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Op-Ed | The American Prospect | June 24, 2020

The Quiet Seizure Of Independent Agencies

Independent Agencies

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It has taken a herculean effort and immense sacrifice over almost a decade—countless people in the streets, thousands in jail, and many with permanent injuries from “nonlethal” weapons—for anti-racist protesters to begin to expand the horizon of political possibility. Not everyone in our society must expend such effort to be heard. Corporate America, with its inside path to the powers that be, need not raise its voice, draw attention to itself, or, indeed, sacrifice anything to get its way.

That contrast was on full display in early June, though you could be forgiven for missing it. On June 3, two days after National Guard troops violently cleared Lafayette Square, President Trump nominated Republican Commissioner Hester Peirce to a second term on the Securities and Exchange Commission (SEC). Independent agencies like the SEC are required to have both Republican and Democratic commissioners, and the Senate has traditionally advanced nominations in pairs to incentivize bipartisan cooperation and smooth the confirmation process.

A couple of weeks later, Trump finally nominated Caroline Crenshaw to fill a Democratic seat that has been vacant since February, when Commissioner Rob Jackson left to return to teaching law school at NYU. But there’s no guarantee that Crenshaw will be paired with Peirce to fill the vacancy. Already, it’s taken several months for President Trump to get around to nominating Crenshaw after Senate Democrats recommended her as their preferred nominee. Without Senate Majority Leader Mitch McConnell executing the pairing, the Democratic seat could sit empty indefinitely.

We suspect your eyes are already glazing over; this sounds like a nitpicky procedural complaint. But this story is far more interesting than its wonkish exterior might suggest, and could have consequences across the entire American economy. If Peirce is confirmed without a Democratic pairing, and Republicans hold the Senate, they would have the wherewithal to hang onto the GOP majority on the SEC for the duration of a hypothetical President Biden’s first term. Under this scenario, rules to prevent everything from exploiting small investors to major accounting fraud are certain to get more lax, while consequences for committing white-collar crime will dwindle even further.

This is not just a problem at the SEC. Over the past several years, Trump has repeatedly nominated, and McConnell has confirmed, unpaired Republican nominees to independent agency boards, creating persistent imbalances across the regulatory apparatus. This has invariably shifted the balance of power even further toward corporate America’s interests. And since commissioners stay on after the president that appointed them leaves office, corporate America may continue to enjoy this easy ride at the regulatory agencies even if Biden is elected in November. Despite the severe short-term and dire long-term implications of this move, Senate Minority Leader Chuck Schumer has mounted no meaningful resistance. He’s barely even acknowledged that it’s happening.

By staying silent, Democrats are empowering Trump and McConnell to keep running the same play over and over again. They’ve done it more than once just at the SEC. In the summer of 2018, the president was faced with two upcoming vacancies on the commission, one for a Republican seat and the other for a Democratic one. But while the White House pushed forward with vetting and selecting a Republican nominee, Sen. Schumer dawdled, abdicating the input which the Senate minority leader traditionally enjoys for their party’s nominees. Republicans seized the opportunity to advance Elad Roisman’s nomination alone.

Schumer sent his choice, Allison Lee, to Trump just over a month after the president nominated Roisman. By that time, however, it was too late. Roisman was confirmed in September 2018. Lee was not nominated until April of the following year. And since her predecessor, Kara Stein, had been required to leave her seat that January, the commission had only one Democrat for six months, until Lee’s confirmation in June.

Jackson’s seat officially expired 15 days prior to Lee’s confirmation. Jackson was allowed to stay in the seat, which he had occupied only since 2018, until December of 2020. But after an NYU course catalog included his name on the list of faculty that would be teaching that fall, it became clear that he did not intend to stay. After pushback from insiders, and even from students at NYU, Jackson delayed his departure until February 2020. The nomination for the seat didn’t emerge until four months later.

