Feds to DC Circuit: Labor boards under Trump's authority

WASHINGTON (CN) — A D.C. Circuit panel expressed concern Friday that allowing President Donald Trump to remove independent officials atop two labor boards could pave the way for the Federal Reserve chair and certain judges to be removable.

The three-judge panel grappled over Trump’s sudden terminations at the National Labor Relations Board and the Merit Standards Protection Board and whether a pair of federal judges could order their reinstatement.

Trump terminated MSPB Chair Cathy Harris and NLRB member Gwynne Wilcox in the early days of his second administration via two-sentence emails that provided no justification for their removal.

U.S. Circuit Judge Florence Pan, a Joe Biden appointee, asked Justice Department attorney Harry Graver whether he had considered the potential implications of his position that any agency wielding executive powers must answer to the president.

Graver said the government had not considered the implications for independent executive branch entities like the Fed but urged the panel to limit its review to the NLRB and MSPB.

“What you’re asking this court to do, essentially, is to take more than 30 independent agencies that Congress created as independent and move them to be directly under the control of the president,” Pan said. “Separation of powers is a two-way street. The executive can’t encroach on Congress; it’s supposed to prevent autocracy.”

Graver argued that bringing the agencies under more executive control would improve accountability, pointing to the “kerfuffle” in 2023 surrounding the Consumer Product Safety Commission’s suggestion that gas stoves could be banned.

He said that Biden was able to distance himself from the comments — the commission clarified it was a suggestion, not a policy — to avoid the political blowback.

“That’s a policy judgment made by an independent agency, that blurring of the line of accountability is incompatible with our political system,” Graver said.

The Justice Department has repeatedly argued in court that the president is the office most answerable to the American people as the only office voted on by the full electorate. Graver repeated that Friday, adding that the only way the full executive branch can be answerable is if the president is.

“The only way that works is if the executive agencies that wield his power answer to him,” Graver said.

Pan seemed unconvinced, pointing out that at the nation’s founding, the framers did not make the president accountable to voters because he was selected by the Electoral College, and states themselves chose electors via their state legislatures.

“When you tell me the lines get blurred, that’s very abstract, and we’re talking about real agencies that affect real people here,” Pan told Graver. “It seems to me we have a lot of amicus briefs, about the Fed and other agencies, that it would be quite harmful to make these independent agencies subject to presidential control.”

U.S. Circuit Judge Gregory Katsas, a Trump appointee, also seemed unconvinced that the NLRB and MSPB wielded substantial executive power, noting that as adjudicative bodies, they should be protected under the Supreme Court’s precedent in Humphrey’s Executor v. United States and Wiener v. United States.

Katsas asked Graver how the Fed would not fall under the president’s direct control if the panel ruled in his favor.

He replied that the nation’s central bank primarily engages in monetary policy, which is not a traditional executive power, and has a “historical status” that warranted an exception.

Both Katsas and Pan found the answer troubling, with Pan noting that if the Fed did fall under the president’s control, he could push its chairman to lower interest rates to boost the economy just before an election.

Nathaniel Zelinsky, of Milbank LLP and representing Harris, picked up on the panel’s concerns and argued that if the MSPB’s chair could be removed at will, so too could the Fed chair.

Joined by Deepak Gupta, of Gupta Wessler and representing Wilcox, the attorneys urged the panel to find the entities did not wield executive power and should still be protected under Humphrey’s Executor and Wiener. 

U.S. Circuit Judge Justin Walker, a Trump appointee, rounded out the panel.

Friday’s arguments are the latest in a back-and-forth legal battle that has already reached the Supreme Court, where Chief Justice John Roberts blocked the reinstatement of Harris and Wilcox after the D.C. Circuit ordered their return on April 7.

Robert’s decision granted the Trump administration’s request for a stay, meaning the high court has yet to consider the merits of the case.

The case has become a key challenge against Trump’s efforts to reshape the federal government under the “unitary executive theory,” in part by removing en masse top government officials he deems disloyal or a potential hurdle to his agenda.

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