certain publicly held companies,
Congress enacted the Sarbanes-Oxley Act of 2002, 15 U.S.C. §§
7201 et seq.1 Title I of the Act established the Board “to
oversee the audit of public companies that are subject to the
securities laws . . . in order to protect the interests of investors
and further the public interest in the preparation of informative,
accurate, and independent audit reports.” 15 U.S.C. § 7211(a).
The five members of the Board are appointed by the
Commission after consultation with the Chairman of the Board
of Governors of the Federal Reserve and the Secretary of the
Treasury. Id. § 7211(e)(4)(A). The Act empowers the Board ,
subject to the oversight of the Commission, to, among other
things, register public accounting firms, establish auditing and
ethics standards, conduct inspections and investigations of
registered firms, impose sanctions, and set its own budget,
which is funded by annual fees. Id. §§ 7211(c), 7219(c), (d).

The Commission’s authority over the Board is explicit and
comprehensive. Id. §§ 7217, 7218. Indeed, it is extraordinary.
The Board could commence operations only upon the
Commission’s determination that it was properly organized and
had appropriate rules and procedures in place, id. § 7211(d), and
“[n]o rule of the Board shall become effective without prior
approval of the Commission,” id. § 7217(b)(2). The
Commission is empowered to “abrogate, add to, and delete
from” the Board’s rules “to assure the fair administration of the

1
See S. REP. No. 107-205, at 2 (2002); H. R. REP. No. 107-
414, at 18-19 (2002).
 5

[Board], conform the rules promulgated by that Board to the
requirements of title I of the [Act], or otherwise further
purposes of that Act, the securities laws, and the rules and
regulations thereunder applicable to that Board.” Id. §§
7217(b)(5), 78s(c). In addition to these ex ante controls, all
Board adjudications are subject to the Commission’s de novo
review, id. § 7217(c)(2); Nat’l Ass’n of Sec. Dealers, Inc. v.
SEC, 431 F.3d 803, 804 (D.C. Cir. 2005) (“NASD”), upon an
immediate stay when an application for review is filed or sua
sponte by the Commission, 15 U.S.C. §§
7215(e)(1), 7217(c)(2)(A). The Commission is empowered to
“enhance, modify, cancel, reduce, or require the remission of a
sanction imposed by the Board.” Id. § 7217(c)(3). The
Commission alone determines whether the Board may “sue and
be sued” in any court. Id. § 7211(f)(1). A member of the Board
may be censured or removed from office “for good cause
shown,” id. § 7211(e)(6), upon a finding by the Commission,
after notice and opportunity for a hearing, that the member
willfully violated the Act or abused authority, or failed to
enforce compliance with a rule or standard without reasonable
justification, id. § 7217(d)(3). The Commission is further
empowered, by rule, to relieve the Board, consistent with the
public interest, of any enforcement authority whatsoever, id. §
7217(d)(1), as well as, by order, to censure the Board and, after
notice and opportunity for a hearing, to “impose limitations
upon the activities, functions, and operations of the Board”
upon finding that the Board has failed to abide by its statutory
duties, id. § 7217(d)(2).

This facial challenge to the Act is brought by the Free
Enterprise Fund, a non-profit public interest organization that
“promotes economic growth, lower taxes, and limited
government.” Compl. ¶ 11. It is joined by one of its members,
Beckstead and Watts, LLP (“B&W”), a Nevada accounting firm
that is registered with the Board and is subject to an ongoing
 6

formal investigation that was commenced in 2005. Id. ¶ 79. On
February 7, 2006, the Free Enterprise Fund and B&W
(collectively “the Fund”) filed a complaint alleging that the
creation of the Board violated the Appointments Clause,
separation of powers, and non-delegation principles. The Fund
sought declaratory and injunctive relief prohibiting the Board
from carrying out its duties, including taking “any further
action” against B&W. The United States intervened to defend
the constitutionality of the Act. The district court denied the
Board’s motion to dismiss the complaint for lack of jurisdiction
and granted the motions for summary judgment of the Board
and the United States.

The Fund appeals, and our review is de novo. See Simpson
v. Socialist People’s Libyan Arab Jamahiriya, 470 F.3d 356,
359 (D.C. Cir. 2006); Wilson v. Pena, 79 F.3d 154, 160 n.1
(D.C. Cir. 1996). To succeed in its facial challenge to Title I of
the Act under the Appointments Clause and separation of
powers,2 the Fund bears a heavy burden to show that the
provisions of which it complains are unduly severe in all
circumstances and cannot be constitutionally applied. See
Wash. State Grange v. Wash. State Republican Party, 128 S. Ct.
1184, 1190 (2008) (citing United States v. Salerno, 481 U.S.
739, 745 (1987)).

II.

The Board and the United States contend, as a threshold
matter, that the district court lacked jurisdiction because the
Fund failed to exhaust the Act’s statutory review procedures.
The Act permits a person “aggrieved by a final order of the
Commission” or a person “adversely affected by a rule of the

2
The Fund does not pursue its non-delegation claim on
appeal.
 7

Commission” to obtain review in the court of appeals. 15
U.S.C. § 78y(a)(1), (b)(1) (emphasis added). The Act further
provides that “[n]o objection to an order or rule of the
Commission, for which review is sought under this section, may
be considered by the court unless it was urged before the
Commission or there was reasonable ground for failure to do
so.” Id. § 78y(c)(1) (emphasis added). The Fund did not pursue
administrative remedies before filing its complaint.

As a matter of statutory text, the administrative procedures
available under the Act are confined to challenges to an “order”
or a “rule” of the Board. See, e.g., Nat’l Mining Ass’n v. Dep’t
of Labor, 292 F.3d 849, 856 (D.C. Cir. 2002); Gen. Elec. Co. v.
EPA, 360 F.3d 188, 191 (D.C. Cir. 2004). The Fund’s facial
challenge, by contrast, advances a “broad-scale attack,” Nat’l
Mining, 292 F.3d at 856, to the Act itself that is not “of the type
Congress intended to be reviewed within this statutory
structure,” Thunder Basin Coal Co. v. Reich, 510 U.S. 200, 212
(1994). In Thunder Basin, the Supreme Court acknowledged
that the district court retains jurisdiction over claims
“considered ‘wholly collateral’ to a statute’s review provisions
and outside the agency’s expertise.” 510 U.S. at 212 (quoting
Heckler v. Ringer, 466 U.S. 602, 618 (1984)).

Jurisdiction over the Fund’s complaint is consistent with
the distinction drawn by this court in Time Warner
Entertainment Co. v. FCC, 93 F.3d 957 (D.C. Cir. 1996), which
held that the district court has “general federal question
jurisdiction to consider a facial challenge to a statute’s
constitutionality so long as that challenge is not raised in a suit
challenging the validity of agency action taken pursuant to the
challenged statute or in a suit that is collateral to one
challenging the validity of such agency action,” id. at 965.
Because the complaint presents a “facial, or systemic”
challenge, and not an “as-applied, or particularized challenge[],”
 8

Gen. Elec., 360 F.3d at 192 (internal quotation marks omitted),
and does not attempt to bootstrap other claims regarding a
Board order or rule, see First Jersey Sec., Inc. v. Bergen, 605
F.2d 690, 695 (3d Cir. 1979), the Fund’s lawsuit is not properly
viewed as a circumvention of the Act’s review procedures. In
contrast with American Coalition for Competitive Trade v.
Clinton, 128 F.3d 761 (D.C. Cir. 1997), where the statute
granted the court of appeals exclusive jurisdiction over all
constitutional attacks on the statute upon compliance with
exhaustion requirements, see id. at 765, the Act contains no
similar provision as would indicate that Congress intended the
review scheme to be exclusive.

Therefore, because the Fund’s constitutional challenges to
the Act are collateral to the Act’s administrative review scheme,
the exhaustion doctrine does not apply, and we hold that the
district court had subject matter jurisdiction over the complaint
and properly denied the motion to dismiss.

III.

The Appointments Clause provides:

[The President] shall . . . nominate, and by and with
the Advice and Consent of the Senate, shall appoint
Ambassadors, other public Ministers and Consuls,
Judges of the supreme Court, and all other Officers of
the United States, whose Appointments are not herein
otherwise provided for, and which shall be established
by Law: but the Congress may by Law vest the
Appointment of such inferior Officers, as they think
proper, in the President alone, in the Courts of Law, or
in the Heads of Departments.

U.S. CONST. art. II, § 2, cl. 2.
 9

The plain text of the Appointments Clause thus
contemplates that Congress may lodge the appointment power
of inferior officers in entities other than the President. The
Fund contends, however, that the absence of day-to-day
supervision of the Board by the Commission and the for-cause
limitation on the Commission’s power to remove Board
members means that Board members are not inferior officers
and therefore must be appointed by the President.
Alternatively, the Fund contends that even if Board members
are inferior officers, they cannot be appointed by the
Commission because the Commission is not a “Department[]”
and the Commissioners are not its “Head[].”

A.
“Generally speaking, the term ‘inferior officer’ connotes a
relationship with some higher ranking officer or officers below
the President: Whether one is an ‘inferior’ officer depends on
whether he has a superior.” Edmond v. United States, 520 U.S.
651, 662 (1997). Under this standard, the Board is composed of
officers inferior to the Commission. The Commissioners, who
serve staggered five-year terms, are “appointed by Presidential
nomination with the advice and consent of the Senate,” id. at
663, and they exercise comprehensive control over Board
procedures and decisions and Board members. For instance, the
Commission approves all Board rules, 15 U.S.C. §§ 7211(g),
7217(b)(2), and may abrogate, delete, or add to them, id. §
7217(b)(5). All Board sanctions are subject to plenary review
by the Commission, id. § 7217(c)(2); NASD, 431 F.3d at 804,
and the Commission “may enhance, modify, cancel, reduce, or
require the remission of a sanction imposed by the Board,” id.
§ 7217(c)(3). As such, the Board’s disciplinary authority
“ultimately belongs to the [Commission], and the legal views of
the [Board] must yield to the Commission’s view of the law,”
NASD, 431 F.3d at 806; see also Gold v. SEC, 48 F.3d 987, 990
(7th Cir. 1995); Shultz v. SEC, 614 F.2d 561, 568 (7th Cir.
 10

1980). The Commission both appoints and removes Board
members, id. §§ 7211(e)(4)(A), (e)(6). It also may impose
limitations upon Board activities, id. § 7217(d)(2), and relieve
the Board of its enforcement authority altogether, id. §
7217(d)(1).

Consequently, the Board’s work is necessarily “directed
and supervised at some level” by the Commission, Edmond, 520
U.S. at 663. Notably for purposes of this facial challenge, the
Act subjects Board members to greater supervision than the
Coast Guard judges in Edmond, whom the Supreme Court held
to be inferior officers even though supervision of the judges was
fractured between two different bodies, id. at 664, and their
decisions were not subject to de novo review, id. at 665.
Contrary to the Fund’s suggestion, the fact that the Board is
charged with exercising extensive authority on behalf of the
United States does not mean that Board members must be
appointed by the President, for principal as well as inferior
officers, by definition, “‘exercis[e] significant authority
pursuant to the laws of the United States,’” Freytag v. CIR, 501
U.S. 868, 881 (1991) (quoting Buckley v. Valeo, 424 U.S. 1, 126
(1976)); see also Edmond, 520 U.S. at 662. Instead, what is key
under the Edmond analysis is the fact that Board members
“have no power to render a final decision on behalf of the
United States unless permitted to do so by other Executive
officers,” Edmond, 520 U.S. at 665. The Act vests a broad
range of duties in the Board, 15 U.S.C. § 7211(c), but its
exercise of those duties is subject to check by the Commission
at every significant step.

Board members are also subject to greater oversight than
the Independent Counsel in Morrison v. Olson, 487 U.S. 654,
662 (1988). Whereas the Act specifies that every decision of
the Board is “subject to action by the Commission,” 15 U.S.C.
§ 7211(c), the Ethics in Government Act vested the Independent
 11

Counsel with “full power and independent authority to exercise
all investigative and prosecutorial functions and powers of the
Department of Justice,” 28 U.S.C. § 594(a). Still the Supreme
Court adjudged that the Independent Counsel was an inferior
officer. Morrison, 487 U.S. at 671. The Board’s ability to act
independently is dwarfed by the “independent discretion [of the
Independent Counsel] to exercise the powers delegated to her
under the [Ethics in Government] Act,” Morrison, 487 U.S. at
671.3

The Fund is incorrect in suggesting that the Commission’s
review authority of Board rules and regulations is “severely
circumscribed,” Appellants’ Br. at 34. The Act provides that
the Commission “shall approve a proposed rule, if it finds that
the rule is consistent with the requirements of this Act and the
securities laws, or is necessary or appropriate in the public
interest or for the protection of investors.” 15 U.S.C. §
7217(b)(3). This provision does not, as the Fund offers,
establish a deferential, Chevron-like review but reflects an
intent to require the Commission itself to determine whether
Board rules are consistent with the statutes and the public
interest. Given the Commission’s several statutory

3
Morrison presents a significant obstacle to our dissenting
colleague’s proposed test for inferior officer status, Dis. Op. at 45-46,
because the Independent Counsel had broad final decision-making
authority unchecked by any other Executive officer. The dissent’s
attempt to limit Morrison to situations in which the office is
temporary, id. at 45 n.17, ignores the fact that the Supreme Court has
rejected the interpretation of Morrison as a bright-line test, see
Edmond, 520 U.S. at 661. But even assuming that the temporariness
of the position was the linchpin in view of the Independent Counsel’s
extraordinarily broad powers, the Supreme Court has never suggested
that Morrison has no relevance to the inferior officer analysis for
offices that, while not temporary, possess powers that are significantly
more constrained. Inconvenient precedent is not so easily disposed of.
 12

responsibilities, the Fund’s approach would sanction flouting
one statutory goal in service of another, an untenable
interpretation of congressional intent where the goals can be
reconciled. Cf. Richards v. United States, 369 U.S. 1, 11
(1962). Moreover, in Edmond the Supreme Court held that the
“limitation upon review does not . . . render the judges of the
Court of Criminal Appeals principal officers.” 520 U.S. at 665.
The Fund ignores that the Commission’s regulatory control does
not end with its review of Board rules. The Act empowers the
Commission to abrogate or amend Board rules “to assure the
fair administration of the [Board], conform the rules
promulgated by that Board to the requirements of title I of the
[Act], or otherwise further the purposes of that Act, the
securities laws, and the rules and regulations thereunder
applicable to that Board.” 15 U.S.C. § 7217(b)(5). The
Commission itself is also empowered to promulgate rules in
furtherance of the Act. Id. § 7202(a). These powers are
inimical to Chevron-like deference.

To the extent the Fund suggests that the for-cause
limitation on the Commission’s removal power requires Board
members to be deemed principal officers, it overinflates the
importance of removal authority. Recognizing that “[t]he
power to remove officers . . . is a powerful tool for control,”
Edmond 520 U.S. at 664, the Supreme Court has indicated that
courts should consider removal authority as one factor in
determining whether an official is an inferior officer, id. at 666.4

4
Our dissenting colleague’s reading of Edmond to mean that
at-will removal authority is “the key initial question,” Dis. Op. at 42,
is curious in light of the Supreme Court’s cursory consideration of this
factor in determining that the Coast Guard judges were inferior
officers, see Edmond, 520 U.S. at 664, 666. As the dissent
acknowledges, at-will removal authority is not the linchpin of the
analysis; rather, an officer is inferior as long as he is “statutorily
 13

The Court has held that both the Coast Guard Judges in
Edmond, who were subject to the Judge Advocate General’s at-
will removal authority, 520 U.S. at 664, and the Independent
Counsel in Morrison, who was subject to removal only for
cause, 487 U.S. at 663, were inferior officers. Here, the Act
vests removal authority in the Commission, providing that “[a]
member of the Board may be removed by the Commission from
office, in accordance with section [107(d)(3)], for good cause
shown.” 15 U.S.C. § 7211(e)(6).5 Just as in Morrison, “the fact
that [Board members] can be removed by the [Commission]
indicates that [they are] to some degree ‘inferior’ in rank and
authority,” 487 U.S. at 671.

The Supreme Court has expressly permitted legislatively-
imposed limitations on executive officers’ removal authority:

We have no doubt that when congress, by law, vests
the appointment of inferior officers in the heads of

subject to direction and supervision in all significant activities.” Dis.
Op. at 48. Here every significant Board function is subject to
significant Commission oversight. See supra pp. 9-10.
5
Section 107(d)(3) provides that the Commission may
remove a Board member upon finding that the member

(A) has willfully violated any provision of this Act,
the rules of the Board, or the securities laws; (B) has
willfully abused the authority of that member; or (C)
without reasonable justification or excuse, has failed
to enforce compliance with any such provision or
rule, or any professional standard by any registered
public accounting firm or any associated person
thereof.

15 U.S.C. § 7217(d)(3).
 14

departments, it may limit and restrict the power of
removal as it deems best for the public interest. The
constitutional authority in congress to thus vest the
appointment implies authority to limit, restrict, and
regulate the removal by such laws as congress may
enact in relation to the officers so appointed. The head
of a department has no constitutional prerogative of
appointment to offices independently of the legislation
of congress, and by such legislation he must be
governed, not only in making appointments, but in all
that is incident thereto.

United States v. Perkins, 116 U.S. 483, 485 (1886). In Myers v.
United States, 272 U.S. 52 (1926), the Court reaffirmed that
“Congress, in committing the appointment of such inferior
officers to the heads of departments, may prescribe incidental
regulations controlling and restricting the latter in the exercise
of the power of removal,” id. at 161, although not to the point
of requiring Senate approval of removals, id. at 164; see also
Bowsher v. Synar, 478 U.S. 714, 726 (1986).