Amazingly, the SEC is not even the worst example. In January 2018, there were two vacancies on the Federal Deposit Insurance Corporation board, but Trump only advanced a nomination for the Republican seat. By May, his choice for chair, Jelena McWilliams, had been confirmed … but the Democratic vice chair seat was still empty. To this day, Trump has not put forward a nomination to fill it (despite having been given a name in July of 2018), nor has he nominated someone to replace the corporation’s only sitting Democrat, Martin Gruenberg, whose term expired in December of 2018 (although he can serve indefinitely).

That same year, Republicans ran a similar playbook at the National Labor Relations Board. Trump nominated Republican John Ring in January of 2018, but neglected to pair his nomination with one for a Democrat to fill Mark Gaston Pearce’s soon-to-be-expired seat. NLRB members are statutorily prohibited from serving past the ends of their terms, making it particularly important that nominations are advanced before terms expire. Senate Republicans confirmed Ring alone in April, and Trump waited to renominate Pearce until the day after his term had expired in August. Predictably, that nomination went nowhere, and the Democratic vacancy remains.

One Democratic vacancy became two when Lauren McFerran’s term expired in December of 2019. Unlike Pearce, however, McFerran has been renominated and paired with Republican Marvin E. Kaplan, whose term is set to expire in August. Why the willingness to work with Democrats this time? Because Kaplan’s departure would leave the board without a quorum and thus unable to push ahead with its Republican-led anti-worker, deregulatory agenda. And since Trump and McConnell successfully blocked Pearce, confirming McFerran will still leave the board out of balance, at three Republicans to one Democrat. Clearly, when their interests come under threat, Republicans are willing to gesture at the bipartisan norms they’ve otherwise mangled.

Schumer, for his part, has said and done next to nothing about this circumstance. Bear in mind that putting forward commissioner nominees is one of the few ways a Senate minority leader can exert power without having to work with the Senate majority leader. Faced with McConnell’s legendary intransigence, Schumer is choosing not to use one of the only tools in his belt to actually accomplish something.

Having encountered little to no resistance, Trump and McConnell have pressed ahead. Most recently, when faced with two vacancies on the Federal Energy Regulatory Commission (FERC)—one for a Republican and one for a Democrat—Trump chose to only nominate Republican James Danly, and McConnell duly had him confirmed in just nine days.

Clearly, Trump and McConnell have killed these norms. But what, practically, is the effect? Even if they had faithfully honored the norms and consistently confirmed Democrats alongside Republicans, Republicans would still have had the majority. Why bother starting a fight over a few missing commission seats when it wouldn’t impact the regulatory results either way?

For one, commissioners do not always vote with their party, meaning particular configurations can matter a great deal on the margins. At the Securities and Exchange Commission, for example, Chairman Jay Clayton has bucked Republican colleagues to support several enforcement actions. With only one Democrat left on the commission, Clayton’s defection is still not enough to ensure the necessary majority for real consequences against corporate wrongdoers. (It’s perhaps for this reason that Clayton was tapped to leave the SEC for the U.S. Attorney’s Office in New York City, in what has become a fiasco for the White House.)

More importantly, minority-party commissioners can use their platforms and inside knowledge to draw attention to important agency actions and to demystify the regulatory bureaucracy’s power. Just look, for example, to Federal Trade Commissioner Rohit Chopra, who regularly breaks down the commission’s decisions in widely read Twitter threads.

Traditionally, officials at many independent agencies counted on the seemingly complex, esoteric nature of their work to dampen public resistance to their actions. By making the stakes of decisions clearer and, therefore, opposition more accessible, commissioners like Chopra can increase the costs for their peers’ acting out of step with the public interest. Chopra can even sometimes win a few battles, like a recent decision at the FTC to write new rules penalizing companies that use false “Made in the USA” labels.

The absence of strong Democratic voices on agency commissions over the last several years has made corporate America’s route to domination even smoother. Take, for example, the merger between BB&T and SunTrust banks, which is shaping up to be just as disastrous as critics predicted. The combined bank, Truist, has already begun laying off employees even as it pays dividends to shareholders throughout the present crisis.

