Back when I was in law school, the fringier aspects of conservative legal thought were laying the ground work for attacking several key doctrines of the New Deal.  Now those fringier elements are at the core of the conservative theory, and we are seeing the fruits of those efforts.  This week, there were several key decisions by the Supreme Court in cases dealing with the “Administrative State” and labor unions.

Prior to the New Deal, the Supreme Court had stood in the way of attempts empower executive branch agencies.  By the 1940s, the Supreme Court had made several key decisions that allowed independent agencies and executive branch departments to operate.  These decisions included:  1) limiting the scope of the non-delegation doctrine (the doctrine that Congress could not delegate the power to make laws to administrative agencies); 2) deference to the decisions of executive branch agencies; 3) the  existence of independent agencies (agencies whose heads could only be removed for cause); and 4) quasi-judicial administrative hearings in which “administrative law judges” reviewed the claims of parties with their decisions reviewed by courts rather than political appointees.  In recent years, we have seen cases calling into question all of these doctrines.  This week, we got decisions in two cases involving two of these issues.

Up first is Collins.  This case, in which Justice Alito wrote the majority opinion, is the latest involving the independence of executive branch agency heads.  For certain agencies, Congress has attempted to protect the agencies from political interference by giving the agency head a set term with the president only being able to remove that appointee for cause.  This case involves some of the reforms enacted in response to the mortgage crisis.  The specific statute created the Federal Housing Finance Agency as part of the rescue of two private companies — the Federal National Mortgage Association (Fannie Mae) and the Federal Home Loan Mortgage Association (Freddie Mac) — to oversee those two corporations.  The agency is managed by a single director who is removable for cause.  Part of this director’s authority is to act as a receiver for these two organizations.   In that capacity, the director negotiated changes to the terms of the loan that the U.S. Treasury made to Freddie Mac and Fannie Mae.  Because these two organizations are technically private organization (although chartered by the federal government to serve specific roles in the housing market), they have private investors who sued to challenge the renegotiated agreement.  Following up on prior decisions, the Supreme Court continued its war on limitations on the power of the president to remove an  agency head.  At some point, this war will have serious policy impact when a president chooses to remove an agency head for following the law and replaces that agency head with somebody who will not follow the law. Continue Reading...