Opinion ID: 559506
Heading Depth: 4
Heading Rank: 2

Heading: Department

Text: 76 Having concluded that the Tax Court is not a Court of Law within the meaning of the Appointments Clause, we must now determine whether the Tax Court is a department of which the Chief Judge is the head, an argument advanced by the Commissioner but rejected by both the Company and Amicus. We find the argument advanced by the Commissioner to be persuasive. 77 We begin by repeating that the nature of the duties performed by an office does not determine where the appointment power for such an office can be properly placed. For instance, an officer's performance of traditionally recognized executive functions--such as prosecution--does not mean that he or she must be appointed by the executive. See Morrison, 487 U.S. at 675-77, 108 S.Ct. at 2610-11 (power to appoint special prosecutor can be vested in Article III court). As the Supreme Court has counselled, we should not give undue emphasis to the nature of the duties assigned to a particular office. 78 It is no doubt usual and proper to vest the appointment of inferior officers in that department of the government, executive or judicial, or in that particular executive department to which the duties of such officers appertain. But there is no absolute requirement to this effect in the Constitution; and, if there were, it would be difficult in many cases to determine to which department an office properly belonged. 79 Ex Parte Siebold, 100 U.S. 371, 397, 25 L.Ed. 717 (1880). The question where to place the Tax Court in our constitutional scheme leads us to an examination of the history of the Tax Court. 80 The United States Tax Court was originally established by an Act of Congress in 1924 as the Board of Tax Appeals and was designated as an independent agency in the executive branch of the Government. Revenue Act of 1924, ch. 234, Sec. 900(a), (k), 43 Stat. 336, 338. In 1942, Congress changed the name of the Board of Tax Appeals to the Tax Court of the United States. Revenue Act of 1942, ch. 619, Sec. 504, 56 Stat. 798, 957. Its designation as an independent agency within the Executive Branch, however, was not changed. Indeed, this designation continued until Congress enacted the Tax Reform Act of 1969, P.L. 91-172, tit. IX, Sec. 951, 83 Stat. 487, 730 (codified as amended at 26 U.S.C. Sec. 7441). That provision provided: 81 There is hereby established, under article I of the Constitution of the United States, a court of record to be known as the United States Tax Court. 82 Id. Congress' passage of the 1969 Tax Reform Act renaming this adjudicatory body the United States Tax Court does not in itself lead to the conclusion that Congress removed this body entirely from the Executive Branch. Likewise, we do not find the legislative history to indicate definitively where in our constitutional scheme Congress intended to place this adjudicatory body. The legislative history regarding the Tax Act of 1969 is rather limited. The Senate Report does demonstrate that Congress intended to cease classifying the Tax Court as an agency within the Executive Branch. S.Rep. No. 552, 91st Cong., 1st Sess. 301, reprinted in 1969 U.S.Code Cong. & Admin.News 1645, 2027, 2340-41. While it is clear that Congress intended to establish a court pursuant to its Article I authority, it is equally apparent that Congress realized that this Article I forum lacked the requisites of Article III status. See generally id. at 2343 n. 3. The source from which the Chief Judge's appointment power was to be derived, however, is unclear. The lack of congressional clarity on the specific issue now before us is not surprising. Since the New Deal era, the administrative state has become an accepted and necessary element of our government. As yet, our constitutional precedent has failed to address specifically all the ramifications that stem from the continuing evolution in our governmental structure. For the reasons that we discuss infra, we believe that Congress' desire to create a court is not inconsistent with the conclusion that for purposes of the Appointments Clause the Tax Court is a department associated with the Executive Branch. 83 Several factors lead us to conclude that the Tax Court remains a department associated with the Executive Branch. First, in examining the Founders' use of the phrase Heads of Departments, the Supreme Court has explained: The phrase 'Heads of Departments,' used as it is in conjunction with the phrase 'Courts of Law,' suggests that the Departments referred to are themselves in the Executive Branch or at least have some connection with that branch. Buckley, 424 U.S. at 127, 96 S.Ct. at 686. This explanation is particularly applicable to the Tax Court. The Tax Court serves as a forum to challenge tax deficiencies as determined by the Commissioner. The Internal Revenue Service is clearly within the province of the Executive Branch, specifically the Department of Treasury. Thus, in this respect, it