Regulatory commissions (e g , FCC, SEC, FERC)
Regulatory Commissions in the U.S.
What Are Regulatory Commissions?
Regulatory commissions are federal agencies created by Congress to regulate specific industries or economic activities.
They typically have quasi-legislative (rulemaking), quasi-judicial (adjudicative), and executive functions.
Examples:
FCC: Regulates interstate and international communications by radio, television, wire, satellite, and cable.
SEC: Regulates securities markets and protects investors.
FERC: Regulates interstate transmission of electricity, natural gas, and oil.
Characteristics
Independent agencies: Many regulatory commissions are independent, meaning commissioners have fixed terms and can only be removed “for cause” (not at the President’s whim).
This independence is designed to insulate them from political pressure and promote expert, nonpartisan decision-making.
They exercise delegated legislative authority, which raises constitutional issues under the nondelegation doctrine.
Their decisions are subject to judicial review but courts often defer to their expertise.
Key U.S. Supreme Court Cases on Regulatory Commissions
1. SEC v. Chenery Corp. (1947) (Chenery I)
Issue: Whether the SEC can defend its order on a ground other than the one it originally relied upon.
Facts: The SEC ordered a company to divest shares, based on its interpretation of a statute.
Holding: The Court ruled the SEC must justify its decisions on the grounds presented during the administrative process.
Significance: This case established the principle of agency deference to the original reasoning behind its decisions, ensuring transparency and fairness in agency rulemaking and adjudication.
2. SEC v. Chenery Corp. (1949) (Chenery II)
Issue: Whether courts may uphold an agency decision based on a reason the agency itself did not articulate.
Holding: The Court ruled that a court cannot substitute its own judgment for the agency’s, but must review the agency’s action based on the reasons the agency provided.
Significance: Reinforced the “Cheney doctrine”, emphasizing agencies must clearly explain their decisions, limiting arbitrary action.
3. Humphrey’s Executor v. United States (1935)
Issue: Whether the President can remove a commissioner of an independent regulatory agency at will.
Facts: Humphrey was removed from the Federal Trade Commission by President Hoover.
Holding: The Court held that Congress can limit the President’s removal power for officials of independent commissions, protecting their independence.
Significance: This case legitimized the independence of regulatory commissions by protecting them from political removal, which is vital to their functioning.
4. Mistretta v. United States (1989)
Issue: Whether Congress violated the nondelegation doctrine by delegating authority to the U.S. Sentencing Commission.
Holding: The Court upheld the delegation, finding Congress provided an intelligible principle.
Significance: This case affirmed the constitutionality of delegations to commissions, so long as Congress provides guidance—a cornerstone for regulatory commissions’ existence.
5. Motor Vehicle Manufacturers Association v. State Farm (1983)
Issue: Whether an agency action revoking a rule can be arbitrary and capricious.
Facts: The National Highway Traffic Safety Administration rescinded a rule requiring seat belts without proper justification.
Holding: The Court held the rescission was arbitrary and capricious.
Significance: This case set standards for judicial review of agency actions under the Administrative Procedure Act (APA), requiring reasoned decision-making by commissions.
6. FCC v. Fox Television Stations, Inc. (2009)
Issue: Whether FCC's enforcement actions against fleeting expletives violated due process.
Holding: The Court ruled the FCC’s policy was not arbitrary, but agencies must provide clear notice about changing enforcement policies.
Significance: Demonstrated the need for clarity and fair warning in regulatory enforcement by commissions.
7. Free Enterprise Fund v. Public Company Accounting Oversight Board (2010)
Issue: Whether the multi-layered protection of PCAOB members from removal violated separation of powers.
Holding: The Court struck down the removal protections as unconstitutional.
Significance: This case reaffirmed Presidential removal power over executive officials, limiting excessive insulation of regulatory commissioners.
Summary of Constitutional and Legal Principles
Congressional Delegation: Congress delegates legislative powers to commissions, but must provide clear guidance (“intelligible principle”).
Independence vs. Accountability: Commissions’ independence is protected but must be balanced with executive control and oversight.
Due Process: Commissions must act transparently, with reasoned decisions and fair procedures.
Judicial Review: Courts review commission decisions for reasonableness and adherence to law, without substituting their own judgment.
In Conclusion
Regulatory commissions like the FCC, SEC, and FERC are powerful bodies that balance technical expertise and democratic accountability. The Supreme Court has shaped their constitutional boundaries through decisions emphasizing:
Proper delegation (Mistretta)
Independence (Humphrey’s Executor)
Procedural fairness and transparency (Chenery cases, State Farm)
Limits on insulation from removal (Free Enterprise Fund)
Clear enforcement policies (FCC v. Fox)
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