THE STATUS OF REGULATORY INDEPENDENCE* A. EVERETTE MACINTYRE Introduction The advent and growth of the railroads, improved and expanding methods of communication, developing an ever-increasing technology after the Civil War, caused a mushrooming of commercial intercourse between the States. The regulation of this commerce the Constitution entrusted to the Congress of the United States.1 By 1885, Congress had come to realize, however, that it would not be able to deal with all the minutiae of regulation by way of direct legislation from one detail to the next. Even assuming that Congress had the knowledge and desire to do so, such a task would be a physical impossibility; at least a part of this task would have to be delegated. Congress also realized, however, that under the theory of separation of powers it would be inappropriate to delegate, to the extent Congress desired to do so, the function of filling in legislative details to either the Judiciary or the Executive Branch. At the same time Congress was to delegate a certain amount of quasi-judicial authority, which Congress felt the Judiciary was not sufficiently expert to handle and which would have been improper to delegate to the Executive Branch of the Government. Congress, therefore, determined upon a course of creating, as arms of the Congress, independent regulatory agents to whom would be delegated a limited amount of legislative and judicial authority. The legislative authority was designed to fill in the legislative detail within a broad framework of congressional standards and policy declarations: the judicial authority as a necessary adjunct to successful regulation. An example of such a delegation is Section 5 of the Federal Trade Commission Act,2 which provides that "unfair methods of competition" are unlawful.3 In such situations there was left to the independent regulatory agent, as an arm of the Congress-in this instance the Federal Trade Commission-the delegated authority to fill in and implement the various legislative details in order to establish the precise meaning of the phrase "unfair methods of competition." This task * Reprinted from the Winter 1969 issue of the Federal Bar Journal, with permission of the Federal Bar Association, Washington, D. C. Commissioner, Federal Trade Commission. The author wishes to acknowledge the assistance of Joachim J. Volhard in the preparation of this article. 1 Article 1, Section 8 of the Constitution empowers Congress "to regulate commerce with foreign nations, and among the several states, and with the Indian Tribes.' 2 38 Stat. 719 (1914); 15 U.S.C. 45. 3 The Act was amended in 1938 to include "unfair or deceptive acts or practices" within its proscription, 52 Stat. 111. was to be accomplished by quasi-judicial action through the process of judicial inclusion and exclusion and by a quasi-legislative process, including rule making proceedings. This is not to say, of course, that Congress could not have quite properly, and within the framework of accepted constitutional theories, delegated some regulatory authority to the Executive. Under constitutional concepts of separation of powers, however, such delegation would have required a great deal more specificity than is required for "an arm of Congress." An attempt to delegate quasi-legislative and quasi-judicial authority to the Executive to the same extent as was conferred upon “an arm of Congress' would have been unconstitutional. 4 This was demonstrated by the Supreme Court's 1935 decision 1 dealing with the National Industrial Recovery Act of 1933. In that case the Supreme Court unanimously held the Act to be unconstitutional because it attempted to delegate to the Executive legislative powers which the Constitution granted exclusively to the Congress. Among others, the Court stated: The Congress is not permitted to abdicate or to transfer to others the essential legislative functions with which it is thus vested. [Article I of the Constitution.] We have repeatedly recognized the necessity of adapting legislation to complex conditions involving a host of details with which the national legislature cannot deal directly. We pointed out in the Panama Company case [293 U.S. 388] that the Constitution has never been regarded as denying Congress the necessary resources of flexibility and practicality, which will enable it to perform its functions in laying down policies and establishing standards, while leaving to selected instrumentalities the making of subordinate rules within prescribed limits and the determination of facts to which the policy as declared by the legislature is to apply. But we said that the constant recognition of the necessity and validity of such provisions, and the wide range of administrative authority which has been developed by means of them, cannot be allowed to obscure the limitations of the authority to delegate, if our constitutional system is to be maintained. [Emphasis supplied.] 5 The National Industrial Recovery Act attempted to authorize the establishment of "codes of fair competition" by the Executive, and the Court particularly concerned about the absence of a specific definition for the concept "fair competition." 6 The specificity required to per 4 Schechter Poultry Corp. v. United States, 295 U.S. 495. 5 Id. at 529. 6 What is meant by "fair competition" as the term is used in the Act? Does it refer to a category established in the law, and is the authority to make codes limited accordingly? Or is it used as a convenient designation for whatever set of laws the formulators of a code for a particular trade or industry may propose and the President may himself prescribe, as being wise and beneficient provision for the government of the trade or industry in order to accomplish the broad purposes of rehabilitation, correction, and expansion which are stated in the first section of Title 1? [Id. at 531.] " * SASA* * *% reslew and analye so * 1,4. At the outset it should be *.66 differs from other independen cm my ighth matter of regulation; whereas othe kach w pache war industry assigned to them, th barn medit, jaksarged with regulating that vast array dom kép spunk mom the subject of special Federal regula Gay meaning and importance to the theory em agaleatum 14 the Federal Trade Commission,9 #Berrykenment the term "independent establishments" fre wenig neither in the legislative nor the judicial branch Ne bak ben melled executive departments. [ELEMENTS OF PUBLIC by M. Marx ed., New York, 1946, p. 208, n. 1.1 , TC in 1914; FPC in 1920; SEC in 1933; FCC in 1934 ALEZJA VMSN, and GAB în 1988. Rikkentipe, the