Court Opinion

ID: 6103838
Source: CourtListenerOpinion
Date Created: 2022-01-14 20:41:39.251795+00
Date Added: 2024-06-11T08:53:41.034421
License: Public Domain

(Slip Opinion)

      Appointment and Removal of Federal Reserve Bank
       Members of the Federal Open Market Committee
The statutory procedures for appointing and removing Federal Reserve Bank members
  of the Federal Open Market Committee are consistent with the Constitution, and
  would have continued to be so under proposed H.R. 6741, the Federal Reserve Re-
  form Act of 2018.

                                                                October 23, 2019

                     MEMORANDUM OPINION FOR THE
                     ASSISTANT ATTORNEY GENERAL
                     OFFICE OF LEGISLATIVE AFFAIRS

   This memorandum memorializes our review of the constitutionality of
an amendment in the nature of a substitute to H.R. 6741, the Federal
Reserve Reform Act of 2018, which would have expanded the authority of
the Federal Open Market Committee (“FOMC”) and changed its structure
for the first time in decades. The bill was reported as amended by the U.S.
House Committee on Financial Services in the 115th Congress, but was
not enacted. The FOMC is part of the Federal Reserve System and directs
U.S. monetary policy, principally by setting the target for the “federal
funds rate”—the interest rate at which banks lend money to one another
overnight. Sections 4(1)(B) and 5 of H.R. 6741 would have permitted the
FOMC to authorize emergency lending and to set the interest rate on
certain reserves maintained on behalf of financial institutions. Sections 6
and 8 would have amended the membership of the FOMC and the process
for selecting its members.
   Currently, the FOMC consists of twelve members—the seven members
of the Federal Reserve System’s Board of Governors, a member drawn
from the Federal Reserve Bank of New York, and four members drawn
from geographical groups of other regional Federal Reserve Banks, who
serve one-year terms on the FOMC on a rotating basis. Each of the five
Reserve Bank members must be either a president or first vice president
of a Reserve Bank. A Reserve Bank president or first vice president is
selected by a subset of directors of the Reserve Bank, subject to the ap-
proval of the Board of Governors, and then may be designated to serve on
the FOMC by the full membership of the combined boards of directors of
the Reserve Banks in the geographical group to which the Reserve Bank
belongs. Like any other Reserve Bank president or first vice president,
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                       43 Op. O.L.C. __ (Oct. 23, 2019)

Reserve Bank FOMC members may be removed from their Reserve Bank
positions either by the Board of Governors or by the boards of directors of
their respective Reserve Banks, which in turn would have the effect of
removing the president or first vice president from the FOMC.
   The structure of the FOMC has long raised constitutional questions.
In 1986, a district court considered, although ultimately rejected, an
Appointments Clause challenge to the FOMC’s structure. See Melcher v.
FOMC, 644 F. Supp. 510 (D.D.C. 1986), aff ’d on other grounds, 836
F.2d 561 (D.C. Cir. 1987). But H.R. 6741 would have heightened Ap-
pointments Clause concerns with the FOMC’s structure by increasing
the authority of the FOMC’s Reserve Bank members. We thus consid-
ered the constitutionality both of the FOMC’s basic structure as it exists
today and of the changes the proposed legislation would have made to
that framework.
   We concluded that Reserve Bank representatives on the FOMC are
“Officers of the United States” under the Appointments Clause. U.S.
Const. art. II, § 2, cl. 2. More specifically, they are “inferior Officers”
who are appointed to their Reserve Bank positions by the “Head[] of
[their] Department[],” id.—the Board of Governors of the Federal Reserve
System, which approves their appointments as Reserve Bank presidents or
first vice presidents. Their appointments as Reserve Bank presidents or
first vice presidents make them eligible for service as members of the
FOMC, even though the boards of directors that select them for FOMC
membership may not make appointments under the Appointments Clause.
Because the duties of Reserve Bank presidents and first vice presidents
are germane to the duties of FOMC members, those officers may serve on
the FOMC on the strength of the Governors’ approval of their earlier
appointments.
   We also concluded that the procedures for removing Reserve Bank
FOMC members are constitutional. Reserve Bank FOMC members are
subject to plenary removal and supervision by the Board of Governors,
which tracks the default rule that an officer is subject to removal at will
by the appointing official. Under the statute, Reserve Bank FOMC mem-
bers may also be removed from their underlying bank positions by the
Reserve Bank boards of directors. But this additional removal authority
does not unconstitutionally interfere with the removal authority of the
Board of Governors, because the statute can be read and administered to

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     Appointment and Removal of Federal Reserve Bank Members of the FOMC

require the Board to approve any removal of an FOMC Reserve Bank
member.
   For these reasons, we concluded that the basic structure of the FOMC is
constitutional, both as it exists today and as it would have been amended
by H.R. 6741. This memorandum memorializes our reasoning in support
of those conclusions. 1

                                           I.

   The Federal Reserve System consists of three overlapping entities: the
Board of Governors, the twelve regional Federal Reserve Banks, and the
FOMC. The Board of Governors has seven members, who are appointed
by the President to fourteen-year terms with the advice and consent of the
Senate. 12 U.S.C. §§ 241–242. The Board oversees the operations of the
regional Reserve Banks, including by setting policies for Reserve Banks’
lending of money to private banks and provision of other financial ser-
vices. The Board also regulates certain private financial institutions and
activities. For instance, the Board imposes notice and reporting require-
ments, establishes capital requirements and leverage limits for financial
institutions, and conducts stress tests to ensure that those institutions
have sufficient capital to survive under adverse economic conditions.
See, e.g., id. §§ 248–248b, 5361–5374.
   The twelve regional Federal Reserve Banks execute the Federal Re-
serve System’s policies. The Reserve Banks are owned by member com-
mercial banks within their regional districts. Id. § 341. Each Reserve
Bank is overseen by its own board of directors and operated on a day-to-
day basis by a president and one or more vice presidents. Id. Among
other functions, Reserve Banks review the soundness of financial institu-
tions, including state depository institutions; serve as “bank[s] for banks”
by offering lending and payment services to other financial institutions;
execute orders to buy and sell government securities; and gather infor-
mation used to formulate national monetary policy. See Board of Gov-
ernors of the Federal Reserve System, The Federal Reserve System:
Purposes & Functions 13–14 (10th ed. Oct. 2016) (“Federal Reserve

  1 In preparing this opinion, we consulted with the Office of the General Counsel of the

Department of the Treasury and with the Office of the General Counsel of the Federal
Reserve System Board of Governors.

