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14. In this case, the court should rule that the statute establishing the national board is
Following all required administrative procedures, the board issued an elaborate set of rules regulating the operations of all banks, securities dealers, and commodities brokers. A company that was subject to the board's rules sought a declaratory judgment that the rules were invalid because the statute establishing the board was unconstitutional.
A federal statute with inseverable provisions established a new five-member national board with broad regulatory powers over the operation of the securities, banking, and commodities industries, including the power to issue rules with the force of law. The statute provides for three of the board members to be appointed by the President with the advice and consent of the Senate. They serve seven-year terms and are removable only for good cause. The other two members of the board were designated in the statute to be the respective general counsel of the Senate and House of Representatives Committees on Government Operations. The statute stipulated that they were to serve on the board for as long as they continued in those positions.
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Although Congress may appoint its own officers to carry on internal legislative tasks (i.e., its staff), it may not appoint members of a body with administrative or enforcement powers; such persons are «officers of the United States» and must, pursuant to Article II, Section 2, be appointed by the President with senatorial confirmation unless Congress has vested their appointment in the President alone, in federal courts, or in heads of departments. Buckley v. Valeo, 424 U.S. 1 (1976).
The Constitution grants Congress a number of specific powers, many of which are enumerated in Article I, Section 8. It also grants Congress auxiliary power under the Necessary and Proper Clause. This Clause gives Congress the power to make all laws necessary and proper (i.e., appropriate) for carrying into execution any power granted to any branch of the federal government. Congress may not, however, adopt a law or otherwise take legislative action that is expressly prohibited by another provision of the Constitution.
Under Article I, Section 8, Congress may spend for the general welfare, it may tax for the general welfare, but it may not regulate for the general welfare. See United States v. Butler, 297 U.S. 1 (1936). For this reason, a congressional regulatory scheme has to be justified as a reasonable means of carrying out some other enumerated power.
B is correct. In this case, two of the members were not appointed by the President with the advice and consent of the Senate (or by the President alone in the proper context), but rather, designated in the statute to be selected from the respective general counsel of the Senate and House of Representatives Committees on Government Operations. Because these members are within the executive branch and not appointed in a manner consistent with Article II, Section 2, the statute is likely to be held unconstitutional.
A is incorrect. This answer reaches the correct answer with the wrong reasoning. Congress has the power to establish and regulate federal agencies through legislation. However, Congress is not permitted to appoint officers of an agency within the executive branch. Such appointments must abide by the requirements of Article II, Section 8, which gives the power to the President, with Senate consent, to appoint such officers.
C is incorrect. The Necessary and Proper Clause allows Congress to make all laws necessary and proper for carrying into execution any power granted to any branch of the federal government. However, the invocation of congressional power under this Clause must not otherwise violate the Constitution. The Appointments Clause requires the appointment of executive officers to be by the President (with the advice and consent of the Senate), which means the Necessary and Proper Clause does not authorize Congress alone to designate executive agency board members, which is what occurred here.
D is incorrect. The «substantial nexus» rule is related to Congress's spending power to regulate interstate commerce. Specifically, a «substantial nexus» standard is applied when state or local government seeks to impose sales tax obligations on out-of-state vendors. Neither this power nor any other spending power gives Congress the authority to appoint executive agency board members. Such responsibility lies with the President, as explained above.