Tuesday, October 22, 2019

Court to Review CFPB

The Supreme Court on Friday agreed to hear a separation-of-powers challenge to the structure of the Consumer Financial Protection Bureau. The Court granted cert. to determine whether the for-cause removal provision for the head of the CFPB violates the separation of powers. It then ordered the parties to brief whether the for-cause removal provision was severable from the Dodd-Frank Act.

We previously posted on the case, Seila Law LLC v. CFPB, here. Notably, the CFPB itself now joins Seila Law in arguing that the structure is unconstitutional.

The case tests the for-cause removal provision for the head of the CFPB--long a target of opponents of independent agencies within the executive branch. Opponents argue that the for-cause removal provision impermissibly encroaches on the President's authority to execute the law, because it prohibits the President from firing the head of the agency at will.

The Court has long upheld similar protections that create agency independence. But the government argues that those rulings involved multi-member bodies (as in Humphrey's Executor v. U.S.) or "inferior offices" that lack the independent power of the CFPB (as in Morrison v. Olson), so that they don't unduly encroach on the President's authority.

The attack on the structure of the CFPB is just the latest in a long line of challenges that draw on a strong version of the "unitary executive theory," set out most prominently in Justice Scalia's lone dissent in Morrison v. Olson. Justice Scalia's position has gained traction since Morrison, and this case may now make it law.

In a different case dealing with the same question, then-Judge Kavanaugh wrote for a panel of the D.C. Circuit that the CFPB's structure violated the separation of powers. The ruling is a robust endorsement of the unitary executive theory and a roadmap for opponents of the agency's independence.

The severability question means that if the Court strikes the director's for-cause removal provision, it could also overturn the provisions in Dodd-Frank that created the agency in the first place. That could have sweeping effects, even potentially nullifying the agency's prior actions.

The Court hasn't yet scheduled the case for argument.

https://lawprofessors.typepad.com/conlaw/2019/10/court-to-review-cfpb.html

Cases and Case Materials, Congressional Authority, Executive Authority, News, Separation of Powers | Permalink

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