can be said that the Tax Court has some connection with [the Executive Branch]. This conclusion is further supported by Congress' decision to place the predecessor to the Tax Court in the Executive Branch. In adopting the 1969 amendments, Congress explained: The United States Tax Court established under the amendment made by section 951 is a continuation of the Tax Court of the United States as it existed prior to the date of enactment of this Act. Tax Reform Act of 1969, P.L. 91-172, tit. IX, Sec. 961, 83 Stat. 487, 735. Thus, Congress did little more than change the label to be used when referring to this alternative forum for the resolution of tax disputes. We do not think that the label that Congress chooses to give an adjudicatory body determines its constitutional status. To so hold would render many of the Constitution's provisions superfluous. 84 Second, it is well established that Congress can provide for the adjudication of public rights in Article I courts. Public rights are those rights that arise between the Government and persons subject to its authority in connection with the performance of the constitutional functions of the executive or legislative departments. Crowell, 285 U.S. at 50, 52 S.Ct. at 292. The public rights doctrine has its basis in the principle of separation of powers, and the historical understanding that certain prerogatives were reserved to the political Branches of Government. Northern Pipeline, 458 U.S. at 67, 102 S.Ct. at 2869. Indeed, the rationale underlying this understanding is that since Congress would be free to commit such matters exclusively to the Executive Branch for resolution, Congress can employ the less drastic expedient of committing their determination to a legislative court or an administrative agency. Id. at 68, 102 S.Ct. at 2870. As the Supreme Court has summarized: 85 In essence, the public rights doctrine reflects simply a pragmatic understanding that when Congress selects a quasi-judicial method of resolving matters that could be conclusively determined by the Executive and Legislative Branches, the danger of encroaching on the judicial powers is reduced. 86 Thomas, 473 U.S. at 589, 105 S.Ct. at 3337 (quoting Northern Pipeline, 458 U.S. at 68, 102 S.Ct. at 2870). 87 The Tax Court is the classic example of a forum that adjudicates public rights. The relationship between the government and taxpayer plainly gives rise to public rights and we have no doubt that the resolution of such disputes can be relegated to a non-Article III forum. Crowell, 285 U.S. at 50-51, 52 S.Ct. at 292; Bakelite, 279 U.S. at 450-51, 49 S.Ct. at 413; Murray's Lessee v. Hoboken Land & Improvement Co., 59 U.S. (18 How.) 272, 284, 15 L.Ed. 372 (1856). 88 The public rights doctrine rests on the premise that any matters subject to adjudication in Article I forums could have been conclusively determined by the executive or legislative branches in the first instance. See Thomas, 473 U.S. at 589, 105 S.Ct. at 3337; Northern Pipeline, 458 U.S. at 67-69, 102 S.Ct. at 2869-70; Bakelite, 279 U.S. at 451-53, 49 S.Ct. at 413-14; see also Strauss, supra note 6, at 632 (the whole point of the [traditional] 'public rights' analysis has been that no judicial involvement at all was required--executive determination alone would suffice). Given the fact intensive nature of tax disputes, resolution of such claims would ordinarily be left to the executive. See Redish, Legislative Courts, Administrative Agencies, and the Northern Pipeline Decision, 1983 Duke L.J. 197, 213 (1983). Thus, we find it entirely consistent with the reasoning underlying the public rights doctrine to treat the Tax Court as a department associated with the Executive Branch. 89 Third, legislative courts, such as the Tax Court, share many of the characteristics of administrative agencies. We believe that the work performed by legislative courts and adjudicatory agencies cannot be distinguished. Id. at 201. Both are bodies created by Congress under Article I to adjudicate federal rights and both lack the requisites of Article III status. [F]rom the perspective of Article III, [there is] no difference in constitutional principle between legislative courts and administrative agencies. Fallon, Of Legislative Courts, Administrative Agencies, and Article III, 101 Harv.L.Rev. 915, 928 (1988) (citations omitted); see also Northern Pipeline, 458 U.S. at 113, 102 S.Ct. at 2893 (White, J., dissenting) (noting that many Article I courts go by the contemporary name of 'administrative agencies' ); Sommer, Independent Agencies as Article One Tribunals: Foundations of a Theory of Agency Independence, 39 Admin.L.Rev. 83, 98-100 (1987) (advocating treating independent agencies as Article I courts, yet recognizing that the constitutional status of both remains unclear); Miller, Independent Agencies, 1986 Sup.Ct.Rev. 41, 50 (noting that the term independent agency has never been conclusively defined and that Article I courts can properly be categorized