As the largest bank merger since the financial crisis, the deal attracted more attention than most. All of it, however, was coming from the outside. How might an inside voice on the FDIC, for example, have added to pressure to reject the merger? (This case also acts as a lesson on the importance of remaining attentive to the quality of officials who are nominated for these roles; the FDIC’s lone Democrat, Martin Gruenberg, ultimately supported the deal.)

Even when commissioners’ rabble-rousing is not enough to stop agency action in the short term, minority-party commissioners can shape the horizon for future action. Dissenting opinions on rule making or enforcement decisions can help establish precedent for different ways of interpreting and applying the law. Together, these opinions lay the groundwork for swifter, more legally grounded action when the commission’s majority shifts. Again, look at Chopra’s fiery dissent to his agency’s settlement with Facebook over the Cambridge Analytica scandal. Chopra has not-so-subtly acknowledged the FTC’s strong biases in favor of corporate America and away from its duties to the public, contributing to much deeper scrutiny of the agency.

Having a full slate of commissioners on politically balanced independent agency boards also speeds the transition of power from one president to the next. When commissions are three Republicans to two Democrats, a new Democratic president only has to confirm one commissioner to retake the majority. If, however, there’s only one minority-party commissioner, or worse, none, that requires a steeper climb. And with fewer experienced co-partisans in place, it is more likely that, even once new commissioners have been successfully confirmed, agency action will proceed more slowly as they learn the ropes at their respective institutions.

In short, Trump and McConnell’s refusal to nominate and confirm minority-party commissioners will continue to bear fruit for corporate America for years to come. This would especially be true if Democrats seize the presidency but Republicans retain an obstructionist Senate majority: With solid Republican majorities at so many commissions, Senate Republicans can likely be assured of control at critical agencies for years, even if they don’t confirm any new officials. Imagine a Merrick Garland–style refusal to act on an open seat, but multiplied across dozens of different parts of the federal government.

The strength of this advantage will depend, in no small part, on the Supreme Court’s upcoming decision in Seila Law v. CFPB, which has challenged the constitutionality of laws preventing a president from firing independent agency commissioners without cause. If the Court weakens these protections, a President Biden could have much wider latitude to remake agency boards. But even such a radical departure would not entirely erase the consequences of Republicans’ power grab. If Republicans continue blocking nominations in the Senate, then Biden would not readily be able to restore a Democratic majority to some agency boards and maintain a quorum, even if he were to fire all of the Republican officials.

This sad state of affairs was not inevitable. Senate Democrats have many tools at their disposal to resist such incursions; they just didn’t use them. Chuck Schumer and the Senate Democratic Caucus have been virtually silent as Senate Republicans push independent agency boards further and further out of balance. Had Schumer been serious about protecting these positions, he would have incorporated Democratic nominations into the deals he’s cut around must-pass legislation. These nominations—some of his only means of personally asserting power—were, quite simply, not a priority.

Moving forward, if progressives have any hope of undoing the damage that Trump and McConnell have wrought and, more broadly, making the federal government work for the general public, that will have to change. Senate Democrats need to fight hard for these roles. In the short term, for example, they should fight for nominations to fill the at least 18 Democratic seats on independent agency boards that are currently vacant.

If the Crenshaw nomination is a harbinger that McConnell’s recognition of the force of current political tides will lead him to reconsider his obstruction over the final six months of the Trump administration, Democrats must recognize that this is too little, too late.

Democrats’ exact strategy will depend on many factors, but common across all of these scenarios is the absolute necessity that Senate Democrats take these positions seriously. That means, for example, that if they retake the Senate, they should not immediately return to the pre-existing norms which Senate Republicans have ignored for four years.

Instead, they should observe how their opponents have been so effective. Sen. Mitch McConnell is meticulous in his defense of corporate interests, considering every corner of the bureaucracy and every possible strategy to solidify their power over the long term. Progressives should prepare to force Schumer and Biden to act as energetically on behalf of the 99 percent as Mitch and Trump fight for corporate America.

Independent Agencies

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