(a) Multiple membership, appointed for set terins which expire at staggered intervals. (b) Restrictions against removal by the President except for cause; and (c) The exercise of quasi-judicial powers concerning economic regulation of business activities, which almost without exception is not subject to review by any executive official. The heads of executive regulatory agencies, although also selected by the President subject to Senate confirmation, typically do not have set terms or limitations on the power of removal. They serve at the pleasure of the President. Almost without exception, such executive agencies are headed by a single administrator and do not utilize the commission form. The Administrator is the President's man-or woman-at the agency; and a change in that office could, in a single stroke, effect the policy and direction of the agency. Executive agencies are, and are thought to be, directly subject to the President. Such is not the case with the independent commissions—or at least not to the same extent. C. GENERAL LIMITATIONS ON INDEPENDENCE The independent regulatory commissions are not autonomous from the rest of government. To a significant degree they are integrated through limitations, some general and others very specific, on the extent of agency independence. Each branch of the government exercises checks and responsibilities for the commissions, and those relationships define the true contours of independence. There is general agreement that many of the limitations are necessary and proper; others however are controversial, and considered by some to be inappropriate intrusions on the independence of the agencies and the relationship Congress intended them to have with the executive branch. The agencies are empowered to reach final decisions on adjudicatory matters, and to issue rules and regulations-both of which generally are not subject to regular approval by any other government institution. But agency decisions can be reviewed, and the principal check on that authority is the federal judiciary. The scope of judicial review is expressly delineated by the Administrative Procedure Act. The Act provides that the reviewing court shall "hold unlawful and set aside agency action, findings, and conclusions" which are found to be: (A) arbitrary, capricious, and abuse of discretion, or otherwise not in accordance with law; (B) contrary to constitutional right, power, privilege, or immunity; (C) in excess of statutory jurisdiction, authority, or limitations, or short of statutory right; (D) without observance of procedure required by law; (E) unsupported by substantial evidence. . .: or (F) unwarranted by the facts to the extent that the facts are subject to trial de novo by the review court.64 45 USC 706(2) (A–F). The APA also authorizes courts to "compel agency actions unlawfully withheld or unreasonably delayed." In its review a court may examine the "whole record or those parts of it cited by a party." 66 Of course agency actions are not automatically referred to the judiciary for review; they must be brought to the courts by parties entitled to sue.67 Although a court may not substitute its judgment on the merits for that of the agency, these provisions were intended by Congress to assure a comprehensive review of a broad spectrum of administrative actions. It is an important check on the independent commissions. Judicial review, as the Hoover Commission task force observed, is a "safeguard against actions which are arbitrary or capricious, or which do not conform to statutory standards or authority, or which are not in accordance with fair procedure of substantial evidence." 69 The executive and legislative branches also exercise some degree of formal control over agency decision-making. Indirect in nature, it is principally manifested in decisions concerning agency leadership and budgets, to be discussed shortly. There are also formal direct controls. In certain carefully delineated areas, agency decisions are subject to approval by the President. For example, under the Civil Aeronautics Act, the President has explicit authority to approve the action of the CAB in granting, modifying, or refusing certificates or permits for overseas or foreign air transportation by domestic or foreign carriers.70 Under the Securities and Exchange Act, the approval of the President is necessary for an order suspending trading on exchanges. Generally speaking, however, agency decisions are not regularly submitted to the President or any other executive officer for approval. 71 Particular agency actions also are not systematically reviewed by the Congress. Of course, most regulatory agencies owe their existence to statutes adopted by Congress; and the commissions are subject to periodic oversight by both Houses, a matter that is discussed in depth in Volume II of our study.72 Congress has various mechanisms at its command to review and oversee agency policies and directions— most important is doubtless the appropriations process. On behalf of Congress, the Comptroller General exercises various auditing functions for government agencies; and, with the exception of the Federal Reserve Board, no distinction is drawn for the independent commissions.73 Some agency organic acts contain specific provisions for GAO review and auditing. But Congress has been reluctant to subject specific agency actions to regular review through the device known as the "legislative veto." 655 USC 706(1). 