argument advanced-that executive control of an agency 4* ** pink time protects it from unwanted control by the industry it regu * no particularly relevant with respect to the Federal Trade Commis of History and Theory of Independence The legislative history of the Federal Trade Commission Act, as well as that of any of the other commissions, leaves little doubt of Congress' intent insofar as it pertains to the Commission's independence from control by the Executive. More specifically, Congress expressed the desire to create a commission which in the performance of its functions would be independent from the Executive Branch of the Government. For instance, prior to the creation of the Commission, its powers of investigation resided with its predecessor-the Bureau of Corporations of the Department of Commerce. This investigatory power was taken from a department under the control of the Executive and given to an independent agency.10 Expressions of congressional intent on this -point are extremely explicit. As a matter of fact, no other single topic concerning the new commission received such extensive comment. It was, perhaps, most succinctly stated by Senator Newlands, Chairman of the Senate's Committee on Interstate Commerce, who introduced the original bill, when he explained the need for independence from the Executive Branch in the following way: The need has long been felt for an administrative board which would act in these matters in aid of the enforcement of the Sherman antitrust law, which would have precedents and traditions and a continuous policy and would be free from the effect of such changing incumbency as has in the nature of things characterized the administration of the Attorney General's office.11 10 51 Cong. Rec. 8842. The opinion was also expressed that if the Bureau of Corporations could be converted into an independent commission, more complete knowledge about corporations engaged in commerce could be gathered. 11 Senator Newlands, 51 Cong. Rec. 10,376. In the House of Representatives Mr. Morgan expressed these views: And instead of giving additional power to the Attorney General we should, as the gentleman from Maryland [Mr. Covington] said this afternoon, create a great, independent, non-partisan commission, independent of the President, independent of Cabinet officers, removed so far as possible from partisan politics, that would command the respect and confidence of all parties and of all the people of the Nation. What I say is not particularly applicable to the present Attorney General or the administration in power. Whatever we do in regulating business should be removed as far as possible from political influence. It will be far safer to place this power in the hands of a great independent commission that will go on while administrations may change. That is one reason why I believe in having all these matters placed, so far as they can be, in the hands of a commission, taking these business matters out of politics [51 Cong. Rec. 8857]. In an article entitled "Constitutionality of Investigations by the Federal Trade Commission," 28 Col. L. Rev. 708, 728 n. 56 (1928), Milton Handler pointed out that: The opposition to the Covington bill came not from those who thought the bill went too far but that it did not go far enough. . . . There was The desire for impartial regulation not dictated by political considerations and the recognized, as well as demonstrated, need for a continuous policy of regulation prompted the care which Congress bestowed upon this particular part of the Act. This is also demonstrated by the organic acts establishing the various agencies. Though the President has the power to appoint members of agencies, these appointments must be confirmed by the Senate. The terms of office are staggered and are scheduled on an overlapping basis in addition to extending beyond the President's own term.1 12 In theory this would prevent the Chief Executive from appointing a majority of members of any Commission. This theory breaks down, of course, if the President serves for more than one term. Another requirement is the bipartisan nature of most commissions whereby each must be composed of no more than a majority from one political party. And, finally, the President may not remove a member of a commission except for the fairly customary grounds of "inefficiency, neglect of duty, or malfeasance in office." Aside from specific congressional intent the theory of independence as it concerns the Federal Trade Commission has proven merit over and beyond that of other regulatory agencies. For example, the Commission and the Department of Justice's Antitrust Division have concurrent jurisdiction over a variety of practices. The benefits of such concurrent jurisdiction can be readily observed. The Department, as a general matter, has traditionally concerned itself almost exclusively with hard-core and clear-cut cases. The Commission, on the other hand, has been more willing to pioneer into the gray areas, as indeed was one of the purposes of its creation, i.e., to fill the interstices of the Clayton Act. Thus, enforcement of Section 7 of the Clayton Act in the area of conglomerate mergers 13 by the Commission has been more innovative and imaginative. Therein the Commission is able to rely to a considerable extent on the economic expertise available to it. Similarly, the brunt of enforcement activity under the Robinson-Patman Act has been borne by the Commission. There can be little doubt that concurrent jurisdiction by an independent regulatory agency and a department of the Executive has resulted in more effective and successful law enforcement than exclusive jurisdiction by one governmental body could have provided.14 singular agreement as to the wisdom of establishing an independent, nonpartisan fact-finding body, and no attempt was made to reduce the broad inquisitional powers discussed in the text [of Handler's article]. 12 The Federal Trade Commission Act provides that the "first Commissioners shall continue in office for terms of three, four, five, six, and seven years, respectively, from the date of the taking effect of this Act, the term of each to be designated by the President, but their successors shall be appointed for terms of seven years. 38 Stat. 717; 15 USC 41. 13 See, for example, F.T.C. v. Proctor & Gamble, 386 U.S. 568 (1967); and General Foods v. F.T.C., 386 F.2d 936 (3d Cir. 1967), cert. den., 391 U.S. 919 (1968). 14 On the other hand, it could conceivably deteriorate in the kind of buckpassing so detrimental to effective law enforcement. |