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                       43 Op. O.L.C. __ (Oct. 23, 2019)

System”), https://www.federalreserve.gov/aboutthefed/files/pf_complete.
pdf.
   The FOMC, in turn, oversees the Federal Reserve System’s “open mar-
ket operations”—that is, “the purchase and sale of Government securities
in the domestic securities market,” through which the Federal Reserve
System expands or contracts the supply of money in the United States.
FOMC v. Merrill, 443 U.S. 340, 343 (1979); see 12 U.S.C. § 263; Federal
Reserve System at 15–17, 20–32. To increase the money supply, the
FOMC directs purchases of federal securities from banks; the proceeds of
those purchases increase the banks’ cash reserves. Merrill, 443 U.S. at
343. Conversely, to decrease the money supply, the FOMC directs sales
of securities, thereby decreasing banks’ reserves. Id. at 343–44. This
change in reserve volume affects the amounts of money that banks may
loan and invest. When banks have more money to loan, the interest rates
on loans become lower and borrowers enjoy cheaper access to capital.
When banks have less money, the interest rates on loans become higher.
This ease or difficulty of access to capital has a “substantial impact” on
“investment activity in the economy as a whole,” id., which is why these
“open market operations . . . are the most important monetary policy
instrument of the Federal Reserve System,” id. at 343; see also Federal
Reserve System at 32–38.
   The FOMC directs open-market operations primarily by setting the tar-
get for the federal funds rate. The FOMC executes that decision by direct-
ing the Federal Reserve Bank of New York to purchase or sell govern-
ment securities until the federal funds rate meets the target. See Federal
Reserve System at 32–38; David Zaring, Law and Custom on the Federal
Open Market Committee, 78 Law & Contemp. Probs. 157, 163 (2015). In
response to the financial crisis that began in 2007, the FOMC also em-
ployed other, less traditional monetary policy tools, such as directing the
purchase of longer-term securities to place downward pressure on long-
term interest rates. See Federal Reserve System at 21–22. H.R. 6741
would have expanded the FOMC’s authority further. It would have re-
quired decisions of the Board of Governors to authorize emergency lend-
ing to be approved by a two-thirds vote of the FOMC (as well as the
Secretary of the Treasury) and would have authorized the FOMC to set
the interest rate on balances held by Reserve Banks as part of commercial
banks’ required reserves. H.R. 6741, sec. 4(1)(B), § 343(3)(A); id. sec. 5,
§ 461(b)(12)(A).

                                      4
       Appointment and Removal of Federal Reserve Bank Members of the FOMC

   The FOMC consists of the Board of Governors and representatives of
the regional Reserve Banks. The seven Governors of the Federal Reserve
System hold positions on the FOMC for their entire fourteen-year terms
as Governors. 12 U.S.C. §§ 241–242, 263. The remaining five FOMC
members are the president of the New York Federal Reserve Bank and the
presidents of four other regional Reserve Banks, each of whom serves a
one-year term on the FOMC. Id. § 263(a).2 Each Reserve Bank president
is initially selected to his Reserve Bank position by two classes of the
directors of that Reserve Bank, with the approval of the Board of Gover-
nors, for a five-year term. Id. §§ 304, 305, 341. The full membership of
the combined boards of directors of the Reserve Banks in each regional
group, see supra note 2, then selects the FOMC member who will repre-
sent that regional group, 12 U.S.C. § 263(a). H.R. 6741 would have
amended the membership of the FOMC to include the presidents of all
twelve Reserve Banks, bringing the FOMC’s total membership to nine-
teen. H.R. 6741, sec. 6, § 263(a). H.R. 6741 would also have amended the
underlying method of appointment to the position of Reserve Bank presi-
dent. Under the proposed legislation, the president of each Reserve Bank
would have been selected by the Reserve Bank’s entire board of directors
instead of by only two classes of its directors. Id., sec. 8, § 341. Each
appointment of a Reserve Bank president would have remained subject to
the approval of the Board of Governors. Id.
   There are two methods of removing Reserve Bank presidents. First, the
Board of Governors may “suspend or remove any officer or director of
any Federal reserve bank,” so long as it communicates “the cause of such
removal . . . in writing . . . to the removed officer or director and to said
bank.” 12 U.S.C. § 248(f ). Second, the board of directors of an individual

   2 The remaining four Reserve Bank members typically include, on a rotating basis, one
of the presidents of the Reserve Banks of Boston, Philadelphia, and Richmond; one of the
presidents of the Reserve Banks of Cleveland and Chicago; one of the presidents of the
Reserve Banks of Atlanta, Dallas, and St. Louis; and one of the presidents of the Reserve
Banks of Minneapolis, Kansas City, and San Francisco. See 12 U.S.C. § 263(a). In
addition to the Reserve Bank presidents, the statute provides that the first vice president
of each Reserve Bank is also eligible for appointment to the FOMC, id., and H.R. 6741
would have continued to render them eligible to represent the Reserve Banks on the
FOMC, H.R. 6741, sec. 6, § 263(a). Because the first vice presidents are appointed and
removed in the same way as the Reserve Bank presidents, see 12 U.S.C. § 341, there is no
difference in the relevant constitutional analysis, so we refer in this opinion simply to
Reserve Bank presidents, the officials who typically serve on the FOMC.

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                      43 Op. O.L.C. __ (Oct. 23, 2019)

Reserve Bank may dismiss the Reserve Bank’s officers “at pleasure.” Id.
§ 341. Because the Reserve Bank presidents participate on the FOMC as
representatives of their regional banks, removal from their positions as
Reserve Bank presidents strips them of their duties on the FOMC as well.
See id. § 263(a) (Reserve Bank FOMC members “shall be presidents or
first vice presidents of Federal Reserve banks”).

                                    II.

   The Appointments Clause of the Constitution, U.S. Const. art. II, § 2,
cl. 2, provides the exclusive means of appointing “Officers of the United
States.” Principal officers must be nominated and appointed by the Presi-
dent with the advice and consent of the Senate. Id. Inferior officers must
be appointed in the same manner, unless Congress by law vests their
appointment in the President, the head of a department, or a court of law.
Id. We conclude that Reserve Bank presidents serving on the FOMC are
inferior officers of the United States. Congress has constitutionally pro-
vided for their appointments by requiring the approval of the selection of
a Reserve Bank president by the Board of Governors, the constitutional
head of the Federal Reserve System.

                                    A.

