In a new Executive Order, President Trump asserted presidential oversight over all federal agencies, including independent agencies.
The EO states that “all executive power” is vested in the President under Article II of the US Constitution and directs agencies to submit draft regulations for White House review, with no exceptions for independent agencies other than the Federal Reserve’s monetary policy functions. The EO mandates that agencies consult with the White House on strategic plans and performance standards.
President Trump asserted that “so-called independent agencies” such as the FTC and SEC exercise “enormous power over the American people without Presidential oversight.” He further said that these agencies: (i) “issue rules and regulations that cost billions of dollars and implicate some of the most controversial policy matters, and they do so without the review of the democratically elected President” and (ii) “spend American tax dollars and set priorities without consulting the President, while setting their own performance standards.”
The EO requires the Office of Management and Budget to adjust independent agencies’ apportionments to ensure tax dollars are spent “wisely.”
Commentary by Steven Lofchie
It is hard to assess the practical significance of this EO; i.e., how much it could change behavior at the regulators. Historically (meaning before the Biden-Gensler era at the SEC and the Obama-Gensler era at the CFTC), the SEC and the CFTC acted in a fairly non-partisan manner, meaning that it was somewhat unusual to have rules or enforcement actions approved by the majority party of the Commissioners over the dissents of the minority party. (There were exceptions to this, such as the SEC’s approval of Reg NMS, over the dissent of the two Republican Commissioners, including and then Commissioner, expected soon-to-be Chair, Paul Atkins, but these were exceptions, not the ordinary course.)
During Mr. Gensler’s tenure at the SEC and the CFTC, unanimity was the exception, and party-line votes the ordinary course. If there is now a shift in the SEC’s priorities (to be consistent with the views of the Republican rather than the Democratic party), that shift is entirely consistent, from a political standpoint, with how the SEC and other “independent” agencies have acted for the past four years.
There is one power that the minority party will continue to have—the power to issue dissents. SEC Commissioners Peirce and Uyeda, and CFTC Commissioner (later Chair) Giancarlo wrote dissents that were meaningful and helped to keep the majority party honest. To that end, independent agencies might consider expanding the staffs that are delegated to each of the non-Chair Commissioners, so that the minority Commissioners have more resources at their disposal to dissent. An enhanced ability to issue public dissents might do more to strengthen the independence of the agency than does the continued pretense that the majority Commissioners operate “independently” of the President.