Executive summary
On June 29, the Supreme Court overruled a 91-year-old precedent that permitted Congress to protect leaders of certain independent agencies from at-will presidential removal. The decision significantly strengthens presidential control over executive agencies and may signal the end of independence for numerous multimember commissions and boards across the federal government. Businesses regulated by agencies such as the FTC, SEC, FCC, FERC, CFTC, NLRB and others should anticipate potentially greater policy swings between administrations and increased political accountability for agency decision-making.
Keep reading for an explanation of how we got here and what it means for the future.
Background
Almost a century ago, in Humphrey’s Executor v. United States, the Supreme Court held that Congress could limit the President’s ability to remove FTC Commissioners except for specified causes such as “inefficiency, neglect of duty, or malfeasance in office.” The decision became the constitutional foundation for the modern “independent agency,” allowing Congress to create multimember commissions whose leaders were insulated from direct presidential control.
The issue returned to the court after President Trump removed FTC Commissioners Rebecca Slaughter and Alvaro Bedoya without asserting any statutory cause for removal. The terminated commissioners challenged their dismissals, relying on the protection recognized in Humphrey’s Executor.
The Supreme Court’s decision
In a 6-3 decision, the court expressly overruled Humphrey’s Executor and held that statutory restrictions preventing the president from removing FTC Commissioners at will are unconstitutional. Chief Justice Roberts, writing for the majority, concluded that Article II vests executive power in the president and that officials exercising executive authority must remain accountable to the president through the removal power.
The court rejected the longstanding distinction that FTC Commissioners perform “quasi-legislative” and “quasi-judicial” functions that justify insulation from presidential control, holding instead that those labels do not change the fact that commissioners exercise executive power and therefore must remain subject to presidential supervision and removal under Article II. Accordingly, agencies exercising executive authority cannot be placed beyond the president’s supervision through statutory removal restrictions.
Implications for independent agencies
The consequences of the decision are likely to extend far beyond the FTC.
Many federal agencies are led by multimember commissions whose members serve fixed terms and traditionally enjoy protection from at-will removal. These structures were designed to promote expertise, continuity and political independence. Following Trump v. Slaughter, political independence will no longer be a key attribute (or, perhaps, even a desirable one) of these agencies.
The decision may affect agencies including:
- Federal Trade Commission (FTC)
- Securities and Exchange Commission (SEC)
- Federal Communications Commission (FCC)
- Commodity Futures Trading Commission (CFTC)
- Federal Energy Regulatory Commission (FERC)
- National Labor Relations Board (NLRB)
- Consumer Product Safety Commission (CPSC)
While the precise impact will vary from agency to agency based on statutory design and future litigation, the court’s reasoning strongly favors increased presidential oversight of executive branch regulators. Notably, the court appears to have preserved a distinct constitutional status for the Federal Reserve in a related decision issued the same day, suggesting that certain uniquely structured entities may remain exceptions.
What this means for businesses
The ruling is expected to reshape the regulatory environment in several important respects.
- Increased Policy Volatility. Presidents may now have greater ability to replace agency leadership shortly after taking office, potentially accelerating shifts in enforcement priorities, rulemaking agendas and regulatory interpretations.
- Expanded Executive Influence. Agency actions previously viewed as insulated from political direction may become more closely aligned with presidential priorities. Businesses engaged with federal regulators should expect changes in enforcement intensity and policy emphasis to coincide more directly with changes in administration.
- New Litigation Opportunities. The decision is likely to generate challenges to agency actions, agency structures and existing removal protections across the federal government. Parties subject to agency regulation may seek to leverage the court’s reasoning in ongoing administrative and constitutional litigation.
- Impact on Antitrust Enforcement. For antitrust practitioners, the decision has particular significance because it directly concerns the FTC. Future administrations may have greater flexibility to reshape the FTC’s leadership and priorities, potentially affecting merger review, competition rulemaking and enforcement initiatives.
Looking ahead
The court has fundamentally altered the constitutional framework governing independent agencies and significantly expanded presidential control over the administrative state. Companies operating in highly regulated industries should closely monitor agency leadership changes, enforcement priorities and forthcoming litigation testing the scope of the decision. The practical effects are likely to unfold over several years as courts, agencies and Congress respond to this major shift in administrative law. Enhanced presidential control over agency leadership could materially affect regulatory strategy, enforcement risk assessments, and long-term compliance planning, affecting clients involved in various regulatory matters, including mergers and acquisitions, antitrust investigations, consumer protection matters, securities regulation, energy regulation, and labor relations, to name just a few.
Be on the lookout for our part two post where we will examine how the decision is likely to affect the FTC specifically and whether the FTC’s days are numbered.
If you have any questions, please contact Jay at 202-778-3021 or jlevine@porterwright.com
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