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Monday, January 20, 2020

Could Congress Put Chief Justice Roberts on the Federal Reserve’s Open Market Committee? It’s Not As Crazy As You Might Think

The Supreme Court has paid careful attention to Article II’s Appointments Clause requirements in recent cases. Such enhanced scrutiny coincides with renewed constitutional challenges to the appointments process for members of the Federal Reserve’s Federal Open Market Committee. Drawing on my recent paper, this post provides several reasons why the Committee’s appointments should be considered constitutional. These appointments even find support in the First Congress’s decision to make Chief Justice John Jay an ex officio member of the Sinking Fund Commission. The Commission is a founding-era antecedent to the Open Market Committee, and Chief Justice Jay served on the Commission without ever receiving an appointment as a principal officer in the executive branch.

First consider the Appointments Clause issues raised by the Open Market Committee. Its monetary policy decisions have enormous ramifications for the U.S. economy, and yet only seven of the Committee’s twelve members (the governors) are appointed as principal officers. The remaining five members of the Committee are presidents of regional Federal Reserve banks. The bank presidents vote independently and as the governors’ colleagues on the Open Market Committee, but their appointments are approved by the governors rather than the President and Senate. Thus the bank presidents meet only the requirements for inferior officers. Peter Conti-Brown has argued that multiple vacancies on the board of governors have exacerbated the problem by granting bank presidents a majority of votes on the Open Market Committee. It’s not clear that this change (or underlying factors) would render bank presidents principal officers under current precedent. A minority of governors would still retain power to remove bank presidents at will, and regional bank presidents cannot form a quorum of the Committee necessary to transact business without the presence of at least two governors.  (Please see my paper for citations to relevant authority.)

Nor do the bank presidents’ appointments run afoul of originalist arguments for broader Appointments Clause requirements. The Sinking Fund Commission, which again was the Open Market Committee’s founding-era antecedent, provides helpful precedent on this issue. As explained earlier, the Sinking Fund Commission was proposed by Alexander Hamilton, passed by the First Congress, and signed into law by President George Washington. Like the Open Market Committee, the Sinking Fund Commission conducted open market purchases of U.S. securities pursuant to a statutory mandate. In this legislation, Congress specified that five principal officers would become ex officio members of the Sinking Fund Commission: the President of the Senate/Vice President, the Chief Justice, the Secretary of State, the Secretary of Treasury, and the Attorney General. The decision to bestow ex officio positions upon five persons who were already properly appointed principal officers is distinct from appointments concerns raised by the Open Market Committee. Still, the Sinking Fund Commission’s ex officio provisions suggest that some members of multi-member agencies may serve without meeting Appointments Clause requirements for executive officers.

Consider the Chief Justice. Chief Justice Jay was first appointed to an Article III office outside of the executive branch and performed judicial duties that had nothing to do with the Sinking Fund Commission’s open-market purchases of U.S. securities. The new duties Congress assigned as a Sinking Fund Commissioner were not germane to his existing judicial duties or even duties within the judicial branch. It would seem that the Chief Justice served on the Commission without a second appointment qualifying him to be an executive officer. The historical record does not clarify whether the Chief Justice’s role was permissible because he served alongside other properly appointed executive officers, or because the Commission’s open-market purchases were quasi-private actions that did not involve significant authority of the United States. Either way, Chief Justice Jay’s service on the Commission without an appointment to an executive post suggests that the limited appointments process for regional Federal Reserve bank presidents is also permissible.  

Posted by Christine Chabot on January 20, 2020 at 10:17 AM in Constitutional thoughts, Legal History | Permalink

Comments

Very interesting. But may I ask:

The " ex officio position " as stated in the post, is that one called in jurisprudence as: " the de facto officer doctrine" ? like here in the first circuit case ( Aurelius v. Commonwealth of Puerto Rico):

http://media.ca1.uscourts.gov/pdf.opinions/18-1671P-01A.pdf

Thanks

Posted by: El roam | Jan 20, 2020 12:14:24 PM

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