Moreover, the Fund can point to no case prescribing the
ways in which Congress can restrict a principal officer’s
removal of his inferiors. The opinion of the Justice
Department’s Office of Legal Counsel (“OLC”), 17 U.S. Op.
Off. Legal Counsel 150, 156-57 (1993), relied on by the Fund,
concluded only that “jointly” vesting removal authority in a
cabinet secretary and the council whose members were
themselves subject to removal could pose constitutional
problems. Like the Attorney General in Morrison and the Judge
Advocate General in Edmond, the Commission has sole
removal authority under the Act. For purposes of this facial
challenge, the arguably more restrictive for-cause removal
cannot be dispositive because, as the district court concluded,
the Commission could broadly interpret its removal authority in
 15

order to ensure that the Board conforms to its policies.

Finally, our dissenting colleague’s two-part test for
determining inferior officer status, Dis. Op. at 45-46, sets up a
new paradigm in order to reach a desired result. Nothing in
Edmond suggests that “direct[ion] and supervis[ion] at some
level,” 520 U.S. at 663 (emphasis added), necessitates
“manag[ing] the ongoing conduct,” Dis. Op. at 46, of every day-
to-day function. Surely both the Coast Guard judges in Edmond
and the Independent Counsel in Morrison would have failed
such a narrow test. But even under the terms of this novel test,
the Act survives scrutiny. Indeed, the Act commands that all of
the Board’s duties are “subject to action by the Commission.”
15 U.S.C. § 7211(c). As in Edmond, any sanctions imposed by
the Board are “subject to review by the [Commission] before
the decisions t[ake] effect on the accused,” Dis. Op. at 41; see
15 U.S.C. §§ 7215(e)(1), 7217(c)(2). Additionally, the
Commission’s broad authority under the Act contradicts the
dissent’s position that the Board’s decisions regarding
“inspections, investigations, and enforcement actions” cannot
be “prevent[ed][,] affirmatively command[ed], and manage[d]”
by the Commission, Dis. Op. at 46. First, the Act requires the
Board to inspect all registered public accounting firms in
accordance with a predetermined schedule, 15 U.S.C. §
7214(b); the Board lacks discretion not to inspect a particular
firm. Each inspection yields an inspection report, 15 U.S.C. §
7214(g), and each firm may seek Commission review of its
inspection report, id. § 7214(h). Therefore, to the extent the
inspection report forms the basis for a subsequent investigation
by the Board, the Board’s determination is subject to
Commission approval. Second, although it has the power to do
so, see id. § 7202(a), the Commission need not “affirmatively
command” an investigation, Dis. Op. at 46, given that the Act
preserves the Commission’s own authority to take
administrative or disciplinary action against a firm, 15 U.S.C.
 16

§ 7202(c)(3). The fact that the Commission’s investigative
authority remains intact is consistent with the role of the Board
as a specialized component of the Commission that exercises
authority for purposes of efficiency and convenience but cannot
usurp it. Third, and most important, because the Board must
establish by rule “fair procedures for the investigation and
disciplining” of accounting firms and individuals, id. § 7215(a),
and “[n]o rule of the Board shall become effective without prior
approval of the Commission,” id. § 7217(b)(2), the Commission
is empowered to modify the Board’s investigative authority as
it sees fit and may mandate that all decisions regarding
investigation or enforcement actions against a firm be approved
by the Commission. See also id. § 7271(d)(2). While the Board
may adjust the inspection schedule, it may do so only by rule,
id. § 7214(b)(2), and all Board rules are subject to Commission
approval. So too for the Board’s investigative authority, see id.
§ 7215(b)(1). Certainly the Commission’s authority to
“promulgate such rules and regulations[] as may be necessary
or appropriate in the public interest or for the protection of
investors, and in furtherance of th[e] Act,” id. § 7202(a),
provides ample room for the Commission to tighten its reins on
the Board’s investigative authority.6 For purposes of this facial
challenge, that the Commission has not chosen to take these
steps does not mean that it lacks the authority to do so. If
anything, it suggests that the Board has so far acted in

6
In suggesting that the Commission is somehow limited by
its statutory obligation to promulgate rules “in furtherance of this
Act,” Dis. Op. at 50, our dissenting colleague ignores that the Act’s
purpose in establishing the Board was “to protect the interests of
investors and further the public interest,” 15 U.S.C. § 7211(a), and
therefore Congress contemplated that the goals of the Act and the
public interest would go hand in hand. If the public interest demands
increased micromanaging of Board operations, the Act empowers the
Commission to respond accordingly.
 17

accordance with Commission policy.

Because the Board’s exercise of its powers under the Act
is subject to comprehensive control by the Commission and
Board members are accountable to and removable by the
Commission, we hold that Board members are inferior officers.

B.
The Fund’s alternative contention, assuming Board
members are inferior officers, that the Commission is not a
department and the Commissioners are not the head of the
Commission, is also unpersuasive.

1. As used in the Appointments Clause, the phrase “‘Heads
of Departments’ . . . suggests that the Departments referred to
are themselves in the Executive Branch or at least have some
connection with that branch.” Buckley, 424 U.S. at 127. The
Supreme Court has explained that “Departments” refers to “the
subdivision of the power of the Executive into departments, for
the more convenient exercise of that power.” United States v.
Germaine, 99 U.S. 508, 510 (1878). In Freytag, the Supreme
Court described Departments as being “like the Cabinet-level
departments,” 501 U.S. at 886 (emphasis added), which are
“limited in number and easily identified,” id. Although the
Court did not identify the precise characteristics of “Cabinet-
like” departments and reserved the issue of whether independent
agencies are departments, id. at 887 n.4, four Justices urged that
“Departments” should be understood to encompass “all
agencies immediately below the President in the organizational
structure of the Executive Branch,” including “all independent
executive establishments,” id. at 918-19 (Scalia, J., joined by
O’Connor, Kennedy, and Souter, JJ, concurring in part and in
the judgment) (hereinafter “Concurring Op.”). They reasoned
that the Framers “chose the word ‘Departmen[t]’ . . . not to
connote size or function (much less Cabinet status), but separate
 18

organization – a connotation that still endures even in colloquial
usage today.” Id. at 920. Noting that the Constitution makes no
reference to the term “Cabinet,” id. at 916-17, and that the Court
has not held that “‘the Heads of Departments’ are Cabinet
members,” id. at 917, the concurring justices observed that even
the sparse history of the Appointments Clause included the
1792 Act creating a Post-Master General, who, while not a
cabinet member, had power to appoint an assistant and deputies,
id. As Congress has continued to empower non-Cabinet
officers to appoint inferior officers, id. at 918, the concurring
justices cautioned that to conclude such action violated the
Appointments Clause would “cast[] into doubt the validity of
many appointments and a number of explicit statutory
authorizations to appoint,” id.

The Commission is “Cabinet-like” because it exercises
executive authority over a major aspect of government policy,
and its principal officers are appointed by the President with the
advice and consent of the Senate, 15 U.S.C. § 78d(a), and
subject to removal by the President, SEC v. Blinder, Robinson
& Co., 855 F.2d 677, 681 (10th Cir. 1988). Given the
constitutionality of independent agencies, see Humphrey’s Ex’r
v. United States, 295 U.S. 602 (1935), such entities must be able
to constitutionally exercise appointment authority to permit
their proper functioning. As the Attorney General opined in
concluding that the Civil Service Commission was a
“Department[]” under the Appointments Clause, the
Commission here is “not a subordinate Commission attached to
one of the so-called executive departments but is in itself an
independent division of the Executive Branch of the
Government with certain independent duties and functions.” 37
U.S. Op. Att’y Gen. 227, 231 (1933). In 1996, the OLC further
stated that Congress may “vest the power to appoint inferior
officers in the heads of the so-called independent agencies.” 20
Op. Off. Legal Counsel 124, 152 (1996). Congress has
 19

authorized the Commission to appoint officers and employees,
5 U.S.C. § 4802(b), and it would be illogical to handicap its
ability to effectuate its statutory mandate because of the very
independence that Congress has deemed necessary and the
Supreme Court has deemed constitutional.

2. The Commissioners as a group exercise the same final
authority as is vested in a single head of an executive
department. Congress has vested “the Commission” with
rulemaking, investigative, and adjudicatory authority. See, e.g.,
15 U.S.C. § 7202. Just as independent agencies are
“Departments” capable of receiving appointment powers even
though they are structured to give the President less control over
their functioning, see Freytag, 501 U.S. at 919 (Concurring
Op.), the heads of independent agencies need not be wholly
controlled by the President as long as they are principal officers
appointed (with the advice and consent of the Senate) and
removable by the President. All three branches of government
are in agreement that the head of an agency can be a multi-
member body. The Attorney General’s opinion in 1933
acknowledged that the Civil Service Commission is “headed
by” its commissioners. 37 U.S. Op. Att’y Gen. at 228.
Congress enacted the Reorganization Act of 1949, 5 U.S.C.
§ 904, providing that a Presidential plan for Congressional
approval can “provide that the head of an agency be an
individual or a commission or board with more than one
member.” The Ninth Circuit held in Silver v. United States
Postal Service, 951 F.2d 1033 (9th Cir. 1991), that the nine
governors of the Postal Service constituted its “Head[],”
concluding that “[t]he fact that the Postal Service is not
structured like a traditional government agency need not imply
that its structure is not constitutionally permissible,” id. at 1037,
and that as to appointment, removal and decisionmaking,
“Congress carefully vested ultimate control and authority of the
Postal Service in the Governors,” id. at 1038. The same is true
 20

here. Congress, in the Act as well as the Securities Exchange
Act of 1934, 15 U.S.C. § 78a et seq., vested authority in “the
Commission” to promulgate rules, initiate investigations, sue to
enjoin violations of securities laws, review disciplinary
sanctions, appoint Board members, approve Board rules and the
Board’s budget, and censure and remove Board members.

The historical sources relied on by the Fund regarding the
“benefits of lodging the appointment power in a single
individual,” Appellants’ Br. at 39 (citing THE FEDERALIST No.
76 and 3 JOSEPH STORY, COMMENTARIES ON THE
CONSTITUTION § 1522 (1833)), address a different question,
namely the decision to vest appointment of principal officers in
the President, and the Framers entrenched that preference in
Article II, § 2, cl. 2. The Fund has pointed to no authority
wherein the Framers foreclosed Congress from granting multi-
member commissions authority to appoint inferior officers. The
dictionary is of no assistance because a definition of a “head” as
“one who has the first rank or place,” Appellants’ Br. at 39-40
(quoting NOAH WEBSTER, AN AMERICAN DICTIONARY OF THE
ENGLISH LANGUAGE (1828)), does not resolve whether the
“one” must be one person rather than one committee.

Finally, in urging that the Chairman of the Commission is
its “Head[]” and therefore the Act’s grant of Commission
appointment power is invalid, the Fund’s authorities do not
support its conclusion. While the Postmaster General in Silver
was an inferior officer appointed and removable by the nine
governors, see 951 F.2d at 1040, the Chairman is not inferior to
the Commission but rather is simply one commissioner who has
additional administrative functions. Just as the Chairman has no
power to remove another commissioner, the Commission as a
whole may neither appoint nor remove one of its own.
Moreover, the Reorganization Act addressed in Silver mandated
that the head of an agency be either a civil service position or
 21

subject to Presidential appointment with the advice and consent
of the Senate, 5 U.S.C. § 904; the Chairman is neither, as the
President alone selects a Chairman from among the
Commissioners. Reorganization Plan No. 10, § 3, 64 Stat.
1265, 1266 (1950). Additionally, although the Chairman has
authority to appoint and supervise personnel pursuant to
Reorganization Plan No. 10 of 1950, the Chairman does not
have sole appointment authority under the Plan; rather “[t]he
appointment by the Chairman of the heads of major
administrative units under the Commission shall be subject to
the approval of the Commission.” Reorganization Plan No. 10,
§ 1(b)(2), 64 Stat. at 1266 (1950); see United States v. Hartwell,
73 U.S. (6 Wall) 385, 393-34 (1867); Nat’l Treasury Employees
Union v. Reagan, 663 F.2d 239, 246 n.9 (D.C. Cir. 1981).

Because Board members are inferior officers of the
Commission, which is a “Department[]” whose “Head[]”
consists of the several Commissioners, we hold that Title I of
the Act creating the Board does not violate the Appointments
Clause.

IV.

Although not expressly included in the Constitution itself,
the principle of separation of powers is implicit in the first three
articles of the Constitution that define separate roles for the
legislative, executive, and judicial branches. See Nat’l Mut. Ins.
Co. of D.C. v. Tidewater Transfer Co., 337 U.S. 582, 591
(1949); Kilbourn v. Thompson, 103 U.S. 168, 190 (1880).7

7
This principle has been more recently reaffirmed by the
Supreme Court in a series of opinions interpreting the President’s
Article II powers. See Boumediene v. Bush, 128 S. Ct. 2229
(2008); Hamdan v. Rumsfeld, 548 U.S. 557 (2006); Hamdi v.
Rumsfeld, 542 U.S. 507 (2004).
 22

Considered a bulwark of a just government, see THE
FEDERALIST No. 47 (James Madison), this principle, however,
“by no means contemplates total separation of each of these
three essential branches of Government,” Buckley, 424 U.S. at
121. The Fund does not assert that Congress or the judiciary
have directly encroached on the Executive Branch’s
appointment, removal, or decisionmaking authority by
aggrandizing their own powers. Instead, the Fund’s separation
of powers challenge is premised on the contention that the Act
constitutes an excessive attenuation of Presidential control over
the Board. The crux of the Fund’s challenge – that the double
for-cause limitation on removal makes it impossible for the
President to perform his duties – is a question of first
impression as neither the Supreme Court nor this court has
considered a situation where a restriction on removal passes
through two levels of control. But the Fund’s categorical,
bright-line approach conflicts with the Supreme Court’s case-
specific reasoning in Morrison, which emphasized that there are
“several means of supervising or controlling [Presidential]
powers,” 487 U.S. at 696. The removal power thus does not
operate in a vacuum; rather it is one of several criteria relevant
to assessing limits on the President’s ability to exercise
Executive power.

A.
The Supreme Court has long recognized that some types of
restrictions on Presidential authority within the Executive
Branch are permissible, especially in the case of independent
agencies. In Humphrey’s Executor, the Supreme Court rejected
a challenge to the constitutionality of independent agencies in
which principal officers were “subject to removal by the
President for inefficiency, neglect of duty, or malfeasance in
office,” rather than at the President’s will. 295 U.S. at 623. The
Court observed that “to hold that . . . the members of the
[Federal Trade Commission] continue in office at the mere will
 23

of the President,” id. at 626, would thwart Congress’s intention
that the commission be “nonpartisan” and “independent of
executive authority,” id. at 624-25 (internal quotation marks
omitted).

Several decades later, the Supreme Court expanded upon its
analysis in Humphrey’s Executor, concluding that the statute
establishing the Independent Counsel did not violate the
principle of separation of powers. The Court considered the
“two related issues” of restrictions on the President’s power to
remove and the impact of the Ethics in Government Act as a
whole in order to address the “real question” of “whether . . . the
President’s ability to perform his constitutional duty,”
Morrison, 487 U.S. at 691, to “take Care that the Laws be
faithfully executed,” U.S. CONST., art. II, § 3, was impeded.
Noting the Attorney General’s powers to request appointment
of the Independent Counsel and to remove her for cause
alongside her limited jurisdiction and tenure and lack of
policymaking authority, id. at 691-92, the Court held that
restrictions on the “amount of control or supervision,” id. at
695, that the President ultimately exercised over the functions
of the Independent Counsel were constitutional given the
“several means of supervising or controlling the . . . powers that
may be wielded,” id. at 696.

B.
As an initial matter, independent agencies such as the
Commission by definition enjoy a degree of autonomy in
conducting their affairs, including staffing and operations. Yet
this independence is not without limits. In addition to the
ability to appoint Commissioners, 15 U.S.C. § 78d(a), and
remove them for cause, see Blinder, 855 F.2d at 681; see also
Wiener v. United States, 357 U.S. 349 (1958), which removal
 24

power the Supreme Court has interpreted broadly,8 the President
possesses significant additional levers of influence. Most
obviously, by appointment of the Commission chairman, who
serves at the pleasure of the President and often “dominate[s]
commission policymaking,” the President can influence
Commission policy and control who directs “the administrative
side of commission business, select[s] most staff, set[s]
budgetary policy, and as a consequence command[s] staff
loyalties.” Peter L. Strauss, The Place of Agencies in
Government: Separation of Powers and the Fourth Branch, 84
COLUM. L. REV. 573, 591 (1984) (citing DAVID M. WELBORN,
GOVERNANCE OF FEDERAL REGULATORY AGENCIES (1977)).
“Here the White House connection is often less direct and
generally more subtle, but consultation and coordination on
general policy issues of national interest naturally occurs.” Id.
(footnotes omitted). Additionally, although statutory as well as
political constraints may prevent Presidential dominance in
specific decisions, the President is not stripped of overall
influence because independent agencies generally require
“presidential good will” to obtain budgetary and legislative
support, id. at 594-95. Various administrative tools provide
additional influence to the President; these include
centralization of contracting, personnel requirements, and
property allocations. Id. at 587. “[A]ny assumption that
executive agencies and independent regulatory commissions
differ significantly or systematically in function, internal or
external procedures, or relationships with the rest of
government is misplaced.” Id. at 596.

