US court could back Trump’s firing of Democratic labor board members

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By Daniel Wiessner

(Reuters) -Judges on a U.S. appeals court panel on Friday expressed agreement with claims Republican President Donald Trump has made that he has broad powers to fire members of independent federal agencies, in a challenge to his removal of two Democrats from federal labor boards.

Circuit Judges Gregory Katsas and Justin Walker of the U.S. Court of Appeals for the District of Columbia Circuit, who were both appointed by Trump during his first term, said there were few exceptions to the president’s broad powers under the U.S. Constitution to control the executive branch.

The three-judge panel heard oral arguments in the Trump administration’s appeal of separate rulings by two judges that reinstated Cathy Harris to the Merit Systems Protection Board and Gwynne Wilcox to the National Labor Relations Board.

The appeals court’s decision could set important precedent on a president’s power to fire officials at a range of multi-member agencies such as the Federal Reserve and may tee up review by the U.S. Supreme Court, which temporarily paused the lower court rulings last month.

Trump’s removal of Wilcox and Harris in January was unprecedented and violated federal laws allowing members of those agencies to be fired only for cause such as inefficiency, neglect of duty or malfeasance. The Trump administration has argued that those laws are invalid because the U.S. Constitution vests the president with expansive powers over the executive branch.

Walker said that a 1935 U.S. Supreme Court ruling upholding removal protections for appointees to multi-member agencies had been narrowed by more recent decisions allowing officials to be removed by the president when they wield significant executive powers.

“Sometimes the Court, without overruling its precedent, will limit its precedent,” Walker said to Wilcox’s lawyer, Deepak Gupta.

Gupta replied that the Supreme Court in those recent cases declined to overturn the 90-year-old ruling known as Humphrey’s Executor, which involved the Federal Trade Commission. And the NLRB is more similar to the trade commission than the agencies involved in those other cases, he said.

The NLRB hears private-sector labor disputes and the merit board decides appeals by federal employees who have been disciplined or fired. Because the merit board is often the only legal recourse for federal workers, it could have a key role in reviewing Trump’s efforts to purge the federal workforce.

Along with Harris and Wilcox, Trump has removed many other officials who would typically keep their jobs in a new administration, including members of other boards and inspectors general who police individual agencies for waste and corruption.

ENERGETIC EXECUTIVE

Harry Graver of the U.S. Department of Justice, who argued for the Trump administration, told the panel that the president must have near absolute power to remove members of executive agencies in order to be accountable to the public.

“It is a unitary, energetic executive that answers to the people,” Graver said. “The only way that works is if the executive agencies that wield his power answer to him.”

Katsas said the NLRB and the merit board seemed to exercise significant executive powers, meaning they should be accountable to Trump. But he expressed some reservations about the scope of Graver’s arguments, citing the existing Supreme Court precedent.

Without Humphrey’s Executor, “this is an easy case and you lose,” Katsas said to Nathaniel Zelinsky, who represents Harris. “The reason why it’s a hard case is we have to give some reasonable effect to Humphrey’s.”

The removal of Harris and Wilcox has paralyzed both labor boards, which already had vacant seats, by depriving them of enough members to decide individual cases. Hundreds of cases are pending at the NLRB and more than 9,300 appeals have been filed with the merit board since Trump took office.

The issue is being closely watched by legal experts, some of whom say that striking down removal protections would give Trump more direct control over regulation of various areas including trade, energy, antitrust enforcement, finance and consumer product safety.

A ruling in Trump’s favor could also embolden him to fire Federal Reserve Chair Jerome Powell if they clash on interest rates and other monetary policy.

Circuit Judge Florence Pan, an appointee of Democratic President Joe Biden, told Graver she was concerned that a ruling against Harris and Wilcox could apply to virtually any of the roughly 30 federal agencies designed to be independent from the White House.

She singled out the potential impact on the Fed and grew frustrated when Graver initially declined to take a position.

“The Fed regulates a very large part of our economy, and so it’s important to understand what you’re asking for,” Pan said.

Graver said the Fed has a unique history and cannot be compared to agencies like the labor boards.

“Nothing here dictates what happens to the Fed, full stop,” he said.

(Reporting by Daniel Wiessner in Albany, New York; Editing by Alexia Garamfalvi and Mark Porter)