in this manner); Redish, supra, at 201 (Court cannot logically distinguish the work of non-Article III legislative courts from that of administrative adjudicatory bodies. Despite several differences in both appearance and operation, their work cannot be functionally or theoretically distinguished.). As one scholar has aptly explained: 90 The members of administrative agencies do not wear robes or retain the other traditional indicia of judicial office. Nevertheless, these agencies are analogous to legislative courts because, although they may and often do perform adjudicatory functions, their members do not receive the salary and tenure protections of Article III. 91 Redish, supra, at 214. We, therefore, think it entirely consistent with the text of the Constitution and the existing precedent to treat Article I creatures, like the Tax Court, as departments, particularly where as here the matters being adjudicated could have been left to executive resolution. 92 Fourth, historically when analyzing Appointments Clause arguments, the Supreme Court has focused its attention on the question of which branch retains the authority to remove a particular officer. See, e.g., Bowsher, 478 U.S. at 724-26, 106 S.Ct. at 3187-88; Wiener v. United States, 357 U.S. 349, 78 S.Ct. 1275, 2 L.Ed.2d 1377 (1958); Myers v. United States, 272 U.S. 52, 47 S.Ct. 21, 71 L.Ed. 160 (1926). Here, the judges of the Tax Court are appointed by the President and removable by him, albeit only after notice and opportunity for public hearing, for inefficiency, neglect of duty, or malfeasance in office, but for no other cause. 26 U.S.C. Sec. 7443(f); compare U.S. Const. art. III, Sec. 1 (Article III judges serve during good Behavior). Thus, although insulated to a large extent, the judges of the Tax Court ultimately remain answerable to the President and are not wholly divorced from his oversight. In this regard, the analogy between the Tax Court and administrative agencies becomes even stronger. The principal officers of some agencies are presidentially appointed and serve for a term of years and are not removable at the will of the President. See Humphrey's Executor v. United States, 295 U.S. 602, 55 S.Ct. 869, 79 L.Ed. 1611 (1935) (holding that Congress can limit the President's removal power over independent agencies). While not having been subject to constitutional challenge, the principal officers of such independent agencies have been presumed to be proper repositories of the appointment power. See, e.g., 7 U.S.C. Sec. 4a(e) (vesting the members, including the chairman, of the Commodities Future Trading Commission with the power to appoint); 15 U.S.C. Sec. 78d(b) and Reorganization Plan No. 10 of 1950, effective May 24, 1950, 15 F.R. 3175, 64 Stat. 1265 (placing the power to appoint in the chairman of the Securities and Exchange Commission). Although such agencies have been deemed to be independent of the executive, they remain affiliated with the Executive Branch. See generally Note, Incorporation of Independent Agencies into the Executive Branch, 94 Yale L.J. 1766 (1985) (arguing for increased executive control over independent agencies). Adopting the pragmatic approach endorsed by the Supreme Court in Mistretta, Thomas and Morrison, we conclude that legislative courts, like administrative agencies, are for purposes of the Appointments Clause most appropriately characterized as departments associated with the Executive Branch. 93 Finally, section 7443A places the power to appoint special trial judges in the Chief Judge of the Tax Court. 26 U.S.C. Sec. 7443A(a). Congress chose to place the power in a specified office and not in the Tax Court itself. Compare 28 U.S.C. Sec. 631(a) (placing power to appoint United States magistrates in all of the judges of each United States District Court); 28 U.S.C. Sec. 152 (vesting United States Court of Appeals with the power to appoint bankruptcy judges). Clearly Congress knows how to place the appointment power in a judicial body as opposed to a particular office. Although not in itself definitive, we conclude that the decision by Congress to vest the Chief Judge, a particular office, instead of the Tax Court itself, with the power to appoint, further supports the conclusion that the Tax Court is a department and the Chief Judge is the head of that department for purposes of the Appointments Clause. 94 Arguing on behalf of the Commissioner, the Solicitor General, in response to one of our questions, frankly acknowledged that the day-to-day operations of government would not be impacted negatively if we were to conclude that the Tax Court was a Court of Law. This concession alone, however, cannot lead us to ignore the Constitution and the existing precedent. While the issue before us is not susceptible to easy analysis, we are convinced that our holding is consistent with the nation's constitutional framework and the practical considerations of managing the operations of our contemporary government.