Trump, the FTC, and the Fight Against the Headless Fourth Branch

Mark Chenoweth: Welcome to Unwritten Law with Mark Chenoweth and John Vecchione. We are delighted to be joined by a special guest today, our colleague at the New Civil Liberties Alliance, Margot Cleveland, who is of counsel at NCLA and the principal author of an amicus brief that we have just filed at the U.S. Supreme Court in the case of Donald J. Trump, President of the United States v. Rebecca Slaughter, who was a commissioner at the Federal Trade Commission until President Trump said, “You’re fired.” So, glad to have you here to talk about this case, Margot.

ourt is going to overturn the: 1935

John Vecchione: I will say this. We all know how it’s gonna come out. She’s gonna stay fired. But there are at least two ways it could come out. And this brief argues for the right way. And there’s a little concern the wrong way is just saying, “Eh, the FTC’s different.”

Mark Chenoweth: Right, so they could definitely have a narrower or wider decision here. But let’s take a step back, quickly remind the audience, if we can, Margot, what Humphrey’s Executor held. And then we’ll step forward to the Slaughter case itself.

cutor came out in, I believe,: 1935

Mark Chenoweth: Or, Article 2, you mean.

John Vecchione: Article 2.

Margot Cleveland: Yes. I'm sorry, under Article 2.

John Vecchione: We don't want the Second Amendment restraining his power.

Mark Chenoweth: They tried that already.

John Vecchione: Exactly.

Margot Cleveland: Thank you. Under Article 2. But when you say, “What did Humphrey’s hold?” That’s where I kind of get a little wishy washy because what they held was that the Federal Trade Commission doesn't have any executive authority, which was wrong. And in fact, if you actually read the details of it, there was a sentence in it that actually spoke about how the Federal Trade Commission can go to a Federal Circuit court to enforce one of their cease and desist orders. That’s classic executive power. So, the Supreme Court could say, well, it was wrongly decided because they were wrong on the facts or the Supreme Court could say they were wrong on Article 2, which they were also wrong on Article 2.

Or you could say that everything in Humphrey’s Executor goes out the window because it wasn't based on the ordinary understanding of the president’s executive authority. So, there’s an array of ways the Supreme Court could attack this.

Mark Chenoweth: I almost look at this case as a Supreme Court that was concerned about President – then – Franklin Delano Roosevelt exercising too much executive power and maybe reaching a wrong legal conclusion, a wrong constitutional conclusion because they were too worried about restraining the president. And lo and behold, now we have another executive who some people are concerned about restraining his executive authority. And will that in any way, perhaps, dissuade the Supreme Court from reaching the right result in this case?

John Vecchione: And here, I do think that this was result-oriented. I think that Humphrey’s Executor was a result-oriented decision. They’d had Myers, what, less than 10 years earlier?

Mark Chenoweth: Less than 10 years. And that was written by the former president of the United States, Chief Justice Taft.

John Vecchione: Yeah. So, I do think this was part of the struggle that might have gone better between them if they hadn't done stuff like this.

sure, we could criticize the: 1930

Margot Cleveland: They could do exactly that, which is say, well, whether or not Humphrey’s was right, it’s a different creature now. I think that’s dangerous because Humphrey’s has been relied on by numerous lower courts to order different agency heads reinstated. So, anything that the Supreme Court says about Humphrey, other than that you are all dead, is going to cause more mischief in the lower courts. And I also don't think that the Supreme Court will do that. They wouldn’t have taken the case on an expedited basis before judgment to resolve this unless they were going to actually resolve it. Justice Thomas wanted to overrule it five years ago, 10 years ago.

I can't remember the timeframe. In Seila Law he spoke about it. I actually think that they’re not only going to overrule Humphrey’s Executor. I think they’re gonna try to kind of shake the page clean and establish how you look at the administrative law and that you do it from an originalist standpoint because there are so many other doctrines that have been created by the Supreme Court to deal with the fact that they left the original language. And we have different justices – Gorsuch, Alito, Kavanaugh, Thomas, and I would even say Justice Roberts in Seila Law – who seemed to recognize we need to get back on track with what was the understanding of separation of powers and what agencies can and can’t do.

