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Last December, a group of prominent law professors came together to form a group they call “The Shadow SEC,” whose stated purpose is to “provide, encourage, facilitate, and distribute policy discussions and debates relating to the federal securities laws” and the SEC. In response to the Trump administration’s Executive Order asserting presidential control over independent agencies like the SEC, the members of this group penned a spirited defense of the SEC’s independence on the CLS Blue Sky Blog. Here’s what they argue are some of the consequences if the agency loses its independent status:

What would happen if the SEC in fact loses its independence? Concentrated interest groups can be expected to pressure each new administration to change regulation in ways that might not be in the interest of investors and the public and that might not enhance capital formation. Entrenched companies could seek to have the SEC build regulatory moats to prevent competition. Parties seeking to avoid the rigors of the SEC’s disclosure regime may succeed in having that regime diluted and subject to expanded exceptions, making share prices less accurate and eroding the efficiency of the pricing of capital and distorting the manner in which U.S. firms are operated.

What this defense doesn’t address is the proverbial “elephant in the room” – the Trump administration’s embrace of the “unitary executive theory” and what a judicial endorsement of that theory would mean for independent agencies. This theory essentially says that the President possesses sole authority over the Executive Branch, including the ability to remove any subordinate officials at will. In other words, truly “independent” agencies aren’t a thing that the Constitution contemplates.

As Meredith pointed out in her recent blog on the Executive Order, the SCOTUS held in a New Deal Era case called Humphrey’s Executor v. US that the President didn’t have the authority to fire the head of an independent agency.  Justice Scalia questioned Congressional efforts to limit executive power in this fashion in his dissent from the SCOTUS’s 1988 decision in Morrison v. Olson (“Article II, § 1, cl. 1, of the Constitution provides: “The executive Power shall be vested in a President of the United States”. . . [T]his does not mean some of the executive power, but all of the executive power.”).

Scalia was the lone dissenter in that case, but more recently, the Humphrey’s Executor decision and cases following it have been criticized by a growing chorus of conservative scholars and practitioners. Many expect that the current SCOTUS will be open to revisiting and ultimately overruling it – and a high court showdown certainly seems to be where all this is heading.

The unitary executive theory has plenty of conservative champions, but it’s worth noting that even in this deeply partisan era, not all conservative scholars are on-board. For example, here’s what George Mason law professor Ilya Somin wrote about the risks of reviving the unitary executive theory in a 2018 Cato Institute publication:

Federal agencies now regulate almost every aspect of American life. If the president has near-total control over them, he or she has much greater power than originally granted — more than can safely be entrusted to any one person. So long as the executive wields authority far beyond the original meaning, Congress should be allowed to insulate some of it from total presidential control to prevent excessive concentration of power.

– John Jenkins