8
The Supreme Court has held that the restrictions on the
President’s removal of Commissioners for “inefficiency, neglect of
duty, or malfeasance in office” are “very broad and . . . could sustain
removal . . . for any number of actual or perceived transgressions.”
Bowsher, 478 U.S. at 729.
 25

In turn, the Commission enjoys both appointment and
removal powers over Board members and, most significantly,
“Congress has provided sweeping mechanisms to guarantee
substantive control by the [Commission] of the Board’s use of
its powers under the Act.” Intervenor’s Br. for the United States
at 49-50. The Board’s status, as a heavily controlled component
of an independent agency, is fully congruent with the paradigm
laid out in Humphrey’s Executor.9 No Board rule is
promulgated and no Board sanction is imposed without the
Commission’s stamp of approval. Indeed, any policy decision
made by the Board is subject to being overruled by the
Commission. The Act also provides authority for the
Commission to limit and to remove Board authority altogether.
15 U.S.C. §§ 7217(d)(1), (2). Additionally, the Act fully
preserves the Commission’s authority to regulate the accounting
profession, set standards, and take any action against a company
or individual. Id. § 7202(c). “Because the Commission can
withdraw or preempt any aspect of the Board’s substantive
regulatory authority at any time to effectuate the Commission’s
own understanding of ‘purposes of th[e] Act and the securities
laws,’ no functional concern or constitutional dimension should
be raised by the ‘good cause’ restrictions on its ability to
remove particular officers.” Intervenor’s Br. for the United
States at 50 (quoting 15 U.S.C. § 7217(d)(1)). Thus the Act
ensures that all Board functions are subject to pervasive

9
Our dissenting colleague wholly misreads both the court’s
opinion and the Board’s brief to suggest that the Board is itself an
independent agency. Dis. Op. at 1,3, 30 n.9. Indeed, with that premise
the dissent’s conclusion that the Board’s structure is unconstitutional
conveniently follows. But repeatedly referring to the Board as an
independent agency, see, e.g., id. at 23 & n.7, 24, 26, 30 n.9, 36, 43 &
n.16, does not make it so. As explained in Part III above, by statutory
design the Board is composed of inferior officers who are entirely
subordinate to the Commission and whose powers are governed by the
Commission.
 26

Commission control, including approval of its annual budget
and supporting fees, 15 U.S.C. § 7219(b), (d).

When assessed in the context of the restrictions on
Presidential power upheld in Morrison, the President’s powers
under the Act extend comfortably beyond the minimum
required to “perform his constitutionally assigned duties,”
Morrison, 487 U.S. at 696. Although the President does not
directly select or supervise the Board’s members, the President
possesses significant influence over the Commission, which in
turn possesses comprehensive control over the Board. By
contrast, neither the President nor the Attorney General had the
power to appoint the Independent Counsel or the power to
control her investigatory or prosecutorial authority. Instead, a
three-judge court appointed the Independent Counsel, Morrison,
487 U.S. at 661 (citing 28 U.S.C. § 49 (1982 ed., Supp. V)), and
defined her jurisdiction, id. Whereas the Board cannot appear
in court without the Commission’s permission, 15 U.S.C. §
7211(f)(1), the Independent Counsel’s powers included
“‘initiating and conducting prosecutions in any court of
competent jurisdiction, framing and signing indictments, filing
informations, and handling all aspects of any case, in the name
of the United States,’” Morrison, 487 U.S. at 662 (quoting 28
U.S.C. 594(a)(9)) (emphasis added), and hiring staff to do so,
id. (citing 28 U.S.C. 594(c)). Most importantly, while the
Commission retains its full authority under the Act, 15 U.S.C.
§ 7202(c), the Ethics in Government Act divested the Attorney
General of his pre-existing authority and invested it entirely in
the Independent Counsel: “[W]henever a matter has been
referred to an independent counsel under the [Ethics in
Government] Act, the Attorney General and the Justice
Department are required to suspend all investigations and
proceedings regarding the matter,” Morrison, 487 U.S. at 662-
 27

63.10 As designed by Congress, the Independent Counsel
possessed significant independence from the President, but the
Supreme Court found no separation of powers violation. The
statutorily more constrained authority of the Board, when set
beside the Independent Counsel’s broad powers and
independence, falls well within constitutional bounds.11

The Fund points to the limited tenure and jurisdiction of the
Independent Counsel in Morrison as justification for the
unchecked powers of the position, but neither the duration of
the office nor its prescribed scope operated as significant
constraints on the Independent Counsel’s exercise of her broad
powers. Although the Independent Counsel was a temporary
position, neither the President, the Attorney General, nor even
the statute itself limited the length of her tenure; rather, the
Independent Counsel determined when her statutory duties were
complete, id. at 664. The Independent Counsel’s time in office,
thus, was “rather indefinite and expected to last for multiple
years.” 31 Op. Off. Legal Counsel, at *34 (Apr. 16, 2007).
Moreover, the Independent Counsel’s powers were arguably

10
Thus, the Independent Counsel “possessed core and largely
unchecked federal prosecutorial powers, effectively displacing the
Attorney General and the Justice Department within the counsel’s
court-defined jurisdiction, which was not necessarily limited to the
specific matter that had prompted [her] appointment.” 31 Op. Off.
Legal Counsel, at *34 (Apr. 16, 2007).
11
Even viewing Morrison as authorizing a “significant
intrusion” on the Executive power, Dis. Op. at 21, because the Board
is subject to much greater Executive control than the Independent
Counsel, the Board would withstand constitutional scrutiny if the
Independent Counsel had not. The “sky is falling” approach to the
Board’s separation of powers implications is an exaggerated response
to a relatively insignificant innovation. Morrison was the proverbial
mountain; the present case, by comparison, is a molehill.
 28

less delimited than the Board’s insofar as she could request
expansion of her prosecutorial jurisdiction. See Morrison, 487
U.S. at 667; 28 U.S.C. § 593(c). Not only is the Board subject
to statutorily-defined jurisdictional boundaries, but also the
Commission is empowered to further limit the Board’s
functions, 15 U.S.C. § 7217(d)(2). To the extent the Fund
maintains that the breadth of the Independent Counsel’s powers
was justified by exceptional circumstances, the circumstances
leading to the enactment of the Independent Counsel statute are
far from unique; as in the case of the Board, Congress identified
the need for an entity within the Executive Branch and
determined that some limitations on Presidential power were
advisable. See supra n.1.

More directly, the Act’s attenuation of the President’s
removal power of Board members does not mean, as the Fund
contends, that the President’s ability to carry out his Executive
responsibility is therefore unconstitutionally restricted.
Although the principal officer in Morrison – the Attorney
General – served at the pleasure of the President, nothing in
Morrison suggests that Congress cannot restrict removal of
inferior officers in independent agencies as well as executive
agencies.12 The Supreme Court instead underscored that the
animating concern of the Court’s removal-power cases is not
formal but functional:

The analysis . . . is designed not to define rigid
categories of those officials who may or may not be

12
Our dissenting colleague’s assertion that Morrison “all but
resolves the removal issue in this case” so as to “require[] invalidation
of the [Board],” Dis. Op. at 25-26, is remarkable in light of the fact
that in Morrison the Supreme Court did not purport to establish what
removal restrictions would “completely strip[]” the President of
removal authority, 487 U.S. at 692.
 29

removed at will by the President, but to ensure that
Congress does not interfere with the President’s
exercise of “executive power” and his constitutionally
appointed duty to “take care that the laws be faithfully
executed” under Article II.

487 U.S. at 689-90. The Court stated that, as regards an inferior
officer, “we cannot say that the imposition of a ‘good cause’
standard for removal by itself unduly trammels on executive
authority.” Id. at 691. So too here, the President is not, as the
Fund contends, “completely stripped” of his ability to remove
Board members: Like-minded Commissioners can be appointed
by the President and they can be removed by the President for
cause, and Board members can be appointed and removed for
cause by the Commissioners. Although the level of Presidential
control over the Board reflects Congress’s intention to insulate
the Board from partisan forces, this statutory scheme preserves
sufficient Executive influence over the Board through the
Commission so as not to render the President unable to perform
his constitutional duties.13

13
The Fund’s suggestion that the Board’s creation represents
an effective diminution of Executive Branch power or an
unprecedented Congressional innovation is also unavailing. The
Commission’s wide-ranging oversight over the Board was modeled
after the rules regarding Commission authority over self-regulatory
organizations (“SROs”) in the securities industry, which have existed
for over seventy years, NASD, 431 F.3d at 804, such as the New York
Stock Exchange and the National Association of Securities Dealers,
15 U.S.C. § 7217(a); S. Rep. No. 107-205, at 12. A main difference
– Board members are appointed by the Commission, whereas the
government plays no formal role in the selection of SRO board
members – means that the Board’s grant of governmental authority is
duly accompanied by government accountability. Consequently, the
Fund’s characterization of the Commission’s review of Board action
as “highly deferential,” “severely restricted,” and “severely
 30

Our dissenting colleague asks why the Board is removable
only for cause, Dis. Op. at 51, concluding that it is to preserve
the Board’s independence of the Commission. But for-cause
removal is not the end of the constitutional inquiry. We might
ask in return, why has Congress granted such pervasive
Commission authority over the Board if not to preserve the
means of Executive control? Indeed, why would Congress deny
the Commission at-will removal authority on the one hand and
then provide the Commission with the authority to abolish
Board powers on the other, essentially granting at-will removal
power over Board functions if not Board members? Certainly
the latter power blunts the constitutional impact of for-cause
removal. Even if these statutory provisions may reveal a
legislative compromise, the Act as a whole provides ample
Executive control over the Board. If, as the dissent posits, the
for-cause removal provision reflects Congress’s intention to
grant “some degree of substantive independence” to the Board,
id. at 34, that independence is undercut by the vast degree of
Commission control at every significant step. To the extent the
dissent offers that the Commission cannot have broad
rulemaking authority to circumscribe the Board’s investigative
actions because “such authority would all but destroy the
‘independence’” that the for-cause removal provision might
otherwise allow, id. at 49; see id. at 34-35 (citing legislative
history), such is the statute as written by Congress.

The Fund’s contention that the Act violates separation of
powers because the removal restrictions go beyond the “good
cause” standard approved in Morrison fares no better. The
Fund contends that under the Act “the [Commission] cannot
remove a Board member who incompetently pursues wrong-

circumscribed,” Appellants’ Br. 7, 33, 34, is difficult to reconcile with
the Act, much less with this court’s analysis of the same statutory
review provisions for SROs in NASD, 431 F.3d at 806.
 31

headed policies, but permits, at most, removal only of those
members who egregiously and deliberately flout their duties or
engage in serious misconduct.” Appellants’ Br. at 21. The
Supreme Court has never specified that “good cause” is the
greatest restriction Congress may impose on removal of inferior
officers. In fact, the Court has broadly stated that Congress
“may limit and restrict the power of removal as it deems best
for the public interest.” Perkins, 116 U.S. at 483. Furthermore,
it is far from clear that the Commission would share the Fund’s
cramped interpretation of its removal authority. Cf. supra n.8.
While the Fund points to the fact that two of the three
provisions that authorize removal of Board members refer to
actions taken “willfully,” see supra n. 5, the meaning of that
word “is often being influenced by its context,” Spies v. United
States, 317 U.S. 492, 497 (1943), and the Fund points to no
basis for assuming that the Commission would view 15 U.S.C.
§ 7217(d)(3) as necessarily defining the exclusive
circumstances in which removal for “good cause” may be
established, see Bowsher, 478 U.S. at 729; cf. Wonsover v. SEC,
205 F.3d 408, 413-14 (D.C. Cir. 2000).

V.

“[F]acial challenges are disfavored” precisely because they
do not permit the Executive Branch to attempt to “implement[]
[statutes] in a manner consonant with the Constitution,” Wash.
State Grange, 128 S. Ct. at 1191, and the Fund’s challenge does
not present the occasion for the court to announce a bright-line
rule regarding removal restrictions.14 Consistent with the court’s

14
Contrary to our dissenting colleague, Dis. Op. at 35-36
n.12, the fact that this is a facial challenge significantly affects the
analysis, for the Fund bears a heavy burden to demonstrate that the
Act unduly constrains the President’s ability to see that the laws are
faithfully executed in all circumstances and cannot be constitutionally
 32

duty to construe statutes to avoid constitutional infirmity,
Commodity Futures Trading Comm’n v. Schor, 478 U.S. 833,
841 (1986), there is no basis to conclude that the Commission’s
removal authority does not satisfy Article II requirements, cf.
Morrison, 487 U.S. at 682. The Fund’s focus on the removal
limitations ignores the statutory context, which empowers the
Commission not only to oversee all significant Board activities
through ex ante controls and ex post de novo review but also to
“withdraw or preempt any aspect of the Board’s substantive
regulatory authority,” Intervenor’s Br. for the United States at
50, thus mitigating concern regarding the scope of the removal
restrictions. The Act additionally preserves all of the
Commission’s authority in the field while enhancing Executive
control in an area previously left largely in private control. See
supra n.13.

Nor does our dissenting colleague’s philosophical approach
undermine either the court’s logic or view of the law. While the
fundamental purposes of the Appointments Clause and the
principle of separation of powers are undisputed, the
constitutional question for this court requires that we take
instruction from Supreme Court precedent as we find it and
understand that the absence of a precise precedent is neither the
end of the inquiry – the statutory scheme in Morrison, for
example, was also novel – nor grounds for failing to address
Congress’ statutory scheme as it is written. Our dissenting
colleague’s analysis, cloaked in textualist garb, construes
Supreme Court precedent to support his theory instead of
acknowledging its limits; for example, the intrusion by Congress
upon the President’s removal authority in Myers is far removed

applied, see supra p.6. In making that determination, the court must
look at the extent of the Commission’s authority under the Act, not to
whether and how it has exercised that authority, see Dis. Op. at 51
n.23.
 33

from what is at issue here, and the Court’s multi-factor analysis
in Edmond does not fit the dissent’s novel two-step paradigm.
The absolutes that the dissent postulates – essentially, either the
President must have at-will removal power or Congress has acted
unconstitutionally – are inconsistent with the Supreme Court’s
more nuanced approach in addressing limitations on the
President’s appointment authority and separation of powers. In
the face of a comprehensive statutory scheme that provides
exhaustive means of Executive control and oversight, the dissent
misrepresents the Board as an independent agency with final
Executive authority, see supra n.9, interprets the Commission’s
powers of oversight narrowly, see Dis. Op. at 48-51, 51 n.23, and
the limitations attendant to for-cause removal broadly, see id. at
31-35, divorced from their statutory context in a manner to create
constitutional problems where there are none; and misreads
Supreme Court precedent to portend doom for the unitary
Executive. But those fears have no statutory basis, for our
dissenting colleague can cite to no instance in which the Board
can make policy that the Commission cannot override.15

Given the constitutionality of independent agencies and the
Commission’s comprehensive control over the Board, the Fund
cannot show that the statutory scheme so restricts the President’s
control over the Board as to violate separation of powers. The
bulk of the Fund’s challenge to the Act was fought – and lost –
over seventy years ago when the Supreme Court decided

15
To the extent our dissenting colleague asserts both that
overturning the Act would have no impact on other independent
agencies, Dis. Op. at 5-6, and that failing to overturn the Act would
produce a parade of horribles were Congress to adopt a double-for-
cause approach generally, id. at 28, again he ignores the statutory
scheme in a singular focus on the removal power. If that is to be the
Supreme Court’s approach, then it must say so for its precedent is
more nuanced and takes account of the statute as a whole.
 34

Humphrey’s Executor. At that time, the Court concluded that the
concept of a unitary Executive embodied in the Constitution does
not require the President to have an alter ego (i.e., an official
serving at the pleasure of the President and removable at will)
within independent agencies. The Court reiterated the
conclusion that neither for-cause removal nor substantial
independent discretion eviscerates Executive control in
Morrison. The key question the Supreme Court requires this
court to answer is whether the Act so limits the President’s
ability to influence the Board as to render it unconstitutional.
Because of the reality of the President’s broad-ranging authority
under the Act, the Fund’s facial challenge fails.

Accordingly, we hold that the Fund’s facial challenge to
Title I of the Act fails to reveal violations of the Appointments
Clause or separation of powers, and we affirm the grant of
summary judgment to the Board and the United States.
 KAVANAUGH, Circuit Judge, dissenting: This case raises
fundamental questions about the scope of the President’s
constitutional power to appoint and remove officers in the
Executive Branch. Article II begins: “The executive Power
shall be vested in a President of the United States of
America.” Under Article II, the President possesses the sole
power and responsibility to “take Care that the Laws be
faithfully executed.” To assist in his duties, the President has
authority, within certain textual limits, to appoint and remove
executive officers. Myers v. United States, 272 U.S. 52, 117
(1926). Disputes over the scope of the President’s
appointment and removal powers have arisen sporadically
throughout American history. This latest chapter involving
the Public Company Accounting Oversight Board is the most
important separation-of-powers case regarding the President’s
appointment and removal powers to reach the courts in the
last 20 years. Cf. Morrison v. Olson, 487 U.S. 654 (1988);
Bowsher v. Synar, 478 U.S. 714 (1986); Buckley v. Valeo, 424
U.S. 1 (1976); Humphrey’s Executor v. United States, 295
U.S. 602 (1935); Myers, 272 U.S. 52.

