U.S. Supreme Court makes major ruling! Expands the president’s power to remove heads of federal independent agencies, but excludes the Federal Reserve.

U.S. Supreme Court makes major ruling! Expands the president’s power to remove heads of federal independent agencies, but excludes the Federal Reserve.

The U.S. Supreme Court, by a 6-3 majority, overturned a precedent nearly 90 years old, vastly expanding the president's power to dismiss officials of federal independent agencies, marking a major legal breakthrough in the Trump administration's efforts to reshape the administrative state.

The ruling allows Trump to dismiss Democratic Commissioner Rebecca Kelly Slaughter of the Federal Trade Commission (FTC), despite laws stating commissioners can only be removed for specific reasons.

This verdict overturns the 1935 precedent "Humphrey's Executor," which established the legal foundation of the modern administrative system, meaning various independent regulatory agencies covering labor relations, consumer product safety, transportation safety, and employment discrimination will now fall directly under the White House's control.

Notably, the Supreme Court explicitly excluded the Federal Reserve from the scope of the ruling, continuing the exemption clause established in May this year, thus temporarily preserving the Fed's independence. The Court separately ruled that Trump may not immediately dismiss Fed Governor Lisa Cook on grounds of alleged mortgage fraud.

Reason for the Decision: FTC Exercises Executive Power, Must Be Controlled by the President

Chief Justice John Roberts explained the core logic of the decision in the majority opinion:

"The FTC's 'for-cause removal' clause violates the separation of powers. The FTC undoubtedly exercises executive power, and therefore must be subject to control by the President to whom executive power belongs. Consequently, while serving at the FTC, Slaughter was subordinate to the President, who has the authority to terminate her term early."

Slaughter previously argued her removal violated the Federal Trade Commission Act, which states the President can only dismiss commissioners for "inefficiency, neglect of duty, or malfeasance."

The administration, in seeking to overturn this restriction, told the Supreme Court that the modern FTC's powers far exceed those protected by presidential intervention in the 1935 ruling, so a favorable decision could be made without entirely overturning precedent. Ultimately, the Court went further, directly overturning the Humphrey's Executor precedent.

Liberal Justice Sonia Sotomayor issued a dissent, strongly worded. She wrote jointly with two other liberal colleagues:

"Today, this Court discards centuries of political practice, concluding that longstanding actions by all three branches have been blatantly unconstitutional. That conclusion is wrong."

Scope of Impact: Multiple Independent Regulatory Agencies Face Power Restructuring

The conservative majority of the Supreme Court has, in recent years, continuously weakened regulatory agency authority through several major rulings—including limiting agencies' power to regulate under ambiguous federal statutes, and restricting their power to adjudicate complaints via internal judges. This latest ruling continues that trend.

According to this decision, agencies expected to be affected include those regulating labor relations, consumer product safety, transportation safety, and employment discrimination, involving potentially dozens of long-term independently operating government bodies.

After the ruling, Slaughter issued a statement, focusing on the impact felt by ordinary people:

"What disappoints me most is for our country. The consequences of this ruling will affect every American in both visible and invisible ways."

Federal Reserve Exemption: The Market's Biggest Concern Temporarily Addressed

On the issue most closely watched by the market, the Supreme Court clearly set a firewall for the Federal Reserve.

The Court maintained the exemption clause established in May regarding the Fed's independence, confirming the ruling does not apply to the Federal Reserve, thus temporarily allaying concerns of political interference in monetary policy independence.

The Court separately ruled on the case of Fed Governor Lisa Cook, deciding that Trump cannot immediately remove her on grounds of alleged mortgage fraud. Cook herself denies the allegations.

However, the long-term legal boundaries of the Fed's exemption remain uncertain. This ruling fundamentally restructures the constitutional basis of independent agencies, and whether the Fed can continue to maintain its special status may become a focus of future litigation and political battles.

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