Mark Chenoweth: Well, absolutely, and this case would be a good vehicle for them to do that, for sure. Let’s jump in, if we can, Margot, into sort of some of the arguments that you make in the brief or I should say that we make in the brief.

John Vecchione: You’re on it too.

Mark Chenoweth: Yeah, I’m on it too. But –

John Vecchione: As is Phil Hamburger.

Mark Chenoweth: Yes, yes, our fearless leader, Philip Hamburger. But as I say, this is chiefly Margot’s handiwork. So, one of the things that I think this brief says that we may not see in the party briefs or in other amicus briefs is this discussion of executive power including an absolute, unqualified removal authority in part because of the nature of the executive power. So, how is it that we characterize the executive power that might be different from how people might ordinarily think of it?

Margot Cleveland: Sure. So, most of the litigants have been focusing on executive power as merely executing the law. But that really is not the breadth of executive power. And we see that with the president’s ability to engage in relationship building in foreign-affairs matters. And the brief that I drafted which relies heavily on Philip Hamburger’s research over the years focuses on the idea that at the founding, executive power also meant the power of the nation, so the nation’s strength and their force. And that all will – resides in one individual: the president. That is the only way that you can really reconcile the fact that the president has these foreign-affairs relationships.

Yes, he’s the commander in chief. But he does much more than that. And one of the things that I think is really interesting in this case – and frankly, it shocked me when I started reading through the government’s brief – is that the Federal Trade Commission actually enters into memoranda of understandings or collaborative agreements with foreign countries. So, if you pull – I went to the webpage. You can pull it up, and you can see that the chair of the FTC actually signed an agreement with other countries to cooperate in foreign investigations. That, to me, is alone enough to say the president has to have the ability to fire.

What if these FTC chairs were out doing something completely contrary to what the president is trying to do in foreign relations in El Salvador, for instance. It’s got to be within his control. So, I think our brief does a great job highlighting this concept that Professor Hamburger has been hammering for the last decade or more, that executive power is not merely the power to enforce the law, it’s the power to act as the strength of the nation, of the nation’s will. And we see that when the president goes and works with other countries on how to deal with Federal Trade Commission issues.

Mark Chenoweth: And if you think about some of the other executive powers that the president has – so, for example, he’s the commander in chief – no one would suggest that if the president wants to fire a general, that somehow Congress gets to say, “Oh, no, no, no, only if he’s neglecting his duties can you fire the general.” Or you used the foreign policy example. If there’s an ambassador that the president has sent to a foreign country who is not representing the U.S. interests in the way that the president thinks that the person should be, the president can recall that ambassador and presumably fire the ambassador as well, even though again, that’s Senate-confirmed position, just as the flag officers in the military are.

But somehow when we get to a federal agency that’s litigating on behalf of the United States, there’s no longer – under Humphrey’s there’s no longer the ability for the president, currently at least, to fire someone? That doesn't seem right. That seems inconsistent with these other uses of executive power.

John Vecchione: And something Margot just said triggered something in my mind, which is the FTC under the last administration was going around to foreign FTCs to do things to American companies that the FTC itself was not allowed to do. So, that example is actually very interesting because the FTC was getting foreign countries to try to regulate particularly social media type company –

Mark Chenoweth: Yeah, data privacy and things like that.

John Vecchione: Yes – that it was not allowed to do.

Mark Chenoweth: Because of the First Amendment or other restrictions in U.S. law.

John Vecchione: Right. And as you brought up the generals, I was thinking of the Civil War where Congress did have influence over who the generals are because the president didn't wanna annoy certain constituencies. But it wasn't like they could stop him. They have other things. It’s all about checks and balances. But those two examples, I think, are very good because the FTC did not stick to its knitting and just do things here.

Mark Chenoweth: Well, and President Lincoln famously kept firing generals until he found one who understood the arithmetic. And then Ulysses S. Grant won the war. So, the president historically has had a lot of power in these other executive areas. But for some reason when it’s come to the modern administrative state, they wanna bind the president’s authority over firing or removing officers. But what we say in this brief, Margot, is that in part because of the “take care” clause, that the president’s absolute – has absolute and unqualified removal authority. Can you speak to that point?

