Trump Escalates His War on Independent Regulatory Agencies
His
February executive order and the firing of a labor relations board
member are the latest moves in a multi-decade right-wing campaign to
legitimate an authoritarian presidency.
by Peter M. Shane
The
first month of the second Donald Trump Administration displayed a
staggering indifference to law and a devastating antagonism to
democratic norms. Trump believes he can withhold funds Congress has
already appropriated for programs, both foreign and domestic,
effectively mothball legislatively established agencies, fire
independent administrators, and turn the military into a Praetorian
guard. He has given unprecedented power to a private citizen—drenched in
conflicts of interest and vetted by no independent authority—to march
agency by agency with a team of tech “bros,” inserting themselves into
sensitive government information systems with little to no transparency
and no understanding of how government works.
More arcane but no less revolutionary is an executive order on what Congress, by statute,
calls “independent regulatory agencies” (IRCs). These are the
multi-member bodies, such as the Federal Trade Commission (FTC) or the
National Labor Relations Board (NLRB), whose members enjoy statutory
protection against removal except for some version of “good cause.” Executive Order 14215, “Ensuring Accountability for All Agencies,” signed in February, would turn agency independence into agency subservience.
Expressly,
the new order authorizes the Office of Management and Budget (OMB) to
“prohibit independent regulatory agencies from expending appropriations
on particular activities, functions, projects, or objects”; requires
IRCs to clear regulatory proposals through OMB; and mandates
consultation with OMB regarding “performance standards and management
objectives for independent agency heads,” as well as each agency’s
“obligations for consistency with the President's policies and
priorities.”
Although
the prevailing pre-Trump norm has been for the White House to
communicate policy views to independent agencies through public
statements or formal submissions of comments, the new order dictates
that agency heads will “regularly consult with and coordinate policies
and priorities with the directors of OMB, the White House Domestic
Policy Council, and the White House National Economic Council,” and
“establish a position of White House Liaison in their respective
agencies.”
Like
all administrative agencies, IRCs carry out missions assigned to them
by Congress. At the FTC, the mission is attacking “unfair or deceptive
trade practices” and “unfair methods of competition.” For the NLRB, it
is redressing “unfair labor practices.” Other familiar examples include
the Federal Communications Commission (FCC), which, among other things,
licenses the airwaves for such uses as radio broadcasting and wireless
telephony; the Securities and Exchange Commission (SEC), which promotes
transparency and integrity among publicly traded companies; and the
Consumer Products Safety Commission (CPSC), whose mission is evident
from its name. Among the tools Congress has given these agencies are
administrative adjudication—for example, prosecuting unfair labor
practices or unfair methods of competition—and administrative
rulemaking, such as the FTC’s controversial attempt to regulate the use
of non-compete agreements.
The
mix of administrative techniques IRCs employ differs from agency to
agency. But Congress has given them all a recognizable statutory
structure. They are multi-member bodies, no more than a bare majority of
which can belong to the same political party. The president typically
gets to designate which member serves as the agency chair. But the terms
of agency members—should they choose to fulfill them—typically last
longer than a single presidential administration. And again, most
important, members—once appointed by the president with the Senate’s
advice and consent—may be fired only for such causes as “inefficiency,
neglect of office, or malfeasance.”
Presidents,
of course, care about what these agencies do. Their activities can have
significant impacts on public health and safety, as well as the
economy. Support for the president among voters who tend to view
everything that agencies do as “the government” can well be affected by
the activities of the IRCs, as much as by the initiatives of those
executive branch agencies whose chief officers serve at the president’s
pleasure. However, given their investigative and regulatory powers,
IRCs' licensing, prosecutorial, and grant-making functions could be
powerful tools in the hands of a president determined to reward friends
and punish enemies.
