Tuesday, May 7, 2019
The Ninth Circuit ruled in CFPB v. Seila Law LLC that the Consumer Financial Protection Bureau--with its single head, removable only for cause--did not violate the separation of powers. The case aligns with the en banc D.C. Circuit's ruling in PHH Corporation v. CFPB.
The CFPB has been under constant constitutional attack as a legislative encroachment upon executive authority. (If the president can't fire the head of the CFPB at will, the argument goes, then the head of the CFPB encroaches on the president's (absolute, exclusive, unitary) power to execute the law.) The challenges also take aim at Morrison v. Olson. The Court in that case upheld the independent counsel law against a similar separation-of-power challenge. The case has long been a thorn in the side of unitary executive theorists, with many now arguing that Justice Scalia, the lone dissenter in the case, got it right. Despite the attacks, Morrison v. Olson is still good law.
The court in Seila Law said that the CFPB question is resolved by Humphrey's Executor v. United States and Morrison v. Olson. The court explained that Humphrey's Executor validated a "for cause" removal provision for members of the Federal Trade Commission--"an agency similar in character to the CFPB"--because "the agency exercised mostly quasi-legislative and quasi-judicial power, rather than executive powers."
The Court reasoned that it was permissible for Congress to decide, 'in creating quasi-legislative or quasi-judicial agencies, to require them to act in discharge of their duties independently of executive control.' The for-cause removal restriction at issue there, the Court concluded, was a permissible means of ensuring that the FTC's Commissioners would 'maintain an attitude of independence' from the President's control.
So too with the CFPB:
Like the FTC, the CFPB exercises quasi-legislative and quasi-judicial powers, and Congress could therefore seek to ensure that the agency discharges those responsibilities independently of the President's will. In addition, as the PHH Corp. majority noted, the CFPB acts in part as a financial regulator, a role that has historically been viewed as calling for a measure of independence from Executive Branch control.
The court rejected the argument that the CFPB has more executive power than the FTC in Humphrey's Executor and therefore is a greater intrusion into the president's executive authority. The court said that the Supreme Court has since validated other offices with for-cause removal that have similar executive power (in Morrison and Free Enterprise Fund v. PCAOB).
The court also rejected the argument that the CFPB's single head distinguishes it from the multi-member commission at issue in Humphrey's Executor.
[T]he Supreme Court's decision in Humphrey's Executor did not appear to turn on the fact that the FTC was headed by five Commissioners rather than a single individual. . . . And the Court's subsequent decision in Morrison seems to preclude drawing a constitutional distinction between multi-member and single-individual leadership structures, since the Court in that case upheld a for-cause removal restriction for a prosecutorial entity headed by a single independent counsel.