Terry Gerton Let’s talk about two decisions that came down at the end of the Supreme Court’s last term, Slaughter and Cook. One deals with the officials at the Federal Reserve Board, one deals with The Federal Trade Commission, but the implications seem really much broader than the individuals whose names are on the cases. So before we get into the legal details, why are federal lawyers and agency leaders paying such close attention to these rulings?

Jay Lerner Well, thank you, Terry. I think these are really important decisions to look at side by side, and they were issued on the same day, and both written, the majority opinions were written by the Chief Justice Roberts. The key question here is whether Congress can place limits on the president’s authority to remove officials at independent agencies. And it really goes directly to the independence of the officials and the independence of those agencies. Because, frankly, if the official knows that they might be fired if they disagree or are not in alignment with the administration, then that might influence their decisions and motivations. And it has much broader implications than just for the FTC or the Federal Reserve. It affects many other independent agencies. I’d say that it’s really a great clash of judicial philosophies between the executive powers in the legislative branch and legislative powers. And ultimately decided by the judiciary, as well as sort of distinction between law and a strict interpretation of the language versus policy decisions, and the history of the framers from the 1700s or even over the last hundred years versus the current conditions or circumstances that the government is in. So it really is a culmination of many of these forces.

Terry Gerton Why do you think the courts treated these two individuals differently?

Jay Lerner Well let’s take a look at the holdings in the case and I think that may shed some light on it. In slaughter, the Federal Trade Commission, the FTC as you mentioned, and it was a six three decision based on ideological lines. The FTC, as you know, protects consumers against corporate interests and unfair trade practices and Chief Justice Roberts wrote that it was really a legal interpretation of Article 2 of the Constitution, which states that the executive power shall be vested in a president of the United States of America. And so it gave broad powers to the president to remove officials at will, which is the legal term for really no due process, no notice or opportunity to be heard. This case, the Slaughter case, overruled a 90-year precedent of Humphrey’s Executor, where President Roosevelt, Franklin Roosevelt, tried to remove an FTC commissioner that had been appointed by the prior administration, President Hoover. And although Mr. Humphrey passed away before the litigation was completed, the estate, the executor, filed suit for back pay. And the court, in that case, in 1935, ruled that because the FTC was quasi-legislative and quasi-judicial, it wasn’t necessarily acting as an executive branch agency or executive branch functions, and therefore the FTC Act was constitutional and the dismissal was unjustified. In Slaughter, it overruled that and upheld what’s known as the unitary executive theory, where the president has exclusive authority over the entire executive branch. And Justice Roberts wrote that ‘Congress nor the courts may saddle him with those with whom he cannot work. Subordinates who exercise the president’s power. Are subject to removal by him. Then and only then can they remain accountable to the president and the president to the people.” And so Chief Justice Roberts really looked at the role of the FTC and its executive branch functions like rulemaking, investigations of corporations, enforcement and lawsuits against the corporations, and then ultimately concluded when an agency executes a congressional mandate against private parties, it exercises executive power. And he says, no ifs, ands, or quasis about it, referencing back to the Humphries Executor quasi-judicial, quasi-legislative. In Cook, there was really a different sort of logic involved here. The Federal Reserve Board oversees monetary and macroeconomic policy for the government and for the country. And the holding here, also written by Chief Justice Roberts really takes more of a policy perspective and abandons that Slaughter analysis on the executive branch functions and says because of the unique history and structure of the Federal Reserve Board and its banks, including the first, you know, referencing back to the first and second banks of the United States, that it’s one of our nation’s and the world’s most important financial institutions and therefore has a special arrangement sanctioned by history. And so, because of that special arrangement in the history, due process is required for removal of the governors, of Ms. Cook in this case. That includes notice and an opportunity to be heard so she can defend herself. Even though I should say that the Federal Reserve Board has similar sorts of functions as the Federal Trade Commission in terms of those rulemaking and then enforcement and investigations that I mentioned earlier in the Slaughter case. And so it’s really sort of different logic different analysis and it’s, in one case of more of a legal interpretation and the other case more of a policy indication.