Why
Congress makes some agencies independent depends on the politics of a
given moment. When he was a judge on the D.C. Circuit Court of Appeals,
Brett Kavanaugh explained
that multi-member agencies can foster deliberation, provide a
monitoring system for each party through the minority’s capacity for
dissent, reduce the prospects for agency “capture” by special interests,
and promote impartiality in the administration of statutes. Congress
may find that putting such an agency at some remove from direct
presidential control is reassuring to otherwise volatile markets, as
with the SEC, the Federal Energy Regulatory Commission (FERC), or, most
prominently, with the Board of Governors of the Federal Reserve System
(“the Fed”). But there is no obvious reason in principle that the
Consumer Product Safety Commission should be independent, but the
Environmental Protection Agency is not; the difference is that President
Richard Nixon would agree to the independence of the former, but not
the latter. Whatever the reason, one constitutional bottom line is well-established: whether to set up an independent agency is exclusively a decision for Congress, not the president.
Congress’s authority to set up independent agencies was unanimously confirmed in a 1935 case Humphrey’s Executor v. U.S.
which upheld the constitutionality of the FTC and invalidated President
Franklin D. Roosevelt’s dismissal of an FTC Commissioner, William
Humphrey, whom he fired without good cause and in violation of the FTC
Act. The Court stated that the FTC carried out its mission through a
mixture of so-called quasi-legislative and quasi-judicial
functions—rulemaking and adjudication—on subjects not within the
President’s explicit Article II domain. When an agency acts outside that
domain and is tasked merely “to carry into effect legislative policies
embodied in [a] statute,” then, according to Humphrey’s Executor, Congress may protect its members against discharge except for good cause.
Government lawyers and legal academics regarded Humphrey’s Executor
as stating a stable constitutional doctrine until the 1980s. The
arrival of Ronald Reagan’s administration, however, coincided with a
conservative campaign to make something called “unitary executive
theory” (UET) the law of the land. The essence of the theory is that
Article II of the Constitution vests the entirety of the government’s
executive power in the president, who is constitutionally entitled to
control how everyone in the executive branch exercises whatever
statutory authority Congress has granted them. This theory has different
flavors, ranging from more modest to more extreme. Still, even the most
modest asserts that Article II entitles the president to fire at will
or order the discharge of anyone in the executive branch in whom the
president has lost confidence. Under the unitary executive theory, Humphrey’s Executor,
though unanimous, was wrong. According to UET, the Constitution does
not allow for agencies independent of complete presidential control.
How
UET went from being a marginal view of the Constitution to the enabling
vision of a Trumpian assault on independent agencies involves a complex
history of developments within the executive branch and the courts. The
courts were slow to adopt UET. In 1988, the Supreme Court under Chief
Justice William Rehnquist, over the sole dissent of the late Justice
Antonin Scalia, affirmed Humphrey’s Executor in upholding the independent counsel system Congress enacted after Watergate. The majority in the case, Morrison v. Olson,
wrote that they “simply do not see how the President's need to control
the exercise of [the independent counsel’s] discretion is so central to
the functioning of the Executive Branch as to require as a matter of
constitutional law that the counsel be terminable at will by the
President.”
However,
the George W. Bush Administration solidified a new conservative
majority, including Chief Justice John Roberts (succeeding Rehnquist)
and Justices Scalia, Anthony Kennedy, Clarence Thomas, and Samuel Alito.
Roberts and Alito had been Reagan administration lawyers and advocates
for UET within the White House and Justice Department, respectively. By
2010, in a case called Free Enterprise Fund v. Public Company Accounting Oversight Board, the Court began challenging the legal logic underlying Humphrey’s Executor. A decade later, in Seila Law v. Consumer Finance Protection Bureau, a 5-4 majority came close to overruling it, demoting Humphrey’s Executor
to the status of mere exception to a newly announced general
rule—namely, that the President was constitutionally entitled to fire at
will the head of any administrative agency. The result was to leave
multi-member IRCs hanging by a constitutional thread.
