US Supreme Court Reshapes Independent Agency Removals, Carves Out Fed

In a landmark decision on June 29, Trump v. Slaughter, the US Supreme Court invalidated the Federal Trade Commission’s for-cause removal protections for commissioners and overturned Humphrey’s Executor v. United States, itself a landmark 1935 decision that had previously established that Congress could constitutionally limit the president’s power to remove commissioners of independent regulatory agencies.

The Slaughter case arose following President Trump’s firing in 2025 of two Democratic commissioners at the FTC, without citing “inefficiency, neglect of duty, or malfeasance in office,” which are required for the removal of sitting commissioners according to the FTC Act.

In a related decision, Trump v. Cook, the Court specifically carved out the leadership of the Federal Reserve Board of Governors (Federal Reserve) from the rule announced in Slaughter—at least to a limited extent. Following Slaughter, the president now holds at-will removal authority over principal officers of independent agencies, with limited exceptions, such as the Federal Reserve.

In addition to the FTC, various other regulatory agencies of similar structure may be impacted. With this decision from the Court, it is unclear whether President Trump will remove additional agency officials and how the decision will impact day-to-day activities of businesses and individuals under the regulatory purview of these agencies.

In the wake of Slaughter, we anticipate the policy direction and regulatory enforcement at agencies to align more closely and more quickly with the priorities of whichever administration is in the White House. Significant policy shifts could present challenges to long-term capital projects and planning as businesses face decreased predictability across administrations.

Further, we anticipate additional litigation involving agency design to unfold over the coming years. First, other statutory provisions that serve as historical indicia of independence may be challenged (e.g., fixed terms, holdover provisions, statutory provisions addressing the political party balance in the number of officials serving on multi-member bodies).

Second, issues left undecided by the Slaughter decision are called into question, including the governance of non-Article III courts, inferior officers, and potentially operation of the civil service.

There is also the potential for the legal landscape at agencies to shift further over time depending on any congressional reactions to the Slaughter decision. For example, Congress may revisit certain aspects of agency authorities and procedures in the future in light of the new rule announced in Slaughter and the overruling of Humphrey’s Executor.

BACKGROUND

In March 2025, President Trump removed without cause two Democratic commissioners at the FTC, Rebecca Slaughter and Alvaro Bedoya. In the FTC Act, Congress structured the agency as a five-member commission whose members serve 7-year staggered terms, no more than 3 of whom can be of the same political party and who can be removed during their tenure only for “inefficiency, neglect of duty, or malfeasance in office.” 15 U.S.C. § 41.

The President did not invoke this provision when he advised the Commissioners that they were removed from office pursuant to the President’s authority under Article II of the Constitution because their continued service on the FTC was inconsistent with the administration’s priorities. Both Ms. Slaughter and Mr. Bedoya filed suit and prevailed in the lower courts based on the language of the FTC Act and the Supreme Court’s prior ruling upholding that language in Humphrey’s Executor, but the Supreme Court intervened, staying the district court’s order, and granted certiorari before judgment.

Lisa Cook was appointed to Federal Reserve in 2022 to complete the final two years of a 14-year term. President Biden subsequently nominated her to a full 14-year term, and she was confirmed by the Senate in 2024 to a term set to expire in 2038. In August 2025, President Trump attempted to fire Ms. Cook, assertedly for cause. She challenged the removal, and the U.S. district court issued a preliminary injunction to prevent it. The D.C. Circuit Court of Appeals declined to stay the injunction. The government applied for a stay in the Supreme Court, and the Supreme Court deferred the stay application pending oral argument, allowing Cook, unlike the dismissed FTC Commissioners, to continue in her official role.

THE SUPREME COURT'S DECISIONS

In Slaughter, the Supreme Court held 6-3, in an opinion authored by Chief Justice Roberts, that the FTC’s statutory for-cause removal provision violates the separation of powers and is contrary to Article II of the Constitution, which vests executive authority in the president. The Court stated, “To remain accountable to the President, those officers must be removable by the President.”

