Free Enterprise Fund v. Public Co. Accounting Oversight Board
The Court struck down the removal protections Congress gave members of the Public Company Accounting Oversight Board, ruling that stacking two layers of "for cause" job protection between the President and the officials who enforce federal accounting rules went too far.
The decision leaves the Board itself intact but makes its members removable at will by the Securities and Exchange Commission, restoring a single layer of insulation between the President and the officers who wield executive power.
“The President cannot “take Care that the Laws be faithfully executed” if he cannot oversee the faithfulness of the officers who execute them.”
The core rationale for why double layers of removal protection violate the separation of powers.
How it got here: A federal district court granted summary judgment to the government; a divided D.C. Circuit panel affirmed; the accounting firm and advocacy group asked the Supreme Court to review.
The Case in Depth
What happened
Congress created the Public Company Accounting Oversight Board after major accounting scandals to police the auditors of public companies. Board members, appointed by the SEC, could only be removed by the SEC for good cause, and the SEC's own commissioners could only be removed by the President for good cause. A Nevada accounting firm inspected and investigated by the Board, along with an advocacy group, sued, arguing the Board's structure was unconstitutional.
The question before the Court
Could Congress shield members of a new accounting oversight board from removal by giving them two layers of "good cause" protection, so the President could not directly fire them or the officials who oversee them?
Why it matters
The ruling limits how far Congress can go in insulating federal officials from presidential control, potentially affecting other agencies structured with multiple layers of removal protection. It keeps the accounting oversight board running, but clarifies that the SEC—not just the board itself—must be able to fire board members without cause, tightening the chain of political accountability for financial regulation.
What changes now
The case is remanded for further proceedings consistent with the opinion. The Board continues to operate, but its members are now removable at will by the SEC rather than only for cause, and the Court left it to Congress to decide whether to restructure the Board further. The ruling does not resolve how it applies to other multi-layered removal arrangements across the federal government, an issue the dissent warned could generate extensive future litigation.
What this does not decide
The Court expressly declined to decide how its holding affects civil-service employees, administrative law judges, military officers, or other government positions with layered removal protections, leaving those questions for future cases. It also did not invalidate the Board itself or its broader powers — only the specific double for-cause removal restriction.
Concurrences and dissents
Dissent — Justice Breyer
Justice Breyer argued the double for-cause structure barely affects presidential power in practice, since the SEC retains near-total control over the Board's budget, rules, and functions regardless of the removal standard. He contended the majority's fact-specific precedents call for a functional analysis of context rather than a rigid "two layers is one too many" rule, warned the new rule is unworkably vague, and catalogued hundreds of other federal positions with similar layered protections that could now be constitutionally vulnerable.
How the Court got there
The legal reasoning, step by step
- The Court began from the premise, undisputed by the parties, that Article II vests the President with the executive power and the duty to ensure laws are faithfully executed, which the Court has long understood to include some power to remove executive officers who fail to do their jobs.
- The Court accepted, without revisiting, two established exceptions: Congress can give principal officers of independent agencies good-cause tenure (Humphrey's Executor), and it can similarly protect inferior officers from removal by the department heads who appoint them (Perkins and Morrison) — but in each prior case only a single layer of such protection separated the President from the officer wielding power.
- Applying that framework to a genuinely new arrangement, the Court reasoned that stacking a second layer of good-cause tenure — protecting Board members from the Commissioners, who were themselves protected from the President — meant the President could not evaluate or act on his own judgment that a Board member was performing poorly, because that judgment was assigned instead to Commissioners he could not fully control.
- The Court concluded this double insulation broke the chain of political accountability the Constitution requires, since the President could no longer be held responsible for the Board's conduct nor make the Commission responsible for it either.
- Having found the removal restrictions unconstitutional, the Court applied ordinary severability principles, concluding Congress would have preferred a Board with members removable at will by the Commission over no Board at all, so it excised the tenure protections rather than dismantling the Board.
- On a separate Appointments Clause challenge, the Court applied its existing test for who counts as an inferior officer and concluded that, once removable at will by the Commission, Board members qualified as inferior officers whose appointment by the Commission (treated as a "Head of Department") was constitutionally valid.
Doctrinal impact
Cases affected by this decision
Distinguishes Humphrey's Executor v. United States (295 U.S. 602)
Left intact as allowing one layer of good-cause tenure, but held it does not extend to a second, stacked layer.
Distinguishes Morrison v. Olson (487 U.S. 654)
Reaffirmed as valid for a single layer of removal protection, but found not to control this two-layer situation.