Overview
On June 29, the Supreme Court issued its highly anticipated decision in Trump v. Slaughter, which overruled its 1935 precedent (Humphrey's Executor) that stood behind many independent agencies. This ruling came on the heels of FCC v. AT&T and Sripetch v. SEC, two other cases involving major administrative law challenges. These three proceedings were highlighted in our prior alert. The Court's decisions showcase its continued willingness to significantly modify the administrative law landscape, but questions remain about exactly what they mean for agencies like the Federal Energy Regulatory Commission (FERC) and others.
Trump v. Slaughter: 6-3 Majority Invalidates FTC's For-Cause Removal Protections
In a 6-3 decision authored by Chief Justice John Roberts, the Court held that statutory limits on the president's authority to remove members of the Federal Trade Commission (FTC) violate the Constitution's separation of powers. Drawing primarily on the Constitution's text and structure, as well as Founding-era history, the Court concluded that the Constitution vests the "executive Power" exclusively in the president, who must be able to exercise that power at will to remove principal officers like FTC commissioners. In so doing, the Court expressly overruled Humphrey's Executor, the 1935 decision that had long permitted for-cause removal protections for multimember independent agencies. Because the FTC has the authority to promulgate rules, conduct in-house adjudications, and file civil suits in federal court, the Court concluded that the agency "unquestionably exercises executive power," making its commissioners presidential subordinates rather than quasi-judicial or quasi-legislative actors.
In dissent, Justice Sonia Sotomayor, joined by Justices Elena Kagan and Ketanji Brown Jackson, argued that the Court's decision abandoned nearly a century of settled precedent and threatens the structural independence of federal agencies. The dissent reasoned that overturning Humphrey's Executor risks politicizing regulatory bodies and destabilizing core governance structures that depend on expertise, continuity, and insulation from political pressure.
Members of FERC, like their FTC counterparts, have historically enjoyed statutory for-cause removal protections to provide stability, bipartisan balance, and insulation from political pressures. Although the Court noted that it "do[es] not determine the fate of officials not before" it, the Court's reasoning suggests that FERC likewise exercises purely executive power. Like the FTC, FERC "has the power to promulgate substantive rules that carry the force of law," "enforces [its] statutes and rules through in-house adjudications," and "files civil suits on behalf of the United States in federal court."
The Court, however, "left open the possibility that some functions traditionally handled outside the Executive Branch"—for example, the Federal Reserve—"may not be encompassed" by its ruling. Several former FERC commissioners filed an amicus brief to the Court arguing that ratemaking agencies like FERC should fall within a comparable historical exception.
After Slaughter, any statutory removal protections for agency members are at risk and will likely be the subject of future litigation. One potential issue in any such litigation is severability. As the Court noted in a footnote, removal provisions are typically severable, meaning that invalidating them does not invalidate the entire law. But the Court suggested that some such provisions may not be severable, depending on the agency, and how this might apply to other agencies (like FERC) remains unresolved. If the removal provisions are not severable, the entire law establishing the agency would be unconstitutional.
But even putting severability aside, should a court extend Slaughter to invalidate the for-cause removal protection enjoyed by FERC commissioners, the president would be able to reshape the composition of the agency far more rapidly, which could increase policy volatility and inject greater uncertainty into an industry that has historically relied on continuity and predictability.
FCC v. AT&T: Court Affirms Hybrid Enforcement for the FCC
Earlier in the month, the Court issued an 8-1 decision authored by Chief Justice Roberts holding that the Federal Communications Commission's (FCC) in-house forfeiture process does not violate the Seventh Amendment right to a jury trial. While the case did not further limit agency power, it was narrowly decided and may raise more questions than answers in future application.
