Author: Tuan Samahon


A Whopper of an Assumption in Free Enterprise Fund v. PCAOB

In his dissent in Free Enterprise Fund v. PCAOB, D.C. Circuit Judge Brett Kavanaugh characterized the SEC – Public Company Accounting Oversight Board (PCAOB) relationship as “Humphrey’s Executor squared.” His analysis assumes that two firewalls shield the PCAOB’s exercise of executive power from presidential control. First, PCAOB members can be removed only for cause by SEC commissioners. That’s clear enough. Second, SEC commissioners can be removed only for cause by the President.

The strange thing is that no statute says that the President may remove SEC commissioners only for cause. The idea that the President may not remove SEC commissioners except for cause turns out to be only a whopper of an assumption. Removing that erroneous assumption, there is only the PCAOB-SEC firewall to presidential control of the PCAOB and so understood that arrangement looks no worse than Humphrey’s Executor to the first power. Unless the Court is prepared to abandon Humphrey’s Executor altogether, this part of the challenge looks like a loser at this point in time.

The significance of the assumption was not lost on the Court during oral argument.

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Who Wrote Synar? A Judge Who Types and Why It’s Important

In Synar v. United States, a per curiam three-judge district court held that the Gramm-Rudman-Hollings Act violated the separation of powers because the statute had given the Comptroller General executive powers and Congress previously held the qualified power to remove the Comptroller for cause. Chief Justice Burger’s majority opinion in the direct appeal, styled as Bowsher v. Synar, very substantially relied on the district court’s formal analysis — citing and quoting from it several times — that the congressional removal power made the Comptroller General “here-and-now subservient” to Congress.

Academics and commentators (including Anthony Lewis) either speculated or assumed that of the three judges on the panel — Oliver Gasch, Norma Holloway Johnson, and then-D.C. Circuit Judge Antonin Scalia — Scalia most likely penned the per curiam opinion. Amy Spare, Villanova Faculty Services Librarian, recently unearthed for me an unappreciated oral history of the late honorable Oliver Gasch that ends the speculation.

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