Meanwhile,
the intervening years between Reagan and Trump witnessed significant
institutional developments within the bureaucracy. By executive order,
Reagan, for the first time, instituted a formal system of White House
review of all significant rulemaking activity by the many agencies
encompassed within the federal executive. Before publishing either
proposed or final rules, agencies had to prepare cost-benefit analyses
of their proposed initiatives, which were to be cleared through OMB’s
Office of Information and Regulatory Affairs (OIRA). Agencies were also
told to use their analyses to shape their rules in the most
cost-sensitive, legally permissible way. The new oversight system
functioned as an alert system for the White House about any new rule
that might give them political or policy headaches and as a lever for
nudging agencies toward exercising their administrative powers in
alignment with the president’s agenda.
Before Reagan issued his executive order creating the new system, OMB Director David Stockman obtained an opinion
from the Justice Department’s Office of Legal Counsel regarding the
order’s legality. For executive agencies other than the IRCs, the Office
of Legal Counsel thought the system a permissible exercise of the
President’s Article II coordinating role over the bureaucracy plus his
constitutional authority to require agency heads to provide him
information. The draft order that Justice reviewed required the IRCs,
however, only to provide their regulatory analyses to OMB and to
contribute to a periodically published, government-wide agenda of
recently completed, still-in-process, and contemplated rulemaking. The
executive order draft did not direct how IRCs were to use their analyses
in making policy.
Under
Reagan, the Justice Department advised that, regarding the IRCs, the
President could legitimately play “a coordinating role with only an
indirect effect on substantive policymaking,” so long as “none of these
actions would directly displace the agencies’ ultimate discretion to
decide what rule best fulfills their statutory responsibilities.” Even
with that provisional signoff, however, the Reagan Administration
decided for political reasons not to impose any oversight requirements
at all on the IRCs—not even for purposes of the published rulemaking
agenda. Policymakers realized that Reagan’s new oversight procedure
would be a lot for a Congress controlled by the Democrats to accept and
probably did not want to raise additional political alarm.
George
H.W. Bush's administration, through Barack Obama’s, basically toed the
line that Justice had advised in 1981. In 1993, President Bill Clinton revised
the Reagan Order to tone down its anti-regulatory rhetoric and tighten
the range of regulations subject to White House review. Clinton took
advantage of the 1981 Justice Opinion. He required the IRCs to
participate in the government-wide agenda of all regulations under
development or review and to submit to OMB statements “of the most
important significant regulatory actions that the agency reasonably
expects to issue in proposed or final form in that fiscal year or
thereafter.” George W. Bush left the system essentially intact. Barack
Obama issued an order
telling the IRCs that they “should” follow the same steps required of
the other administrative agencies and requiring them submit to OMB plans
for periodically reviewing existing regulations to help ensure their
ongoing soundness. But again, the direct presidential orders were
limited to information provision; all else was left hortatory.
And
so things stood until the first Trump Administration. During his first
four years in office, Trump did not try to formally rein in all IRCs
through White House oversight. In 2019, however, he did obtain an opinion
from the DOJ’s Office of Legal Counsel that he was constitutionally
entitled to do so should he wish. That opinion minimized the distinction
that had been important to the OLC lawyers in the Reagan era between
imposing a reporting process on the IRCs and affecting their substantive
policymaking. It emphasized, instead, the views of the Roberts Court
insisting on presidential control over the totality of executive branch
administrative action. As for the Court’s unanimous stance in 1935, the
opinion stated: “[W]e do not believe that the vision of independence
suggested by Humphrey’s Executor
accurately describes the current state of the law.” Although the
Justice Department under Joe Biden’s administration did not withdraw
this opinion, the president did not follow it.
The
second Trump administration has embarked on a radical course, arguably
going further than the 2019 OLC opinion. In firing NLRB Member Gwynne
Wilcox, the administration hopes to elicit a Supreme Court opinion
overturning Humphrey’s Executor
in its entirety. Insofar as the administration gave any thought to the
legality of its February order, however, it must hope that the Court
will embrace a radical view of unitary executive theory even more
generous than endorsing a plenary power of presidential removal.
