Independent Regulatory Commissions
What are they?
Why do they exist?
How do they operate?
The most technical definition of an independent regulatory commission (or administration, agency or board) is “an entity created only by Congress that is intended to be non-political and independent of both Congress and the President.” It is empowered to make objective, evidence-based rules and regulations that govern a specific, usually highly technical subject (eg. the sale of US stock, bonds and other financial instruments) and that protect and benefit the public. It also has the authority to adjudicate disputes involving enforcement of its rules. Commission members, normally an odd number between three and nine, are always appointed by the President and confirmed by the Senate. Members serve fixed, staggered terms of office, typically between three and seven years, and may be removed for cause (insufficiency, malfeasance or neglect of duty) by Congress using impeachment (extremely rare) or by the President. The President must inform Congress in writing and provide a justification for removal.1
An independent regulatory commission (hereafter IRC) is staffed by professionals hired for their technical expertise and experience rather than their political affiliation. Mostly composed of lawyers, IRC personnel study issues and problems that emerge, conduct research and issue new rules to address the problems. The rules are publicly announced in print, and take effect only after a lengthy period during which those affected by the rules can challenge them. This power to make rules is called an IRC’s quasi-legislative authority, that is, the IRC’s rules have essentially the same authority as an act of Congress.
If a person, corporation or other entity violates an IRC rule, the IRC is empowered to enforce it. Its lawyers will file a legal action against the violator and bring the charge before an IRC administrative law judge,2 who will then hold a trial to determine the defendant’s innocence or guilt. The losing party in the case may appeal the trial court judge’s decision to an IRC tribunal of three administrative law judges, who render a decision. Once again, the losing party may appeal, but in most instances the case goes directly to the US Supreme Court, which may or may not chose to hear it. This power to self-adjudicate its rules is called an IRC’s quasi-judicial authority, that is, IRC administrative law judges’ decisions have the same weight as those of any other federal judge.3
IRC s were first established during the Progress Era (1890-1920). Congress sought to protect people and small businesses from exploitation by large corporations. The first IRC was the Interstate Commerce Commission (ICC), created in 1887.4 Other IRCs followed. Examples include the Federal Reserve Board (1913), Federal Trade Commission (1914), Federal Power Commission (1930), Federal Communications Commission (1934), Securities and Exchange Commission (1934), National Labor Relations Board (1935), US Maritime Commission (1936), Civil Aeronautics Board (1938),5 Occupational Safety and Health Review Commission (1970), Commodities Futures Trading Commission (1974), Nuclear Regulatory Commission (1974, formerly the Atomic Energy Commission), Federal Energy Regulatory Commission (1977), Mine Enforcement and Health Review Commission (1977), Federal Housing Finance Board (2008), and Consumer Financial Protection Board (2020), to name a few.
Between 1978 and 1980, President Carter worked with his economic advisors to abolish or consolidate many IRCs in order to open markets to more competition, thereby lowing prices and providing consumers with more choices. Beginning in 1978 at Carter’s direction, Congress passed the Airline Deregulation Act, which abolished the CAB (Civil Aeronautics Board). The Motor Carrier Act, which deregulated the trucking industry, the Staggers Rail Act, which removed regulations over rail shipping rates, and the Telecommunications Act, which removed the FCC’s power to regulate long-distance phone rates, were all signed by Carter in 1980. He issued Executive Order 12044, which required all agencies to analyze the impact of any new regulation on a regulated market and to make their reports public. Agencies were directed to adopt the least burdensome method to achieve the regulation’s objectives. President Reagan continued Carter’s plan. Under both of President Trump’s administrations, more extreme methods were deployed to reign in IRS independence and narrow its powers, viz. by removing IRS commission members without regard for the rules, and by firing IRS personnel.