   FOMC members, including Reserve Bank members, have authority that
may be exercised only by officers of the United States who are appointed
in conformity with the Appointments Clause. That is because each mem-
ber (1) “‘exercis[es] significant authority pursuant to the laws of the
United States’” and (2) “occup[ies] a ‘continuing position’ established by
law.” Lucia v. SEC, 138 S. Ct. 2044, 2051 (2018) (quoting United States
v. Germaine, 99 U.S. (9 Otto) 508, 511 (1879); Buckley v. Valeo, 424 U.S.
1, 126 (1976) (per curiam)); see also Officers of the United States Within
the Meaning of the Appointments Clause, 31 Op. O.L.C. 73, 122 (2007)
(“Officers of the United States”) (“[A]n individual who will occupy a
position to which has been delegated by legal authority a portion of the
sovereign powers of the federal government, and which is ‘continuing,’
must be appointed pursuant to the Appointments [C]lause.”).
   The members of the FOMC satisfy the first aspect of the test for of-
ficer status because they exercise significant authority pursuant to t he
laws of the United States. See Lucia, 138 S. Ct. at 2051; Officers of the

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     Appointment and Removal of Federal Reserve Bank Members of the FOMC

United States, 31 Op. O.L.C. at 78. The FOMC sets the government’s
monetary policy by ordering open-market transactions on the govern-
ment’s behalf, which is “the most important monetary policy instrument”
of the United States. Merrill, 443 U.S. at 343. To implement that policy,
the FOMC is empowered to order the Federal Reserve Bank of New York
to buy or sell government securities. In addition, the FOMC exercises
another form of sovereign authority: the power to make binding rules.
See Buckley, 424 U.S. at 141; 12 U.S.C. § 263(b) (authorizing the FOMC
to promulgate regulations that bind Reserve Banks). The FOMC has
issued regulations governing the Reserve Banks’ open-market operations,
12 C.F.R. §§ 270.1–.4, regulations regarding public access to information
about FOMC proceedings, id. §§ 271.1–.9, and rules of procedure, id.
§§ 272.1–.5. Such authority reflects “power lawfully conferred by the
government to bind third parties, or the government itself, for the public
benefit.” Officers of the United States, 31 Op. O.L.C. at 87.
   The FOMC’s members satisfy the second aspect of the test for officer
status because they occupy continuing positions established by law. See
Lucia, 138 S. Ct. at 2051; Officers of the United States, 31 Op. O.L.C. at
100. A “continuing” position is one that is either a “permanent” position
or a temporary position that is “not personal, ‘transient,’ or ‘incidental.’”
Officers of the United States, 31 Op. O.L.C. at 100. The FOMC is a per-
manent body with statutorily defined powers and duties. See Banking Act
of 1933, Pub. L. No. 73-66, § 8, 48 Stat. 162, 168. Although the FOMC’s
Reserve Bank members serve on the FOMC for only one-year terms, 12
U.S.C. § 263(a), each Reserve Bank position on the FOMC is still perma-
nent because the position itself, as opposed to its occupant, “is not limited
by time or by being of such a nature that it will terminate by the very fact
of performance.” Officers of the United States, 31 Op. O.L.C. at 111
(internal quotation marks omitted).
   In reaching this conclusion, we disagree with the district court in
Melcher v. FOMC, which held that Reserve Bank members of the FOMC
are not officers of the United States because they are “otherwise private
individuals.” 644 F. Supp. at 520. Melcher reasoned that Reserve Banks
are private corporations and Reserve Bank FOMC members are “not
appointed by or beholden to either branch of government.” Id. at 518, 520.
But we have rejected the premise that the Appointments Clause does not
apply to appointments outside the federal government of officials who
exercise permanently delegated federal statutory functions in continuing

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                            43 Op. O.L.C. __ (Oct. 23, 2019)

positions. See Officers of the United States, 31 Op. O.L.C. at 121. But see
The Constitutional Separation of Powers Between the President and
Congress, 20 Op. O.L.C. 124, 145–48 (1996) (“Separation of Powers”)
(concluding that the Appointments Clause does not apply to private enti-
ties). And even if the Appointments Clause applies only to positions
within the federal government, Reserve Bank presidents are assuredly
federal officials in their role as FOMC members.3 The FOMC, after all, is
the statutorily created monetary-policy-making arm of the federal gov-
ernment. And Reserve Bank FOMC members are appointed (and may be
removed at will) by the Board of Governors, see infra Parts II.B.2 and III,
and therefore are “appointed by” and “beholden to” an establishment of
the federal government. Melcher, 644 F. Supp. at 520. We thus think that
the FOMC’s Reserve Bank members serve in the federal government for
constitutional purposes. They are officers of the United States who must
be appointed under the Appointments Clause.
   The fact that Reserve Bank members currently constitute only a minori-
ty on the FOMC does not bear on this conclusion. When federal sovereign
authority is delegated to a body, all voting members of that body share in
the authority; the officer status of some members does not turn on the
presence of others who may outvote them. Otherwise, no single member
would be an officer, despite the power of that body to collectively exer-
cise significant authority. We have accordingly “viewed the power to cast

    3 We need not address whether the duties that Reserve Bank presidents perform, apart

from membership on the FOMC, are otherwise so significant as to make them officers of
the United States, or the constitutional status of the Reserve Banks more broadly. Alt-
hough the Reserve Banks are established as private corporations, a statutory “disclaimer
of . . . governmental status” does not control for constitutional purposes if the “practical
reality” is that the entity “is not an autonomous private enterprise.” Dep’t of Transp. v.
Ass’n of Am. R.R., 135 S. Ct. 1225, 1232–33 (2015); see also Lebron v. Nat’l R.R. Pas-
senger Corp., 513 U.S. 374, 392–99 (1995). Reserve Banks exhibit some features of
private enterprises, but they are fiscal agents of the United States empowered by delega-
tion from the Board of Governors—an establishment of the federal government—to
supervise financial institutions and activities. 12 U.S.C. § 248(k). Some courts thus have
described Reserve Banks as “plainly and predominantly fiscal arms of the federal gov-
ernment.” Fed. Reserve Bank of Boston v. Comm’r of Corps. & Taxation, 499 F.2d 60, 62
(1st Cir. 1974); see Fed. Reserve Bank of St. Louis v. Metrocentre Imp. Dist., 657 F.2d
183, 186 (8th Cir. 1981). But cf. Scott v. Fed. Reserve Bank of Kansas City, 406 F.3d 532
(8th Cir. 2005) (considering Reserve Banks private entities for certain statutory purposes);
Lewis v. United States, 680 F.2d 1239 (9th Cir. 1982) (same). We need not address these
questions to conclude that members of the FOMC are officers of the United States.

