Dear Reader,

Trump and Musk are on a self-declared mission to destroy the bureaucracy and the “deep state,” and one battle in that war is their quest to get rid of so-called independent agencies. These are agencies created by Congress to have a degree of independence from immediate partisan pressures so that they can create more stable policies based on expertise instead of political whims. One valuable tool for establishing some insulation from partisan pressure is to allow the president to remove the heads of these agencies only for cause, such as malfeasance or neglect of their duties, instead of allowing the president to remove someone arbitrarily.

A classic example of an independent agency is the Federal Reserve. Its Board of Governors serve 14-year terms and members can be removed only for cause. Congress established this structure so that monetary policy would not fluctuate in response to political pressures. This independence has been referred to as “the cornerstone of good monetary policy” because without it, “the obvious danger is an unwise monetary expansion timed to win an election.”

Congress created many other agencies responsible for financial regulation with similar restrictions on the removal of those who lead them. They include the Securities and Exchange Commission, the Commodity Futures Trading Commission, the Federal Deposit Insurance Corporation, the Federal Trade Commission (FTC), and the Consumer Financial Protection Bureau (CFPB). Congress also gave this structure to other agencies where protection from immediate political interference could threaten its mission.

The Supreme Court approved of Congress’s ability to create agencies with this structure in a 1935 decision, Humphrey’s Executor v. United States. The case came to the Court after President Roosevelt sought to remove William E. Humphrey, a Republican commissioner of the FTC who had been first appointed to that position by President Calvin Coolidge and then reappointed by President Hoover. Roosevelt, a Democrat, wanted to remove and replace him with a commissioner more sympathetic to Roosevelt’s policies. Roosevelt asked for his resignation in a letter, telling him that “I do not feel that your mind and my mind go along together on either the policies or the administering of the Federal Trade Commission, and, frankly, I think it is best for the people of this country that I should have a full confidence.”

Humphrey refused to resign, so Roosevelt removed him. Humphrey sued, insisting he should be permitted to carry out his duties and collect his $10,000/year salary. After Humphrey died, the executor of his estate continued the suit for the back pay. The Roosevelt Administration argued that the law’s removal restriction, which allowed FTC commissioners to be removed only for “inefficiency, neglect of duty, or malfeasance in office,” was unconstitutional because it restricted the executive power of the president. The Supreme Court unanimously disagreed with Roosevelt’s sweeping vision of executive power, thus establishing the precedent that allowed Congress to create agency structures that provide some degree of insulation from political pressures to obtain better policies.

Humphrey’s Executor sits alongside Roe v. Wade in the pantheon of Supreme Court decisions hated by many conservatives. Just as they have clamored for decades to get Roe v. Wade overturned – and saw their goal fulfilled by the Supreme Court when it dismissed the fifty-year-old precedent in Dobbs v. Women’s Health – they have been on a mission to undercut Humphrey’s Executor.

This mission is driven by their rigid view of separation of powers in which all executive power must be controlled by the President – what is often referred to as the unitary executive theory. In their view, Congress cannot impede presidents by placing restrictions on their ability to remove people they do not like in the Executive Branch.

This conservative view of executive power essentially makes the executive branch nothing more than an extension of the president’s personal views. Our current Supreme Court is filled with Justices who have themselves subscribed to this view of executive power, so it is hardly surprising that they have been dismantling the reach of Humphrey’s Executor.

Their efforts began in 2010 when they struck down removal protections for members of the Public Company Accounting Oversight Board. Those members could be removed only for cause by the Securities and Exchange Commission, which itself had for cause removal protection for its members. The Court concluded that these two layers of protection were one layer too many and thus distinguishable from Humphrey’s Executor.

The Court leveled an even greater blow in 2020 in a case called Seila Law v. Consumer Financial Protection Bureau. The Supreme Court held that Congress could not place restrictions on the president’s ability to remove the head of the CFPB. The law creating the CFPB followed the blueprint used for other independent financial agencies and stated that the Director of the CFPB could be removed only for “inefficiency, neglect of duty, or malfeasance in office.” The Court held that this violated the separation of powers because the president’s executive power includes the ability to remove those who exercise authority on his behalf.

The Court did not go so far as to overrule Humphrey’s Executor, however, and instead opted to distinguish it. It observed that Humphrey’s Executor involved “a multi-member body of experts who were balanced along partisan lines” and served staggered terms to accumulate institutional knowledge, whereas the CFPB only had a single head.

The Trump Administration has made it clear that it does not view that distinction as meaningful. The Acting Solicitor General Sarah Harris sent a letter to the ranking member of the Senate Judiciary Committee, Richard Durbin, informing him that the Department of Justice intends to ask the Supreme Court to overrule Humphrey’s Executor, at least with respect to agencies it named in its letter: the Federal Trade Commission, the National Labor Relations Board, and the Consumer Product Safety Commission. Trump has already fired a member of the National Labor Relations Board, so that case seems poised to get this issue before the Court.

When it gets there, it is likely to have a receptive audience.

Justices Thomas and Gorsuch have already gone on record in Seila Law stating their view that Humphrey’s Executor should be entirely overruled. Given the language in Seila Law, it is hard to see the Court’s other conservatives disagreeing when the matter is specifically put before them. These are Federalist Society conservatives who have themselves worked in the Executive Branch and have been raised on this view of executive power.

What might make them blink, however, is the effect of such a decision on the economy. That is because the viability of the Federal Reserve as an effective central banking agency depends on its independence. If the Court were to conclude that members of the Reserve’s Board of Governors are removable, it will lead to catastrophic economic destabilization. A group of law professors who specialize in financial regulation made this very point in an amicus brief filed with the Court in a removal case making its way through the courts seeking emergency relief. They warned the Court that overruling Humphrey’s Executor would place the Federal Reserve under a cloud and unsettle the markets.

In another context, Justice Alito attempted to distinguish the Federal Reserve Board from other independent agencies by claiming without elaboration that it is “a unique institution with a unique historical background.” But the Federal Reserve Board is exactly like these other agencies when it comes to the need for removal protection. If the Supreme Court lets one fall, it risks destabilizing the entire economy because no one can be sure the Federal Reserve is safe.

Even if the Supreme Court arbitrarily carves out a safe harbor for the Fed and decrees that its decision applies only to all the other independent agencies or some subset of them, it will, as it did in its immunity case, have once again turned the presidency into something closer to a royal office than the checked institution the Framers had in mind.

When the Court decided Humphrey’s Executor, authoritarian governments in Germany, the Soviet Union, and Italy were a global threat. The Court clearly saw the danger, and it unanimously agreed that the Constitution was not molded in a similar authoritarian cast. Our Constitution allows Congress flexibility to create agencies within the government that have some degree of independence from the president because that is necessary for the rule of law and stability. These agencies are still accountable in numerous other ways to Congress and the president, in terms of appointment, budget, oversight, and legislation. But removal protections allow these officials to make decisions without fear that a president will fire them because they fail his loyalty test simply because they act on the basis of their view of sound policy instead.

The current Court, however, seems to think that the president must be able to fire anyone in the executive branch who does not bend to his will.

All other democracies have recognized that you need some insulation as well as accountability for certain governmental functions. Whether it is an independent judicial branch, independent prosecutors who are not beholden to political pressures, or financial agencies to maintain economic stability, some independence is a virtue.

Our Framers recognized that, too, but the Court seems poised to reject almost a century of settled law. The presidential immunity decision last Term was a devastating blow to the checks and balances; overruling Humphrey’s Executor might be the knock-out punch that shatters the Framers’ vision of avoiding tyranny.

Stay Informed,

Rachel