The majority found that the president must have at-will removal authority over principal officers exercising executive power and expressly overruled Humphrey’s Executor, which had upheld the limitations in the FTC Act as constitutional, holding now that “independent agencies are not ‘independent’ in the sense that they are free of the President and thus responsive ‘only to the people of the United States.’”  

The Slaughter ruling applies to agencies that exercise “executive” power, although the Court observed that “not all offices created by Congress necessarily come with executive or even sovereign power attached,” suggesting that agencies with more limited functions may be subject to a different analysis.

Justice Gorsuch wrote a concurring opinion in which he questioned whether some independent agencies would have been created at all if Congress had not held the expectation that their leaders would have been insulated from removal, thereby suggesting that additional litigation may ensue challenging other aspects of agency authority, such as whether an agency can be “severed” from its for-cause removal provision.

In Cook, the Court, in a 5-4 decision also authored by Chief Justice Roberts, explicitly carved out the Federal Reserve from the holding in Slaughter, emphasizing its unique historical and statutory status. The Court observed that the Federal Reserve’s independence is rooted in “a long tradition of central banking protected from political interference,” and its board members are removable only “for cause” rather than at the President’s pleasure.

The Court’s opinion stressed that the Federal Reserve occupies a “distinct historical tradition of central bank independence” and that any change to its independence “must come from Congress, not the courts.”

The Court’s decision in Cook underscores the exceptional status of the Federal Reserve among federal agencies. The Court referenced historical lessons from the First and Second Banks of the United States and quoted Alexander Hamilton’s warning that “suspicion of political manipulation would continually corrode the vitals of the credit of the Bank.”

And the statutory “for cause” removal protection for Federal Reserve Governors requires a “substantial threshold for 'cause,'” and procedural protections—such as notice and hearing—are incorporated into the statute, reflecting a “settled interpretation at common law.”

The Court rejected the government’s argument that the president’s determination of “cause” is “wholly unreviewable,” holding instead that “whether a Governor should be 'removed for cause' is a decision only the President can make (short of impeachment), but that does not mean that he may make that decision for any reason, or no reason.”

Judicial review available to ensure the president’s asserted cause meets the statutory standard, and procedural protections must be observed. The Court denied the government’s stay application, and the case will now be litigated on its merits.

Justice Sotomayor’s dissent in Slaughter emphasized the importance of stare decisis and Congress’s longstanding reliance on Humphrey’s Executor in constructing modern administrative agencies and warned that the majority’s decision will “reshape our Government” by subjecting dozens of independent commissions to direct presidential control. The dissent also recognized the special status of the Federal Reserve but questioned the workability and coherence of such a carve-out.

IMPLICATIONS FOR BUSINESSES

We anticipate that the Supreme Court’s decisions will have wide-ranging effects across the federal regulatory landscape, particularly for entities subject to oversight by agencies that have historically operated with a degree of bipartisanship and independence from the executive branch.

While the full impacts are not yet clear, businesses should expect increased policy volatility between administrations as presidents now have broader power to reshape agency leadership and priorities, more quickly impacting regulatory enforcement, rulemaking, and compliance obligations. Policymaking will remain subject to Senate confirmation processes; however, it may be less likely that existing Senate-confirmed minority-party commissioners will be available to assume their duties immediately after a party-change election.

Additional litigation over the constitutional scope of agency authority and design will also likely play out over the next several years—as foretold in the Slaughter dissents and Justice Gorsuch’s concurrence. 

It also remains to be seen how Congress will respond in any future legislation, whether in terms of agencies’ structures or agencies’ substantive authorities, particularly in light of the Court’s decision to end Congress’s ability to legislate removal criteria for principal officers of most agencies. 

The decision may also have an impact globally. For instance, concerns have already been raised related to the 2023 EU–US Data Privacy Framework, which provides a mechanism to transfer data between the United States and the EU, due to the reliance of the framework on the FTC’s position as an “independent” agency. 

Entities regulated by the Federal Reserve can take some comfort in the Court’s explicit preservation of its independence, which remains grounded in unique historical and statutory considerations in the Supreme Court’s view. However, regulated parties should be aware that future congressional action could, of course, nonetheless change the Federal Reserve’s procedures and structure in the future.