485 TSC 706. 075 TSC 702. 74 68 Citizens Committee for Hudson Val. v. Volpe, 425 F. 2d 97 (2 Cir. 1970), cert. den'd, 400 TS 949. Hoover Commission, Task Force Report on Regulatory Commissions, p. 15 (1949). 70 49 TSC 1461. 71 15 USC 781(k). 72 Committee on Government Operations. U.S. Senate. Study on Federal Regulation: Congressional Oversight of Regulatory Agencies, vol. II, 95th Cong., 1st sess., in passim (1977). (Hereafter: Committee Study, vol. II). 73 Legislation, adopted by the House on October 14, 1977, and presently pending in the Senate. would amend the Budget and Accounting Act to specifically require GAO to audit the Federal Reserve Board as well as two other banking agencies. FDIC and Comptroller of the Currency. H.R. 2176. 95th Cong.. 1st sess.; 31 USC 53, 67, 1154. 74 E.g., 42 USC 5876 (NRC), 49 USC 57 (ICC). Although its constitutionality is not yet clear, it is thought that Congress could require that agency action be submitted to it for a specified period of time before taking effect. During that interval, Congress could adopt a resolution expressing disapproval, and thereby veto the proposed action. In the regulatory area, Congress has not imposed this requirement in very many instances; motor vehicle safety standards may be cited as one of the few examples of legislative veto over regulation.75 Very recently Congress declined to apply that mechanism to the new Department of Energy, stating: [The legislative veto] could cause significant delays in the Department's conduct of its business, and that it would involve Congress, to an inappropriate degree, in the day-to-day operations of the Department. [Further it] could seriously hinder the ability of the Department to begin meeting, in an expeditious and definitive manner, the nation's very serious needs in the area of energy....7 76 Generally Congress has delegated specific decision-making authority to the commissions, subject only to general review and supervision. The direction and substance of regulatory policy is directly affected by decisions concerning agency leadership. Through the appointment process, top officials of the commissions in theory reflect the combined judgment of the President and the Senate. The President selects and nominates the commissioners, who are then subject to advice and consent by the Senate. Within certain previously discussed limits, the President may remove commissioners, and they-like other officials— may be removed from office through impeachment by the House and the Senate. The selection of commission chairmen is the single, most important personnel decision, since broad administrative powers for the agency typically are granted to that official. At present responsibility for that selection is exclusively lodged in the President. Chairmen are designated by the President without advice and consent of the Senate, and-in most cases-serve at his pleasure. A chairman may be removed by the President as chairman, but not as commissioner, for any cause.Volume I of our study considered this matter. The issues of independence aside, we concluded that exclusive appointment of the Chairman was "an unusual and unwise exception to the general principle that top governmental office-holders should be subject to advice and consent of the Senate."" In this session of Congress, legislation which would subject the President's chairmanship designation to Senate confirmation has been adopted or is presently under consideration by the Senate. With that change, this important selection would be a responsibility shared jointly by the President and the Senate. 78 The regulatory commissions are not independent in matters of staff employment practices. Federal personnel laws and regulations apply to the independent commissions as they do to all departments and agencies. Federal employees are recruited and selected in conformity with uniform procedures and standards, developed and administered by the Civil Service Commission.79 Uniform treatment also marks the Ibid., pp. 115–122. 78 Conference Report, Department of Energy Organization Act, 95th Cong., 1st sess., Rep. N. 95-367, p. 83 (1977). Committee Study, vol. I, p. 175. S. 1532. 1533. 1535, 1536, 1537-all 95th Cong. 1st sess. 795 USC 2102, 3101. appointment process for administrative law judges.so There is to our knowledge no objection to independent agencies being subject to the same personnel rules as other agencies. Obviously the benefits of the career service-professionalism, hiring based on merit, and job protection-should apply with equal force to the independent bodies. When the system works as it was intended, persons are hired in an impartial manner on the basis of qualifications and competitive examination; the process therefore is supportive of an independent regulatory environment. However, each independent regulatory commission has a small but very significant number of staff positions, commonly known as Noncareer Executive Assignments or NEAS, which are not subject to career service requirements. Typically the NEA positions include the top policymaking staff members of the agency. The NEA category was created by an Executive Order issued by President