The specter of Gramm-Rudman-Hollings haunts Washington's federal regulatory agencies.
It's not the probability of deep budget cuts that frightens them. It's the gnawing, though faint, possibility that the Supreme Court, in reviewing the law, may decide the agencies do not have the constitutional authority to regulate anything.
The Constitution requires that the three branches of government maintain strictly separate functions. Congress passes the laws; the executive branch -- the president and the Cabinet agencies -- carries them out.
But the powerful independent regulatory agencies, such as the Securities and Exchange Commission, the Federal Reserve Board and the Interstate Commerce Commission, are hybrids -- neither fish nor fowl, neither legislative nor executive. They operate in an uncertain in-between world as a "headless fourth branch" of government, a branch long vilified by the conservatives now leading a charge against them.
The president appoints the heads of those agencies but cannot remove them at will, as he can all other executive branch political appointees, such as the director of the Office of Management and Budget.
Most observers think that the Supreme Court upheld the agencies' independence in 1935, when it ruled that President Franklin D. Roosevelt could not dismiss a Federal Trade Commission commissioner for personal or political reasons. The decision, Humphrey's Executor v. U.S., sharply limited the president's removal powers and overruled a 1926 decision that gave the president exceptionally broad removal powers.
Conservatives, however, continue to insist that the agency heads are not part of the executive branch and have no authority to enforce laws.
That is the argument being made by Theodore B. Olson, once head of the Justice Department's office of legal counsel under then-Attorney General William French Smith. Olson is representing Ticor Title Insurance Co., which has been accused by the FTC of price fixing. He has argued that the FTC cannot have prosecutorial power unless it is under the direct control of the president.
A U.S. District Court judge recently dismissed that argument, and Olson appealed the dismissal last week. An argument similar to Olson's was made by Attorney General Edwin Meese III in a speech in September to the Federal Bar Association, but Justice Department officials have not filed a brief in Ticor's case.
However, the department did file a brief in the challenge of the Gramm-Rudman-Hollings balanced-budget law, making a similar separation-of-powers argument that the power given the comptroller general under that law is unconstitutional.
The department argued that the comptroller general, who can be removed only by Congress and not by the president, is a legislative branch employe. As such, the department argued, he cannot enforce the law and order the president to make budget cuts.
The unanimous three-judge panel decision agreed with Justice on that point and struck down the comptroller's role in enforcing that law. The decision also contained extraneous language indicating that the panel thought recent high court decisions, especially a 1983 ruling striking down the use of a one-house veto, might have undermined the court's 1935 ruling on independent regulatory agencies.
The panel's musings heartened Olson, but the Supreme Court, which is expected to hear the Gramm-Rudman-Hollings appeal in late April or early May, is not likely to address -- much less agree with -- the constitutional issues raised in the Ticor litigation, according to attorney Alan Morrison, who represents a group of House members challenging the comptroller's role in Gramm-Rudman-Hollings and who won the 1983 Supreme Court case.
Still, some conservatives hope that the justices will comment in passing on those issues, setting the stage for an eventual showdown on Humphrey's Executor.