Will ‘Slaughter’ end independent agencies at federal level?

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A New Deal era precedent was on the chopping block when the U.S. Supreme Court heard oral argument on Dec. 8 in Trump v. Slaughter, in which the Trump administration challenged a provision in the Federal Trade Commission Act providing that commissioners can be removed only for “inefficiency, neglect of duty, or malfeasance in office.”

The FTC is one of around two dozen so-called independent federal agencies that are governed by multi-member bodies whose members serve staggered terms and can be removed only for cause. If the Supreme Court upholds Donald Trump’s decision to fire FTC Commissioner Rebecca Slaughter without cause, then the validity of the structure of all independent federal agencies will be in jeopardy.

The idea that a president may be able to fire someone like Commissioner Slaughter without cause despite a statute barring such action is consistent with the unitary executive theory popularized by the late Justice Antonin Scalia, the essence of which is that all executive power is granted to the president and, in order to allow the president to be able to carry out his policies, he must be able to remove any official who is not acting in accordance with those policies. A for-cause removal provision thus impermissibly stands in the way of the president.

Although no such removal power is explicitly stated in the Constitution, the purported basis for this power is in the clause requiring the president to “take care that the Laws be faithfully executed.” U.S. Const. Art. II, Cl. 1, §3.

This view of presidential power is controversial, and many of the briefs in this case take it head on, contesting that the founders agreed that the president had unlimited removal power and pointing out that the first Congress established two bodies, the Sinking Fund Commission and the Revolutionary War Debt Commission, with members whom the president could not remove.

As for the Take Care clause, Slaughter’s brief cites Justice William H. Rehnquist as saying that extrapolating an unrestricted removal power from “such general language” is “more than the text will bear.”  Morrison v. Olsen, 487 U.S. 654, 690 n.29 (1988).

Still, a number of recent Supreme Court decisions have relied on the unitary executive theory, and the Supreme Court’s 6-3 decision granting a stay of a lower court order that Slaughter be reinstated during the litigation suggests that the Supreme Court is likely to side with the administration.

The FTC was established in 1914 and given consumer protection and anti-trust responsibilities. It is governed by a five-member board, each of whose members is appointed by the president, confirmed by the Senate, and serves a seven-year term. No more than three members may be of the same party and, because the commissioners’ terms are staggered, a president will have an opportunity to appoint, at a minimum, two or three commissioners in a single term.

President Woodrow Wilson did not seem to think this structure was inconsistent with his responsibilities for he signed the bill creating the FTC. Later amendments to the FTC Act that increased the scope of its powers and also allowed each president to pick the FTC chair from among the commissioners were also approved by the sitting president.

This structure and the limits the act places on the president’s removal power have stood for more than a century and were challenged only once in the 1930s when President Franklin D. Roosevelt sought to fire an FTC commissioner named Alvaro Bedoya because “I do not feel that your mind and my mind go along together on the policies or the administering” of the FTC. The Supreme Court disagreed with FDR, holding that “illimitable power of removal is not possessed by the President.” Humphrey’s Executor v. United States, 295 U.S. 602, 629 (1935).

Although Humphry’s Executor is a longstanding precedent, it contains what appears to be a fatal flaw. The court justified upholding the for-cause removal provision of the FTC Act by saying that the commission’s “duties are neither political nor executive, but predominantly quasi judicial and quasi legislative.” Id. at 624. That approach has not stood the test of time as present day administrative law acknowledges that agencies may do things that seem legislative, such as adopting legally binding regulations, or seem judicial, by conducting administrative hearings, but those can be legitimate powers of an executive branch agency if properly cabined.

It is this weakness that the government focused on in its brief to the court. It also relied heavily on recent Supreme Court statements espousing seemingly unlimited power of the president to fire executive branch officials for any reason or no reason at all. The government justified this unlimited removal power by saying that it is necessary to put executive officials in fear of their jobs in case they might think of straying from the president’s preferred policies, which is hardly an accurate way to describe the day-to-day workings of most administrations.

What the government does not do is wrestle with the portion of the Humphreys’ Executor decision that describes why Congress established the FTC the way it did, and it is this rationale that Slaughter relies on. Congress thought that the FTC should be made up of a body of experts serving a fixed term so that each member would have the time to develop the expertise needed to perform the position and that it was “essential that the commission should not be open to the suspicion of partisan direction.” Id. at 624-25.

The focus on expertise is consistent with progressive era thought that not all government matters are dependent on the policy preferences of elected officials. Some demand that experts be put in charge. If you want to know what the unemployment rate is, you need someone with expertise in gathering such data to handle that, not the nephew of a politician.

But the FTC wasn’t set up simply to handle technical matters. It was to root out unfair methods of competition. What is unfair competition is a judgment call on which reasonable people can disagree. Providing that the FTC should be bipartisan forces the agency to try to reach consensus on whether a particular form of competition is unfair, can lead to some consistency across administrations, and can create broader public acceptance of the commission’s decisions.

What this means is that not only does the Slaughter case present the question of Congress’s ability to limit the president’s removal power, but it also could call into question Congress’s ability to create agencies run in a bipartisan or neutral way with some consistency across administrations.

