As regular readers of this blog may be aware, I recently argued in the U.S. Supreme Court—and lost. 

In Collins v. Yellen, the Court appointed me to defend the Federal Housing Finance Agency, an independent agency whose director can only be fired “for cause.” Applying Seila Law v. CFPB, the Court concluded 7-2 — including Justice Kagan’s concurrence in the judgment — that the president must be able to remove the heads of single-headed agencies like the FHFA at will. As the Court reasoned in Collins and Seila Law, because the Constitution vests all executive power in the president, the president must be able to fire agency heads for any reason in order to prevent the emergence of a headless fourth branch of government not accountable to anyone.

Although there are other arguments against the Court’s recent decisions (many which Justice Kagan canvased in her dissent in Seila Law, and others of which I advanced in my brief in Collins), the most obvious pushback to the Court’s reasoning in Collins and Seila Law rests on precedent. In particular, in Humphrey’s Executor v. United States, the Court rejected the president’s authority to fire commissioners of the Federal Trade Commission based on mere policy disagreement.  Relying on Humphrey’s Executor, defenders of agency independence argue that because multi-headed agencies like the FTC are permissible despite restrictions on presidential removal, single-headed agencies like the FHFA or CFPB should also be permissible despite similar restrictions.  That argument, however, goes both ways.  As Justices Clarence Thomas and Neil Gorsuch explained last year in Seila Law, because restrictions on the president’s authority to remove the heads of single-headed agencies are unconstitutional (as confirmed by the Court’s modern cases), it follows that restrictions on the president’s authority to remove the heads of multi-headed agencies should also be unconstitutional. Accordingly, they urged their colleagues to overrule Humphrey’s Executor, thus ending agency independence altogether.   

Further, Seila Law‘s majority opinion itself reads Humphrey’s Executor narrowly (which, notably, it calls an “exception” to the general rule of unrestricted removability):

In Humphrey’s Executor, decided less than a decade after Myers, the Court upheld a statute that protected the Commissioners of the FTC from removal except for “inefficiency, neglect of duty, or malfeasance in office.”  In reaching that conclusion, the Court stressed that Congress’s ability to impose such removal restrictions “will depend upon the character of the office.” 

Because the Court limited its holding “to officers of the kind here under consideration,” the contours of the Humphrey’s Executor exception depend upon the characteristics of the agency before the Court. Rightly or wrongly, the Court viewed the FTC (as it existed in 1935) as exercising “no part of the executive power.”  Instead, it was “an administrative body” that performed “specified duties as a legislative or as a judicial aid.”  It acted “as a legislative agency” in “making investigations and reports” to Congress and “as an agency of the judiciary” in making recommendations to courts as a master in chancery. “To the extent that [the FTC] exercise[d] any executive function[,] as distinguished from executive power in the constitutional sense,” it did so only in the discharge of its “quasi-legislative or quasi-judicial powers.” 

The Court identified several organizational features that helped explain its characterization of the FTC as non-executive. Composed of five members—no more than three from the same political party—the Board was designed to be “non-partisan” and to “act with entire impartiality.”  The FTC’s duties were “neither political nor executive,” but instead called for “the trained judgment of a body of experts” “informed by experience.”  And the Commissioners’ staggered, seven-year terms enabled the agency to accumulate technical expertise and avoid a “complete change” in leadership “at any one time.” 

In short, Humphrey’s Executor permitted Congress to give for-cause removal protections to a multimember body of experts, balanced along partisan lines, that performed legislative and judicial functions and was said not to exercise any executive power.

That is not a ringing endorsement of Humphrey’s Executor — especially given that the Court also observed that its 1935 understanding “that the FTC did not exercise executive power has not withstood the test of time.” Thus, the Court stated in Seila Law that the exception to unrestricted presidential removal from Humphrey’s Executor applies to “multimember expert agencies that do not wield substantial executive power.”*

Reading the Supreme Court’s decisions in Collins and Seila Law, I thought the state of the law was clear: Multi-headed independent agencies should watch out because the constitutionality of their removal protections rests on a 1935 case that conflicts with the Supreme Court’s current understanding of the separation of powers.  And to even fit within Humphrey’s Executor — and thus have any claim to stare decisis under the Court’s view of Humphrey’s Executor — such agencies must be “impartial,” make decisions based on “experience,” and not “wield substantial executive power.”

Yesterday, however, the FTC — in a series of 3-to-2 votes — embarked on an aggressive new agenda.  As recounted here by Richard Pierce, a majority of FTC Commissioners rescinded a bipartisan policy statement adopted by the FTC in 2015 that required the agency to prioritize “consumer welfare,” eliminated longstanding rulemaking procedural safeguards, withdrew authority from the agency’s chief administrative law judge and placed it in the hands of the Chair, and expanded the Chair’s authority to approve use of certain investigative tools.  

I’ll let others discuss the wisdom of these policy changes, although I have some doubts. Instead, I want to focus on what the FTC’s changed direction may mean for Humphrey’s Executor. Simply put, the unintended consequence of aggressive use of executive power by the FTC may be to prompt the Supreme Court to re-examine whether the FTC’s independence is constitutional in light of its recent holdings in Collins and Seila Law that the president must be accountable for what agencies do.   

The Supreme Court’s recent cases confirm that a supermajority of the justices now reject the idea that agency officials can create policy without being subject to presidential control. As the Supreme Court explained last week in Collins, “because the President, unlike agency officials, is elected, this control is essential to subject Executive Branch actions to a degree of electoral accountability.”  Yet does President Biden support the FTC’s decision to jettison the “consumer welfare” standard? Probably. But there is a degree of separation between the White House and the FTC so we don’t know for sure. That seems problematic under the most natural reading of the the Court’s recent precedent.

Humphrey’s Executor thus may be on thin ice.  If the president must be directly responsible to the people of the United States for what the FHFA and the CFPB do, then why shouldn’t the president also have to be equally responsible for what the FTC does?  The upshot, it seems to me, is that the more aggressive the FTC decides to be in its use of regulatory power, the greater the likelihood that the Supreme Court will overrule Humphrey’s Executor and require the president to be accountable for the FTC’s decisions. Perhaps I’m wrong, but the FTC may be a collision course with the unitary executive.

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* In Collins, the Court concluded that restrictions on presidential removal are unconstitutional whether or not an agency exercises “significant executive power” — prompting Justices Sotomayor and Breyer to dissent and Justice Kagan to concur only in the judgment.