The Public Company Accounting Oversight Board is an
independent executive agency created by the Sarbanes-Oxley
Act of 2002. The PCAOB is considered an “independent”
agency because the five members of the PCAOB are
removable only for cause, not at will. The PCAOB portrays
itself as just another independent executive agency – like the
FCC, the FTC, and the NLRB – that is permissible under the
Supreme Court’s 1935 decision in Humphrey’s Executor.
Plaintiffs, including a Nevada accounting firm regulated by
the Board, strenuously disagree and challenge its
constitutionality. Plaintiffs object to the fact that members of
the PCAOB are appointed by and removable for cause by
another independent agency, the Securities and Exchange
Commission, rather than by the President. They argue that
this structure, an independent agency appointed by and
removable only for cause by another independent agency:
 2
(i) interferes with the President’s Article II authority to
remove executive officers, and thereby exercise the executive
power and take care that the laws be faithfully executed; and
(ii) violates the specific terms of the Appointments Clause of
Article II regarding the President’s authority to appoint
“principal officers” in the Executive Branch. Plaintiffs
contend that “vesting government agencies with coercive
power over the citizenry, and simultaneously depriving the
citizenry of any ability to control or check those exercising
such potentially tyrannical authority, is precisely the
fundamental threat to the ‘liberty and security of the
governed’ that separation of powers principles were designed
to prevent.” Plaintiffs’ Br. at 10-11 (quoting Metro. Wash.
Airports Auth. v. Citizens for Abatement of Aircraft Noise,
Inc., 501 U.S. 252, 272 (1991)).

On the removal issue, the majority opinion views this
case as Humphrey’s Executor redux. But this case is
Humphrey’s Executor squared. There is a world of difference
between the legion of Humphrey’s Executor-style agencies
and the PCAOB: The heads of the Humphrey’s Executor
independent agencies are removable for cause by the
President, whereas members of the PCAOB are removable
for cause only by another independent agency, the Securities
and Exchange Commission. The President’s power to remove
is critical to the President’s power to control the Executive
Branch and perform his Article II responsibilities. Yet under
this statute, the President is two levels of for-cause removal
away from Board members, a previously unheard-of
restriction on and attenuation of the President’s authority over
executive officers. This structure effectively eliminates any
Presidential power to control the PCAOB, notwithstanding
that the Board performs numerous regulatory and law-
enforcement functions at the core of the executive power. So
far as the parties, including the United States as intervenor,
 3
have been able to determine in the research reflected in their
exhaustive and excellent briefs, never before in American
history has there been an independent agency whose heads are
appointed by and removable only for cause by another
independent agency, rather than by the President or his alter
ego.1 But that is the case with PCAOB members, who are
removable for cause only by the SEC – and it is undisputed
that the SEC as an independent agency is not the President’s
alter ego. The PCAOB thus goes well beyond what historical
practice and Humphrey’s Executor authorize.

The PCAOB’s structure not only exceeds the boundaries
of Humphrey’s Executor; it also contravenes specific and
critical language in the Supreme Court’s 1988 decision in
Morrison v. Olson. The Supreme Court allowed for-cause
removal of the independent counsel in Morrison only because
the President through his alter ego (the Attorney General) still
retained the authority to remove the independent counsel.
Therefore, the Court emphasized, Morrison was “not a case in
which the power to remove an executive official has been
completely stripped from the President, thus providing no
means for the President to ensure the ‘faithful execution’ of
the laws.” 487 U.S. at 692. This is such a case. The

1
By the President’s “alter ego,” I mean the head of a
department who is removable at will by the President, such as the
Attorney General or the Secretary of the Treasury. The Supreme
Court has recognized that when the head of a department appoints
inferior officers in that department, the President technically
exercises his removal authority over those inferior officers through
his alter ego, the department head. See Myers, 272 U.S. at 133
(referring to “alter ego” of President); Morrison, 487 U.S. at 692
(describing Attorney General as President’s alter ego for removal of
inferior officer by Attorney General); Ex parte Hennen, 38 U.S.
230, 259-60 (1839).
 4
President has no ability to remove the PCAOB members,
either directly or through an alter ego.

The statute’s violation of the Appointments Clause is also
plain. Under Article II as interpreted in Edmond v. United
States, 520 U.S. 651 (1997), the PCAOB members are
principal officers who must be appointed by the President
with the advice and consent of the Senate. They are not
inferior officers because they are not “directed and
supervised” by the SEC, id. at 663: 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. See, e.g., 15 U.S.C. §§ 7211(c),
7214, 7215, 7217; see also S. Rep. No. 107-205, at 6 (2002)
(“The successful operation of the Board depends upon its
independence . . . .”); 148 CONG. REC. S6327, S6331 (daily
ed. July 8, 2002) (statement of Sen. Sarbanes) (“[W]e need to
establish this oversight board . . . to provide an extra
guarantee of its independence . . . .”). 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.

The two constitutional flaws in the PCAOB statute are
not matters of mere etiquette or protocol. By restricting the
 5
President’s authority over the Board, the Act renders this
Executive Branch agency unaccountable and divorced from
Presidential control to a degree not previously countenanced
in our constitutional structure. This was not inadvertent;
Members of Congress designed the PCAOB to have “massive
power, unchecked power.” 148 CONG. REC. at S6334
(statement of Sen. Gramm). 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.”
Morrison, 487 U.S. at 727 (Scalia, J., dissenting); see also
Clinton v. City of New York, 524 U.S. 417, 450 (1998)
(Kennedy, J., concurring) (“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.

Although the constitutional violations here are serious,
two points are important to bear in mind. First, finding the
PCAOB unconstitutional would not itself call into question
the many other independent agencies that dot Washington,
D.C. The heads of those agencies are appointed by and
removable for cause by the President, the precise structure
that Humphrey’s Executor upheld and that is conspicuously
missing from the PCAOB statute. In other words, the
PCAOB is uniquely structured, and a judicial holding
 6
invalidating it would be uniquely limited to the PCAOB.
Second, and relatedly, the constitutional flaws here could be
easily and quickly corrected. Congress could simply amend
the statute to require, for example, that the PCAOB members,
like the heads of other agencies, be appointed by the President
with the advice and consent of the Senate and therefore be
removable by the President. Cf. Housing and Economic
Recovery Act of 2008, Pub. L. No. 110-289, 122 Stat. 2654
(2008) (creating new “independent” federal regulator of
Fannie Mae and Freddie Mac appointed by President with
advice and consent of Senate and removable for cause by
President). Alternatively, Congress could make the Board
part of the SEC – directed, supervised, and removable at will
by the Commission just like inferior officers in the SEC. In
the meantime, however, the Board’s structure violates the
Constitution of the United States.

I

As the Supreme Court has indicated, it is always
important in a case of this sort to begin with the constitutional
text and the original understanding, which are essential to
proper interpretation of our enduring Constitution. See
Clinton v. City of New York, 524 U.S. 417, 438-40 (1998);
Edmond v. United States, 520 U.S. 651, 658-64 (1997); INS v.
Chadha, 462 U.S. 919, 945-59 (1983); Buckley v. Valeo, 424
U.S. 1, 118-37 (1976). 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.

“If there is a principle in our Constitution . . . more sacred
than another, it is that which separates the Legislative,
 7
Executive and Judicial powers.” Myers v. United States, 272
U.S. 52, 116 (1926) (quoting 1 ANNALS OF CONGRESS 581
(Madison) (1789)). “The principle of separation of powers
was not simply an abstract generalization in the minds of the
Framers: it was woven into the document that they drafted in
Philadelphia in the summer of 1787.” Buckley, 424 U.S. at
124. To protect individual liberty, the Framers did not adopt
a parliamentary system with a Prime Minister dependent on
the Legislature but instead created a President independent
from the Legislative Branch: The President is not selected by
the Congress (except in the rare cases when no Presidential
candidate wins a majority of the state electors’ votes); the
President’s salary is protected against any congressional
diminution; and the President’s term in office is fixed, except
in cases of impeachment by the House and conviction by two-
thirds of the Senate for high crimes and misdemeanors.

Article II of the Constitution addresses the Presidency.
Its first 15 words are definitive: “The executive Power shall
be vested in a President of the United States of America.”
U.S. CONST. art. II, § 1, cl. 1. Article II also grants the
President the sole authority and duty to “take Care that the
Laws be faithfully executed.” Id. art. II, § 3. Under the text
of our Constitution, a single President possesses the entirety
of the “executive power” (whatever the scope of that power
may be) and the entire authority to take care that the laws be
faithfully executed.2

2
It is important to distinguish the question of who is
responsible for exercising the executive power from the question of
the scope of executive power. The fact that a single President is
responsible and accountable for exercising the executive power
does not mean that the scope of executive power is broad or
narrow. Cf., e.g., Neal Kumar Katyal, Hamdan v. Rumsfeld: The
Legal Academy Goes to Practice, 120 HARV. L. REV. 65, 69 n.16
 8
The Framers established a single President by design: A
single head of the Executive Branch enhances efficiency and
energy in the administration of the Government. And a single
head furthers accountability by making one person
responsible for all decisions made by and in the Executive
Branch. As the Supreme Court has noted, the “insistence of
the Framers upon unity in the Federal Executive – to ensure
both vigor and accountability – is well known.” Printz v.
United States, 521 U.S. 898, 922 (1997); see also THE
FEDERALIST NOS. 69, 70, 72, 76 (Hamilton); Sierra Club v.
Costle, 657 F.2d 298, 405 (D.C. Cir. 1981); Elena Kagan,
Presidential Administration, 114 HARV. L. REV. 2245,
2332 (2001) (“The Presidency’s unitary power structure, its
visibility, and its ‘personality’ all render the office peculiarly
apt to exercise power in ways that the public can identify and
evaluate.”).

Justice Breyer succinctly summarized the Constitution’s
provision for a single President: “Article II makes a single
President responsible for the actions of the Executive Branch
in much the same way that the entire Congress is responsible
for the actions of the Legislative Branch, or the entire
Judiciary for those of the Judicial Branch. . . . The Founders
created this equivalence by consciously deciding to vest
Executive authority in one person rather than several. They
did so in order to focus, rather than to spread, Executive
responsibility thereby facilitating accountability. . . . [T]hese
constitutional objectives explain why a President, though able
to delegate duties to others, cannot delegate ultimate
responsibility or the active obligation to supervise that goes

(2006) (“The unitary executive theory merely means that truly
executive power is concentrated in the President; the theory alone
does not specify what counts as executive power in the first
place.”).
 9
with it.” Clinton v. Jones, 520 U.S. 681, 712-13 (1997)
(concurring in judgment).

Of course, “the President alone and unaided could not
execute the laws. He must execute them by the assistance of
subordinates.” Myers, 272 U.S. at 117. It has been
understood since the beginning of the Republic that “Article
II grants to the President the executive power of the
Government, i.e., the general administrative control of those
executing the laws, including the power of appointment and
removal of executive officers – a conclusion confirmed by his
obligation to take care that the laws be faithfully executed.”
Buckley, 424 U.S. at 136 (quoting Myers, 272 U.S. at 163-64)
(emphasis added).

Under Article II, the President thus necessarily possesses
the power to appoint executive officers who exercise
executive authority delegated by the President and who
otherwise advise and assist the President. See U.S. CONST.
art. II, § 2, cl. 2; id. art. II, § 2, cl. 1 (President “may require
the Opinion, in writing, of the principal Officer in each of the
executive Departments, upon any Subject relating to the
Duties of their respective Offices”); see also Akhil Reed
Amar, Some Opinions on the Opinion Clause, 82 VA. L. REV.
647, 660-68 (1996). Reflecting the Framers’ careful attention
to checks and balances, the text of the Constitution constrains
the President’s appointment power in certain important
respects. In particular, the Appointments Clause provides that
the President may appoint the “principal” executive officers –
a category that includes at least the heads of departments –
only with the advice and consent of the Senate. See U.S.
CONST. art. II, § 2, cl. 2. In other words, the President does
not possess the unilateral power to appoint the Secretary of
Defense or Attorney General, for example, but can do so only
with Senate concurrence. Senate approval helps prevent the
 10
Presidential appointment of “unfit characters.” THE
FEDERALIST NO. 76 (Hamilton). Because Senate confirmation
of all executive officers could prove cumbersome, however,
the Appointments Clause also provides that Congress may by
law vest the appointment of “inferior” executive officers in
the President alone or the heads of departments, without the
need for Senate approval. U.S. CONST. art. II, § 2, cl. 2.

To help direct and supervise executive officers – and
thereby to exercise the “executive Power” and “take Care that
the Laws be faithfully executed” – the President possesses not
just the power to appoint, but also the power to remove
executive officers. “Made responsible under the Constitution
for the effective enforcement of the law, the President needs
as an indispensable aid to meet it the disciplinary influence
upon those who act under him of a reserve power of
removal.” Myers, 272 U.S. at 132. The moment that the
President “loses confidence in the intelligence, ability,
judgment or loyalty of any one of them, he must have the
power to remove him without delay.” Id. at 134; see also THE
FEDERALIST NO. 72 (Hamilton) (executive officers “ought to
be considered as the assistants or deputies of the Chief
Magistrate . . . and ought to be subject to his
superintendence”). “The power to remove officers, we have
recognized, is a powerful tool for control.” Edmond, 520 U.S.
at 664. The reason that the power to remove at will translates
into the power to control is evident: “Once an officer is
appointed, it is only the authority that can remove him, and
not the authority that appointed him, that he must fear and, in
the performance of his functions, obey.” Bowsher v. Synar,
478 U.S. 714, 726 (1986) (quoting Synar v. United States, 626
F. Supp. 1374, 1401 (D.D.C. 1986)). If the President were
stripped of plenary removal power over, say, the Secretary of
Defense or the Attorney General, then the President no longer
could fully control and be accountable for the exercise of
 11
executive power, as the Constitution demands. In other
words, 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.

Unlike the President’s power to appoint, the President’s
power to remove officers in the Executive Branch is not
limited by the text of the Constitution. And the subject of
removing officers in the Executive Branch “was not discussed
in the Constitutional Convention.” Myers, 272 U.S. at 109-
10.3 The issue of removal of executive officers instead was
first “presented early in the first session of the First
Congress,” during consideration of a bill establishing certain
Executive Branch offices and providing that the officers
would be subject to Senate confirmation and “removable by
the President.” Id. at 109, 111. “Then ensued what has been
many times described as one of the ablest constitutional
debates which has taken place in Congress since the adoption
of the Constitution.” Parsons v. United States, 167 U.S. 324,
329 (1897). Representative James Madison of Virginia and
others argued that Article II provided the President plenary
power to remove executive officers, making the reference in
the bill unnecessary and misleading surplusage. Madison and
his allies “dwelt at length upon the necessity there was for
construing Article II to give the President the sole power of
removal in his responsibility for the conduct of the executive
branch, and enforced this by emphasizing his duty expressly

3
The Constitution provides that all executive and judicial
officers of the Federal Government can be removed through the
impeachment process, U.S. CONST. art. II, § 4, but that has never
been understood to be the exclusive method for removing executive
officers other than the President and Vice President. See Shurtleff
v. United States, 189 U.S. 311, 317 (1903).
 12
declared in the third section of the Article to ‘take care that
the laws be faithfully executed.’” Myers, 272 U.S. at 117
(quoting 1 ANNALS OF CONGRESS 496, 497 (Madison)). As
Madison explained, “If the President should possess alone the
power of removal from office, those who are employed in the
execution of the law will be in their proper situation, and the
chain of dependence be preserved; the lowest officers, the
middle grade, and the highest, will depend, as they ought, on
the President, and the President on the community.” Id. at
131 (quoting 1 ANNALS OF CONGRESS 499 (Madison)).
Madison added: “Is the power of displacing an Executive
power? I conceive that if any power whatsoever is in its
nature Executive, it is the power of appointing, overseeing,
and controlling those who execute the laws.” 1 ANNALS OF
CONGRESS 463 (Madison). This Presidential removal power
would preserve “that great principle of unity and
responsibility in the Executive department.” Myers, 272 U.S.
at 131 (quoting 1 ANNALS OF CONGRESS 499 (Madison)).

The House ultimately concurred with Madison’s
understanding and deleted the bill’s express reference to the
manner of removing the officers so as not to imply that the
President’s removal power “might appear to be exercised by
virtue of a legislative grant only.” Id. at 112 (quoting 1
ANNALS OF CONGRESS 579). Congress passed the bill, and
President Washington signed it into law. President
Washington proceeded to assert and use the removal power
throughout his Presidency in order to ensure his personal
control over and direction of the Executive Branch. See
Saikrishna Prakash, Removal and Tenure in Office, 92 VA. L.
REV. 1779, 1827-29 (2006).

Congress’s decision – referred to as the “Decision of
1789” – “provides contemporaneous and weighty evidence of
the Constitution’s meaning since many of the Members of the
 13
First Congress had taken part in framing that instrument.”
Bowsher, 478 U.S. at 723-24 (internal quotation marks
omitted). As Chief Justice Marshall explained, the Decision
of 1789 “has ever been considered as a full expression of the
sense of the legislature on this important part of the American
constitution.” 5 JOHN MARSHALL, THE LIFE OF GEORGE
WASHINGTON 200 (1807).

In short, the plain text and original understanding of
Article II establish the broad scope of the President’s
appointment and removal powers. As a leading scholar of the
Constitution’s text has aptly observed, “What Article II did
make emphatically clear from start to finish was that the
president would be personally responsible for his branch.”
AKHIL REED AMAR, AMERICA’S CONSTITUTION: A
BIOGRAPHY 197 (2005).

II

With that grounding in the constitutional text and the
First Congress’s Decision of 1789, I turn to the Supreme
Court’s key precedents interpreting that text and to analysis of
the questions presented in this case. In this Part II, I will
address the removal power issue. In Part III, I will consider
the Appointments Clause question.