Terry Gerton Jay Lerner is the former inspector general for the Federal Deposit Insurance Corporation and an adjunct professor at George Washington University. So Jay, as I listen to you walk through those two cases, if I’m the head of an independent agency now or maybe on the board of one or someone serving in an oversight role, what lesson am I supposed to take from these two decisions? How do I know which way the wind is going to blow?

Jay Lerner It’s a great question, Terry, and it’s not clear. The court definitely left some many unanswered questions and some ambiguities in its decisions. You know, for instance, It it really didn’t provide much guidance for lower courts to decide or for future litigants are those officials. One of the things that Justice Sotomayor mentions in her dissent was whether it applies to lower level officials at agencies, and she particularly mentions non-Article 3 courts or adjudicatory bodies that might not be in the judiciary but that are part of the executive branch. And there’s actually a pending case, Jackler versus the Department of Justice, where two immigration judges have brought suit against the government for their dismissal. And those are immigration judges that sit within the Department of Justice. That case is pending before the Federal Circuit, the Court of Appeals, currently.

Terry Gerton A lot of Federal Drive listeners are going to wonder about inspectors general and other oversight officials. These cases weren’t directly about IGs, but do you think they offer clues about how courts might view challenges involving inspector general removals or other independent oversight functions?

Jay Lerner It’s interesting you mention that because you might recall that in early 2025, 17 IGs were fired on January 24th of 2025. Eight of those IGs filed a lawsuit the next month. And in September, the judge ruled in that case that there was a violation of law. She said that was obvious because there wasn’t a 30 day notice and there wasn’t reasons for the removal, but she couldn’t grant the preliminary injunction at that time, pending the outcome of the slaughter case. Now that the Slaughter case has been decided, that case has been revived, and there’s actually a schedule between the parties that has been laid out for the judge to determine, asking for summary judgment, declaratory judgment and back pay for those inspectors general. And so those filings will take place in October, November, or go through October, November, and then the judge will make a decision after that. So, we’ll have a direct effect on that lawsuit and the IG Act, the provisions of that act and for the inspectors general.

Terry Gerton Do you see these cases as settling the question of agency independence or are they more likely to trigger another round of litigation?

Jay Lerner I think there’ll be more litigation. I don’t know that it’s been settled. I think that, you know, there is definitely some unanswered questions, as I mentioned. In terms of the history of the agency in the relevance of that obviously the court looked at that in the Cook case. Sotomayor in her dissent focused on the history of the agency. Justice Kavanaugh in his concurrence focused on the importance of the agency in terms of macroeconomic and monetary policy. I think it’s important to realize that these will affect many different agencies that will have different histories and different relevance. Justice Sotomayor in the Slaughter case mentioned a few agencies, how it will transform government and create chaos. She mentioned the Federal Energy Regulatory Commission, the Consumer Product Safety Commission, Chemical Safety Board, Nuclear Regulatory Commission, and the Merit Systems Protection Board. But frankly, there’s lots of other agencies as well, including the Securities and Exchange Commission, the Commodity Futures Trading Commission, Mine Safety, National Transportation Safety Board, and many others. And so these are really important issues and it’s unclear if the importance of the agency or the importance those issues will influence the court’s decision going forward and therefore leading to much more litigation.

Terry Gerton Might this be a prompt for Congress to go back and revisit this legislation? Is there a way to legislate around the court’s decision here?

Jay Lerner Good question and I think that’s a little bit of an unanswered issue as well. I think that congress can do several things in terms of the structure and organizing the executive branch even separate from removal so they can put qualifications on the officials that come before them. Obviously the senate has confirmation authority over any nominees. Congress can also legislate in terms of the role of the official, whether they are investigatory or provide information to Congress or enforce or audit or evaluate issues, what those officials are actually doing. Congress can also put performance standards on the individuals, and I think that’s a really important element here. And obviously, Congress controls the purse strings and appropriate resources for certain agencies and place conditions on those appropriations and funding for the agencies. So I think there are things that Congress can do and we’ll have to see how they respond to these decisions.