A little-known ruling could unleash partisan chaos across federal agencies—and leave nonprofits reeling from the fallout.
The most important federal change impacting nonprofits this week did not actually involve a nonprofit. With an unsigned emergency order, the Supreme Court profoundly increased the power of the president, at the expense of Congress and the American people.
The case is Trump v. Wilcox. It involves the ability of Congress to create administrative agencies within the federal government that are more insulated from partisan influences. These organizations, called "independent" agencies, have for many years carried out functions with, as Justice Kagan put it in her dissent, "a measure of independence from presidential control." For such agencies, a sitting president names new members, but cannot remove a sitting member except for "cause." The Court had ruled such agencies constitutional some 90 years ago. But this Thursday, the Supreme Court ruled in Wilcox that the president "may remove without cause executive officers who exercise [executive] power on [the president's] behalf, subject to narrow exceptions." It further ruled that the Trump Administration would likely be able to show that the agencies at issue in Wilcox, the National Labor Relations Board and Merit Systems Protection Board, were agencies as to which the president had unfettered power to terminate without cause.
As a practical matter, this means that a new president can essentially fire everyone he doesn't like at an "independent" agency and name new people who will advance his policies in a partisan manner. This means that many areas of federal government as to which there was previous statutorily-enforced stability, like the Federal Trade Commission (governing fair economic competition), the Federal Communications Commission (governing the airways), the Federal Reserve Board (governing monetary policy), and others are likely going to swing in a much greater partisan manner with changes in presidents. That last one -- the Federal Reserve -- was not directly involved in Wilcox, but the Court nevertheless went out of its way to note that it may be treated differently than the others because of historical precedents. Why the worry? Because President Trump has been threatening to fire the chairman of the Federal Reserve Board so he can have greater power over US monetary policy.
For nonprofits, this means that many expert agencies may be subject to substantial partisan waves of change. That may benefit nonprofits when progressives assume the presidency, but it creates a much greater sense of uncertainty. It's one thing for a major corporation with billions in the bank to deal with partisan shifts. For nonprofits, which tend to have comparatively little in the way of reserves, these waves of change will create a much less certain path toward stability and sustainability.
There is a more insidious problem with the Wilcox decision, however, which Justice Kagan's dissent spends most of its time on. The Supreme Court previously had a policy of refusing to overrule precedent using its emergency docket, where parties can get relief without full briefing and argument, subject to later full review. Under existing law, the Wilcox case was easy, because there was a clear case (called Humphrey's Executor v. United States) that had stated that independent agencies were lawful. In Wilcox, without even citing Humphrey's Executor, the Court majority reached a ruling completely inconsistent with that decision. Justice Kagan's dissent notes that the majority has allowed President Trump, who thinks that Humphrey's is no longer valid, "to overrule Humphrey's by fiat, again pending our eventual review." "Between Humphrey's and now," she wrote, "14 different Presidents have lived with Congress's restrictions on firing members of independent agencies. No doubt many would have preferred it otherwise. But can it really be said, after all this time, that the President has a crying need to discharge independent agency members right away -- before this Court (surely next Term) decides the fate of Humphrey's on the merits?" The steam coming from Justice Kagan's ears can be felt from here. She is rightly worried about the amount of power this Supreme Court intends to vest in this President.