Margot Cleveland: Sure. So, even though the executive power is broader than enforcing the law, it absolutely includes enforcing the law. And the “take care” clause requires the president – gives him a duty to take care that the law is enforced in the country. So, that implies that the president has the ability to remove officers who he does not believe are adequately doing it. So, that just helps kind of well-round the idea that it has to be an inherent authority to remove the officer. And that actually kind of ties back to what you were saying about the removal of the ambassadors. The Constitution does say they have to be confirmed. But it doesn't say that Congress has any say in their removal. And early on –

Mark Chenoweth: What’s the significance of that silence?

Margot Cleveland: Absolutely. If they’re gonna say that they have to be confirmed and they are silent on removal, then the natural inference is that they have no say on the removal, which if you think about it logically makes sense. Congress can look at the individual and say, “Yes, we believe they’re qualified.” But once they’re qualified and in the position, the only person who can say that they are actually taking care to execute the law, that they’re doing what my policy objectives are, is the commander in chief, the president, the executive. And without that, there is absolutely no check on these so-called independent agencies.

Mark Chenoweth: Well, I think that’s right. And the other sort of constitutional piece of this is the vesting clause because the – Article 2 gives all of the executive power to the president, vests it in him, and then it takes some of that back with restrictions on the appointments power, but it doesn't take any of it back with restrictions on the removal power. So, as you said, Margot, that would seem to leave it intact.

Margot Cleveland: Absolutely. And I think from a very broad, public perspective, the reason they want to take that back is they’re afraid that the president is going to abuse the authority. And the answer to that is if he’s only executing the law, there’s nothing to worry about. The problem is that these agencies are not only executing the law. So, the answer isn’t to restrain the executive. The answer is to return to first principles, make sure that these agencies are not doing legislation that was vested in Congress, that they’re not doing adjudication that was vested in Article 3 in the courts.

So, to the extent people are concerned that there’s going to be an abuse by the executive, the answer is very simply the agencies should not be doing things beyond what is executing the law, so there should be nothing to worry about.

Mark Chenoweth: It’s such a great point, John, that it’s this vast growth in the administrative state, both the proliferation in the number of agencies but also the power that these agencies have because they have colored outside the lines. They are engaged in legislative power, oftentimes with these sort of legislative rules that they write. They are engaged in judicial power with these sort of tribunals that they have internally. And it’s the fact that they’ve been able to arrogate so much legislative and judicial power to go with their executive power that makes them not just constitutionally problematic but also a threat to individual liberty.

And so, if the president can then harness those agencies, that could be a problem for people, which is why we need the agencies not to have legislative or judicial power.

John Vecchione: Well, I think particularly as far as all the statutes that say the regulations of this agency shall carry the force of law – and can be a criminal statute – and the Congress doesn't do anything with those regulations but all these – there’s so many statutes that say this agency’s regulations are laws, right?

Mark Chenoweth: Right.

John Vecchione: And you can go to jail for them. And that is a vast power that obviously Congress wants to be able to reign in. But this is not the way to do it.

Mark Chenoweth: Can you speak to the Chadha issue, John, because we’ve talked about that in some other contexts.

John Vecchione: Oh, yes, I will. Yes. So, we were and I was thinking about this. And I didn't realize this until recently that the legislative veto was invented by Congress in the ‘20s and ‘30s –

Mark Chenoweth: Is that right?

ough the code, going up until: 1983

h: Well, we took care of that: 1984

John Vecchione: Yes. But Congress can only act through both houses of Congress moving and then getting a presidential signature. Well, of course, that – and because Chadha says that the legislative veto went out of style, although they sometimes – they put it in. But it still means that just like the Congressional Review Act, it’s only useful when the president’s gonna sign it, unless you’ve got two thirds of the Senate and two thirds of the House on an issue. And that happens now and again. But it doesn't happen often. So, that check on the executive went away.

And so, then we have these other things that were put in at the same time but that are much more problematic because they basically knew these agencies had a lot of power and they didn't want one president appointing all the heads of it. So, they wanted it to be a mixed bag so that it wouldn’t go in one direction or the other. But that’s really not how this works.

