U.S. Supreme Court Holds that President Has Broad (but Limited) Authority to Fire Agency Leaders

In a pair of widely expected opinions, the U.S. Supreme Court made it easier for the president to fire the leaders of federal agencies. In the first opinion, Trump v. Slaughter, the Court held that the president can fire the heads of most federal agencies at will. But in the second, Trump v. Cook, the Court refused to extend that general rule to the Federal Reserve. Together, the opinions give the president broad but not unlimited authority to fire agency leaders. That authority is expected to extend to the leaders of “independent” labor-and-employment agencies, including the National Labor Relations Board (NLRB) and the Equal Employment Opportunity Commission (EEOC).

Independent Agencies and Removal Protections

Since the early twentieth century, federal agencies have fallen into two general buckets: executive agencies and independent agencies. Executive agencies have included traditional cabinet-level agencies like the Department of Justice and the Department of Labor. These agencies have handled core executive work, like writing regulations and enforcing federal statutes in court. Independent agencies, by contrast, have had a wider range of tasks. Besides enforcing federal statutes, they have often gathered data and prepared reports for Congress to help develop legislation. They have also adjudicated some cases using their own in-house administrative procedures. For that reason, these agencies have sometimes been called “quasi-legislative” or “quasi-judicial” agencies.

Structurally, the biggest difference between these kinds of agencies has been whether their leaders can be fired at will. While the heads of executive agencies have served at the president’s pleasure, the heads of independent agencies could often be fired only for cause. 

These removal protections were upheld in a 1935 case, Humphrey’s Executor v. United States. There, the Supreme Court held that Congress was free to protect the heads of expert, multi-member agencies who handled quasi-judicial or quasi-legislative tasks. So the Court rejected the president’s effort to fire a commissioner of the Federal Trade Commission (FTC) solely because of a policy disagreement. And relying on that decision, Congress went on to create other independent agencies modeled on the FTC, including the NLRB.

Independence Eroded

But recently, Humphrey’s Executor started to erode. In a series of opinions, the Supreme Court narrowed the decision’s reach. For example, it held that Humphrey’s Executor did not allow Congress to protect lower-level officers with two layers of for-cause removal protection. It also held that Humphrey’s Executor didn’t apply at all to agencies headed by a single official. Some of the justices also criticized the decision in their personal capacities. Justice Gorsuch, for one, devoted an entire chapter of his most recent book to attacking Humphrey’s Executor’s rationale.

Reading these tea leaves, the Trump administration challenged the decision straight on. The administration fired officials at multiple independent agencies, including the NLRB, EEOC, and Merit Systems Protection Board. It then defended those firings by arguing that Humphrey’s Executor was wrongly decided. It argued that the decision improperly limited the president’s control over the executive branch. The president, it said, has a constitutional duty to carry out the laws. And he can’t do that if he can’t control some of his agency leaders. Every agency leader has to serve at his pleasure.

Two of those cases eventually wound their way to the Supreme Court. In the first, Slaughter, the president fired a commissioner of the FTC. The president didn’t justify this removal based on any cause; he simply said that he could remove a commissioner at will. In the second, Cook, the president fired a member of the Board of Governors of the Federal Reserve. There, the president argued that he had cause to fire the member, whom he had accused of wrongdoing related to certain mortgage documents. But he also argued that even if he didn’t have cause, he didn’t need it: he could remove the member at will.

Slaughter, Cook, and Control of the Executive Branch

In Slaughter, the Supreme Court mostly agreed. It reasoned that Article II of the Constitution assigns “executive power” to the president alone. But the president can’t exercise executive power personally. He has to work through his subordinates—including the heads of agencies. Those agency heads are his eyes, ears, and hands: he enforces the laws through them. So to do his job effectively, he has to be able to hold them accountable. That is, he has to be able to fire them.

But in Cook, the Court refused to extend that reasoning to the Federal Reserve. The Court explained that banking and monetary policy have traditionally been separated from the political process. As far back as the First and Second Banks of the United States, Congress has put monetary policy in the hands of disinterested and independent officials. And it had done that for a good reason: political meddling in monetary policy could spook financial markets. This history suggests that “executive power” under Article II does not include unchecked control over the Federal Reserve. Monetary policy is simply different.

Going forward, Slaughter appears likely to apply more broadly than Cook. Many agencies, including the NLRB, were modeled after the FTC. And for their removal protections, they relied on Humphrey’s Executor. With Humphrey’s Executor now overruled, their leaders appear likely to be removable at will. 

Cook, by contrast, is likely to be more limited. It relied heavily on the nation’s long history of separating monetary policy from politics. That rationale is unlikely to extend to many other agencies. It may in fact apply only to the Federal Reserve. So while it is an important exception, it is also a narrow one. Slaughter likely represents the general rule: agency heads are removable at will.

Whether that general rule changes policy remains to be seen. Theoretically, Slaughter will mean that presidents no longer have to wait for an official’s term to end before installing a friendlier nominee. But in practice, any new nominee will still need confirmation from the Senate. So there will still be brakes on the president’s ability to shift policy. And those brakes may prevent, or at least slow, major shifts from administration to administration.