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Brown on the Public Company Accounting Oversight Board & Separation of Powers

By Lawrence Solum

Kimberly N. Brown (University of Baltimore School of Law) has posted Presidential Control of the Elite ?Non-Agency? (North Carolina Law Review, Vol. 88, 2009) on SSRN. Here is the abstract:

This article examines the constitutionality of legislation creating a new form of independent agency ? in effect, a ?non-agency? agency residing in the no-man?s land between Articles I and II of the Constitution. In the Sarbanes-Oxley Act, Congress established the Public Company Accounting Oversight Board (?PCAOB? or ?Board?) and endowed it with massive governmental powers while insulating it from traditional mechanisms for ensuring accountability. Congress deemed the PCAOB not an agency, rendered it substantially immune from judicial review, empowered Board members to set their own salaries and budget, and gave the embattled Securities and Exchange Commission ? not the President ? the power to appoint and remove Board members. In Free Enterprise Fund v. PCAOB, 537 F.3d 667 (D.C. Cir. 2008), the statute was challenged as violating the Appointments Clause of the Constitution and principles of separation of powers. The D.C. Circuit upheld the statute, with the dissenting judge calling it ?the most important separation-of-powers case regarding the President?s appointment and removal powers to reach the courts in the last 20 years.? The Supreme Court has granted certiorari. This article considers the legal and normative implications of the PCAOB blueprint for future independent agencies, and explores the underlying constitutional tension between Congress?s power to restrict and channel agency administration and the President?s power to control it. It concludes that the prevailing analytic framework for evaluating challenges to novel agency forms is problematic as it reflects a myopic emphasis on presidential power per se. The article posits that a more justifiable standard may be fashioned by considering whether sufficient ?checks and balances? operate to cabin a suspect independent agency?s actions without delving into thorny questions about the proper scope and definition of executive power.

Fine treatment of a very important topic. Recommended.

Full post as published by Legal Theory Blog on January 14, 2010 (boomark / email).