Supreme Court Sidesteps Removal Fight, Delays Ruling on Executive Power

The U.S. Supreme Court on Wednesday refused to remove Shira Perlmutter, the director of the U.S. Copyright Office, despite an appeal from President Donald Trump's administration to oust her. The justices said they will not act on the request until after reviewing two other significant legal battles involving presidential removal powers. This decision effectively keeps Perlmutter in her position for now according to Bloomberg.

The case centers on a broader legal question about the extent of presidential authority to remove officials from independent agencies. The court will hear arguments in a related case involving Federal Reserve Governor Lisa Cook in January 2026. The outcome of these cases could redefine the separation of powers between the executive and legislative branches.

Perlmutter, who is also the register of copyrights under the Library of Congress, has argued that her position is part of the legislative branch rather than the executive branch. This argument adds a unique twist to the legal dispute, which could have far-reaching implications for how presidents interact with independent agencies.

Why the Standoff Happened

The legal challenge stems from a decades-old precedent known as Humphrey's Executor v. United States, in which the Supreme Court upheld the idea that Congress can impose "for cause" restrictions on the president's ability to remove certain agency heads. These protections apply to independent agencies such as the Federal Reserve, the Securities and Exchange Commission, and the Federal Trade Commission according to legal analysis.

President Trump has pushed to assert broader executive authority, challenging the longstanding legal framework that insulates these officials from removal without cause. The administration argues that these protections violate the unitary executive theory, which holds that the president should have sole control over the executive branch. The Supreme Court has already hinted at a potential re-evaluation of Humphrey's Executor, with recent rulings showing a shift in favor of the president's arguments.

The Library of Congress case is particularly notable because it involves an agency that includes the word "Congress" in its title, which Perlmutter has used to argue that it is inherently part of the legislative branch. This distinction could offer a legal shield against removal and set a precedent for other similar cases.

What This Means for Independent Agencies

The Supreme Court's handling of these cases will determine whether the president can remove independent agency heads without congressional limitations. If the court rules in favor of the administration, it could lead to significant shifts in how independent agencies operate. These agencies currently function with a degree of autonomy, allowing them to make policy decisions without direct presidential interference.

A reversal of the Humphrey's Executor precedent could mean that future presidents may have greater control over the direction and enforcement of regulations. For businesses regulated by independent agencies such as the Consumer Financial Protection Bureau or the Equal Employment Opportunity Commission, this could lead to more frequent policy changes and regulatory volatility tied to political cycles.

Investors and analysts are closely watching these developments, as they could impact how agencies enforce rules and interpret regulations. Companies regulated by these entities may find themselves navigating a more unpredictable environment if the court decides that statutory "for cause" removal protections are unconstitutional.

Risks to the Outlook

The outcome of these cases carries profound constitutional implications, with the potential to reshape the balance of power between the president and Congress. If the Supreme Court sides with the administration, it could lead to a broader presidential control over regulatory bodies, which may weaken the checks and balances intended by the Founding Fathers.

Critics of the administration's approach argue that removing the legal safeguards on independent agency heads undermines democratic accountability and could allow political agendas to drive regulatory decisions. Supporters, however, believe it enhances accountability by linking agency policies more directly to the elected executive branch according to legal experts.

With the Supreme Court's decision in the Perlmutter and Cook cases scheduled in early 2026, the legal landscape for independent agencies remains in flux. The implications of these rulings will extend far beyond the Library of Congress and the Federal Reserve, affecting how the U.S. government regulates key sectors of the economy.