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(From America’s Credit Unions) – On Monday, the U.S. Supreme Court heard oral arguments in Trump v. Slaughter a case challenging the removal of Democrat Commissioner Rebecca Slaughter from the Federal Trade Commission (FTC).
The Supreme Court is widely anticipated to overturn a 1935 precedent in the case of Humphrey’s Executor v. United States, which established limitations on the president’s ability to remove heads of independent agencies, as a violation of the Constitution’s separation of powers.
This nearly century-old case created the modern independent agency framework that we know today, including the National Credit Union Administration (NCUA), which often includes bipartisan boards or commissions largely insulated from presidential influence. Based on today’s argument, we suspect that previous predictions will hold true and the Supreme Court will overturn Humphrey’s Executor by a 6-3 vote along ideological lines.
However, during oral arguments, the Government argued that overruling Humphrey’s Executor would only impact how agency officials are appointed and would not alter or destroy these agencies. While a decision in this case will impact the lawsuit brought by former NCUA Board Members Todd Harper and Tanya Otsuka, the extent to that impact is unknown.
Below, please see a detailed recap of Monday’s arguments. America’s Credit Unions will continue to keep credit unions informed of developments and what they mean for the NCUA.
Breakdown of the Oral Arguments:
The Government argued that Humphrey’s Executor should be overturned because it has created a “headless fourth branch insulated from political accountability and democratic control.” The Government said that the President should have complete authority to remove agency officers that exercise executive power and there are no exceptions or permissible restrictions on this authority. The Government did admit that the vast and varied nature of the federal government makes it a difficult line-drawing exercise for every agency (especially those that straddle the line between legislative and executive power, for example), but said that for multi-member agencies that are exercising executive powers, like rulemaking, adjudication, investigation, and seeking civil enforcement through litigation or penalties, the Constitution and the Supreme Court’s previous cases, including in Seila Law, make clear that the president should have removal authority. The Government distinguished the Governors of the Federal Reserve Board as unique and distinct and not subject to the same removal authority. The Government argued that overruling Humphrey’s Executor would only impact how agency officials are appointed and would not alter or destroy these agencies.
On the other hand, attorneys representing Commissioner Slaughter argued that agencies throughout history have been insulated from influence from the president and from Congress. They cited examples, including from the first Congress and president, to note that it has always been understood by both Congress and past presidents that this limit on presidential authority is important. Slaughter’s attorney argued that removing the executive powers from agencies that unconstitutionally wield that type of power should be the solution here, not striking down the statutory removal protections. The function of the officers and the agency is the important question in evaluating the appropriate level of presidential supervision through removal authority. The attorneys argued that the president should not have “illimitable power to fire heads of agencies” and the Court should avoid establishing “heavy-handed constitutional principles,” in other words, not tackle the Constitutional question of the scope of the president’s mandate to ensure that laws are faithfully executed.
Insights from the Justices:
The conservative justices asked several questions about how to decide which agencies exercise executive authority and whether agencies that perform mostly quasi-judicial functions should be insulted from removal at-will. They also asked questions that suggested they believe the FTC today, which wields significant executive power, is very different than the FTC in 1935. The justices were tough on Slaughter’s arguments, asking whether a decision in favor of Slaughter would give Congress sweeping power, including the authority to establish agency officials with long term-limits and even convert Cabinet departments into multi-member agencies to insulate them from presidential influence.
The three liberal justices, on the other hand, expressed concerns about “massive uncontrolled, unchecked power” in the hands of the president should they be able to remove agency officials at-will. The justices asked about the real-world risks of ruling in favor of the Government and made clear that allowing the president to “come in and clean house of all leaders at an agency and install whoever he wants” could have dangerous consequences.
None of the judges paid much attention to the second question at issue of whether only back pay or reinstatement is permissible when agency officials are removed. That may not be a good sign for Slaughter.
Impact on NCUA:
As for what this means for the NCUA, the Supreme Court previously refused to hear the Harper v. Bessent case, which also raised the precedent set in Humphrey’s Executor. That case is currently stayed in the D.C. Circuit Court of Appeals pending a decision in Trump v. Slaughter. How the court decides this case will directly impact the NCUA lawsuit and the fate of future NCUA Board members. If the Court sides with the Government, then the former NCUA Board members’ lawsuit becomes moot. If not, they may have a chance at being reinstated on the Board.
Based on the oral argument, it seems the court is likely to overturn Humphrey’s Executor or at least rule that multi-member agency leaders can be removed at-will if they perform executive functions. If the Court issues the latter, more narrow ruling, then the D.C. Circuit Court will decide what that means for the NCUA Board members.
A decision from the court is expected by June 2026.