                                             8
     Appointment and Removal of Federal Reserve Bank Members of the FOMC

a vote on executive functions, even if that vote itself is not decisive, as the
exercise of significant authority.” Memorandum for Daniel J. Bryant,
Assistant Attorney General, Office of Legislative Affairs, from Sheldon
Bradshaw, Deputy Assistant Attorney General, Office of Legal Counsel,
Re: Secure Transportation for America Act of 2001, H.R. 3150, at 3 (Oct.
19, 2001) (noting that “the fact that the improperly appointed member of
the Board would constitute a minority of the [Transportation Security
Oversight] Board members would [not] cure any Appointments Clause
concerns”). Moreover, H.R. 6741 would have increased the role of Re-
serve Bank members and made them the majority of the FOMC. The
proposed legislation would have also required a two-thirds vote of the
FOMC to approve a decision by the Board of Governors to authorize
emergency lending. H.R. 6741 thus put the constitutional status of Re-
serve Bank FOMC members into stark relief.

                                      B.

   Reserve Bank FOMC members are inferior officers under the Ap-
pointments Clause because they are subordinates of the Board of Gover-
nors. And the appointments of Reserve Bank FOMC members comport
with the Appointments Clause. Their selections as Reserve Bank presi-
dents are approved by the Board of Governors, which is the head of the
Federal Reserve System and therefore may appoint inferior officers of the
United States. U.S. Const. art. II, § 2, cl. 2. Although Reserve Bank
FOMC members are designated to serve on the FOMC by officials who
may not constitutionally appoint officers, the new duties that Reserve
Bank presidents acquire as members of the FOMC are sufficiently ger-
mane to their underlying Reserve Bank positions that they may serve on
the FOMC without new Article II appointments. That conclusion would
have remained the same even under H.R. 6741.

                                      1.

   “Generally speaking, the term ‘inferior officer’ connotes a relationship
with some higher ranking officer or officers below the President: Whether
one is an ‘inferior’ officer depends on whether he has a superior.” Ed-
mond v. United States, 520 U.S. 651, 662 (1997). To decide whether an
officer has a superior, the Supreme Court has considered whether the
officer is subject to the policy direction of another official, whether the

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                            43 Op. O.L.C. __ (Oct. 23, 2019)

officer can take “final” action without the approval of another officer, and
whether an executive officer other than the President has the “power to
remove [the] officer[].” Id. at 664–65.
   An official who is invested with authority to make a final decision for
the Executive Branch and who is not supervised by anyone other than
the President is the prototypical principal officer. See, e.g., id. at 663
(“‘[I]nferior officers’ are officers whose work is directed and supervised
at some level by others who were appointed by Presidential nomination
with the advice and consent of the Senate.”); Intercollegiate Broad. Sys.,
Inc. v. Copyright Royalty Bd., 684 F.3d 1332, 1339 (D.C. Cir. 2012)
(concluding that copyright royalty judges were principal officers given
their “nonremovability and the finality of their decisions”); Secretary of
Education Review of Administrative Law Judge Decisions, 15 Op. O.L.C.
8, 14 & n.11 (1991) (concluding that an administrative law judge who
enjoyed “tenure protection” and “whose decision could not be reviewed
by the Secretary . . . would appear to be acting as a principal officer of the
United States”). By contrast, an officer who lacks final decision-making
authority and who may be removed by other officers is an inferior officer.
See, e.g., Edmond, 520 U.S. at 664–65 (concluding that certain military
judges were inferior officers because they were subject to administrative
oversight, were “remov[able] . . . without cause,” and had “no power to
render a final decision”); see also Separation of Powers, 20 Op. O.L.C. at
150 (“an officer who is subject to control and removal by an officer other
than the President should be deemed presumptively inferior”). 4

   4 In Morrison v. Olson, 487 U.S. 654 (1988), the Supreme Court relied on other factors

to define inferior officers, such as whether the officer performed only limited duties, had
narrow jurisdiction, and had limited tenure. Id. at 671–73. Yet the Court’s subsequent
decision “in Edmond appeared to offer one overall standard for identifying inferior
officers.” Special Master for Troubled Asset Relief Program Executive Compensation, 34
Op. O.L.C. 219, 229 (2010) (“Special Master for TARP”). And Edmond specifically
rejected reliance on the importance of an officer’s duties in analyzing the question,
explaining that the significance of one’s duties “marks, not the line between principal and
inferior officer for Appointments Clause purposes, but rather . . . the line between officer
and nonofficer.” 520 U.S. at 662. The Court has since adhered to Edmond ’s approach of
examining whether an officer is supervised by someone other than the President, with a
focus on whether the officer can make final decisions and be removed by a principal
officer. See, e.g., Free Enter. Fund v. Pub. Co. Accounting Oversight Bd., 561 U.S. 477,
510 (2010); Intercollegiate Broad. Sys., 684 F.3d at 1339. Although this Office has
sometimes considered the Morrison factors in addition to Edmond, see Special Master for

                                            10
     Appointment and Removal of Federal Reserve Bank Members of the FOMC

   Under this rubric, we believe that Reserve Bank members of the FOMC
are inferior officers. It is true that the FOMC, as a body, has final authori-
ty over open-market operations. See 12 U.S.C. § 263(a). But the work of
Reserve Bank members on the FOMC is “directed and supervised at some
level,” Edmond, 520 U.S. at 663, by the Board of Governors, which has
the authority to remove them at will. Because the power to remove is a
“powerful tool for control,” the Court has viewed the removability of an
officer by someone other than the President to be strong evidence of
inferior-officer status. Id. at 664; see Free Enter. Fund v. Pub. Co. Ac-
counting Oversight Bd., 561 U.S. 477, 510 (2010) (relying on removabil-
ity and “the Commission’s other oversight authority”).
   Here, the Board of Governors has statutory authority to “suspend or
remove any officer or director of any Federal reserve bank,” including any
Reserve Bank FOMC member. 12 U.S.C. § 248(f ). An agency head’s
statutory authority to remove a subordinate is plenary absent statutory
language to the contrary under the “well approved principle of constitu-
tional and statutory construction that the power of removal of executive
officers [is] incident to the power of appointment.” Myers v. United
States, 272 U.S. 52, 119 (1926); see also, e.g., Ex Parte Hennen, 38 U.S.
(13 Pet.) 230, 259 (1839). “This principle applies to the appointments by
the President and by other Executive officers, such as department heads,
who are appointing officials.” Removal of Members of the Commission on
Federal Laws for the Northern Mariana Islands, 7 Op. O.L.C. 95, 98
(1983).
   Nothing in the statute limits the Board’s removal authority. It is true
that the Board of Governors must convey “the cause of such removal . . .
in writing . . . to the removed officer or director and to said bank.” 12
U.S.C. § 248(f ). But we think that “cause” in this context means whatever
reasons (if any) the Board has for removing the officer, and therefore
permits the Board to remove the officer at will. The requirement that the
Board notify certain parties of the reasons for removal does not displace
the default rule that the appointing authority retains plenary removal
authority. Such a notification requirement parallels many statutes that

TARP, 34 Op. O.L.C. at 231–38, we think Edmond states the correct approach to analyz-
ing the principal–inferior distinction. Accord NLRB v. SW Gen., Inc., 137 S. Ct. 929, 947
n.2 (2017) (Thomas, J., concurring) (“Although we did not explicitly overrule Morrison
in Edmond, it is difficult to see how Morrison’s nebulous approach survived [the Court’s]
opinion in Edmond.”).