Mark Chenoweth: Well, the court struck down the restriction while allowing the –

John Vecchione: The growth in power.

Mark Chenoweth: The growth in power, the delegation of legislative power. So, that’s sort of a one-way ratchet when you start doing it that way.

John Vecchione: It is.

Mark Chenoweth: One of the things I really like about this brief, Margot, is that you talk about the different kinds of interference with the executive authority. There’s an interference with the separation of powers. There’s an interference with the conduct of executive power. And there’s an interference with democratic accountability. We’ve talked about the conduct of executive power a little bit. But what about these other two things? What about the interference with the separation of powers and the interference with democratic accountability?

Margot Cleveland: Sure. So, we’ve been touching a little bit on the idea of the interference with the separation of powers where it actually came from Humphrey’s where the court framed the FTC as being quasi-legislative, quasi-judicial. And that ignores the reality that the founders created three separate branches. Each one had its own lane to stay in. And by merging them into the agencies, they basically created a fourth, headless branch of government – which of even greater concern to me is that that headless branch of government is beholden to no one. And that part is – I think it’s kind of in a very ironic that everyone speaks of well, we need independent agencies. We don't want them beholden to Trump.

The answer is they need to be beholden to Trump because that is the only person who has been elected by the country as a whole. None of the agency heads have. No members of Congress have been elected by the country as a whole. And if the agency is not beholden or responsible to someone, then they aren’t responsible to the democratic process, the people who voted for the president. And that is counter to our entire constitutional system –

Mark Chenoweth: Yeah, it absolutely –

nd: – which is [inaudible] [: 00:22:02

Mark Chenoweth: It absolutely undermines self-governance. And, John, I think Philip Hamburger would say, “Well, that was part of the design.” When Woodrow Wilson was creating the Federal Trade Commission, he wanted to give the power to the experts and take it away from the little people.

John Vecchione: And you don't have to go back that far. We differ slightly on whether Congress can do this. But the CFPB, not only did it have a single head, but it had no responsibility to anyone because they’re automatically funded. So, Congress can't even do what they can do to a lot of these agencies. They can go to the SEC; they can cut off its money. “We don't like how you’re doing this. We’re not gonna give you this money.” They can’t do that with some of these independent agencies. That Wilsonian impulse has been made to isolate them more and more and more as the years went on even from congressional control by budget.

So, yeah, there’s a lot of problems there. And particularly, if these terms last longer than a presidency, that’s an awful lot of power to give to unelected people.

Mark Chenoweth: There’s another case that’s coming up later in the term, Margot. It’s the Cook case where President Trump fired one of the – Lisa Cook, one of the members of the board of governors of the Federal Reserve. And John mentioning the CFPB makes me think, well, here too, we have another regulatory agency because after all, the Fed passes regulations too where folks are trying to say that there is a – no ability for the president to fire those people. The Cook case is a little bit different –

John Vecchione: No, they say they can for cause.

Mark Chenoweth: For cause. And I was gonna say: so, there’s a slight difference with the Cook case. One is that that firing proports to be for cause because of something that she did. But the question I was gonna pose to you, Margot, is does the result in this case, does the result in the Slaughter case dictate what’s going to happen in the Cook case or could the court come out differently in those two cases?

Margot Cleveland: Well, it depends on if in Humphrey’s the court gets to the remedy issue. So, they actually had two issues that were briefed. One: does the president have the authority to remove, an unqualified authority to remove? And related to that, do we overrule Humphrey’s? I think everyone is pretty much of the consensus that the court is gonna say yes, he had that authority to remove. Whether and how they do that’s another question. The second question is do the lower courts have the authority to reinstate? And that deals with whether at common law that was a remedy, et cetera.

If the court says he can remove, they’re not going to get to the second question. And anything they say would be dicta. I doubt that the court’s gonna get to the second question. That second question could be important in the Cook case.

Mark Chenoweth: Because she was reinstated.

Margot Cleveland: Right, because she was reinstated.

Mark Chenoweth: And Slaughter was not.

