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Can Congress create agencies insulated from White House control?

The US Supreme Court is considering whether an oversight board created by Congress intrudes on executive branch authority - the latest battleground in the dispute over separation of powers.

By Staff writer / December 5, 2009

The U.S. Supreme Court building at One First Street in Washington, DC. On Monday, the high court takes up a case examining the extent to which Congress can create an independent watchdog agency insulated from direct presidential control and political accountability.

Molly Riley/Reuters

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The US Supreme Court on Monday takes up a case examining the extent to which Congress can create an independent watchdog agency insulated from direct presidential control and political accountability.

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At issue is whether Congress unconstitutionally intruded into executive branch authority when it created the Public Company Accounting Oversight Board (PCAOB).

The case represents the latest battleground in a long-running dispute among legal scholars over whether there should be a bright line separating presidential power from congressional power, or whether that line can sometimes be blurred when Congress seeks to create independent agencies that operate at the murky intersection between the executive branch and the legislative branch of government.

In broad terms, the case, Free Enterprise Fund v. Public Company Accounting Oversight Board, is about the structure of American government and how rigorously the Supreme Court believes that structure is to be enforced. More narrowly, the case is about a little-known accounting oversight board with some big powers.

Case began with Enron scandal

The oversight board was established in 2002 as part of the Sarbanes-Oxley Act passed in the wake of the accounting scandals at Enron and other companies. The oversight board is designed to conduct aggressive audits of publicly-traded companies. It was intended to help keep corporate officials honest and investors better apprised of a firm’s financial health.

To avoid potential influence of the accounting industry, Congress decided that the five members of the oversight board should be appointed by the Securities and Exchange Commission. The SEC supervises the board’s activities and may remove board members, but only if they have acted improperly rather than for mere policy differences.

The key question in the case is whether appointment of the oversight board by the SEC rather than the president violates the Constitution’s required separation of powers by insulating the board from presidential supervision and control.

“Separation of powers protects the liberty and security of the people by denying the legislature a role in the enforcement of the laws it enacts,” writes Washington lawyer Michael Carvin in his brief to the court.

“In vesting the executive power in a single president,” Mr. Carvin adds, “the framers sought to ensure accountability at the ballot box and the ability to resist legislative encroachments.”

Carvin represents an accounting firm and a non-profit organization that filed suit in federal court challenging the constitutionality of the oversight board. They allege that the board was created in violation of the Constitution’s appointments clause and the separation of powers.