The Justice Department's former chief legal adviser, now in private practice, is making a novel argument: that the Federal Trade Commission and other independent regulatory agencies have no constitutional power to enforce the laws.
Theodore B. Olson, who resigned as assistant attorney general in charge of the Office of Legal Counsel last Nov. 1, has advanced this view in defending a mortgage insurance company against price-fixing charges brought by the FTC.
Attorneys for the FTC and Congress dismiss the argument as unfounded, but they acknowledge that an adverse ruling could decimate the enforcement powers of such regulatory agencies as the Consumer Product Safety Commission, Interstate Commerce Commission, Securities and Exchange Commission and Nuclear Regulatory Commission.
Olson was the chief legal adviser to then-Attorney General William French Smith. Olson and Larry L. Simms, who was a deputy assistant attorney general in his office, have joined Smith at the Los Angeles firm of Gibson, Dunn & Crutcher.
The firm has filed suit in U.S. District Court here on behalf of its client, Ticor Title Insurance Co., asking that the FTC's case against Ticor and five other title companies be thrown out on constitutional grounds.
Olson and Simms base their argument on the fact that, while the president nominates FTC commissioners, he does not have the power to fire them, except for cause. Therefore, they say, the FTC and other independent agencies are not under his control and not really part of the executive branch.
"The Constitution does not permit law enforcement power to be granted by Congress to officials who are beyond the ongoing supervisory control of the president," the Ticor suit says.
Rep. John D. Dingell (D-Mich.), chairman of the House Energy and Commerce Committee, sharply criticized this argument in a letter to acting FTC Chairman Terry Calvani. To accept Olson's reasoning, Dingell said, "is to emasculate the Federal Trade Commission," as well as other regulatory agencies.
Dingell said he would dismiss the suit as "patently frivolous," except for "the fact that plaintiffs are represented by prominent counsel, including the firm . . . of the former attorney general and former assistant and deputy assistant attorneys general for legal counsel."
Olson is no stranger to controversy about executive branch authority. He provided much of the Justice Department's advice in the 1983 battle over whether Environmental Protection Agency enforcement documents could be withheld from Congress under the doctrine of executive privilege.
Olson said yesterday that the power of independent agencies "has been a subject of debate for years, both within and without government and in law journals and academic circles . . . . The president's power to appoint and remove is the touchstone of control. The framers of the Constitution wanted the enforcement power to be vested in a president who is elected by the people."
House General Counsel Steven R. Ross said Olson and Simms used to advance the same argument in private at the Justice Department. "It's a very, very minority view . . . . They are attempting to relitigate the basic premise of administrative law," Ross said.
Michael Antalics, the FTC's lead attorney on the Ticor case, called Olson's argument "very weak. I can't imagine a court overturning 70 years of administrative law."
Congress intentionally established several regulatory agencies as independent to insulate them from shifting political pressures. The Supreme Court upheld this independence in the 1930s when President Franklin D. Roosevelt tried to fire an FTC commissioner.
Federal officials are prohibited from contacting their old agencies for one year after they leave the government. Olson said he and Simms have not discussed the case with anyone at the Justice Department.
Even if the department represents the FTC, Olson said, he will be free to work on the case after that period expires for him on Friday.
The FTC charged last January that the six companies have fixed the rates they charge for title searches and settlement services in 13 states. They say these are insurance services and therefore exempt from federal regulation.