In-class Exercise #2
In response to mounting concerns about unscrupulous telemarketing tactics, Congress
enacts the “Fair Marketing Act of 2000” (FMA). The FMA reads as follows:
§ 1. Findings: The Congress hereby finds:
1. Telemarketing can bring many economic benefits to the nation, but only if
properly and fairly conducted.
2. Unscrupulous and unfair telemarketing erodes public confidence in the economic
system, with serious effects on national prosperity.
3. Prompt adjudication of claims of unfair telemarketing will encourage private
enforcement of the statute. Such prompt adjudication can be best accomplished
through the more streamlined procedures available to agency courts.
§ 2. Goals
It is the policy of the Congress of the United States to further public confidence in the
economic system, and to ensure national prosperity.
§ 3. Unfair and Unscrupulous Telemarketing Prohibited:
It shall be a violation of federal law for any individual or business entity to propose a
business transaction to a stranger over the telephone, if such proposal is conveyed in a
misleading, unfair or unscrupulous manner.
§ 4. Federal Fair Marketing Agency
1. There is hereby created within the existing Federal Trade Commission an office
entitled the Federal Fair Marketing Agency (“Agency” or FFMA). The head of
the FFMA shall be appointed by the Director of the FTC, and shall serve for a
five-year term, and shall be removable by the President before the end of that
term only for good cause, or by Congress, via impeachment.
2. The FFMA shall have the authority to promulgate regulations implementing
section 2 of the statute.
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3. The FFMA shall also have the authority to adjudicate claims, whether brought by
its own prosecutors or by private parties, that an individual or business entity has
violated section 2. FFMA adjudicators, who shall serve for five year terms after
which they shall return to their other jobs within the agency, shall not have the
power to enforce their own orders. To enforce an order, the party prevailing
before the FFMA shall apply to any federal court where venue is proper. The
results of such adjudications may be appealed to any federal court where venue is
proper. When a federal court reviews an appeal from an FFMA order, or a
request to enforce such an order, it shall review the agency’s fact findings under
the “weight of the evidence” standard, and shall review its legal conclusions de
§ 5. Legislative Oversight
Congress may overturn any regulation promulgated by the FFMA, upon a majority
vote of both the Senate and House of Representatives.
Identify and analyze the constitutional issues raised by this statute. You may assume that
the head of the FFMA is an “inferior officer” of the United States.
END OF EXERCISE
1. Does the statute include an excessive delegation of legislative power?
Congress is prohibited from delegating its legislative power to another branch. The
modern rule is that this non-delegation principle is satisfied as long as the statute contains
an “intelligible principle” that guides the discretion of the agency. One way to
understand this requirement is that statutes must not give agencies excessively broad
tools to carry out excessively broad goals.
These facts probably do not reveal a violation of the non-delegation principle. Here, the
ends are fairly broad – to further public confidence in the economic system, and to ensure
national prosperity. But the means the agency has to accomplish those ends are relatively
limited: to promulgate regulations implementing the prohibition on misleading, unfair or
unscrupulous telemarketing techniques. Just like in Yakus, where Congress had fairly
broad goals – to control price inflation during wartime – but gave the agency relatively
narrow authority – to promulgate price controls consistent with several guidelines given
in the statute – so too here the Congress sufficiently limits the agency’s discretion so as to
defeat a non-delegation claim. Compare this statute to that in Schechter: in that case,
Congress gave the agency nearly unlimited power (the power to promulgate codes of fair
competition, with basically no standards governing what they were to include) in order to
achieve an extremely broad goal (to improve the national economy). This statute is
clearly more limited, both in its ends and especially in its means.
For this reason there is probably no violation of the non-delegation principle.
2. Does the statute unconstitutionally impair the President’s enforcement power?
Article II’s grant to the President of “the executive power” and the power “to take care
that the laws are faithfully executed” requires that, at least to some degree, the President
have control over the selection and the firing of important officials responsible for law
execution. The rule from Morrison is that the constitutionality of congressional
restrictions on presidential personnel control turns on whether the limitation is of such a
nature as to impede the President’s ability to perform his constitutional duty.
