Brief Fact Summary.
The Free Enterprise Fund filed suit against the Public Company Accounting Oversight Board claiming that the Board’s protection from removal is unconstitutional.
Synopsis of Rule of Law.
The President cannot be prevented from removing a principal officer of the law, who will subsequently be prevented from removing an inferior officer of the law who enforces laws, because that prevents the President from ensuring that laws are faithfully executed.
The Sarbanes-Oxley Act created the Public Company Accounting Oversight Board (Board) to regulate the accounting industry, and the Securities and Exchange Commission (SEC) to oversee them. While the SEC cannot remove a Board member, the President cannot remove an SEC commissioner. The Board began an investigation of Beckstead and Watts, LLC, a member of the Free Enterprise Fund, and the Free Enterprise Fund filed suit against the Board for its protection against removal. The lower courts granted judgment in favor of the defendants and the Supreme Court granted certiorari.
Whether the President can be restricted from removing an officer who is responsible for the execution of the laws?
No. Affirmed in part and reversed in part.
(Breyer, J.) Although the members of the Board are inferior officers, the Sarbanes-Oxley Act does not interfere with the powers of the President.
The issue with the Sarbanes-Oxley Act is that it prevents the President form making a determination about what constitutes good cause for a member to be removed from the Board. Similarly, because the Commissioner makes decisions as to what constitutes good cause for a Board member to be removed and the President of the United States cannot remove the Commissioner, the Board and the SEC remain unaccountable to the President. The President cannot ensure that the laws are faithfully executed and the act is therefore unconstitutional.