In examining the FCC's process, the Court concluded that an FCC forfeiture order carries no independent binding authority to compel payment or seize assets. If a regulated entity refuses to pay, the Department of Justice must initiate a de novo collection action in federal court, where a jury has the final word. The Court explicitly contrasted this with the SEC regime struck down in SEC v. Jarkesy, noting that the FCC does not have statutory authority to independently execute final monetary penalties. The Court also noted that the FCC was prohibited by statute from holding the existence of an unpaid penalty "against a regulated party"—supporting its view that the FCC's orders were "simply the [FCC's] own determination" without any other legal effect. Said differently, the Court's ruling was premised on the FCC's orders not meaning anything.
Justice Clarence Thomas, the lone dissenter, argued that the Court's assumptions as to the voluntariness of complying with the FCC's orders were flawed. Instead, Justice Thomas argued, the record showed the FCC operated under the assumption that its orders were binding without Article III involvement and that regulated entities treated them as such.
The Court's holding in FCC v. AT&T provides incomplete guidance to entities subject to enforcement action in the energy context.
On one hand, FCC v. AT&T reinforces that the right to de novo review in district court is a strong indication that an agency's enforcement practices satisfy the Seventh Amendment. But the Court's discussion in FCC v. AT&T of the allegedly narrow effects of non-binding penalty determination suggest that there remain avenues to challenge enforcement practices even when de novo review is available. Enforcement practices before the FERC illustrate why.
Under the Federal Power Act (FPA) FERC initially assesses a proposed penalty through its ordinary procedures. If a party refuses to voluntarily comply with that penalty order, FERC must seek enforcement in a federal district court, where its findings are subject to de novo review. This would arguably satisfy Jarkesy and FCC v. AT&T's elaboration thereof.
However, FERC's enabling statutes contain no language, like that found in the FCC context, that precludes FERC from considering its own findings as to the liability of an entity prior to a subsequent de novo judicial determination. And, even non-binding FERC orders can influence the actions of non-agency actors who have substantial influence on the regulated community. For instance, although FERC (like the FCC) has indicated that its in-house orders are non-binding prior to Article III review, in an ongoing case PJM has already used the mere issuance of a FERC penalty order to demand tens of millions in new collateral and sweep existing market revenues.1
FERC has staked out the position that "collateral, downstream effects of [] penalty proceeding[s] that are attributable not to the Commission's actions but rather to the voluntary choices" of others "do not implicate Jarkesy and the Seventh Amendment."2 But FERC cannot claim to be entirely agnostic to its own penalty findings: indeed, FERC's penalty guidelines increase penalties against actors based on "a prior Commission adjudication" or the "adjudication of similar misconduct by any other enforcement agency." So how FCC v. AT&T would be applied is an open question.
Sripetch v. SEC: Unanimous Win for SEC's Statutory Disgorgement Authority
Also earlier in the month, in a unanimous decision, the Court ruled that under the Securities Exchange Act the SEC does not need to establish that investors suffered actual pecuniary harm to secure equitable disgorgement. This case followed an earlier one (Liu) that held equitable disgorgement under that statute was confined by "equitable" principles. The ruling preserves the SEC's broad authority to strip wrongdoers of ill-gotten profits in fraud and market-manipulation cases. Notably, the Court rejected the petitioner's argument that a lack of an immediate distribution plan or an inability to identify specific investor losses up front bars the SEC from seeking disgorgement in the first place.
This should be seen as a boost for agencies (like FERC) that seek to use equitable powers to order disgorgement as part of their enforcement regimes. But questions remain. The SEC's disgorgement authority is much more clearly defined in statute and in precedent, whereas many agencies (like FERC) rely on broad grants of authority to seek disgorgement.
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Exactly how these decisions will be interpreted and applied in other contexts remains to be seen. But there is no doubt the Supreme Court will continue to give a searching review of agency authority and action, and what was once settled law may continue to be modified.
1 Status Report, American Efficient LLC v. FERC, No. 1:25-cv-68 (M.D.N.C. May 26, 2026).
2 Affirmed Energy LLC, 195 FERC ¶ 61,199, at P 18 (2026)