Such a theory would draw sustenance from the Court’s remarkable 2024 opinion
on the scope of immunity for former presidents from criminal
prosecution for misconduct while in office. That opinion reiterates the
textually and historically puzzling assertion that the president is, for
constitutional purposes, a one-person branch of government. The
majority opines that because the president is a one-person branch, the
power of administrative supervision must be within a presidential
arsenal of “exclusive and preclusive powers,” which neither Congress nor
the judiciary may limit. It infers from the president’s obligation to
ensure that the laws be faithfully executed a seemingly comprehensive
power to direct all “those who wield executive power on his behalf.” In
short, through an amazing display of interpretive acrobatics, the Court
extracts from the president’s obligation of fidelity to law an
all-but-absolute power to ignore it.
Trump’s order takes the radical view of unitary executive theory and runs with it. As I have also explained in an essay for The Regulatory Review,
here’s the implicit Trump version: If the president alone is the
executive branch, then any delegation of authority by Congress to an
administrative agency begins to look advisory. If he chooses, the
president could perform all tasks delegated to the executive branch by
himself. If that is true, then what any administrator does is not just
dependent on the authority Congress has delegated to the executive. It
is constitutionally reliant on the president’s willingness to leave that
delegation in place and not take over personally. Sociologist Kim Lane
Scheppele, an expert on authoritarianism, has explained
the new bottom line: “Under the unitary executive theory, agencies no
longer trace their primary constitutional authority to congressional
delegation of its legislative powers but instead to presidential
delegation of his executive power.”
Once
a case dependent on Trump’s extreme view reaches the Roberts
Court—involving firing an independent administrator or perhaps his
asserted control over federal spending—it is unclear what the Court will
do. One hopes it would draw a constitutional line around the holding of
the Seila Law
case, giving the president control over single-headed agencies but
affirming the constitutionality of multi-member IRCs. It could also
reject the idea that the president’s “unitariness” gives him discretion
to ignore Congress’s decisions regarding how agencies are structured,
how federal funds are spent, and by whom Congress’s delegated rulemaking
and adjudicative tasks are to be performed. The result would be an
uneasy equilibrium between the elected branches regarding their
relationship to the bureaucracy. It would, however, be a far preferable
alternative to giving in to Trump’s radical assertion of authority and
overthrowing our constitutional system of checks and balances.
It is assumed among Court observers that the Justices have so far stopped short of overturning Humphrey's Executor because
they do not want to undermine the independence of the Federal Reserve
System; such a decision could destabilize both domestic and global
markets. Holding the United States unable to have an independent agency
controlling the money supply would be an extreme move. Because it is
difficult to see how Humphrey's Executor could be overruled without invalidating Fed independence, the central bank may prove the most decisive reason for keeping Humphrey's Executor alive.
(Trump’s executive order tries to navigate this difficulty by
controlling only “its supervision and regulation of financial
institutions,” but not “its conduct of monetary policy.” But that won’t
solve the removability problem. Members of the Fed cannot be half-fired,
half-empowered.)
Unfortunately
for Trump (but fortunately for the rest of us), his agenda of ramping
up presidential power to incapacitate administrative agencies other than
those cracking down on immigrants or DEI programs largely requires the
judiciary to adopt a radical separation of powers doctrine. Even
Congress’s overgenerous delegation of emergency powers does not give
Trump or any president enough statutory authority to sabotage programs
Congress has already established and funded. What is worrisome is that a
Court that lavished immunity from prosecution on the presidency will be
equally irresponsible regarding the president’s subservience to law
more generally. Trump’s executive order bets the Roberts Court answers
his claims in the affirmative; the rule of law—and democracy—depends on a
negative.
Click here to read this article on washingtonmonthly.com
Peter
M. Shane is the Jacob E. Davis and Jacob E. Davis II Chair in Law
Emeritus at Ohio State University and a Distinguished Scholar in
Residence at the New York University School of Law. He is the author of Democracy’s Chief Executive: Interpreting the Constitution and Defining the Future of the Presidency (2022) and the host of "Democracy's Chief Executive: The Podcast." Follow Peter on Bluesky at @petermshane.bsky.social. |