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                       43 Op. O.L.C. __ (Oct. 23, 2019)

require the President to “communicate [to Congress] the reasons for . . .
removal” of a particular officer but impose no substantive constraint on
the removal authority. See, e.g., 10 U.S.C. § 139(a)(1); 22 U.S.C.
§ 3929(a)(2); 44 U.S.C. § 2103(a).
   The structure of the Federal Reserve System is consistent with this con-
clusion. Congress no doubt intended to give the Federal Reserve System a
degree of independence in providing that the members of the Board of
Governors—as distinct from the presidents of the regional Reserve
Banks—may be removed only “for cause.” 12 U.S.C. § 242. In Wiener v.
United States, 357 U.S. 349, 350, 355–56 (1958), the Supreme Court
inferred, despite the absence of any explicit tenure protection in the stat-
ute, the existence of such protection for the members of the War Claims
Commission based on what the Court perceived as Congress’s intent to
insulate the Commission from political influence in carrying out its adju-
dicative functions. But whatever the continuing vitality of Wiener’s
“questionable” rationale, Separation of Powers, 20 Op. O.L.C. at 168
n.115, that rationale does not apply here. Subjecting the Reserve Bank
FOMC members to removal at will does not threaten the mechanism
Congress chose for protecting the independence of the Federal Reserve
System as a whole. The members of the Board of Governors remain
tenure-protected, even if their subordinates serving on the FOMC are not.
   Principles of constitutional avoidance bolster this conclusion. See Ed-
ward J. DeBartolo Corp. v. Fla. Gulf Coast Bldg. & Constr. Trades
Council, 485 U.S. 568, 575 (1988) (statutes should be interpreted to avoid
the reading that “would raise serious constitutional problems” where
multiple readings are available). Under the statute, the President may
remove members of the Board of Governors only for cause. See 12 U.S.C.
§ 242. If the Governors, in turn, could remove FOMC Reserve Bank
members only for cause, then those members would be unconstitutionally
insulated from presidential supervision with two layers of for-cause
removal protection. The Supreme Court invalidated a similar structure in
Free Enterprise Fund. There, the Court held unconstitutional tenure
protection for members of the Public Company Accounting Oversight
Board, because they were removable only by members of the Securities
and Exchange Commission, the members of which (the Court assumed)
were likewise tenure protected. 561 U.S. at 487, 492–508. Inferring tenure
protection for Reserve Bank FOMC members would raise grave constitu-
tional questions for substantially the same reasons.

                                     12
    Appointment and Removal of Federal Reserve Bank Members of the FOMC

   We recognize that Reserve Bank FOMC members have voting power
on a body that is empowered to make final decisions on behalf of the
federal government. H.R. 6741, by increasing their ranks from five to
twelve, see sec. 6, § 263(a), would have increased the collective power of
the Reserve Bank FOMC members in that regard, because it would have
made them a majority on the FOMC, and therefore able to outvote the
seven members of the Board of Governors. Be that as it may, we agree
with the D.C. Circuit, which reached a similar conclusion with respect to
copyright royalty judges supervised by the Librarian of Congress, that the
plenary supervision that the Governors exercise over the Reserve Bank
FOMC members is enough to make the latter inferior officers. See Inter-
collegiate Broad. Sys., 684 F.3d at 1340–41 (severing removal protections
of copyright royalty judges gave the Librarian of Congress the “direct
ability to ‘direct,’ ‘supervise,’ and exert some ‘control’ over the Judges’
decisions” such that they became inferior officers). Just as the power to
remove is incident to the power to appoint, the power to supervise and
direct is incident to the power to remove. See Myers, 272 U.S. at 135;
Proposed Executive Order Entitled “Federal Regulation,” 5 Op. O.L.C.
59, 61 (1981) (noting that Congress is presumably aware that agency
heads “perform their functions subject to presidential supervision on
matters of both substance and procedure”). The Board’s ability to super-
vise Reserve Bank FOMC members through the removal authority means
that Reserve Bank members would have remained inferior officers, even
if H.R. 6741 had made them a majority on the FOMC. See, e.g., Intercol-
legiate Broad. Sys., 684 F.3d at 1340–41.
   We thus disagree with the suggestion of the court in Melcher, see 644
F. Supp. at 519–20, that Reserve Bank FOMC members are subject to
dismissal by the Board of Governors only for cause. Instead, Reserve
Bank FOMC members are subject to plenary supervision and control by
their co-participants on the FOMC, the members of the Board of Gover-
nors, and therefore are inferior, rather than principal, officers.

                                    2.

  We further conclude that, as inferior officers, the FOMC’s Reserve
Bank members are appointed in conformity with the Appointments
Clause. Congress may vest the appointment of inferior officers in the
President, a head of a department, or a court of law. U.S. Const. art. II,

                                    13
                           43 Op. O.L.C. __ (Oct. 23, 2019)

§ 2, cl. 2. Here, Congress has done so by providing for each FOMC Re-
serve Bank member to be selected to his position as president of a Re-
serve Bank with the approval of the Board of Governors, which is the
collective head of a department (the Federal Reserve System). The Board
of Governors does not, however, select which presidents serve on the
FOMC; that function is performed instead by the boards of directors of
the Reserve Banks, bodies that are not competent to appoint officers of
the United States. See 12 U.S.C. § 263(a). We think that structure is
nonetheless constitutionally permissible because the function of serving
on the FOMC is germane to the duties of Reserve Bank presidents, and
therefore assigning them the duties of FOMC membership does not re-
quire a new constitutional appointment. 5
   As a threshold matter, each Reserve Bank FOMC member’s initial se-
lection as a Reserve Bank president is consistent with the procedures
identified in the Appointments Clause. The Supreme Court has long held
that a subordinate to the head of a department may select an inferior
officer if the department head approves the appointment. In United States
v. Hartwell, 73 U.S. (6 Wall.) 385 (1868), the Court concluded that “a
clerk in the office of the assistant treasurer of the United States” was a
validly appointed officer because he was selected by “the assistant treas-
urer . . . with the approbation of the Secretary of the Treasury.” Id. at 392.
Even though the Secretary of the Treasury merely approved his subordi-
nate’s choice, the clerk was “appointed by the head of a department with-
in the meaning of the constitutional provision upon the subject of the
appointing power.” Id. at 393–94; see Free Enter. Fund, 561 U.S. at 512
n.13 (noting that appointments made by the Chairman of the Securities
and Exchange Commission with “the approval of the Commission” would
“satisf [y] the Appointments Clause” (internal quotation marks omitted)
(citing, e.g., Hartwell, 73 U.S. at 393–94)); accord United States v.
Mouat, 124 U.S. 303, 307–08 (1888); United States v. Sears, 27 F. Cas.
1006, 1009 (C.C.D. Mass. 1812) (No. 16,247). Hartwell agreed with an
even older tradition of Attorney General opinions approving similar
appointments. See Power of the Secretary of the Treasury to Remove

