This week, President Trump laid the groundwork for the takeover of the regulatory work of previously independent commissions, including the Surface Transportation Board and the Federal Maritime Commission.

In a February 18 Executive Order entitled “Ensuring Accountability for All Agencies,” Trump directs all “so-called independent agencies” to “submit for review all proposed and final significant regulatory actions to the Office of Information and Regulatory Affairs (OIRA) within the Executive Office of the President before publication in the Federal Register.”

The new EO is an aggressive example of “unitary executive theory” that now threatens to upend a balance of power that has existed since 1887. That year, Congress created the first independent regulatory agency – to regulate transportation. The Interstate Commerce Act of 1887 created an independent Interstate Commerce Commission, to have five Commissioners, appointed by the President and confirmed by the Senate, serving staggered six-year terms. No more than three of the five Commissioners could be from the same political party, and the law prohibited the President from removing any Commissioner except for “inefficiency, neglect of duty, or malfeasance in office.”

This basic setup – a bipartisan commission of experts to issue regulatory interpretations of law, insulated from political interference – was both quasi-legislative (since regulations are quasi-laws) and also quasi-judicial (since they would issue decisions between two opposing parties as to whether or not the regulations were being violated). It worked well enough that during the antitrust crisis, Congress created a similar setup for a Federal Trade Commission in 1914, then a U.S. Shipping Board in 1916 to oversee maritime issues, and then under Franklin Roosevelt, a series of others, including the Securities and Exchange Commission and the Federal Communications Commission.

The part about the President not being able to fire Commissioners of this kind except for good cause was tested by Franklin Roosevelt, who did not like the way one of the Republican FTC Commissioners, William Humphrey, was voting. Roosevelt told Humphrey to vote the way Roosevelt wanted; Humphrey declined, and then Roosevelt fired him for no other reason than his voting record. Humphrey kept showing up for work and sued to get his job back. Even though Humphrey died while the lawsuit was pending, his estate kept up the suit trying to get his back pay, and eventually prevailed in a 1935 Supreme Court decision, Humphrey’s Executor v. United States.

In Humphreys’ Executor, the Court ruled that the ICC/FTC setup of a bipartisan board of experts, performing quasi-legislative and quasi-judicial tasks, was exempt from the general rule that all executive branch employees appointed by the President can be relieved of their jobs by the President.

In recent decades, “unitary executive theory” has gained more acceptance in the court. This basically says that the Constitution vests all power to execute and administer laws in the President, and to the extent that a part of government is about executing/administering/enforcing the law, the President has to have full control of that part of government.

Unitary executive theory was most recently on display in June 2020, when the Supreme Court issued the Seila Law v. Consumer Financial Protection Bureau decision. This case determined that the President could relieve the head of the CFPB from duty without cause, even though the law said that the head of CFPB could only be fired with cause. Because the CFPB was headed by a single director, instead of by a bipartisan group of Commissioners, the court did not have to get into whether or not to overrule Humphrey’s Executor. But that opinion (a 5-4 decision with a Roberts-Thomas-Alito-Gorsuch-Kavanaugh majority) left some writing on the wall that led attorneys to think that that a majority might be susceptible to overturning Humphrey’s Executor down the road.

In particular, the Seila Law opinion said “Rightly or wrongly, the Court viewed the FTC (as it existed in 1935) as exercising ‘no part of the executive power.’ Id., at 628. Instead, it was ‘an administrative body’ that performed ‘specified duties as a legislative or as a judicial aid.’ Ibid. 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. Ibid. ‘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.’ Ibid. (emphasis added).”

A footnote to that paragraph said “The Court’s conclusion that the FTC did not exercise executive power has not withstood the test of time. As we observed in Morrison v. Olson, 487 U. S. 654 (1988), ‘[I]t is hard to dispute that the powers of the FTC at the time of Humphrey’s Executor would at the present time be considered ‘executive,’ at least to some degree.’ Id., at 690, n. 28. See also Arlington v. FCC, 569 U. S. 290, 305, n. 4 (2013) (even though the activities of administrative agencies ‘take ‘legislative’ and ‘judicial’ forms,’ ‘they are exercises of—indeed, under our constitutional structure they must be exercises of—the ‘executive Power’ ‘ (quoting Art. II, §1, cl. 1)).”

When a majority of the Supreme Court says things like “Rightly or wrongly, a previous Court decision says X” or that “The Court’s conclusion of X has not withstood the test of time,” smart lawyers see that as the majority hanging out a sign saying “Help Us Repeal This Precedent.” The five Justices who signed the Seila Law majority opinion are still on the Court and have been joined by a sixth conservative vote, Amy Barrett.

This is why White House lawyers felt comfortable with President Trump violating the statute and firing Democratic members of the National Labor Relations Board and the Equal Employment Opportunity Commission during his first week in office, without regard for the “for cause” provisions in the statutes governing those entities. They feel that they are following the path that a majority of the Court left open in Seila Law, and that path leads to the President’s unfettered ability to fire regulatory commissioners who vote against Administration regulatory policy.

All that being said, President Trump has not fired any members of the Surface Transportation Board (the successor to the Interstate Commerce Commission) or the Federal Maritime Commission, at least not yet. (They love to make news after 5 p.m. on Fridays.) We are not sure whether the third transportation-related independent board, the National Transportation Safety Board, is subject to the President’s executive order. Although the NTSB can issue regulations (shown here), they only apply to the procedures and hearings of the NTSB itself – the Board lacks the power to issue broad rules regulating the behavior of persons or companies. As such, the NTSB is much farther removed from the execution/administration/enforcement of law than the other alphabet soup boards and commissions, and any Court decision striking down Humphrey’s Executor still might not apply to them.

While Trump has not fired any STB or FMC members, the threat of doing so in the future is obviously there, as is a new threat in section 5 of the Order, directing the Office of Management and Budget to keep a closer hold on the appropriations provided by Congress to those independent regulatory boards and commissions and “adjust such agencies’ apportionments by activity, function, project, or object, as necessary and appropriate, to advance the President’s policies and priorities.  Such adjustments to apportionments may prohibit independent regulatory agencies from expending appropriations on particular activities, functions, projects, or objects, so long as such restrictions are consistent with law.” This will, no doubt, also upset the Appropriations Committees to the extent that those programs, projects, and activities were delineated specifically in appropriations committee reports.

In addition to running all proposed regulations through OMB, the Order also orders STB chairman Patrick Fuchs and FMC chairman Louis Sola (and the other chairmen) to “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 to each “establish a position of White House Liaison in their respective agencies” at GS-15 pay.

There wasn’t much on the STB’s most recent Semiannual Regulatory Agenda, but the FMC’s semiannual agenda indicates several new regulations in the works required by the Ocean Shipping Reform Act of 2022, which now have to be run through the White House OMB, if FMC complies with the Executive Order.

In the meantime, we will wait and see the degree to which the STB and FMC comply with the new order, and also wait to see how the inevitable lawsuit from the fired commissioners at the EEOC, NLRB, and wherever else winds its way through the courts to the inevitable Supreme Court showdown.

One final thought: it seems clear that the conservative justices did indicate their willingness to go a lot farther in hollowing out, or perhaps overturning completely, Humphrey’s Executor. But that was four years ago, and the CFPB was a very unusual agency for a bunch of reasons. It is possible that, even though five Justices were open, in theory, to repealing that 1935 case, one or two Justices might get cold feet once a case with the specifics of who, how, and why President Trump has fired from the independent regulatory commissions comes before the Court.