There are agencies that possess regulatory authority but either are not fully independent or do not have quasi-legislative or quasi-judicial authority. Examples are the Environment Protection Agency, which regulates the environment; its rules, however, are subject to review and rejection by Congress, and its director reports to the President, who may easily remove the director. Another is the Consumer Product Safety Commission (1972), which has the mission is to promote safe consumer products. It conducts studies, identifies unsafe products, and issues product recalls; its decisions, however, are subject to review by Congress, which can rescind them.
A word about the Federal Bureau of Investigation (FBI), because of confusion surrounding its status and function. It is not an IRC. Housed within the Department of Justice, its director is appointed by the President, confirmed by the Senate, and reports to the Attorney General. Congress founded the FBI in 1908 to investigate federal crimes,6 both civil and criminal. Under Director J. Edgar Hoover’s leadership (1924 to 1972), the FBI acted almost independently, conducting secret investigations, initiated by the Director. Hoover’s abuse of his office caused Congress to impose limits on the Director’s discretionary authority and made the FBI more responsible to the President. President Nixon used the FBI (and the DoJ) to pursue the President’s political enemies, as came to light during the Watergate investigations. Public and congressional outrage led to the FBI engaging in a major internal review of its operational procedures. This review established new rules that both prevent future efforts to use the agency as a weapon and reaffirm its tradition of independence from carrying out a president’s agenda. Recently, Republicans accused President Biden of “weaponizing” the FBI — and the DoJ — because they investigated and prosecuted President Trump, while President Trump’s appointee as Director of the FBI, Kash Patel, has publicly spoken and written about prosecuting President Trump’s enemies.
- The Supreme Court declared in Humphrey’s Executor v. US (1935) that the President did not have the power to remove members from independent regulatory commissions. In this case, President Franklin Roosevelt removed Mr. Humphrey from the Federal Trade Commission board for political reasons. A unanimous court ruled that FDR could not do so because Congress intended the FTC to be independent of the President, hence removing its members had to be for cause. Over the last several decades, Supreme Court’s decisions have begun to weaken the precedent established by Humphrey’s Executor; in 2025, the Court appears ready to overturn it. ⇧
- An IRC may also request that the DoJ file charges in a federal district court instead of before an IRC administrative judge. ⇧
- Administrative law judges are considered Article I judges, because they are created by acts of Congress rather than constitutionally mandated, the latter being Article III judges and justices. Article I judges may be found in many departments and agencies, such as the Social Security Administration and Department of Veterans’ Affairs, where they hear appeals by agency clients who were denied benefits. ⇧
- Congress created the ICC in response to complaints from farmers who were being exploited by the railroads that hauled the farmers’ crops to market. The railroads colluded on prices, setting them higher than necessary; farmers had no recourse but to pay the high rates. The ICC was given power to set railroad shipping rates for grains and crops. However, the ICC’s original enabling legislation failed to give it sufficient authority to fulfill its function. Congress remedied this when it passed the Hepburn Act in 1906 at the urging of President Theodore Roosevelt. Congress later expanded the ICC’s authority to include shipments by trucks and planes, and later to bus companies and home moving companies operating in interstate commerce (the latter two are considered “common carriers”). The ICC was disbanded in 1996 and its responsibilities eliminated or dispersed to other departments or IRCs. ⇧
- The CAB had authority to set rules and regulate nearly every aspect of air travel in the US, from allowing new airline companies to enter the market, to assigning which airlines could fly which routes, fixing ticket prices, and regulating aircraft safety, pilot qualifications and rules for flying time, among other things. The CAB was eventually dissolved in 1985, with its functions dispersed to other departments and IRCs. The National Transportation Safety Board, for example, was created to investigate aircraft accidents as well as ships, buses and other commercial vehicle accidents, while the FAA was assigned responsibility for plane and pilot safety rules. ⇧
- Killers of the Flower Moon: The Osage Murders and the Birth of the FBI by David Grann tells the story (Doubleday, 2017). ⇧
Additional Information
For additional reading see
Independence of Federal Financial Regulators: Structure,
Funding, and Other Issues
Congressional Research Service, August 2023.
https://crsreports.congress.gov/product/pdf/R/R43391