   5 We do not in this opinion address the constitutionality of the method of appointing
Class A and B directors of the Reserve Banks, who are selected by regional member
banks with little involvement by the Board of Governors. See 12 U.S.C. § 304. The
proposed legislation would not have directly affected this long-standing method of
selecting the directors of the Reserve Banks.

                                          14
     Appointment and Removal of Federal Reserve Bank Members of the FOMC

Inspectors of Hulls and Boilers, 10 Op. Att’y Gen. 204, 205–07 (1862)
(concluding that an initial designation of inferior officers by a board
consisting primarily of the Secretary’s subordinates may have “narrowed
and fettered” his “sphere of selection” to some degree, but that the Secre-
tary’s approval “g[a]ve[] force and effect to the designation and
breathe[d] into the action of the designating board the breath of official
life”); Tenure of Office of Inspectors of Customs, 1 Op. Att’y Gen. 459,
459 (1821) (recognizing that inspectors of customs were appointed by
collectors of duties with “the approbation of the Secretary of the Treas-
ury”). This Office has accordingly advised that, so long as a head of a
department approves the selection of an inferior officer, the department
head’s subordinates may do much of the legwork of the appointment
process. See Assignment of Certain Functions Related to Military Ap-
pointments, 29 Op. O.L.C. 132, 135–36 (2005) (“Military Appointments”).
   Under these established principles, Reserve Bank presidents are select-
ed in a manner that allows them to exercise the authority of an officer of
the United States. Six members of a Reserve Bank board of directors—
three Class B directors and three Class C directors—make the initial
selection of a Reserve Bank president. 12 U.S.C. § 341. Under H.R. 6741,
all nine members of the board of directors would have made the initial
selection. H.R. 6741, sec. 8, § 341. The directors’ picks are then subject to
the “approval of the Board of Governors.” 12 U.S.C. § 341. The Board is
collectively the head of a department, the Federal Reserve System, which
“exercise[s] governmental authority without being subordinated to any
broader unit within the executive branch.” Separation of Powers, 20 Op.
O.L.C. at 152–53. The Board’s members are appointed by the President
and are removable (for cause) only by the President; they report to no one
else in the Executive Branch. See 12 U.S.C. §§ 241–242; Memorandum
for the Files, from Harold F. Reis, Office of Legal Counsel, Re: Applica-
tion of Section 9(a) of the Hatch Act to a Federal Reserve Agent at 9
(Mar. 6, 1964) (concluding that, for Appointments Clause purposes, and
“consistent with the history of its establishment and on the basis of prece-
dents, the Board of Governors of the Federal Reserve System constitutes a
department and the Governors the head thereof ”); cf. Free Enter. Fund,
561 U.S. at 512–13 (concluding that the multi-member Securities and
Exchange Commission acting as a body is a head of a department under
the Appointments Clause). Under Hartwell, the head of a department’s

                                     15
                           43 Op. O.L.C. __ (Oct. 23, 2019)

approval of the Reserve Bank presidents makes their selections comport
with the Appointment Clause.
   Although the Board of Governors is limited to approving or rejecting
the selections made by the Reserve Bank directors, the Board also super-
vises the directors, ensuring that, as the department head, it retains suffi-
cient control and accountability over the directors’ selections. 6 The Class
C directors who select the Reserve Bank presidents are not only them-
selves appointed by the Board of Governors, but they are also removable
by the Board at will. See 12 U.S.C. §§ 248(f ), 305. While the other
selectors are Class B directors elected by regional member banks of the
Federal Reserve System, id. § 304—and H.R. 6741 would have added
Class A directors—the Board of Governors can also fire those directors
at will, id. § 248(f ), and it generally supervises all Reserve Bank boards,
id. § 248( j). Moreover, because each member of the FOMC must be
approved by the Board of Governors, and there are no time limits or
other restrictions on approving the selections, the Board could indefinite-
ly reject proposed candidates until the directors propose Reserve Bank
presidents to the Board’s liking. These powers give the Board effective
control over which Reserve Bank presidents are selected for its approval.
They create sufficient “scope for the judgment and will of the person or
body in whom the Constitution vests the power of appointment,” Civil-
Service Commission, 13 Op. Att’y Gen. 516, 520 (1871), as the Ap-
pointments Clause requires. Reserve Bank presidents are therefore se-
lected to their five-year terms consistent with the Appointments Clause.
   Because Reserve Bank presidents are selected in that manner, they may
be designated to serve on the FOMC without new constitutional appoint-
ments. An appointment to an underlying position makes an appointee
constitutionally competent to perform not only the duties associated with
that position, but also any duties that are “germane to the offices already

   6 Different questions would arise if Congress required the Board of Governors to ap-
point Reserve Bank presidents from a list of individuals compiled by an entity not under
the Board’s control. See, e.g., Letter for Richard Shelby, Chairman, Senate Committee on
Rules and Administration, and Amy Klobuchar, Ranking Member, Senate Committee on
Rules and Administration, from Samuel R. Ramer, Acting Assistant Attorney General,
Office of Legislative Affairs at 1–2 (May 16, 2017) (observing that a bill that would have
required the President to appoint the Register of Copyrights from a list of individuals
generated by a seven-member panel consisting of persons not under presidential supervi-
sion would have violated the Appointments Clause).