A

As explained above, the constitutional text and the
original understanding, including the Decision of 1789,
established that the President possesses the power under
Article II to remove officers of the Executive Branch at will.
That original understanding became widely accepted during
the first 60 years of the Nation. See, e.g., Myers v. United
States, 272 U.S. 52, 149 (1926) (“[T]he construction given to
the Constitution in 1789 . . . may now be considered as firmly
 14
and definitely settled, and there is good sense and practical
utility in the construction.”) (citing 1 JAMES KENT,
COMMENTARIES ON AMERICAN LAW, Lecture 14, at 310). Yet
questions over the extent of the President’s removal power
did not end. The issue came to the fore in the wake of the
Civil War and prompted the House of Representatives’s
impeachment of President Andrew Johnson in 1868. As part
of a bitter struggle over Reconstruction, Congress enacted the
Tenure of Office Act in 1867, 14 Stat. 430, ch. 154. That law
prohibited the President from removing certain Executive
Branch officers without the Senate’s concurrence. President
Johnson contended that the Act was unconstitutional; in
defiance of the Act, he removed his Secretary of War without
Senate approval. The House of Representatives responded by
impeaching President Johnson, which was followed by a
narrow Senate acquittal. The contentious Johnson episode
ended in a way that discouraged congressional restrictions on
the President’s removal power and helped preserve
Presidential control over the Executive Branch. The Tenure
of Office Act was itself repealed in 1887. The Johnson
acquittal stands as one of the most important events in
American history in maintaining the separation of powers
ordained by the Constitution. See WILLIAM H. REHNQUIST,
GRAND INQUESTS: THE HISTORIC IMPEACHMENTS OF JUSTICE
SAMUEL CHASE AND PRESIDENT ANDREW JOHNSON 215-16,
230-31, 250 (1992); see also Raines v. Byrd, 521 U.S. 811,
826-28 (1997).

A few decades later in 1897, the Supreme Court
considered a case that arose when President Cleveland fired a
holdover U.S. Attorney from the Harrison Administration.
See Parsons v. United States, 167 U.S. 324 (1897). The
relevant statute established a four-year term for U.S.
Attorneys. A unanimous Court held that the law did not
preclude the President from removing the U.S. Attorney at
 15
will, based largely on the constitutional backdrop that
necessarily informed interpretation of the statute. The Court
said the debates and opinions on the removal power from the
Decision of 1789 onward showed a “continued and
uninterrupted practice” of unlimited Presidential removal
power. Id. at 340. “Considering the construction of the
Constitution in this regard as given by the Congress of 1789,
and having in mind the constant and uniform practice of the
Government in harmony with such construction,” the Court
construed the act as “providing absolutely for the expiration
of the term of office at the end of four years, and not as giving
a term that shall last, at all events, for that time.” Id. at 339.
The Court accordingly held that recognition that the officials
“were removable from office at pleasure was but a
recognition of the construction thus almost universally
adhered to and acquiesced in as to the power of the President
to remove.” Id.; see also id. at 330 (“[T]he decision of
Congress in 1789, and the universal practice of the
Government under it, had settled the question beyond any
power of alteration.”).

In Myers v. United States, the Supreme Court thoroughly
addressed the scope of the President’s removal power. See
272 U.S. 52 (1926). In an extraordinarily detailed opinion by
Chief Justice Taft, who had previously served as President
and had a keen understanding of the realities of Executive
Branch governance, the Court reaffirmed the Decision of
1789 and agreed with President Johnson’s view in 1868 that
restrictions on the President’s removal power were
unconstitutional. Id. at 166-67. The dispute in Myers arose
after President Wilson had removed a postmaster without
Senate approval, in violation of an 1872 statute covering the
Post Office Department. The postmaster sued. In upholding
the President’s removal authority and rejecting the
postmaster’s claim, the Court examined the text and history of
 16
Article II and outlined the broad reach of the President’s
appointment and removal powers:

The vesting of the executive power in the President
was essentially a grant of the power to execute the
laws. . . . As he is charged specifically to take care that
they be faithfully executed, the reasonable implication,
even in the absence of express words, was that as part of
his executive power he should select those who were to
act for him under his direction in the execution of the
laws. The further implication must be, in the absence of
any express limitation respecting removals, that as his
selection of administrative officers is essential to the
execution of the laws by him, so must be his power of
removing those for whom he can not continue to be
responsible.

Id. at 117. The Myers Court said that the President’s power of
removal over executive officers was “essential to the
execution of the laws by him.” Id. The Court added that the
President’s removal power extended to officers appointed by
the President throughout the Executive Branch, including to
officers who are charged with promulgating regulations or
exercising “quasi-judicial” duties, such as “members of
executive tribunals.” Id. at 135. And the Myers Court made
clear that Congress could play no role in the removal of
executive officers.

Consistent with the constitutional text and the Decision
of 1789, the holding of Myers continues to this day to prohibit
any congressional involvement in the removal of executive
officers. In its 1986 decision in Bowsher v. Synar, for
example, the Court reaffirmed this precise holding. See 478
U.S. 714. The Bowsher Court held that Congress had
impermissibly “intruded into the executive function” by
 17
preventing the President’s removal of an executive officer
(the Comptroller General as his duties were then defined)
without congressional approval. Id. at 734. The Court stated
that “Congress cannot reserve for itself the power of removal
of an officer charged with the execution of the laws except by
impeachment.” Id. at 726.

B

If the removal issue in this case were decided based on
the constitutional text, the prevailing understanding of that
text at the time of drafting and ratification and during the First
Congress, the historical practice and common understanding
of that text during the first 146 years of our constitutional
Government, and the leading Supreme Court decisions in
Myers and Parsons, we would face an easy decision. The
PCAOB would be flatly unconstitutional because the statute
restricts the President’s power to remove PCAOB members at
will and thereby to direct and supervise the exercise of
executive power and take care that the laws are faithfully
executed.

It’s not quite that easy, however. Any decision this Court
makes in this area must recognize the central importance of
the Supreme Court’s 1935 decision in Humphrey’s Executor
v. United States, 295 U.S. 602 (1935). The Court there did
not overrule the precise holding of Myers by allowing
congressional involvement in removal of executive officers.
But in tension with Myers, the Court did uphold
congressionally imposed good-cause restrictions on the
President’s removal of certain executive officers. Id. at 631-
32.4 The case arose after a decision by President Franklin

4
Some have questioned the persuasiveness of the
constitutional distinction drawn in removal cases between (i) a
statute generally requiring the President to meet good-cause
 18
Roosevelt, upon taking office in 1933, to ask for Humphrey’s
resignation from the Federal Trade Commission. President
Roosevelt wrote in a letter to Humphrey, who had been

standards to remove an officer as in Humphrey’s Executor and (ii) a
statute requiring congressional approval of particular removal
decisions as in Myers. In both cases, the President’s power to
remove is restricted by an Act of Congress; the for-cause approach
arguably just shows, as Madison warned, that Congress can “mask,
under complicated and indirect measures, the encroachments which
it makes on the co-ordinate departments.” THE FEDERALIST NO. 48
(Madison). The apparent theory behind the distinction is that (i)
Congressional diminishment of Presidential authority is different
from (ii) Congressional diminishment of Presidential authority and
concurrent enhancement of its own authority. As Justice Kennedy
has written for the Court, that theory is not an entirely accurate
summary of separation of powers principles: “Even when a branch
does not arrogate power to itself, moreover, the separation-of-
powers doctrine requires that a branch not impair another in the
performance of its constitutional duties.” Loving v. United States,
517 U.S. 748, 757 (1996); see also Clinton v. Jones, 520 U.S. 681,
701 (1997) (quoting this language from Loving with approval).
And as Judge Silberman, writing for himself and Judge Williams,
has recognized, the factual basis for the distinction is dubious: “If
the President’s authority is diminished . . . Congress’ political
power must necessarily increase vis-a-vis the President.” In re
Sealed Case, 838 F.2d 476, 508 (D.C. Cir. 1988), rev’d sub nom.
Morrison v. Olson, 487 U.S. 654 (1988); see also In re Sealed
Case, 829 F.2d 50, 65 n.3 (D.C. Cir. 1987) (Williams, J.,
concurring in part and dissenting in part) (“Power abhors a vacuum.
Unhitching the Independent Counsel from the executive may make
the office naturally prone to domination by the branch that
represents its primary competitor.”); Elena Kagan, Presidential
Administration, 114 HARV. L. REV. 2245, 2271 n.93 (2001) (“As a
practical matter, successful insulation of administration from the
President – even if accomplished in the name of ‘independence’ –
will tend to enhance Congress’s own authority over the insulated
activities.”).
 19
appointed by President Hoover: “I do not feel that your mind
and my mind go along together on either the policies or the
administering of” the FTC. Id. at 619. When Humphrey
refused to resign, President Roosevelt fired him. Humphrey
challenged the removal as a violation of the Federal Trade
Commission Act, which provided that the President could
remove commissioners during their statutory term of office
only for “inefficiency, neglect of duty, or malfeasance in
office.” Id.

The Solicitor General defended President Roosevelt’s
decision on constitutional grounds by citing Myers. Yet the
Court ruled for Humphrey. In an opinion by Justice
Sutherland, the Court upheld the statutory limits on the
President’s removal power, allowing the FTC to be “a body
which shall be independent of 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.” Id. at 625-26 (emphasis omitted). The
Court stated that the Constitution permitted Congress to
establish independent agencies that “cannot in any proper
sense be characterized as an arm or an eye of the executive.”
Id. at 628; see also Wiener v. United States, 357 U.S. 349,
355-56 (1958) (relying on Humphrey’s Executor and
upholding removal restrictions on members of War Claims
Commission).5

Humphrey’s Executor thereby blessed Congress’s
creation of the so-called “independent” agencies where “at

5
“The rationale of Wiener, which is essentially that Congress
must have implied a for-cause removal restriction when the Court
believes that the functions of the agency demand such tenure
protection, 357 U.S. at 353-56, seems questionable.” The
Constitutional Separation of Powers Between the President and
Congress, 20 Op. Off. Legal Counsel 124, 168 n.115 (1996).
 20
least one individual is appointed by the President to a full-
time, fixed-term position with the advice and consent of the
Senate and has protection against summary removal by some
form of ‘for cause’ restriction on the President’s authority.”
Marshall J. Breger & Gary J. Edles, Established by Practice:
The Theory and Operation of Independent Federal Agencies,
52 ADMIN. L. REV. 1111, 1114 (2000). Today, this collection
of independent agencies is commonly understood to include,
among many others, the CFTC, the FCC, the Federal Reserve,
the FTC, FERC, the NLRB, and the SEC. As the cases and
statutes illustrate, what makes an agency “independent” is the
for-cause removal restriction that limits the President’s ability
to remove the heads of the agency – typically to cases of
inefficiency, neglect of duty, or malfeasance in office. See,
e.g., 44 U.S.C. § 3502(5) (listing as “independent” for
purposes of the Paperwork Reduction Act 16 particular
agencies); Breger & Edles, Established By Practice, 52
ADMIN. L. REV. at 1114 n.6, app. at 1236-94 (cataloging
“independent agencies”).

Along the same lines as Humphrey’s Executor, the
Supreme Court’s 1988 decision in Morrison v. Olson upheld a
good-cause restriction on removal of an inferior executive
officer by a head of department who was an alter ego of the
President (that is, by a head of department removable at will
by the President). See 487 U.S. 654. In particular, the Court
upheld the independent counsel provisions of the Ethics in
Government Act of 1978, including the restriction on the
Attorney General’s power to remove an inferior officer (the
independent counsel) only for “good cause.” Id. at 685. In
the Morrison Court’s view, because the President’s alter ego
(the Attorney General) retained the authority to remove the
independent counsel for cause, the President’s “power to
remove” was not “completely stripped.” Id. at 692. The for-
cause removal provision of the statute therefore was deemed
 21
not to “unduly trammel[] on executive authority” any more
than in Humphrey’s Executor. Id. at 691. The Court thus
found no constitutionally significant difference for purposes
of Humphrey’s Executor between (i) the President removing
an executive officer for good cause and (ii) a Presidential alter
ego such as the Attorney General removing an executive
officer for good cause. See also In re Sealed Case, 838 F.2d
476, 528 n.30 (D.C. Cir. 1988) (R.B. Ginsburg, J., dissenting)
(Attorney General “is the hand of the President in taking care
that the laws of the United States . . . be faithfully executed.”)
(internal quotation marks omitted) (alteration in original),
rev’d sub nom. Morrison, 487 U.S. 654.6

By permitting a good-cause restriction on the removal of
an executive officer by the President or the President’s alter
ego, there is no doubt that Humphrey’s Executor and
Morrison authorize a significant intrusion on the President’s
Article II authority to exercise the executive power and take
care that the laws be faithfully executed. See Morrison, 487
U.S. at 695 (“It is undeniable that the Act reduces the amount
of control or supervision that the Attorney General and,

6
Like Morrison, the Court’s short and unexplained 19th
Century decision in United States v. Perkins also appeared to allow
restrictions on removal of inferior officers by the head of an
executive agency, at least where the agency was headed by a
principal officer removable at will by the President (there, the
Secretary of the Navy). See 116 U.S. 483 (1886). Assuming
Perkins remains good law on the removability of inferior officers,
see generally John F. Manning, The Independent Counsel Statute:
Reading “Good Cause” in Light of Article II, 83 MINN. L. REV.
1285, 1332-33 n.167 (1999), it goes no further than Morrison in
allowing restrictions on the President’s removal of inferior
executive officers. See Morrison, 487 U.S. at 689 n.27, 690 n.29.
 22
through him, the President exercises over the investigation
and prosecution of a certain class of alleged criminal
activity.”); Humphrey’s Executor, 295 U.S. at 628
(independent agencies are not “an arm or an eye of the
executive”).

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. See, e.g., Geoffrey P. Miller, Independent Agencies,
1986 SUP. CT. REV. 41, 93 (“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 (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.”).

But we cannot, need not, and do not re-litigate those two
cases here. For this Court, those cases are binding precedents
on the removal question. The question is whether the
Sarbanes-Oxley Act’s restriction on the President’s removal
power over the PCAOB is unconstitutional under Humphrey’s
Executor and Morrison. As I explain below, the PCAOB
contravenes those precedents and violates the Constitution.

C

The removal issue in this case arises because, unlike in
Humphrey’s Executor and Morrison, neither the President nor
a Presidential alter ego can remove the members of the
PCAOB. Rather, the Board is removable only by the
 23
Securities and Exchange Commission, and only for cause.
Put another way, the PCAOB is an independent agency
appointed by and removable for cause by another independent
agency.7 This means that the President of the United States is
two levels of for-cause removal away from the PCAOB,
notwithstanding that the PCAOB performs numerous
regulatory and law-enforcement functions at the heart of the
executive power.

In 1935 and 1988, the Supreme Court found that the
President retains at least some authority to remove for-cause
executive officers and thus some degree of control over them.
The Court further said that the President’s power to remove
either directly or through an alter ego was essential to the
constitutionality of the for-cause removal statutes. See
Morrison, 487 U.S. at 692. By contrast, the double for-cause
removal provisions in the Sarbanes-Oxley Act completely
strip the President’s ability to remove PCAOB members,
either directly or through an alter ego, and combine to
eliminate any meaningful Presidential control over the
PCAOB. As one commentator cogently stated, “defenders of
the PCAOB’s structure will have their work cut out for them

7
As an independent agency whose Commissioners are
considered removable by the President only for cause, the SEC
(unlike the Attorney General in Morrison) is not the President’s
alter ego, a point not contested by the Board or the United States as
intervenor. See SEC v. Blinder, Robinson & Co., 855 F.2d 677, 681
(10th Cir. 1988); 44 U.S.C. § 3502(5). Some agencies are
“specifically designed not to have the quality . . . of being subject to
the exercise of political oversight and sharing the President’s
accountability to the people – namely, independent regulatory
agencies such as the Federal Trade Commission and the Securities
and Exchange Commission.” Freytag v. Comm’r of Internal
Revenue, 501 U.S. 868, 916 (1991) (Scalia, J., concurring in part)
(internal quotation marks and alteration omitted).
 24
in arguing that the Constitution allows the PCAOB’s five
members to be even more independent from the President
than the members of federal independent agencies.” Donna
M. Nagy, Playing Peekaboo with Constitutional Law: The
PCAOB and Its Public/Private Status, 80 NOTRE DAME L.
REV. 975, 1056 (2005); see also Peter L. Strauss, The Place of
Agencies in Government: Separation of Powers and the
Fourth Branch, 84 COLUM. L. REV. 573, 597 (1984)
(“Whatever arrangements are made, one must remain able to
characterize the President as the unitary, politically
accountable head of all law-administration . . . .”).

This case therefore presents what the majority opinion
rightly labels a constitutional issue of first impression. The
question is whether to extend Humphrey’s Executor and
Morrison to uphold the removal restrictions in this Act – in
other words, to interpret those precedents to permit not just
independent agencies whose heads are removable for cause by
the President or his alter ego, but also independent agencies
whose heads are removable for cause only by other
independent agencies. I would not so stretch Humphrey’s
Executor and Morrison. Four points inform my conclusion.

First, the lengthy recitation of text, original
understanding, history, and precedent above leads to the
following principle: Humphrey’s Executor and Morrison
represent what up to now have been the outermost
constitutional limits of permissible congressional restrictions
on the President’s removal power. Therefore, given a choice
between drawing the line at the holdings in Humphrey’s
Executor and Morrison or extending those cases to authorize
novel structures such as the PCAOB that further attenuate the
President’s control over executive officers, we should opt for
the former. We should resolve questions about the scope of
those precedents in light of and in the direction of the
 25
constitutional text and constitutional history. See Bowsher,
478 U.S. at 724-26 & n.4; cf. Hein v. Freedom from Religion
Found., Inc., 127 S. Ct. 2553, 2571-72 (2007). In this case,
that sensible principle dictates that we hold the line and not
allow encroachments on the President’s removal power
beyond what Humphrey’s Executor and Morrison already
permit.