Margot Cleveland: Exactly. Although they could send it back and say – if they come contrary to what I think they are doing, they could come back and say you have to reinstate.

Mark Chenoweth: She’s asking for that. Slaughter’s asking for reinstatement.

Margot Cleveland: Exactly, exactly. So, it could end up having that same issue. But I don't think they’re going to get to that issue. In Cook, I actually think the court’s going to say that there’s gotta be some deference to the president on whether or not there’s cause. I think the district court’s idea it has to be something that existed at the time doesn't make sense from a logical standpoint. And I doubt that the court’s gonna second guess it. But if they do, then we’ll get to the second question about reinstatement.

Mark Chenoweth: Well, that sounds right to me that – but go ahead, John.

John Vecchione: Well, I just said they have – they are signaling, though, that the bank might be different. So, there’s gonna be –

Mark Chenoweth: Well, Kavanaugh is.

John Vecchione: Kavanaugh is. And I do think that –

Mark Chenoweth: Not just him, but –

John Vecchione: Yeah, I know. But I do think that they will approach it a little differently. But the Fed is another agency that does not – you don't get appropriations. They live off the vig between what they – they give money to the banks and what the banks charge. It’s the interest difference. So, that one’s gonna be a knock-down, drag-out, though.

Mark Chenoweth: Off topic slightly, but I was in Budapest this summer and they have these big signs everywhere that say “VIG, VIG, VIG.” I think it’s the Vienna Insurance Group or something like that. But I’m just like, I’m not sure I wanna do business with something that’s called the VIG. That just doesn't – do they know what this is – the English references are a little bit different there. But in any event, so it’s almost Halloween, Margot. You’re – talked about the headless fourth branch of government. It makes me think of The Legend of Sleepy Hollow and the headless horseman. So, maybe this will be The Legend of Slaughter Hollow. I don’t know. We’ll see what happens here.

But wanna give you a chance for any last words. Anything else about the opinion that – or not the opinion, rather – anything else about the brief that we didn't talk about that you wanted to be sure to cover today?

Margot Cleveland: The only other point I would mention when you brought up President Wilson is I learned in writing this brief and reading Philip’s book and some of his articles that the whole idea of getting these agencies in place and giving them this authority, it was because they didn't like the democratic will of the people. And it really was a racist and a classist history that they were afraid, in some cases, of us Irish folks coming over –

Mark Chenoweth: Yeah, even Irish and Germans. Wilson was really racist. He hated everybody except for the English.

Margot Cleveland: Right, exactly. And to me, when you look at that history, it’s pretty outrageous that now the argument is being made that we need these independent agencies to protect us from the duly elected president when really the independent agencies were designed to protect the elite from us unwashed masses. It’s pretty appalling.

Mark Chenoweth: It is appalling and –

John Vecchione: Well, the Senate was too. The one pushback I have on that is there are certain things in the Constitution that do that already. And I don't wanna undermine those for other reasons. But anyway, that is – but you’re right. Here it was to insulate them from the democratic process because they were gonna do things that people didn't like. And the bank – the Fed Reserve, it’s because the president wants inflationary policy. That’s what he wants. He wants an inflationary policy, easy money. And everyone’s worried that that’s gonna cause a problem. But isn’t that – and I’ll put on my Rand Paul hat. Is that something that people are allowed to vote on? I don’t know.

Mark Chenoweth: Well, we’ll find out when we talk more about this with the Cook case. But I think we’ll leave it for there now in talking about the Trump v. Slaughter case at the U.S. Supreme Court. The oral argument is gonna be that first week in December. I can’t remember the date, maybe the 8th or 9th, something like that. But in any event, look for that. And I think that, Margot, you’re right that the court needs to overrule Humphrey’s in its entirety because otherwise the lower courts are gonna keep relying on it to make erroneous decisions. So, I hope that your –

John Vecchione: Congress will too.

Mark Chenoweth: But I hope that your prediction is prophetic there. And we really appreciate your being with us on Unwritten Law today.

Margot Cleveland: Thanks so much.

Mark Chenoweth: You’ve been listening to Unwritten Law.

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Duration: 30 minutes