A pivotal U.S. Supreme Court case has the potential to reshape the future of presidential control over independent agencies, with a particular focus on the fate of Jerome Powell, Chairman of the Federal Reserve. The Court is set to weigh in on President Donald Trump’s controversial attempts to remove two Democratic appointees from the National Labor Relations Board (NLRB) and the Merit Systems Protection Board (MSPB). How this case unfolds could directly impact Powell’s tenure at the Fed.
Trump’s efforts to dismiss Cathy Harris from the MSPB and Gwynne Wilcox from the NLRB, both of whom were appointed by President Biden, have triggered legal battles centered around whether Congress’s legal safeguards, which protect these officials from arbitrary dismissal, infringe upon the president’s constitutional powers. The Supreme Court’s interpretation of this conflict could lay the groundwork for broader implications, including how much authority a sitting president has over key federal positions, such as the Fed Chair.
Legal observers note that if the Court rules in favor of Trump’s ability to remove Harris and Wilcox, it could create a precedent that undermines the independence of agencies like the Federal Reserve. Powell’s position as Fed Chair, reappointed by Biden to serve through 2026, could be endangered by a ruling that diminishes the statutory protections afforded to independent agency heads.
The legal basis for this fight lies in the 1935 Supreme Court decision Humphrey’s Executor v. United States, which upheld the for-cause removal protections for Federal Trade Commission members, aiming to shield certain positions from presidential interference. This ruling has served as the cornerstone for the protection of figures like Powell, who, despite being appointed by Trump, enjoys legal safeguards against dismissal for mere policy disagreements.
If the Court decides to narrow or overturn the Humphrey’s Executor precedent, it could lead to a dramatic shift in how U.S. presidents can manage federal agencies. Such a change might pave the way for future efforts to challenge the independence of the Federal Reserve, particularly following Trump’s vocal criticisms of Powell’s monetary policy decisions, which had already rattled financial markets.
Despite the recent friction between Trump and Powell, the latter has publicly asserted that he would not step down if asked. With his 14-year term on the Fed Board running until 2028, Powell’s critics argue that an overreaching Supreme Court decision could chip away at the independence of the nation’s central bank. Legal experts suggest that if the Court allows Trump to dismiss the labor board officials, the same logic might be applied to other appointed positions, including those at the Fed.
As the justices deliberate, the broader issue of presidential control over independent agencies is at the forefront. Legal scholars remain divided on whether any decision will directly influence the Federal Reserve, though some fear the Court may create a legal loophole that weakens the protections of officials across the board.
With the Court’s decision pending, the future of both the NLRB and the Federal Reserve is in a delicate balance, and Powell is closely monitoring the outcome. If the justices decide to change the rules on removal protections, the reverberations could be felt far beyond the labor boards, potentially altering the course of independent agencies for years to come.
