Supreme Court Ends the Ninety-Year Experiment of Independent Agencies

Thomas A. Berry

Over the course of the twentieth century, “independent” federal agencies accumulated vast executive power, including the power to investigate, adjudicate, and impose severe financial penalties for regulatory violations. Yet courts still treated these agencies as if they were mere “judicial or legislative aids” from a bygone era. On that basis, officials within these agencies were wrongly insulated from presidential removal for over 90 years.

On Monday, that ended. The Supreme Court held in Trump v. Slaughter that the Federal Trade Commission’s for-cause removal provision is contrary to the separation of powers enshrined in the Constitution. As the Court explained, the Constitution creates a hierarchy below the elected president within the executive branch. And both constitutional structure and history show that to remain accountable to the President, those officers directly below the President must be removable by him.

In his majority opinion for the Court, Chief Justice John Roberts recounted the key historical moments that led to Monday’s decision. The Framers of the Constitution knew that “almost every State had but a nominal Governor, who could act only with his council’s consent.” And the Framers “chose to depart from this model, for they had seen its flaws up close.” The Framers opted for a system in which all executive power would be vested in one President. And although the President would be aided by many officers, those officers “were to serve as envoys of the President, not his equals.” As Alexander Hamilton described in Federalist 72, those below the President “derive their offices from his appointment” and remain “subject to his superintendence.”

The Framers did include an important limit on the President’s power to appoint the highest-ranking officials in the federal government: He could only do so with the “advice and consent of the Senate.” This provision was included to provide a check against presidential cronyism and nepotism. And this senatorial consent requirement means that when an officer is fired or resigns, the President is not guaranteed to appoint his preferred replacement.

But beyond this practical downside to firing high-ranking officials, can Congress create other obstacles to their removal? That is the question Congress debated in 1789 when the first three Cabinet positions were established. And as Roberts recounts, a contingent led by James Madison “contended that removal was part of ‘the Executive power’ vested in the President, which ‘the Legislature has no right to diminish or modify.’” This group “emerged victorious” when the statutes establishing the first cabinet secretaries included “a new clause that assumed ‘the power of removal to be in the President.’”

The majority opinion and the dissenting opinion by Justice Sonia Sotomayor disagree on the historical relevance of a few federal commissions from the nineteenth century, whose rules of composition and removal are open to debate. But all sides acknowledge that the independent agencies we know today did not become ubiquitous until the twentieth century, when the Supreme Court blessed them in its Humphrey’s Executor opinion. Notably, Roberts strongly suggests that the outcome in Humphrey’s was motivated more by the Supreme Court’s opposition to the New Deal in 1935 than by neutral constitutional principles. After years of narrowing that decision, Monday’s opinion makes clear that “If anything more is left of Humphrey’s, we overrule it.”

In Cato’s amicus brief, we urged the Court to take this route and overrule Humphrey’s explicitly rather than further distinguishing or narrowing it. As we wrote, Humphrey’s was “based on now-discredited assumptions,” was “incompatible with modern precedent,” and could not “be squared with Article II.” The Court has now held, as we urged, that the FTC exercised executive power even in 1935, and that Humphrey’s was thus wrong from the day it was decided.

The Court’s decision on Monday means that any agency that exercises executive power must be controlled by the Chief Executive. As a result, the commissioners of so-called “independent agencies” can now be fired at will by the President for policy disagreements.

Nonetheless, three important limitations still exist that limit the President’s ability to influence such agencies. First, as with all top-level positions, the President must obtain Senate consent before filling a vacancy with a new appointment. Second, unlike most Senate-confirmed positions, the commissioners of the (formerly) independent agencies are exempt from the Vacancies Act, meaning the President cannot temporarily bypass Senate confirmation by unilaterally filling these positions with acting officers. And third, for the time being, “partisan balance” limitations remain in effect. That typically means no more than three of a commission’s five seats may be filled by someone of the President’s party. The practical result, for now, is that most commissions will likely be filled by three Republicans with two unfilled vacancies.

Monday’s decision brings the formerly “independent” agencies in line with the other departments of the Executive Branch: subject to the President’s supervision and accountable to his policy priorities. But this decision also means that the President can no longer hide behind the veil of tenure protection to avoid responsibility for the actions of these agencies. For better or for worse, Presidents will now fully own the decisions of the FTC, SEC, FCC, and similar agencies. In a democracy where presidential elections are the means by which the people direct the executive branch, that is as it should be.

Still, as Justice Gorsuch notes in his concurrence, these agencies will continue to wield tremendous power and discretion. It is certainly possible that Congress would not have given them so much discretion had Congress known they would eventually become subject to presidential control. Now the ball is in Congress’s court. If this decision leads Congress to reevaluate the authority possessed by these agencies, that will be another welcome benefit. If an agency has too much power to be subject to direct presidential control, it had too much power to begin with.