Second, the Supreme Court in Morrison has already
specifically required that the President or his alter ego possess
authority to remove an executive officer protected by a for-
cause removal provision:

Nor do we think that the “good cause” removal
provision at issue here impermissibly burdens the
President’s power to control or supervise the independent
counsel, as an executive official, in the execution of his
or her duties under the Act. This is not a case in which
the power to remove an executive official has been
completely stripped from the President, thus providing no
means for the President to ensure the “faithful
execution” of the laws. Rather, because the independent
counsel may be terminated for “good cause,” the
Executive, through the Attorney General, retains ample
authority to assure that the counsel is competently
performing his or her statutory responsibilities in a
manner that comports with the provisions of the Act.

Morrison, 487 U.S. at 692 (emphases added).

That language from Morrison all but resolves the
removal issue in this case. No doubt recognizing that this
passage from Morrison dooms its submission, the Board tries
to dismiss it as “dicta.” PCAOB Br. at 43. I think not: This
discussion contains the Morrison Court’s essential
 26
explanation for why the independent counsel statute’s
restriction on removal was permissible under Humphrey’s
Executor. If that language from Morrison has meaning – and
the Court clearly indicated that it would – it requires
invalidation of the PCAOB. Here, unlike in Morrison, the
“power to remove an executive official has been completely
stripped from the President.” 487 U.S. at 692.

Third¸ Justice Holmes reminded us that “a page of history
is worth a volume of logic.” New York Trust Co. v. Eisner,
256 U.S. 345, 349 (1921). Perhaps the most telling indication
of the severe constitutional problem with the PCAOB is the
lack of historical precedent for this entity. Neither the
majority opinion nor the PCAOB nor the United States as
intervenor has located any historical analogues for this novel
structure. They have not identified any independent agency
other than the PCAOB that is appointed by and removable
only for cause by another independent agency. Cf. Bowsher,
478 U.S. at 725 n.4 (“Appellants have referred us to no
independent agency whose members are removable by the
Congress for certain causes short of impeachable offenses, as
is the Comptroller General.”).8 The lack of precedent for the

8
In all the laws enacted since 1789, it is always possible that
Congress has created another structure like the PCAOB that
exercises traditional executive functions and yet is two levels of
for-cause removal away from the President – even though the
research of the parties and the Court has not found such a needle in
the haystack. Even if such an example were uncovered, this kind of
“independent agency appointed by and removable for cause only by
another independent agency” has been rare at best.
As the parties acknowledge, any civil service tenure-protected
employees in independent agencies constitute no precedent for the
PCAOB. First, consistent with the text of the Appointments
Clause, the Article II removal precedents have focused on the
President’s control over “officers” – not “employees,” who are
 27

“lesser functionaries” typically exercising ministerial duties.
Buckley v. Valeo, 424 U.S. 1, 126 n.162 (1976). And any civil
servants in independent agencies are employees, not officers,
because they do not exercise “significant authority pursuant to the
laws of the United States.” Id. at 126; cf. In re Sealed Case, 838
F.2d at 497 (“[C]ivil servants are not thought to be the President’s
policymakers.”), rev’d sub nom. Morrison, 487 U.S. 654. Second,
in any event, civil service laws recognize the authority of the
President or agency head to exempt certain employees from tenure
protection as necessary and appropriate. See, e.g., 5 U.S.C. §§
2302(a)(2)(B), 3301-02, 7511(b)(2); cf. id. § 4802 (giving SEC
express authority to hire officers and employees without regard to
civil service laws); see also Steven G. Calabresi & Christopher S.
Yoo, The Unitary Executive in Historical Perspective, 31 ADMIN.
& REG. L. NEWS 5, 5-6 (2005).
Although the Board and the United States as intervenor did not
point to them as a precedent, administrative law judges in the
independent agencies are removable only for cause at the initiation
of the agency that employs them and with approval of the Merit
Systems Protection Board, see 5 U.S.C. § 7521, whose members in
turn are removable only for cause by the President, see id. §
1202(d). But there are good reasons the Board and the United
States did not cite ALJs as a precedent. First, an agency has the
choice whether to use ALJs for hearings, see 5 U.S.C. 556(b);
Congress has not imposed ALJs on the Executive Branch. Second,
many ALJs are employees, not officers. See Landry v. FDIC, 204
F.3d 1125, 1132-34 (D.C. Cir. 2000) (ALJs in FDIC are employees
because they possess only recommendatory powers that are subject
to de novo review by agency). Third, ALJs perform only
adjudicatory functions that are subject to review by agency
officials, see 5 U.S.C. § 557(b), and that arguably would not be
considered “central to the functioning of the Executive Branch” for
purposes of the Article II removal precedents. Morrison, 487 U.S.
at 691-92. Nothing in this dissenting opinion is intended to or
would affect the status of employees in independent agencies who
have congressionally mandated civil service tenure protection or the
status of administrative law judges.
 28
PCAOB counsels great restraint by the Judiciary before
approving this additional incursion on the President’s Article
II powers.

Fourth, upholding the PCAOB here would green-light
Congress to create a host of similar entities. Congress could
thereby splinter executive power to a degree not previously
permitted, in serious tension with Article II’s conception of a
single President who can control his subordinates and the
exercise of executive power. Congress would have license to
create a series of independent bipartisan boards appointed by
independent agencies and removable only for cause by such
independent agencies. Imagine an Energy Price Enforcement
Board appointed by and removable only for cause by FERC,
an Indecency Enforcement Board appointed by and
removable only for cause by the FCC, a Mortgage Regulatory
Board appointed by and removable only for cause by the Fed.
All are permissible under the PCAOB’s theory of the case.
But in such a system, where is the President, in whom the
Constitution vests the “executive power”?

In the past, when faced with novel creations of this sort,
the Supreme Court has looked down the slippery slope – and
has ordinarily refused to take even a few steps down the hill.
As Justice Stevens stated for the Court in invalidating the
structure of the Metropolitan Washington Airports
Authority’s Board of Review: “[T]he statutory scheme
challenged today provides a blueprint for extensive expansion
of the legislative power beyond its constitutionally confined
role. . . . Congress could, if this Board of Review were valid,
use similar expedients . . . . As James Madison presciently
observed, the legislature ‘can with greater facility, mask under
complicated and indirect measures, the encroachments which
it makes on the co-ordinate departments.’ Heeding his
warning that legislative ‘power is of an encroaching nature,’
 29
we conclude that the Board of Review is an impermissible
encroachment.” Metro. Wash. Airports Auth. v. Citizens for
Abatement of Aircraft Noise, Inc., 501 U.S. 252, 277 (1991)
(quoting THE FEDERALIST NO. 48).

As demonstrated in MWAA, when presented with
arguments for “the kind of practical accommodation between
the Legislature and the Executive that should be permitted in
a ‘workable government,’” id. at 276, the Court has strictly
adhered to the constitutional text and the limitations of Myers
and Humphrey’s Executor and flatly and forcefully said no to
novel policy inventions and corresponding structures that
contravene Article II. See id. at 276-77; Bowsher, 478 U.S. at
736; Buckley v. Valeo, 424 U.S. 1, 132, 138-39 (1976); see
also Clinton v. City of New York, 524 U.S. 417, 438 (1998);
INS v. Chadha, 462 U.S. 919, 945 (1983); cf. Printz v. United
States, 521 U.S. 898, 922 (1997) (striking down Brady Act in
part on separation of powers grounds because it effectively
transferred President’s law enforcement responsibility to state
officials “who are left to implement the program without
meaningful Presidential control (if indeed meaningful
Presidential control is possible without the power to appoint
and remove)”). We should do the same here, lest we give rise
to a new “Fifth Branch” of the Federal Government. Cf.
Strauss, The Place of Agencies in Government: Separation of
Powers and the Fourth Branch, 84 COLUM. L. REV. 573.

In sum, the Sarbanes-Oxley Act created an entity that is
inconsistent with the text and history of Article II, that the
Humphrey’s Executor Court did not confront much less
endorse, that Morrison expressly rejects, that is apparently
unprecedented in our history, and that could well lead to
 30
serious additional encroachments on the President’s removal
authority. The PCAOB violates Article II.9

D

Underlying my conclusion that the PCAOB violates
removal precedents is the premise that this double for-cause
removal structure attenuates the President’s control over the
Board more than the typical single for-cause provision
restricts the President’s control over independent agencies
(whose heads are removable for cause directly by the
President). As explained above, text, history, precedent, and
logic demonstrate that this premise is correct.

To be sure, some might argue that the President’s Article
II removal power over independent agencies is already so
crippled by Humphrey’s Executor and Morrison that this
statute does no further discernible damage. The problem with
any such suggestion, however, is that the Supreme Court
upheld the for-cause restrictions at issue in Humphrey’s
Executor and Morrison on the precise factual assumption that
they still permit the President some limited degree of control
over executive officers. The Court concluded that a single

9
The majority opinion seems to argue that the PCAOB is
actually not an independent agency. See Maj. Op. at 23-24, 32-33.
But that is the term that traditionally has been applied by the
Supreme Court, the Congress, and the Executive Branch to
agencies like the PCAOB whose heads are not removable at will.
See, e.g., Lebron v. Nat’l R.R. Passenger Corp., 513 U.S. 374, 398
(1995); Bowsher, 478 U.S. at 724 n.4. The majority opinion can try
to argue that this independent agency is constitutionally permissible
under the Supreme Court’s precedents. But its attempt to claim that
the PCAOB is not even an independent agency defies long-
accepted terminology and does not account for the meaning and
effect of for-cause removal restrictions.
 31
for-cause restriction did not unduly “interfere with the
President’s exercise of the ‘executive power’ and his
constitutionally appointed duty to ‘take care that the laws be
faithfully executed’ under Article II.” Morrison, 487 U.S. at
690. Importantly, the Morrison Court distinguished the
situation there from a case (like this one) where the power to
remove had been “completely stripped” from the President.
Id. at 692. The double for-cause removal provision at issue
here completely strips the President’s removal power and, as
Morrison anticipated, poses a greater restriction on the
President’s constitutional authority than a single for-cause
provision.

From the other direction, rather than argue that the
President’s well of executive removal power is already
drained by the single for-cause restriction allowed by
Humphrey’s Executor and Morrison (so what’s the harm with
two?), some alternatively might contend that the President’s
control over an independent agency is actually not
significantly affected by a for-cause removal provision (so
again, what’s the harm with two?). The majority opinion
seems to latch onto this theory, see Maj. Op. at 23-24, which
posits that, notwithstanding two for-cause removal provisions,
the President can control the SEC and the PCAOB just as well
as the President can control, for example, the Secretary of
State and the U.S. Ambassador to Iraq. But that suggestion
does not fully account for the text of for-cause statutes, the
realities of Executive Branch decisionmaking, and the long-
standing interpretations and understandings of Congresses,
Presidents, and courts regarding independent agencies.

The for-cause removal restrictions attached to
independent agencies typically prohibit removal except in
cases of inefficiency, neglect of duty, or malfeasance. Those
restrictions have significant impact both in law and in
 32
practice. See Freytag v. Comm’r of Internal Revenue, 501
U.S. 868, 916 (1991) (Scalia, J., concurring in part)
(“independent regulatory agencies such as the Federal Trade
Commission and the Securities and Exchange Commission”
are “specifically designed not to have the quality . . . of being
subject to the exercise of political oversight and sharing the
President’s accountability to the people”) (internal quotation
marks and alteration omitted); Mistretta v. United States, 488
U.S. 361, 411 (1989) (good-cause provisions “specifically
crafted to prevent the President from exercising ‘coercive
influence’ over independent agencies”). Humphrey’s
Executor and Wiener demonstrate, for example, that “for
cause” removal requirements forbid dismissal by the
President due to lack of trust in the administrator, see 295
U.S. at 625-26, differences in policy outlook, id., or the mere
desire to install administrators of the President’s choosing,
357 U.S. at 356. In Morrison, the Court therefore took it as a
given that “the degree of control exercised by the Executive
Branch over an independent counsel is clearly diminished in
relation to that exercised over other prosecutors, such as the
United States Attorneys, who are appointed by the President
and subject to termination at will.” 487 U.S. at 696 n.34; see
also Buckley, 424 U.S. at 133 (“The Court in [Humphrey’s
Executor] carefully emphasized that . . . the members of such
agencies were to be independent of the Executive in their day-
to-day operations . . . .”); Humphrey’s Executor, 295 U.S. at
628 (independent agencies “cannot in any proper sense be
characterized as an arm or an eye of the executive”).

Consistent with the plain language, precedents, and
common interpretation of those for-cause provisions,
Presidents, Congresses, and officials in independent agencies
work under the real-world understanding that the heads of the
“independent” agencies possess some degree of
congressionally conferred substantive autonomy from the
 33
President (although exactly how much autonomy is not
always clear). That understanding is why Congress continues
to include for-cause removal restrictions when it wants to
create an independent officer with some substantive
autonomy – as it did yet again a few weeks ago. See Housing
and Economic Recovery Act of 2008, Pub. L. No. 110-289,
122 Stat. 2654 (2008) (creating new “independent” federal
regulator of Fannie Mae and Freddie Mac appointed by
President with advice and consent of Senate and removable
for cause by President). In short, the double for-cause
removal restriction cannot be justified by a theory that for-
cause removal restrictions have no real meaning and effect.10

10
There is some respected academic support for reading the
text of the typical for-cause removal restrictions to be all but
indistinguishable from removal at will. But that conclusion is not
obvious as a matter of ordinary statutory interpretation, and it is not
evident, therefore, that this approach would comfortably fall even
within the scope of the constitutional avoidance doctrine. See
Edward J. DeBartolo Corp. v. Florida Gulf Coast Bldg. & Constr.
Trades Council, 485 U.S. 568, 575 (1988) (“[W]here an otherwise
acceptable construction of a statute would raise serious
constitutional problems, the Court will construe the statute to avoid
such problems unless such construction is plainly contrary to the
intent of Congress.”); William K. Kelley, Avoiding Constitutional
Questions as a Three-Branch Problem, 86 CORNELL L. REV. 831
(2001). If there is a problem with the statutory for-cause removal
restrictions on the President’s removal of so-called independent
agency heads – and many think there may be, see, e.g., Steven G.
Calabresi & Saikrishna B. Prakash, The President’s Power to
Execute the Laws, 104 YALE L.J. 541, 598 (1994) – the problem is
likely because the for-cause statutes contravene constitutional
principles, not because the relevant political and judicial actors
have misinterpreted the statutes for seven decades to be more
restrictive than their plain language actually requires and
contemplates.
 34
Notwithstanding that text, history, precedent, and logic
show that for-cause removal provisions generally have
significant effects, the Board persists in arguing that the
second for-cause restriction at issue here – the restriction on
the SEC’s removal of the Board – does not meaningfully
restrict the SEC’s power over Board members. The
suggestion is that Board members are no different from
inferior officers in the SEC – like the SEC General Counsel –
who are removable at will by the Commission. But the for-
cause removal provision here (as elsewhere) carries real
meaning. It ensures that the Board possesses some degree of
substantive independence from the SEC: In particular, the
SEC has no power to direct and supervise Board inspections,
investigations, and enforcement actions. And the SEC cannot
remove the Board for failing to follow any attempted
substantive direction by the SEC with respect to specific
Board inspections, investigations, and enforcement
decisions – a point the Board never disputes. As a result, the
for-cause removal restriction establishes, just as the
congressional sponsors intended, that the PCAOB has “an
extra guarantee of its independence and its plenary authority
to deal with this important situation.” 148 CONG. REC. S6327,
S6331 (daily ed. July 8, 2002) (statement of Sen. Sarbanes).
The for-cause removal restriction ensures, in other words, that
the PCAOB operates as a “strong independent board.” Cf. id.
at S6330 (statement of Sen. Sarbanes) (“Title I of the bill
creates a strong independent board to oversee the auditors of
public companies.”); S. REP. NO. 107-205, at 2 (2002) (Act
creates “a strong independent board”); id. at 6 (“The
successful operation of the Board depends upon its
independence . . . .”). The for-cause removal provision
supplies the basis for the trenchant observation of one of the
supporters of this legislation that the PCAOB has “massive
 35
power, unchecked power.” 148 CONG. REC. at S6334
(statement of Sen. Gramm).11

The Board’s argument for dismissing the impact of this
second for-cause provision is particularly far-fetched in this
case because the statutory restriction on the SEC’s removal of
the Board is far more stringent than the typical for-cause
removal restriction. The Board is designed to be even more
independent from the SEC when performing certain critical
activities than, for example, the independent SEC is from the
President. The statute permits removal only when a Board
member has “willfully” broken the law, has “willfully
abused” his or her authority, or “without reasonable
justification or excuse” has “failed to enforce compliance.”
15 U.S.C. § 7217(d)(3)(A)-(C). This is more restrictive
removal language than the traditional for-cause language of
inefficiency, neglect of duty, or malfeasance. This provision
makes it even clearer that the SEC’s substantive
disagreements with the Board’s decisions regarding specific
inspections, investigations, or enforcement actions do not
justify removal for cause – a critical point that the Board
never contests and that badly undermines its argument for
upholding the double for-cause removal restriction.12

11
I cite these legislative materials not to alter interpretation of
the text, but to demonstrate that the text’s design of the PCAOB as
an independent agency whose heads are protected against removal
except for cause was exactly consistent with the legislative reports
and statements, contrary to the strained interpretation of the
majority opinion. Cf. Maj. Op. at 25-34.
12
The Board notes that this case involves a facial challenge.
But that does not affect the analysis; this is not the kind of case
where a statute might be applied constitutionally in some instances
but not in others. See United States v. Salerno, 481 U.S. 739, 745
(1987). Here, either the PCAOB is unconstitutionally structured, or
it is not. The Board also invokes the doctrine of constitutional
 36

The statutory language and history show, in short, that
the effect and purpose of this statute was to wall off the
PCAOB from comprehensive SEC control, not to make the
PCAOB “an arm or an eye” of the SEC. Cf. Humphrey’s
Executor, 295 U.S. at 628. The Board’s counter-factual,
counter-textual argument ignores the double for-cause reality
of this statutory scheme.