                                           16
     Appointment and Removal of Federal Reserve Bank Members of the FOMC

held.” Shoemaker v. United States, 147 U.S. 282, 301 (1893); see Weiss v.
United States, 510 U.S. 163, 175–76 (1994); id. at 196 (Scalia, J., concur-
ring in judgment). When an appointing authority selects an official for a
position, that authority has judged the official competent to perform
additional duties that are reasonably related to those already associated
with that position. See Separation of Powers, 20 Op. O.L.C. at 158–59.
In approving the selection of Reserve Bank presidents to their positions,
the Board of Governors has implicitly concluded that the presidents would
be competent to serve on the FOMC, as they compose the small pool of
individuals—two for each of the twelve regional Reserve Banks—who are
eligible to be tapped for the five FOMC positions currently set aside for
Reserve Bank members. The president of the New York Reserve Bank
invariably serves on the FOMC, and the other four Reserve Bank slots on
the FOMC rotate among the eleven other Reserve Banks at predictable
intervals. See supra note 2 and accompanying text. And since, under
existing law, all Reserve Bank presidents are already eligible to serve on
the FOMC, the provision in H.R. 6741 to give each of the twelve Reserve
Banks a guaranteed slot on the FOMC, see H.R. 6741, sec. 6, § 263(a),
likewise would have merely added germane duties to those already per-
formed by the officials. The only significant proposed additions to the
duties associated with service on the FOMC under the bill would have
been directly related to monetary-policy-making functions already exer-
cised by the FOMC: to require decisions of the Board of Governors to
authorize emergency lending to be approved by a two-thirds vote of the
FOMC and to authorize the FOMC to set the interest rate on balances held
by Reserve Banks on behalf of commercial banks as part of their required
reserves. Id. sec. 4(1)(B), § 343(3)(A); id. sec. 5, § 461(b)(12)(A). We
thus think that FOMC service, under existing law or under H.R. 6741, fits
comfortably “within the contemplation of those who were in the first
place responsible for the[] appointment and confirmation,” Separation of
Powers, 20 Op. O.L.C. at 158 (internal quotation marks omitted), of
Reserve Bank presidents. They are therefore constitutionally eligible to
serve on the FOMC without a new constitutional appointment and would
have remained eligible even under H.R. 6741. 7

   7 It would present a different question had Congress added eligibility for FOMC ser-

vice for the first time to the duties of Reserve Bank presidents. Whether FOMC service is
germane to the duties of Reserve Bank presidents would turn on a more detailed compari-

                                          17
                           43 Op. O.L.C. __ (Oct. 23, 2019)

                                          III.

   Finally, we conclude that the methods of removing Reserve Bank
members of the FOMC are constitutional. To promote political accounta-
bility within the Executive Branch, the Constitution requires an appropri-
ate officer to possess removal authority. Typically, as both a constitution-
al and a statutory matter, the removal authority lies with the appointing
authority. See, e.g., Myers, 272 U.S. at 119 (referring to the “well ap-
proved principle of constitutional and statutory construction that the
power of removal of executive officers was incident to the power of
appointment”); Keim v. United States, 177 U.S. 290, 293 (1900) (presum-
ing that the department head who appointed an inferior officer had the
power of removal). Although no statute expressly governs the removal of
FOMC members, a Reserve Bank president may be removed at will from
his Reserve Bank position either by the Board of Governors, 12 U.S.C.
§ 248(f ), or by the Reserve Bank’s board of directors, id. § 341. Remov-
ing a Reserve Bank president from that post would also, as a practical
matter, remove him from the FOMC. The power of the Board of Gover-
nors to remove Reserve Bank presidents at will tracks the constitutional
and statutory default: the Board of Governors, as the appointing authority,
also has the removal power. The harder question is whether Congress may
concurrently vest the removal authority of Reserve Bank FOMC members
in the Reserve Banks’ boards of directors. See id. (authorizing a Reserve
Bank’s board of directors “to dismiss at pleasure” its officers and employ-
ees). We conclude that the removal authority of the boards of directors
may constitutionally be exercised only with the approbation of the Board
of Governors; the relevant removal provisions may be read to require such
approbation.

son of the duties performed by both positions. See, e.g., Application of the Appointments
Clause to a Statutory Provision Concerning the Inspector General Position at the Chemi-
cal Safety and Hazard Investigation Board, 30 Op. O.L.C. 92, 99–103 (2006). We need
not decide that question here.
   We also need not decide whether a Reserve Bank president who is never designated to
serve on the FOMC is an officer of the United States, or the constitutional status of the
Reserve Banks more broadly. See supra note 3. The decisive point here is that a Reserve
Bank president has been adjudged by the Board of Governors, a proper appointing
authority under the Appointments Clause, as competent to serve on the FOMC.

                                          18
       Appointment and Removal of Federal Reserve Bank Members of the FOMC

   We do not believe that the Reserve Bank boards of directors could con-
stitutionally dismiss Reserve Bank FOMC members without the approval
of the Board of Governors. The Appointments Clause limits the authority
to assign or delegate appointment-related powers to officials other than
those identified by the Constitution as having that power. We have long
advised, for instance, that the President alone may appoint officers by and
with the advice and consent of the Senate. See Military Appointments, 29
Op. O.L.C. at 134–35. Congress may authorize the President to delegate
to department heads the authority to appoint inferior officers who do not
require Senate confirmation, because the Appointments Clause allows
Congress to give that authority to department heads. See id.; Delegation of
the President’s Power to Appoint Members of the National Ocean Re-
search Leadership Council, 21 Op. O.L.C. 38, 39 (1997). But the Presi-
dent’s constitutionally assigned authority to appoint officers subject to the
Senate’s advice and consent is not delegable. See Military Appointments,
29 Op. O.L.C. at 134–35.
   In recent years, we have similarly advised that the power to appoint
inferior officers not subject to Senate confirmation may be delegated only
to officials identified by the Appointments Clause as competent to appoint
inferior officers. See, e.g., E-mail for Robin M. Stutman, Executive Office
for Immigration Review, from Daniel L. Koffsky, Deputy Assistant At-
torney General, Office of Legal Counsel, Re: Question About Removals
(Oct. 14, 2010 12:39 PM). After all, “by naming three permissible reposi-
tories of appointment authority—the President, the Heads of the Depart-
ments, and the Courts of Law—the Excepting Clause implicitly indicates
that the power may not be vested in some other person.” Military Ap-
pointments, 29 Op. O.L.C. at 135.8 That conclusion is consistent with
early opinions of the Attorney General holding that “Congress has no
power whatever to vest the appointment of any employé, coming fairly
within the definition of an inferior officer of the government, in any other
public authority but the President, the heads of departments, or the judi-
cial tribunals.” Appointment and Removal of Inspectors of Customs, 4 Op.
Att’y Gen. 162, 164 (1843); accord Civil-Service Commission, 13 Op.

   8 The reasoning of our Military Appointments opinion anticipated our later advice that
the power to appoint inferior officers may not be delegated to an official below the head
of a department, although in that opinion we declined to “provide a definitive answer” to
the question. 29 Op. O.L.C. at 135.