Indeed, President Trump’s action encourages the court to go this far because, although he appointed Slaughter in her first term, he fired her because her continued service would be “inconsistent with my administration’s [unspecified] priorities,” and he also fired the other Democratic commissioner, leaving the FTC with only Republican commissioners.

Anyone hoping that oral argument would shed some new light on the situation was likely disappointed. As expected, the conservative justices by and large expressed skepticism that the president lacked power under the Constitution to fire Slaughter. Chief Justice John G. Roberts Jr. described Humphrey’s Executor as a “dried husk” without getting much pushback. Justice Amy Coney Barrett rejected the recent historians who doubt the historical accuracy of the unitary executive theory.

The three liberal justices took the opposite view. Justice Ketanji Brown Jackson spoke up for congressional authority when creating agencies to draw the line on the circumstances in which a president can remove a commissioner.

But mostly the argument consisted of arid hypotheticals meant to test the limits of each side’s position rather than a discussion of whether the actual setup of the FTC is somehow inconsistent with the president’s power under the Constitution.

Solicitor General John Sauer was the first to face such questioning. He responded by bobbing and weaving. Although he consistently offered the maximalist position that a for-cause removal provision impermissibly interferes with presidential power, which should be in the hands of the president who is responsible to the public, he refused to say whether this approach applied to the Federal Reserve, the Tax Court or even the civil service. Although the Department of Justice is litigating other cases involving agency structure, he simply refused to offer an opinion on the structure of any of those agencies because none of those agency structures were at issue in Slaughter.

Justice Brett Kavanaugh offered him a softball explanation as to why the Federal Reserve or the Tax Court should be seen as properly constituted, hinting that this was his preferred outcome, but Sauer wouldn’t bite.

He couldn’t exactly agree with the justice because his office is defending President Trump’s effort to fire Federal Reserve Board of Governors’ member Lisa Cook, a matter that will be heard by the Supreme Court in a few weeks. He offered only the Supreme Court’s previously expressed view that the Federal Reserve is different from other agencies because it is a quasi-public, uniquely structured agency, without saying that he agreed with the court. He could hardly have done otherwise because giving an agency power to establish the monetary policy of the United States without making its members at-will employees would be absolutely inconsistent with his position.

One question I wish was asked concerned Sauer’s contention that granting a president more power over agencies will not present an opportunity for abuse of power because the president must win the approval of the voting public. How would that apply when the president is serving a second term and cannot run again?

One question that was asked though drew an unusual response. Sauer, when attempting to explain why presidents had gone along with the establishment of multi-member independent agencies, threw past presidents under the bus, saying he thought they were ducking tough political decisions.

Amit Agarwal, of the Protect Democracy Project and counsel for Slaughter, faced similar questions about how far his defense of multi-member agencies would go. Could cabinet agencies be reorganized as multi-member agencies? What if commissioners of multi-member agencies had far longer terms: 10 years, 15 years, for example? Agarwal struggled to explain the limits on creation of multi-member agencies consistent with the Supreme Court’s prior decisions on the removal power and his acceptance that there are some powers that are exclusively executive, such as control of criminal prosecution. That led to him being asked to comment on the unlikely hypothetical whether it would be permissible to split the Department of Justice in two and have a multi-member agency oversee civil cases.

In the end, for all the effort to figure out whether reversing Humphrey’s Executor will spell the doom of independent, bipartisan agencies, too little attention has been paid to the details pertinent to the FTC itself.

Agarwal was rescued from this obtuse sort of questioning by Justice Jackson asking him to explain why Congress created the FTC in the way it did. He pointed out that Congress had tried to come up with a statute that would spell out all the possible ways competition could be unfair, but realizing the impossibility of the task, decided to create an expert agency that could respond to the ever-changing ways businesses might cook up to compete unfairly.

The result to some extent gave away Congress’s legislative power to the executive branch, thereby increasing rather than limiting the president’s power but without giving the president the unilateral authority to define unfair competition.

In the end, for all the effort to figure out whether reversing Humphrey’s Executor will spell the doom of independent, bipartisan agencies, too little attention has been paid to the details pertinent to the FTC itself.

A brief glimpse at what happened when President Trump took office is revealing of how much power the president has over the FTC. Former FTC Chair Lina Khan had opened a comment period on “surveillance pricing,” a practice retailers might use to base pricing on the personal data they have learned about consumers — a practice Congress could not possibly have anticipated when it established the FTC.

Andrew Ferguson, a Republican who had been appointed by President Biden and who President Trump made the new chair, promptly ended the comment period, which shows that the president’s power to name the chair gives him considerable power over the FTC’s agenda.

This power to name the chair and appoint at least two or three members of a five-member commission gives the president considerable authority over the way the FTC runs and hardly leaves it truly independent of the sitting president’s wishes.

I would hope that the court engages in a serious consideration of the actual relation between the FTC and the president when it issues its decision, but chances are it will issue a much broader and more disruptive decision, as the New York Times headline the following day suggested: “Power to Fire Likely to Grow for Presidency.”

James P. Rooney is the first magistrate of the Division of Administrative Law Appeals, an independent state hearing agency. The opinions expressed here are his own.