The US Supreme Court should exempt ratemaking commissions like the Federal Energy Regulatory Commission if the high court decides to overturn a 90-year-old precedent insulating members of independent agencies from at-will removal by the president, a bipartisan coalition of former FERC members said in a Nov. 13 friend-of-the-court brief.
In the amicus brief, 11 former FERC members, who were appointed by Presidents Bill Clinton, George W. Bush, Barack Obama, Donald Trump and Joe Biden, said that eliminating FERC's independence could lead to more drastic policy shifts and a less stable investment environment at a time of rising demand.
"Permitting the president to seize control over ratemaking could adversely affect how regulated companies perceive FERC and therefore increase the risk of financing pipelines and power lines," the brief said. "Ultimately, American consumers would pay higher energy prices."
The brief was filed in support of Rebecca Kelly Slaughter, a member of the Federal Trade Commission who was fired by President Donald Trump without a statutorily required cause (Trump v. Slaughter, 25A264). The Supreme Court previously upheld the constitutionality of removal protections for independent agency heads in the landmark 1935 decision Humphrey's Executor v. United States, which also involved an FTC commissioner.
The Supreme Court in May signaled that it was open to overturning that precedent, allowing Trump to temporarily fire two members of independent labor boards with removal protections similar to those at the FTC. In an unsigned opinion, the high court's conservative majority said the labor board members "exercise considerable executive power," which likely made their removal protections unconstitutional. (Donald J. Trump, et al., v. Gwynne Wilcox, et al., 24A966)
"Eliminating for-cause removal protections would risk transforming FERC into a partisan political body whose priorities flip every election cycle," the brief said. "Such volatility, which has infected certain federal agencies under direct executive control, would conflict with FERC's historic focus on the long-term interests of American consumers and regulated companies and would increase the entire economy's exposure to political risks."
Ratemaking exemption
In the May opinion, the high court appeared to carve out an exemption for the Federal Reserve, referring to the central bank — tasked with setting interest rates and conducting monetary policy — as a "uniquely structured, quasi-private entity that follows in the distinct historical tradition of the First and Second Banks of the United States."
While it appears unlikely that that standard would also apply to FERC, some observers have said that the very existence of an exception could signal the high court's willingness to evaluate the removal protections issue on a case-by-case basis.
The former FERC members — six Democrats, four Republicans and an Independent — said that while they supported Slaughter's argument that removal protections were constitutional, they believed that if the Supreme Court were to overturn Humphrey's, the high court should do so narrowly in a way that exempts ratemaking commissions like FERC. FERC members enjoy nearly identical removal protections as the FTC.
"Ratemaking commissions' for-cause removal protections raise unique economic, legal, and practical issues that are beyond the scope of this proceeding," the brief said. "Regardless of how the Court resolves the first question presented in this case, amici respectfully request that the Court specify that its decision does not reach the distinct history and tradition of ratemaking commissions."
The brief noted that Congress' "nearly 140-year history" of ratemaking did not support direct presidential involvement.
"Overturning Humphrey's Executor would bulldoze the structural supports that Congress built into ratemaking commissions to protect its price-setting power from abuse," the brief said. "By shielding agency action from political control, for-cause removal protections allow ratemaking commissions to sustain stable policies for the long-term benefit of regulated companies and American consumers."
Elizabeth Moler, Pat Wood, Joseph Kelliher, Jon Wellinghoff, Cheryl LaFleur, Neil Chatterjee and Rich Glick — all of whom were FERC chairs — joined former commissioners Donald Santa, Linda Breathitt, Nora Mead Brownwell and John Norris in signing the brief. Ari Peskoe, director of the Electricity Law Initiative at Harvard Law School, is the counselor of record.
The Supreme Court will hear oral arguments in Slaughter's case on Dec. 8.