***

In sum, neither the President of the United States nor a
Presidential alter ego possesses any power to remove PCAOB
members for cause or otherwise. The unique and apparently
unprecedented double for-cause removal statute – an
independent agency whose heads are removable for cause
only by another independent agency – overruns the
boundaries set by Supreme Court precedents in Humphrey’s
Executor and Morrison with respect to congressional
encroachment on Presidential removal authority. I would
hold it unconstitutional as a violation of Article II because it
impermissibly restricts the President’s power to remove
executive officers.13

avoidance and seems to suggest interpreting the statute so as to
minimize if not eliminate the provision restricting the SEC’s
removal of the Board. But the for-cause removal provision cannot
legitimately be read entirely out of the statute; as a result, the
doctrine of constitutional avoidance does not help the Board in
analyzing the removal issue. See DeBartolo Corp., 485 U.S. at
575.
13
The majority opinion claims that this dissent articulates a
theory that the President “must have at-will removal power.” Maj.
Op. at 33. Obviously that is an inaccurate reading of this dissenting
 37

III

The Accounting Board also violates the Appointments
Clause of Article II of the Constitution.

A

To reiterate, the Appointments Clause provides that the
President:

shall nominate, and by and with the Advice and Consent
of the Senate, shall appoint Ambassadors, other public
Ministers and Consuls, Judges of the supreme Court, and
all other Officers of the United States, whose
Appointments are not herein otherwise provided for, and
which shall be established by Law: but the Congress may
by Law vest the Appointment of such inferior Officers, as
they think proper, in the President alone, in the Courts of
Law, or in the Heads of Departments.

U.S. CONST. art. II, § 2, cl. 2.

By its plain text, the Appointments Clause governs the
appointment of all “Officers of the United States.” The
PCAOB does not dispute that its members are “officers” of
the United States, rather than mere employees who are “lesser
functionaries.” Buckley v. Valeo, 424 U.S. 1, 126 n.162
(1976). This concession was sound: PCAOB members have
extraordinarily broad power under the Sarbanes-Oxley Act of
2002 to, among other things, promulgate rules, initiate and
conduct investigations and inspections, compel testimony, and

opinion. Humphrey’s Executor and Morrison permit certain for-
cause removal statutes. My argument on the removal issue is that
the statute at issue here contravenes those two cases.
 38
impose sanctions. They plainly exercise “significant authority
pursuant to the laws of the United States,” and they therefore
are officers who must “be appointed in the manner prescribed
by” the Appointments Clause. Id. at 126; see also Freytag v.
Comm’r of Internal Revenue, 501 U.S. 868, 881 (1991).

As the plain text of Article II provides and as the
Supreme Court has long recognized, the Constitution “for
purposes of appointment very clearly divides all its officers
into two classes.” United States v. Germaine, 99 U.S. 508,
509 (1879). The most important executive officers – the
“principal officers,” a term that includes at least the “heads of
departments” – require nomination by the President and
confirmation by the Senate. The Framers foresaw, however,
that the advice-and-consent process “might be inconvenient”
when “offices became numerous, and sudden removals
necessary.” Id. at 510. The Appointments Clause therefore
says that Congress can provide for appointment of “inferior
officers” either by Presidential nomination and Senate
confirmation or “in the President alone, in the Courts of Law,
or in the Heads of Departments.” U.S. CONST. art. II, § 2, cl.
2.

B

The Appointments Clause issue in this case turns on
whether PCAOB members are “principal” or “inferior”
officers as those terms are understood and have been
explained in Supreme Court decisions. If the members of the
PCAOB are principal rather than inferior officers, then the
Board is an unconstitutional violation of the Appointments
Clause because Board members are not appointed by the
President with the advice and consent of the Senate, but
instead are appointed by the SEC.
 39
Unlike with respect to the removal issue, there are
relatively few Supreme Court precedents on the “principal
versus inferior” officer issue for Appointments Clause
purposes. See In re Sealed Case, 838 F.2d 476, 481 (D.C.
Cir. 1988) (“Two hundred years after the adoption of the
United States Constitution the federal courts are, essentially
for the first time, required to construe closely the
appointments clause of Article II.”), rev’d sub nom. Morrison
v. Olson, 487 U.S. 654 (1988); see also Note, Congressional
Restrictions on the President’s Appointment Power and the
Role of Longstanding Practice in Constitutional
Interpretation, 120 HARV. L. REV. 1914, 1916 (2007). The
dearth of precedent is easily explained as a matter of text and
history. When Congress provides that appointment to a
specific office requires Presidential appointment with Senate
confirmation, the “principal versus inferior” question is
irrelevant because that appointment procedure is
constitutionally permissible for both principal and inferior
officers. For example, the heads of the independent agencies
are all appointed by the President with the advice and consent
of the Senate, so it does not matter whether the officers are
considered principal or inferior. Moreover, in most situations
where Congress historically has provided for appointment of
an executive officer by the Head of a Department, it was clear
that the officer was inferior to that principal officer – because
Congress did not prevent the principal officer from removing
that inferior officer at will. See generally Ex parte Hennen,
38 U.S. 230, 259-60 (1839).

The Supreme Court most recently and most thoroughly
analyzed the distinction between principal and inferior
officers in Edmond v. United States, 520 U.S. 651 (1997). In
that case, service members challenged the affirmance of their
court-martial convictions by the Coast Guard Court of
Criminal Appeals, an intermediate Executive Branch judicial
 40
tribunal within the Department of Transportation. That Coast
Guard Court reviewed decisions of courts-martial, and its
decisions were reviewed by the U.S. Court of Appeals for the
Armed Forces. The service members argued among other
things that the judges of the Coast Guard Court of Criminal
Appeals were “principal officers.” This created a
constitutional problem, they contended, because the judges
had been appointed by the Secretary of Transportation, not by
the President with the advice and consent of the Senate. See
id. at 655-56.

In an opinion by Justice Scalia for eight Justices, the
Supreme Court rejected that argument. Acknowledging that
previous cases had not “set forth an exclusive criterion for
distinguishing between principal and inferior officers for
Appointments Clause purposes,” id. at 661, the Court stated
that “the term ‘inferior officer’ connotes a relationship with
some higher ranking officer or officers below the President:
Whether one is an ‘inferior’ officer depends on whether he
has a superior” other than the President who was nominated
by the President and confirmed by the Senate. Id. at 662. But
it is “not enough” to identify other officers “who formally
maintain a higher rank, or possess responsibilities of a greater
magnitude.” Id. at 662-63. The Court succinctly stated the
test for discerning the difference between the two: Inferior
officers “are officers whose work is directed and supervised
at some level by others who were appointed by Presidential
nomination with the advice and consent of the Senate.” Id. at
663 (emphasis added).

Applying the “directed and supervised” test to the Coast
Guard Court of Criminal Appeals judges, the Edmond Court
concluded that they were inferior officers. See id. at 666.
The Court described two different ways the Coast Guard
judges were “directed and supervised.” First, the Coast Guard
 41
judges were “directed and supervised” by the Coast Guard
Judge Advocate General (who is ex officio the General
Counsel of the Department of Transportation) because they
were removable at will by the JAG, and “[t]he power to
remove officers . . . is a powerful tool for control.” Id. at 664
(citing Bowsher v. Synar, 478 U.S. 714, 727 (1986); Myers v.
United States, 272 U.S. 52 (1926)). As the Court also noted,
the JAG prescribed rules of procedure for the court. Second,
the Coast Guard judges were “directed and supervised” by the
Court of Appeals for the Armed Forces because, by statute,
their judicial decisions were subject to review by the Court of
Appeals before the decisions took effect on the accused. The
Coast Guard judges thus had “no power to render a final
decision on behalf of the United States unless permitted to do
so by other Executive officers.” Id. at 665.14

C

Edmond was a relatively easy case in which to apply the
“directed and supervised” test: The officers were removable
at will, and at-will removal has always been considered a
powerful tool for control. See id. at 664. And the case
involved intermediate adjudicatory officers in the Executive
Branch whose decisions were subject to review by a higher
adjudicatory body before taking effect, not executive officers
who performed more typical executive functions such as

14
As Edmond reveals, the analysis of whether an officer is
“directed and supervised” depends on the express language of the
statutes governing the officer in question. The Edmond test does
not contemplate discovery or factual inquiry into how things work
in different agencies with different superiors and subordinates. The
analysis thus does not turn on the vagaries of particular supervisory
relationships or personalities that might result in different degrees
of actual supervision and direction. Rather, the constitutional
analysis focuses on the structure set up by the statutory text.
 42
conducting investigations, taking enforcement actions, and
otherwise executing laws passed by Congress.

The task in this case is to apply the Edmond “directed and
supervised” test to traditional executive officers who perform
quintessentially executive functions, such as conducting
investigations and inspections, and bringing enforcement
actions.

Edmond and the basic principles underlying Article II
teach that the key initial question in determining whether an
executive officer is inferior is whether the officer is
removable at will. Removability at will carries with it the
inherent power to direct and supervise: “Once an officer is
appointed, it is only the authority that can remove him, and
not the authority that appointed him, that he must fear and, in
the performance of his functions, obey.” Bowsher, 478 U.S.
at 726 (quoting Synar v. United States, 626 F. Supp. 1374,
1401 (D.D.C. 1986)). Therefore, if an executive officer is
removable at will and is not the head of a department, the
officer ordinarily may be considered inferior for purposes of
the Appointments Clause. And Congress in turn may provide
for appointment by the President alone or by the head of the
department, rather than through Presidential appointment with
Senate advice and consent.15

15
Whether removable-at-will executive officers are principal
or inferior depends on their place in the Executive Branch
organizational chart. The heads of departments have no superior
other than the President; therefore, they are principal officers. By
contrast, the remaining removable-at-will officers in the executive
departments and agencies ultimately report not only to the
President, but also to other superior officers in the Executive
Branch chain of command. Therefore, they may properly be
considered inferior officers.
 43
By contrast, an executive officer removable only for
cause is ordinarily designed and understood to be free from
significant substantive direction and supervision by superiors.
Indeed, that’s the whole point of for-cause removal. See
Humphrey’s Executor v. United States, 295 U.S. 602, 625-26
(1935); cf. id. at 629 (“[I]t is quite evident that one who holds
his office only during the pleasure of another cannot be
depended upon to maintain an attitude of independence
against the latter’s will.”). Because the purpose and effect of
for-cause removal are to give the officer some measure of
substantive independence from direction and supervision, for-
cause officers ordinarily are not “directed and supervised” for
purposes of Edmond. Instead, they presumptively should be
considered principal officers who must be appointed by the
President with the advice and consent of the Senate (as are the
heads of independent agencies other than the PCAOB). The
key, therefore, to applying the Edmond test to a for-cause
executive officer, therefore, is to appreciate that for-cause
removal by its nature is generally inconsistent with the notion
of being “directed and supervised” by a superior officer.16

16
Presuming for-cause officers to be principal officers makes
great sense when one considers the purposes of the Appointments
Clause. Because for-cause officers are designed to be relatively
immune from direction and supervision, it is all the more important
at the front end to ensure full scrutiny of the officers’ character and
qualifications. The combination of Presidential nomination and
Senate confirmation is the constitutionally preferred way to achieve
that goal. See LAURENCE H. TRIBE, 1 AMERICAN
CONSTITUTIONAL LAW § 4-8, at 684 (3d ed. 2000); see also
Freytag, 501 U.S. at 884 (“The Framers understood, however, that
by limiting the appointment power, they could ensure that those
who wielded it were accountable to political force and the will of
the people.”). That, indeed, is how the system works for the
independent agencies (other than the PCAOB) now in existence;
 44
To be sure, if a statute expressly provides that a for-cause
officer could be removed for disobeying any direction or
orders by a superior, that officer would be subject to direction
and supervision via the removal power, much like at-will
officers. But the vast majority of agency statutes do not
specify that for-cause officers can be removed for such
disagreement, no doubt because the point of allowing removal
only for cause would not be clear in that situation. Cf.
Elena Kagan, Presidential Administration, 114 HARV. L. REV.
2245, 2323 (2001) (“[A] for-cause removal provision would
buy little substantive independence if the President, though
unable to fire an official, could command or, if necessary,
supplant his every decision.”).

As noted above, in finding the Coast Guard judges to be
inferior officers, Edmond did not refer only to the fact that the
Coast Guard judges were removable at will by the JAG. The
Court also pointed out that the intermediate appellate
adjudicatory body at issue in Edmond could not issue a final
decision; instead, all of its decisions were subject to review
and pre-approval by a superior court if requested by the
accused or the JAG. The Court therefore stated that the
officers in question had “no power to render a final decision
on behalf of the United States unless permitted to do so by
other Executive officers.” 520 U.S. at 665. Although
Edmond involved at-will adjudicatory officers, it is logical to
assume that even for-cause executive officers who perform
traditional executive functions – investigations, enforcement
actions, and the like – still might be considered “directed and
supervised” if a superior other than the President has statutory
authority to prevent and affirmatively command, and to

their heads are appointed by the President with the advice and
consent of the Senate.
 45
manage the ongoing conduct of, all significant exercises of
executive authority by the officer.17

Therefore, an officer removable only for cause is
ordinarily not “directed and supervised” for purposes of
Edmond, at least unless (1) the statute expressly provides that

17
The independent counsel in Morrison was considered an
inferior officer even though removable only for cause. But as the
Court in Edmond stated: “Morrison did not purport to set forth a
definitive test for whether an office is ‘inferior’ under the
Appointments Clause. To the contrary, it explicitly stated: ‘We
need not attempt here to decide exactly where the line falls between
the two types of officers . . . .’” 520 U.S. at 661-62 (quoting
Morrison, 487 U.S. at 671). The critical facts that explain
Morrison – and that also make it an unusual case on the inferior
officer issue – are that the office was temporary and the counsel’s
duties and jurisdiction were considered limited. The temporary
nature of the office is the same reason that acting heads of
departments are permitted to exercise authority without Senate
confirmation. See United States v. Eaton, 169 U.S. 331, 343 (1898)
(“Because the subordinate officer is charged with the performance
of the duty of the superior for a limited time and under special and
temporary conditions, he is not thereby transformed into the
superior and permanent official.”); see also Designation of Acting
Dir. of the Off. of Mgmt. & Budget, Op. Off. Legal Counsel at 3-4
(2003). Had the independent counsel been a permanent office for
investigation and prosecution of crimes by high-level executive
officers, and had the statute included the same for-cause removal
restriction, it seems evident that the counsel would have been
considered by the Morrison Court to be a principal officer requiring
appointment by the President with the advice and consent of the
Senate. In any event, for offices that are not temporary, the later
decision in Edmond, not Morrison, controls the inferior-officer
Appointments Clause analysis: Edmond, unlike Morrison, did
expressly purport to set forth a definitive test for inferior officer
status governing future cases such as this one.
 46
the officer can be removed for failing to follow a supervisor’s
direction and supervision, or (2) the statute expressly provides
that a superior officer other than the President has authority to
prevent and affirmatively command, and to manage the
ongoing conduct of, all of the officer’s exercises of executive
authority against the public (such as conducting investigations
and taking enforcement actions).

D

Applying the Edmond analysis to this case, PCAOB
members are principal officers.

To begin with, unlike the judges at issue in Edmond,
PCAOB members are not removable at will. The SEC can
remove PCAOB members only for cause.

Nor does the statute satisfy the conditions under which a
for-cause officer can still qualify as inferior. The statute’s
for-cause removal provision does not allow the SEC to
remove PCAOB members for failure to follow SEC direction
and supervision. And the statute does not provide that the
SEC can prevent and affirmatively command, and manage the
ongoing conduct of, all PCAOB functions – most importantly,
inspections, investigations, and enforcement actions.

In that regard, it again bears mention that the whole point
of this statute – as evidenced in the statutory text and history –
was to create an Accounting Board that would not be part of
the SEC and not be subject to direction and supervision by the
SEC with respect to Board inspections, investigations, and
enforcement actions.18 Rather, the text of the Sarbanes-Oxley

18
The House overwhelmingly voted for a bill sponsored by
Representative Oxley that would have authorized an accounting
oversight entity within the SEC. See H.R. 3763, 107th Cong. § 2(b)
 47
Act reflects the deliberate legislative choice to create an
independent entity protected by for-cause removal from SEC
interference. As the statutory text repeatedly shows, Congress
did not want the PCAOB to have “here-and-now
subservience” to the SEC. Bowsher, 478 U.S. at 727 n.5.

E

The Board nonetheless cites a scattershot of authorities
that, it suggests, show that the Board is “directed and
supervised” by the SEC and that Board members therefore are
inferior officers. But those arguments are all unavailing. The
key is this: None of the cited authorities gives the SEC power
to prevent and affirmatively command, and to manage the
ongoing conduct of, Board inspections, investigations, and
enforcement actions.

First, the Board contends that after-the-fact review of
Board sanctions by the SEC suffices to show that the SEC
directs and supervises the Board with respect to its
inspections, investigations, and enforcement actions. That
makes little sense. One would not say, for example, that a
U.S. Attorney is directed and supervised by a federal district
court in his or her investigative decisions just because a court
ultimately would have an opportunity to review any
indictment or subpoena challenge. So too here. After-the-
fact judicial or quasi-judicial review of enforcement decisions
following an investigation does not remotely equate to
direction and supervision for purposes of Edmond.