                                           19
                       43 Op. O.L.C. __ (Oct. 23, 2019)

Att’y Gen. at 521–22. And it honors the structural and functional consid-
erations on which the Clause is based. “The diffusion of power carries
with it a diffusion of accountability.” Free Enter. Fund, 561 U.S. at 497.
Accountability is fostered by requiring, in the decision to appoint an
inferior officer, the personal involvement of a department head directly
accountable to the President. While the Appointments Clause “does not
prohibit substantial involvement of subordinates in the appointment
process,” Military Appointments, 29 Op. O.L.C. at 135, it does preclude
Congress and appointing officials from eliminating the need for any
involvement in the appointment decision by the officials who have been
constitutionally assigned that function.
   Those same principles of political accountability apply to the power of
a department head to remove inferior officers. When it comes to the
supervision of an officer within the Executive Branch, the removal power
is perhaps even more significant than the appointment authority. See, e.g.,
Bowsher v. Synar, 478 U.S. 714, 726 (1986) (“Once an officer is appoint-
ed, it is only the authority that can remove him, and not the authority that
appointed him, that he must fear and, in the performance of his functions,
obey.” (internal quotation marks omitted)). Accordingly, we have advised
that the authority to remove inferior officers may not be delegated to an
agency official other than the department head, or another official consti-
tutionally competent to appoint that officer in the first place. Although,
unlike the power to appoint officers, the power of removal is not express-
ly enumerated in the Constitution, that power is frequently treated as a
necessary correlate to the power to appoint. For example, we have long
maintained that the President’s power to remove officials appointed by
and with the advice and consent of the Senate cannot be assigned to
another official just as his appointment power may not be. See, e.g.,
Centralizing Border Control Policy Under the Supervision of the Attorney
General, 26 Op. O.L.C. 22, 24–25 (2002) (“Centralizing Border Control
Policy”); Relation of the President to the Executive Departments, 7 Op.
Att’y Gen. 453, 465 (1855). We have conceived of both the power to
appoint and the power to remove such officers as being among the non-
delegable authorities “prescribed by the Constitution.” Centralizing Bor-
der Control Policy, 26 Op. O.L.C. at 24–25 (internal quotation marks and
emphasis omitted). Since the power to remove inferior officers is likewise
“an incident of the power to appoint them,” Myers, 272 U.S. at 161, we
think that Congress similarly may not assign the power to remove inferior

                                     20
       Appointment and Removal of Federal Reserve Bank Members of the FOMC

officers to officials other than those who may appoint inferior officers
under the Appointments Clause. Such a delegation would improperly
diffuse accountability for the supervision of inferior officers beyond the
President and other appointing officials specified in the Appointments
Clause.
   Under these principles, we do not believe that Congress could consti-
tutionally vest the authority to remove Reserve Bank FOMC members in
the Reserve Bank boards of directors. The boards of directors are not
heads of a department, courts of law, or the President.9 Indeed, the boards
may not even be part of the federal government. See supra note 3. Con-
gress therefore may not constitutionally assign them the authority to
remove inferior officers, such as Reserve Bank FOMC members.
   We believe, however, that the Reserve Bank authorizing statute may
be read and administered to avoid this unconstitutional result. Just as
the Board of Governors’ approval is required for the appointment of
Reserve Bank presidents, so too should the statute be read to ensure
that boards of directors exercise their removal power over Reserve
Bank presidents subject to the approval of the Board of Governors.
Read in isolation, 12 U.S.C. § 341 authorizes Reserve Bank boards of
directors to “dismiss at pleasure” bank officers, including presidents
serving on the FOMC. At the same time, the statute makes clear that all
classes of directors are subservient to the Board of Governors, which can
suspend or remove directors at will, id. § 248(f ), and can “exercise
general supervision” over Reserve Banks, id. § 248( j). These extensive
supervisory powers would enable the Board of Governors to require
boards of directors to seek the approval of the Board of Governors before
they remove FOMC Reserve Bank members. This reading of the statute
would harmonize the Board of Governors’ supervisory authority with the
boards of directors’ removal authority and prevent an unconstitutional
result. See Edward J. DeBartolo Corp., 485 U.S. at 575.
   Although section 341 permits boards of directors to “dismiss at pleas-
ure” Reserve Bank presidents, such language does not expressly foreclose
a requirement that the Board of Governors approve any such dismissals.

   9 We need not address constitutional restrictions on Congress’s power to vest the au-
thority to appoint or remove an executive branch official in a court of law or on other
“interbranch” appointments and removals. See, e.g., Ex parte Siebold, 100 U.S. 371, 398–
99 (1880).

                                          21
                       43 Op. O.L.C. __ (Oct. 23, 2019)

The statute provides that the boards of directors have the power to “ap-
point” Reserve Bank presidents, but makes clear that such authority is
subject to approval by the Board of Governors. See 12 U.S.C. § 341. It is
at least reasonable to read the statute to permit the Board of Governors to
require its approval before boards of directors remove Reserve Bank
presidents, given the long-standing interpretive principle that the power to
remove is incident to the power to appoint. See Keim, 177 U.S. at 293;
Hennen, 38 U.S. at 259; Tenure of Office of Inspectors of Customs, 1 Op.
Att’y Gen. at 459 (“As the approbation of the Secretary of the Treasury is
necessary to put them into office, I presume they cannot be put out of it
without the like approbation.”); see also Power of the Secretary of the
Treasury to Remove Inspectors of Hulls and Boilers, 10 Op. Att’y Gen. at
207–09; Appointment and Removal of Inspectors of Customs, 4 Op. Att’y
Gen. at 165. And if the Board of Governors administers the statute to
require and make such approvals, that would satisfy the constitutional
requirement that a competent appointing official retain ultimate authority
to approve each removal. So construed and executed, the statute’s remov-
al provisions would be constitutional.

                                     IV.

   In sum, H.R. 6741 would have expanded the powers of the FOMC and
the significance of its Reserve Bank members. The proposed legislation
would have reinforced that all members of the FOMC are officers of the
United States who must be appointed consistent with the Appointments
Clause. But we concluded that members of the FOMC are appointed in a
constitutional manner and that they would have continued to be so under
the amendments proposed by H.R. 6741. The statute likewise can be read
to avoid unconstitutionally assigning removal authority over FOMC
members to the regional Reserve Banks’ boards of directors by requiring
the approval of the Board of Governors for any such removal. We accord-
ingly recommended no constitutional objections to this proposed legisla-
tion.

                                    HENRY C. WHITAKER
                                Deputy Assistant Attorney General
                                    Office of Legal Counsel

                                     22