Trump Order to Curb Independent Agencies Has an Open Legal Path

President Donald Trump’s executive order titled “Ensuring Accountability for All Agencies”—which makes independent multi-member agencies more answerable to him—is weighty but constitutionally appropriate, given the absence of statutes prohibiting its requirements and the Constitution’s description of executive power.

The order’s accompanying fact sheet cites the Federal Trade Commission, the Federal Communications Commission, and the Securities and Exchange Commission as examples of agencies that wield “enormous power over the American people without Presidential oversight.”

Trump’s executive order seeks to end the era of independent agencies and bring them within the executive branch. It forbids agencies from publishing significant regulatory actions without first submitting them to the Office of Information and Regulatory Affairs, a division of the Office of Management and Budget. The Federal Reserve’s monetary policy functions are excepted, but not its bank supervision functions.

The order also requires OMB to establish performance standards and management objectives for agency chairmen and to update the president on their job performance. OMB also may review and adjust budget apportionments and restrict specific expenditures, which may be open to challenge depending on how Congress appropriates the money. For example, the president has a lot more budgetary flexibility if Congress appropriates a $590 million lump sum to an agency compared with smaller, specific line-item allocations totaling $590 million.

The executive order further requires the agencies to establish a White House liaison position, and the agencies’ chairmen must regularly consult with the OMB director, the Domestic Policy Council, and the National Economic Council on priorities and strategic plans.

The order states that the president and the attorney general are the sole source of “authoritative interpretations of law for the executive branch,” which are “controlling on all employees in the conduct of their official duties.” The agencies thus may not issue their own contradictory legal opinions.

Trump’s order draws from the unitary executive concept, based on Article II, Section 1 of the Constitution: “The executive Power shall be vested in a President of the United States of America.” In Seila Law LLC v. CFPB, the US Supreme Court said the “entire ‘executive Power’ belongs to the President alone” and that the president’s “lesser officers must remain accountable to the President, whose authority they wield”—all of which appears to support the executive order.

While the executive order doesn’t specifically discuss firing agency commissioners, it must be read together with Acting Solicitor General Sarah Harris’ very recent letter informing Congress that the DOJ:

• Determined that for-cause restrictions on the president’s power to fire commissioners are unconstitutional and so wouldn’t defend them
• Named the FTC, National Labor Relations Board, and the Consumer Product Safety Commission as examples
• Will “urge the Supreme Court to overrule” Humphrey’s Executor v. US, in part because that case “applies only to administrative bodies that do not exercise ‘substantial executive power’”

Humphrey’s Executor is important because it essentially unleashed the modern administrative state. In its opinion, the Supreme Court rejected President Franklin Roosevelt’s at-will firing of FTC Commissioner William Humphrey, a Coolidge and Hoover appointee. It upheld as constitutional the 1914 Federal Trade Commission Act’s limiting his removal only for “inefficiency, neglect of duty, or malfeasance in office” because the FTC had quasi-legislative and quasi-judicial functions, such as administrative case adjudication and rule promulgation.

The Supreme Court distinguished Myers v. US, which upheld President Woodrow Wilson’s firing of Frank Myers, an Oregon postmaster, because Myers exercised only executive functions—not legislative or judicial.

Two fired independent agency officers have already sued the Trump administration on this issue: Hampton Dellinger, head of the Office of Special Counsel (not Jack Smith’s office), and former NLRB member Gwynne Wilcox. Both were appointed by former President Joe Biden, had statutory for-cause removal protection, and cited Humphrey’s Executor as support. Their cases almost certainly will be consolidated and end up at the Supreme Court.

The Supreme Court may be sympathetic to the Trump administration’s arguments to either further narrow or overturn Humphrey’s Executor because it has chipped away at the decision since its 2010 ruling in Free Enterprise Fund v. PCAOB and because the FTC of 1935 is very different from today’s. For example, today’s FTC performs many substantial executive functions such as investigation, enforcement, litigation, and obtaining injunctive relief or financial penalties—in addition to rule-making and administrative adjudication. The FTC and other agencies also are much more intertwined with daily life than they were in 1935.

Because Humphrey’s Executor already is weakened and the FTC and other multi-member agencies perform executive functions, Trump likely will extend his policy preferences over them. Expect a lot of drama, challenged firings, and appeals to the Supreme Court to test the executive order, the constitutionality of multi-member independent agencies, and whether the president may remove their commissioners at will.

This article does not necessarily reflect the opinion of Bloomberg Industry Group, Inc., the publisher of Bloomberg Law and Bloomberg Tax, or its owners.

Author Information

John Shu is a legal scholar and commentator who served in the administrations of Presidents George H.W. Bush and George W. Bush.

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