(2002). But the Senate passed Senator Sarbanes’s proposed bill,
which provided for the creation of a new oversight board protected
from SEC interference by means of for-cause removal provisions.
See S. 2673, 107th Cong. § 107 (2002). The Conference
Committee effectively preserved the relevant portions of the Senate
bill. See H.R. REP. NO. 107-610, at 24 (2002) (Conf. Rep.).
 48

Second, the Board argues that the SEC has power to
review Board rules before they take effect. That is true – and
if the Board’s sole statutory power were rulemaking, then it
might be reasonable to conclude that the Board was “directed
and supervised” for purposes of Edmond. But the problem
with this argument is that the Board also has power to conduct
inspections, investigations, and enforcement actions without
SEC direction and supervision. Being directed and
supervised in only one slice of an officer’s portfolio does not
render the officer inferior if the officer is not directed and
supervised in other significant activities. To qualify as
inferior, an officer must be statutorily subject to direction and
supervision in all significant activities.

Third, the Board points out that the SEC, in certain
circumstances, can exercise, take over, or limit some
investigative and enforcement responsibilities assigned to the
Board if the SEC chooses to do so (after on-the-record
hearings). See 15 U.S.C. §§ 7217(d)(1)-(2). But the SEC’s
exercising, taking over, or limiting the Board’s
responsibilities does not amount to directing and supervising
the PCAOB. For example, Congress can alter the jurisdiction
of particular federal courts, but that does not make judges
inferior to Congress, or “directed and supervised” by
Congress. Congress may switch regulatory authority from
one agency to another, but that does not make the initial
agency “directed and supervised” by Congress. Again, the
critical point is this: The SEC’s theoretical power to alter the
Board’s jurisdiction does not equate to power to prevent and
affirmatively command, and to manage the ongoing conduct
 49
of, Board inspections, Board investigations, and Board
enforcement actions.19

Fourth and finally, the Board seems to argue – albeit only
in one oblique single-sentence footnote – that the SEC
actually has statutory authority to issue rules by which the
SEC could give itself power to direct and supervise all Board
inspections, investigations, and enforcement actions. See
PCAOB Br. at 26 n.3. There is a reason this bootstrapping
argument appears in the Board’s brief only in a single-
sentence footnote. It is incorrect. The statute does not give
the SEC that kind of authority; indeed, such authority would
all but destroy the independence that the statutory text
mandates and that Congress sought to ensure the Board would
possess. Section 7211 states that the Board operates “subject
to action by the Commission under section 7217.” 15 U.S.C.
§ 7211(c); see also § 7211(f). Section 7217 in turn gives the
SEC power to review only Board rules before they take
effect. But § 7217 does not give the SEC power to direct or
supervise Board inspections,20 investigations,21 and
19
The SEC also has the power to “censure” the Board.
§ 7217(d)(2). But this has no more substantive impact than a
critical press release, and thus is not relevant to the “directed and
supervised” question.
20
The PCAOB must conduct inspections at least once a year
(or once every three years for smaller firms), a frequency
requirement the Board can alter by rule with SEC approval. See
§§ 7214(b)(1)-(2). But the SEC has no statutory authority to
prevent and affirmatively command the initiation of an inspection
of a given firm at a given time. Id. And even more importantly, the
SEC has no statutory authority to manage the PCAOB’s ongoing
conduct of inspections of particular firms. On the contrary, the
statute emphasizes the Board’s discretion in the “[c]onduct of
inspections.” § 7214(d). Similarly, the fact that the PCAOB
produces an inspection report that is submitted to the SEC and to
state regulatory authorities does not mean the SEC (or the state
 50
enforcement actions. In addition, § 7202 provides that the
SEC may promulgate rules “as may be necessary or
appropriate in the public interest or for the protection of
investors, and in furtherance of this Act.” § 7202(a). The
phrase “in furtherance of this Act” means, of course, that SEC
rules have to further some aspect of the Act. But the Act
nowhere gives the SEC authority to direct and supervise
Board inspections, investigations, and enforcement actions.
So § 7202 cannot be read as a bootstrapping provision that
grants the SEC authority to issue rules giving itself power to
direct and supervise Board inspections, investigations, and
enforcement actions.22 Finally, the SEC’s related power to

regulatory authorities, for that matter) has statutory authority to
manage the ongoing conduct of Board inspections.
21
The majority asserts that Board investigations are “subject to
Commission approval,” at least “to the extent [an] inspection report
forms the basis for a subsequent investigation.” Maj. Op. at 15.
But the majority’s qualification undermines its assertion because
the Board has absolute discretion to undertake investigations
regardless of whether an inspection report has any particular
content, or even whether such a report exists. See § 7215(b)(1).
The statute specifies that the Board retains the power to “conduct
an investigation of any act or practice . . . regardless of how the act,
practice, or omission is brought to the attention of the Board.” Id.
The SEC thus does not have authority to prevent and affirmatively
command Board investigations. Moreover, the Act does not give
the SEC authority to manage the ongoing conduct of Board
investigations.
22
The fact that the Board must issue general rules governing
investigations, and that such rules are subject to the approval of the
SEC, does not give the SEC authority to prevent and affirmatively
command, and to manage the ongoing conduct of investigations.
There is a critical distinction between (i) approving general rules
for investigations and (ii) preventing, affirmatively commanding,
and managing the ongoing conduct of any particular investigation.
The latter power is essential for true direction and supervision.
 51
amend Board rules does not constitute a backdoor grant of
authority to exercise direction and supervision over Board
inspections, investigations, and enforcement actions.23

In short, the Board cobbles together disparate pieces of
statutory text to justify its mantra that the SEC’s control over
the Board is “comprehensive and pervasive” and that Board
members are therefore inferior officers. But the Board cannot
answer three key questions that completely undermine its
mantra: How can we say that the Board is directed and
supervised by the SEC given that the Board has plenary
statutory authority to conduct its most critical functions –
inspections, investigations, and enforcement actions – without
any opportunity for the SEC to prevent and affirmatively
command, and to manage the ongoing conduct of, those
activities? What is the purpose and effect of the stringent
statutory for-cause removal provision if the Board is simply a
subordinate of the SEC subject to the SEC’s “comprehensive
and pervasive” control? And why should we accept the
Board’s characterization of itself as part of the SEC when, as
both statutory text and history reveal, Congress specifically

23
There is a separate problem with reliance on § 7202 and
§ 7217. It is not at all clear whether a statutory grant of
bootstrapping authority to an agency for that agency to issue rules
granting itself supervisory power over another officer, as opposed
to a direct statutory grant of such supervisory authority, suffices to
constitute direction and supervision for purposes of the Edmond
test. Even if it could suffice, it is doubtful that the Edmond
inferior-officer test would be satisfied unless and until such rules
were issued and took effect (the SEC has issued no such rules as to
the PCAOB). In any event, I need not address those theoretical
questions in this case because the Sarbanes-Oxley Act does not give
the SEC statutory authority to issue rules giving itself direction and
supervision authority over Board inspections, investigations, and
enforcement actions.
 52
considered – and rejected – proposals to make the Board part
of the SEC and Congress expressly decided to create the
Board as an independent entity?

In sum, the PCAOB structure violates the Appointments
Clause of Article II.24

24
Because I would hold that the Act violates the Appointments
Clause, I need not address plaintiffs’ alternative argument that the
SEC cannot appoint inferior officers in the SEC because it is not a
“Department” and its five Commissioners collectively are not its
“Head” for Appointments Clause purposes. On those two issues,
however, I generally agree with the majority opinion that plaintiffs’
submission is inconsistent with current Supreme Court precedents.
On the former issue of what entities constitute departments, Freytag
nominally left open whether the SEC is a department; but as Justice
Scalia explained in his persuasive concurrence for four Justices, it
would not make much sense to hold that independent agencies are
not departments so long as Humphrey’s Executor is good law. See
Freytag, 501 U.S. at 892 (Scalia, J., concurring in part). On the
latter issue of who is a head of a department, both text and long-
standing Executive Branch interpretation confirm that the head of a
department can consist of multiple persons. See The Constitutional
Separation of Powers Between the President and Congress, 20 Op.
Off. Legal Counsel 124, 151-53 (1996); Authority of Civil Service
Commission To Appoint a Chief Examiner, 37 Op. Att’y Gen. 227,
231 (1933).
Although the heads of independent agencies are principal
officers and heads of departments for purposes of the Appointments
Clause, it is worth pointing out (lest there be any future
misunderstanding) that they are not principal officers for purposes
of the 25th Amendment. The 25th Amendment refers to a majority
of the “principal officers of the executive departments” who may
vote on a President’s incapacity; that formulation was not intended
to and does not include the heads of the so-called independent
agencies.
 53
IV

In Morrison, the Supreme Court not only considered the
appointment and removal issues separately, but also asked
whether the combination of the appointment and removal
mechanisms “taken as a whole” violated “the principle of
separation of powers by unduly interfering with the role of the
Executive Branch.” 487 U.S. 654, 693 (1988).25 The Court
thus seemed to contemplate a scenario (albeit somewhat
difficult to imagine) whereby a statute complied with Article
II removal principles and with the Appointments Clause, but
nonetheless violated the constitutional separation of powers
because of restrictions on the President’s appointment and
removal powers. In this case, of course, I need not address
that possibility because I find a constitutional problem on
both the appointment and removal issues.26

In considering the combination of the appointment and
removal problems posed by the PCAOB, I add only one point:
From an accountability perspective, the whole of this statute
is worse than the sum of the parts because neither the
President nor his alter ego has any role in the appointment of

25
The Court cited Nixon v. Adm’r of Gen. Servs., 433 U.S. 425
(1977), as the basis for conducting this “taken as a whole” analysis.
See Morrison, 487 U.S. at 693-96. Nixon was a case about
executive privilege, not the President’s appointment and removal
powers.
26
I do not read Morrison to contemplate the converse – that a
statute that violates the removal precedents or the Appointments
Clause could nonetheless be allowed under some kind of overriding
separation of powers principle. That would make little sense, and
the decisions in cases such as Buckley and Bowsher suggest that
there is no such “taken as a whole” override that could excuse a
violation of Article II removal principles or of the Appointments
Clause.
 54
Board members or in the removal of Board members. Cf.
Printz v. United States, 521 U.S. 898, 922-23 (1997). Each
problem compounds the other, as Professor Tribe perceptively
suggested when describing the Article II accountability issue
with this kind of structure: “[I]n the particular situation in
which an inferior officer is appointed by persons who are
themselves not politically accountable . . . ongoing
supervision by a politically accountable official, whether by
the President or by someone serving at the President’s
pleasure, seems particularly important. In such
circumstances, where there is little or no political
accountability at the front end for the choice of that officer, a
‘for cause’ limitation on removal that renders political
supervision impossible appears troubling from an
accountability perspective.” LAURENCE H. TRIBE, 1
AMERICAN CONSTITUTIONAL LAW § 4-8, at 684 (3d ed. 2000);
see also Humphrey’s Executor v. United States, 295 U.S. 602,
625-26 (1935) (noting that independent agency would be
independent of President “except in its selection”).

This Act is a problem on the appointment front and on
the removal front. And taken as a whole, this unprecedented
extra-constitutional stew is a clear violation of Article II’s
text, original understanding, and history, and of Supreme
Court precedents.

V

Three final points about this important case warrant
comment.

First, the Department of Justice representing the United
States as intervenor has defended the constitutionality of this
 55
statute.27 To be sure, the defense has been rather tentative; at
oral argument, the superb counsel from DOJ refused to say
that the structure of the PCAOB would be permissible in any
analogous situation, strongly implying that the Executive
Branch’s position is a ticket good for this train and this day
only. In any event, the Executive Branch has defended the
statute as consistent with Article II.28 This is reason for
respectful consideration.

27
History tells us that Executive Branch prerogatives have, in
some instances, taken a backseat to the President’s other more
immediate policy, legislative, or political priorities. See Steven G.
Calabresi & Christopher S. Yoo, The Unitary Executive During the
Second Half-Century, 26 HARV. J.L. & PUB. POL’Y 667, 734-36
(2003) (“Lincoln’s vigorous and partisan use of the removal power
. . . indicates his firm belief in the unitariness of the executive and
the importance of presidential control throughout the executive
branch. On the other hand, Lincoln offered no objection when
Congress enacted legislation limiting Lincoln’s power to remove
the Comptroller of the Currency . . . .”).
28
The United States as intervenor has argued that the PCAOB
is better from a Presidential control perspective than the private
self-regulatory accounting organizations that previously existed to
regulate the accounting industry. This is an odd argument as a
matter of constitutional law. The fact that the President would have
less control over a private organization than over an Executive
Branch entity is both obvious and irrelevant. It certainly does not
excuse compliance with Article II’s principles regarding
Presidential appointment and removal of executive officers. See
The Constitutional Separation of Powers Between the President
and Congress, 20 Op. Off. Legal Counsel 124, 148 n.70 (1996)
(Congress may not “evade the ‘solemn obligations’ of the doctrine
of separation of powers by resorting to the corporate form . . . .”)
(quoting Lebron v. Nat’l R.R. Passenger Corp., 513 U.S. 374, 397
(1995)).
 56
But as the Supreme Court has stated when this situation
has arisen before, the Judiciary cannot defer to the Executive
Branch in justiciable cases affecting individual rights simply
because the Executive Branch does not assert its Article II
prerogatives. The primary reason, as the Court has explained
time after time, is that the separation of powers protects not
simply the office and the officeholders, but also individual
rights. As Justice Kennedy has stated, “Liberty is always at
stake when one or more of the branches seek to transgress the
separation of powers.” Clinton v. City of New York, 524 U.S.
417, 450 (1998) (Kennedy, J., concurring); see also Metro.
Wash. Airports Auth. v. Citizens for Abatement of Aircraft
Noise, Inc., 501 U.S. 252, 272 (1991) (“The ultimate purpose
of this separation of powers is to protect the liberty and
security of the governed.”); Mistretta v. United States, 488
U.S. 361, 380 (1989) (separation of powers is “essential to the
preservation of liberty”); Bowsher v. Synar, 478 U.S. 714,
721-22, 730 (1986) (separation of powers is “critical to
preserving liberty”); INS v. Chadha, 462 U.S. 919, 963 n.4
(1983) (Powell, J., concurring in judgment) (discussing
concern that “Congress is exercising unchecked judicial
power at the expense of individual liberties” and stating it was
“precisely to prevent such arbitrary action that the Framers
adopted the doctrine of separation of powers”).

The point was captured well by Justice Blackmun in his
opinion for the Court in Freytag: “In reaching this
conclusion, we note that we are not persuaded by the
Commissioner’s request that this Court defer to the Executive
Branch’s decision that there has been no legislative
encroachment on Presidential prerogatives . . . . The structural
principles embodied in the Appointments Clause do not speak
only, or even primarily, of Executive prerogatives simply
because they are located in Article II. . . . The structural
interests protected by the Appointments Clause are not those
 57
of any one branch of Government but of the entire Republic.”
Freytag v. Comm’r of Internal Revenue, 501 U.S. 868, 879-80
(1991). So too here.

Second, in the wake of accounting scandals, Congress
enacted the Sarbanes-Oxley Act and created the PCAOB to
serve important policy goals. Courts must respect Congress’s
policy objectives. But as the Supreme Court has repeatedly
stressed, the importance of a policy does not license the
Judiciary to ignore or weaken constitutional limits arising out
of the separation of powers. “[P]olicy arguments supporting
even useful ‘political inventions’ are subject to the demands
of the Constitution which defines powers and, with respect to
this subject, sets out just how those powers are to be
exercised.” Chadha, 462 U.S. at 945. Even assuming that the
statutory scheme structuring the PCAOB is an effective
means to regulate the accounting industry, “that a given law
or procedure is efficient, convenient, and useful in facilitating
functions of government, standing alone, will not save it if it
is contrary to the Constitution.” Id. at 944. Over the years,
the Supreme Court thus has struck down as inconsistent with
the constitutional separation of powers the original method of
appointing the Federal Election Commission, the legislative
veto, the provision for congressional removal of the
Comptroller General, the structure of the Metropolitan
Washington Airports Authority’s Board of Review, and the
Line-Item Veto Act – several of which were at least as
important as the PCAOB in terms of their policy objectives.
Congress, fearing another accounting meltdown, may have
“had good reason” for creating the PCAOB, but “such fears,
however rational, do not by themselves warrant a distortion of
the Framers’ work.” Buckley v. Valeo, 424 U.S. 1, 134
(1976).
 58
Third, to reiterate, the PCAOB is uniquely structured, and
a judicial holding invalidating it would be uniquely limited to
the PCAOB. And Congress could easily fix the constitutional
flaws by, for example, making PCAOB members subject to
Presidential appointment with the advice and consent of the
Senate and therefore removable by the President. Cf. Housing
and Economic Recovery Act of 2008, Pub. L. No. 110-289,
122 Stat. 2654 (2008) (creating new “independent” federal
regulator of Fannie Mae and Freddie Mac appointed by
President with advice and consent of Senate and removable
for cause by President). Alternatively, Congress could fix the
problem by making the PCAOB a truly subordinate part of the
SEC – for example, by giving the SEC express authority to
direct and supervise all Board actions and to fire Board
members at will. In such a structure, the Board would not
differ from any other inferior officers in the SEC. In the
meantime, in my judgment, the Board’s structure violates the
Constitution of the United States.

***

I would hold that the PCAOB’s structure
unconstitutionally restricts the President’s appointment and
removal powers. I respectfully dissent.