Hiring Power: The fact that the FFMA is an inferior officer means that there is no
constitutional violation in giving the FTC head the power to appoint the FFMA head.
Article II specifically allows the appointment of inferior officers to be placed, among
other places, in the “heads of departments.”
Firing Power: Here, the statutory restrictions on the President’s power to fire do not rise
to the level of a constitutional violation of Article II. The job of drafting regulations to
implement Congress’ policy can at least arguably be seen as executive in nature, but in
Morrison the Supreme Court allowed Congress to limit the President’s authority to
remove officers who execute federal law. The Court in Morrison concluded that the
“good cause” provision gave the President sufficient control over the special prosecutor
to allow the President to carry out his constitutional duty; that same provision exists in
this statute. If a prosecutor who is an inferior officer can have his tenure immunized
from presidential removal at will, it’s likely that a regulation drafter who is an inferior
officer can be similarly immunized.
Furthermore, the fact that the FFMA head is an inferior officer, who reports to another
federal officer (the head of the FTC), would suggest that there is less reason to expect
that the Constitution requires that the President have complete control over the FFMA
head’s tenure. If the Constitution allows the courts or agency heads to hire the
individual, there’s less reason to think the Constitution requires that the President have
the power to fire.
3. Does the statute violate Article III by vesting some judicial power in the hands of
non-Article III courts?:
Article III specifies that “the judicial power of the United States” resides in Article III
courts, which feature judges with life tenure. This issue is implicated here because the
agency court judges do not have life tenure. Under CFTC v. Schor, the Court uses a
multi-factor balancing test to determine whether an agency adjudication scheme
unconstitutionally restricts the power of Article III courts. Those factors include:
a. the degree to which the essential attributes of Article III jurisdiction remain in the
hands of Article III courts. In Schor the Court considered the following issues to
be relevant to this factor:
i. Is there significant Article III court review of the agency’s decision? Here,
the answer is yes; the standards of review are the same as those in Schor,
which the Court found satisfactory.
ii. To what extent does the agency court possess the broad-ranging jurisdiction of
most Article III courts? Here, the agency court only adjudicates issues arising
out of unfair telemarketing claims. That is a limited jurisdiction that again
would satisfy Schor.
iii. To what extent does the agency court possess the powers normally thought to
rest in Article III courts? Here, the agency court does not have the power to
enforce its own orders; again, this is significant under Schor’s analysis.
b. The nature of the right, as private or public. Because the right is created by
government, it is arguably closer to a public right than the right at issue in Schor.
Remember that the reparations right created by statute in Schor was
unquestionably adjudicable by the CFTC court; the right at issue here is
analogous, as being Under the statute, sometimes an individual may bring a
claim against another individual; that sort of claim is a bit closer to a classic
private right, as compared to a situation where the government is a party to the
action, either as a plaintiff or defendant. But the private/public right issue is not
dispositive; again, in Schor the right at issue was a classic private right – a
common law claim brought by one individual against another – and yet the Court
allowed it to be heard in an agency court.
c. The reasons Congress had for placing adjudication of this right in the agency
court. Here, Congress found that prompt adjudication of such claims would assist
in enforcement. For that reason, and given the lack of any facts suggesting
Congress was seeking to punish or weaken Article III courts, this factor probably
cuts in favor of the agency adjudication scheme.
For these reasons, a court would probably uphold the scheme against this type of
4. Does the statute have an unconstitutional Legislative Veto?:
INS v. Chadha struck down all legislative vetoes (with the possible exception of the War
Powers Resolution) to the extent that the legislative veto in question attempted to alter the
legal rights and duties of individuals outside the legislative branch.
This is clearly a legislative veto, in that the reversal of agency regulations it contemplates
lacks presentment to the President. Such an action overturning an agency regulation
would be legislative in effect, as it would change the legal rights and duties of individuals
(e.g., what would have been illegal under the regulation would not be so now).
Because Congress is attempting to achieve that legislative effect without presentment to
the President, it is unconstitutional.