Court says power wielded by watchdog agency's head warranted firing by Trump

By Nate Raymond

March 11 (Reuters) - A federal appeals court said it allowed U.S. President Donald Trump to fire the head of a watchdog agency after concluding he wielded significant executive power that made him removable at-will, including by working to halt mass firings of government workers by the Republican's administration.

A three-judge panel of the U.S. Court of Appeals for the District of Columbia Circuit released an opinion late on Monday, to explain why it cleared the way for Hampton Dellinger to be removed as the head of the U.S. Office of Special Counsel.

The case marked an early test of Trump's ability to rein in independent agencies and replace their leaders as part of his efforts to reshape the federal government.

In a brief order on Wednesday, the D.C. Circuit had paused a decision by a lower-court judge who found the president had unlawfully fired Dellinger, an appointee of Trump's Democratic predecessor Joe Biden.

Dellinger, the next day, said he was ending his legal fight because he viewed his odds of success at the U.S. Supreme Court as long. The justices had declined to intervene earlier in the litigation to allow for his removal.

Yet the U.S. Justice Department after Dellinger's announcement urged the panel to still issue a formal opinion detailing its legal reasoning, as litigation over Trump's efforts to remove officials from other independent government agencies was ongoing.

Monday's unsigned opinion came from a panel that included U.S. Circuit Judges Karen Henderson, an appointee of Republican President George H.W. Bush; Patricia Millett, an appointee of Democratic President Barack Obama; and Justin Walker, who Trump appointed in his first term.

They pointed to the U.S. Supreme Court's 2020 and 2021 rulings in cases concerning the structure of the Consumer Financial Protection Bureau and the Federal Housing Finance Agency, both of which are headed by a single top officer.

In those cases, the Supreme Court concluded that the U.S. Constitution prohibited even modest restrictions on a president's power to remove the head of an agency.

The panel said the Supreme Court had been particularly concerned about the "significant executive power" the CFPB's director wielded when it held in 2020's Seila Law v. CFPB that its director could be removed at will.

While Dellinger argued his authority was narrower than the CFPB director's, the panel said the Trump administration "has sufficiently demonstrated that Dellinger exercises at least enough authority to contradict the President’s directives."

The panel pointed to an order Dellinger helped secure from the Merit System Protection Board hours before he was removed on Wednesday directing the U.S. Department of Agriculture to temporarily reinstate thousands of workers who lost their jobs as part of Trump's mass layoffs of the federal workforce.

"To be able to obtain the reinstatement of thousands of employees in a single agency, even if only temporarily, with such a vague standard of review seems to suggest the Special Counsel’s powers are not as limited as he claims," the panel said.

Trump also fired the board's Democratic chair, Cathy Harris. A judge ordered her reinstated, but the administration has appealed that decision as well.

The case is Dellinger v. Bessent, U.S. Court of Appeals for the District of Columbia Circuit, No. 25-5052.

For Dellinger: Joshua Matz of Hecker Fink

For the United States: Laura Myron of the U.S. Department of Justice

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