Johnson in 1966.81 The terms of the Order suggest that NEA positions, wherever they might be located, may be reserved for partisans of the President. A candidate for an NEA appointment must: (1) Be deeply involved in the advocacy of Administration programs and support their controversial aspects; (2) Participate significantly in the determination of major political policies of the Administration; or (3) Serve principally as personal assistant to or advisor of a Presidential appointee or other key political figure. Whether those requirements are compatible with the independent nature of the commissions was considered in Volume I of our study.82 We noted that-although no law, including the Executive Order, requires it-NEA candidates have by custom been subject to White House clearance and approval prior to their appointment. Too often that consent has been granted or withheld out of considerations unrelated to the individual's suitability and ability. The process also involves something more than passive review: in the past, the White House has been actively involved in suggesting and recruiting persons: for these positions. However appropriate such requirements might be for an executive agency, we believe that it is an unwarranted Presidential intrusion to require, in effect, that top staff members of the independent agencies be subject to White House review. As we stated in Volume I: The regulatory agencies must be independent in fact as well as: name if they are to exercise quasi-judicial functions vested in them by Congress; and the ability to hire and fire top officers, unfettered by requirements of partisan clearance, is the sine qua non of that independence. 83 Congressional concern about this problem has been evidenced by legislative action. The Consumer Product Safety Commission has been exempted from the requirement of White House clearance which incidentally is the only exception for an independent commission from: 805 USC 1305, 3105. 81 Executive Order 11315. Nov. 17, 1966. 82 Committee Study, vol. I, pp. 194–199. 83 Ibid., p. 199. 84 84 See Conference Report, "Consumer Product Safety Commission Improvement Act of 1976", 94th Cong., 2d sess., p. 2 (1976). general Federal personnel practices. The Interim Regulatory Reform Acts of 1977, some of which have passed the Senate, would extend this exception to other independent regulatory agencies.85 We fully support the principle that agencies should be authorized to hire their top staff members, independent of any requirement of review of those decisions by the White House. Aside from those matters, independent commissions in other regards are positively dependent upon the executive branch and are treated in the same way as any other agency or department. The President's Office of Management and Budget has supervised these agencies as if they were a part and parcel of the executive branch. Generally speaking, the agencies cannot litigate in the courts independent of the Department of Justice. Nowhere is the tension between executive and legislative branches over agency independence more apparent than in those matters. Considerable controversy has ensued, and much of the objection has been focused on the supervisory role of the Office of Management and Budget-an agency, which former SEC Chairman William L. Cary has described as "the Cerberus at the gate of any government program." 86 D. LIMITATION ON INDEPENDENCE: SUPERVISION BY THE OFFICE OF MANAGEMENT AND BUDGET 1. The OMB oversight role The Office of Management and Budget is intended to be an agency of experts, specialists in matters of fiscal policy and government organization. Created in 1970, OMB is the successor to the Bureau of the Budget, which for decades enjoyed a reputation for giving Presidents objective and bipartisan advice, as often as possible outside the public limelight. An admittedly exaggerated statement by the first BOB director more than fifty years ago captures that ideal neutrality: we have nothing to do with policy. Much as we love the President, if Congress passed a law that garbage should be put on the White House steps, it would be our regrettable duty in an impartial nonpolitical and nopartisan way to advise the Executive and Congress as to how the largest amount of garbage could be spread in the most expeditious and economical manner.88 The picture stuck, and the bureau's effectiveness seemed to turn on its reputation as a neutral advisor. With the passage of time that image changed. One line of explanation leads to President Nixon's reorganization of the bureau into the Office of Management and Budget, in order to give greater emphasis to the agency's management responsibilities-its active participation in review and evaluation of federal program performance and management processes. It was to be the coordinator of government. That purpose was declared in express terms in President Nixon's message to Congress on the OMB. As reorganized the agency would continue to S. 1532. 1533, 1535, 1536, 1537-all 95th Cong., 1st sess. See Hugh Heclo, "OMB and the Presidency-the Problem of 'Neutral Competence' ", Publ. Interest, no. 38, pp. 80-98 (Winter 1975). 89 Charles Dawes as quoted in, Gary Bombadier, The Managerial Function of the OMB: Intergovernmental Relations as a Test case," 23 Publ. Policy 317, 320 fn. 5 (Summer |