SCOTUS to determine constitutionality of CFPB structure
On Oct. 18, the U.S. Supreme Court agreed to hear Seila Law v. Consumer Financial Protection Bureau (CFPB), a case challenging the constitutionality of the bureau’s structure.
The CFPB is an independent agency created by the Dodd-Frank Act in 2010. Unlike other independent agencies of the federal government, which are generally headed by multi-member commissions, the CFPB is led by a single director who is only removable by the president for cause. The Supreme Court upheld cause removal protections for the multi-member commissions of independent agencies in the 1935 case Humphrey’s Executor v. United States, but the ruling did not apply to single agency heads.
Seila Law, a national law firm, challenged the constitutionality of the bureau’s structure because the CFPB’s single director is only removable for cause. The firm contended that the director’s cause removal protections unconstitutionally prevent the president from unilaterally firing the agency’s head. The firm said in its petition, “the importance of the [separation of powers] question presented [by this case] cannot be overstated.”
On May 6, the 9th Circuit Court of Appeals ruled the bureau’s structure was constitutional, concluding that the for-cause removal protections are similar to those of the Federal Trade Commission (upheld in Humphrey’s Executor v. United States).
In a brief filed with the court on Sept. 17, Solicitor General Noel Francisco on behalf of the CFPB agreed with Seila Law, claiming that the bureau’s structure violates the separation of powers doctrine because it prevents the president from unilaterally firing the agency’s single director.
This case is not the first time that the constitutionality of the CFPB’s structure has been challenged. In October 2016, a three-judge panel of the United States Court of Appeals for the District of Columbia Circuit ruled 2-1 that the organizational structure of the CFPB was unconstitutional. The full D.C. Circuit—with then-Judge Brett Kavanaugh dissenting—went on to uphold the bureau’s constitutionality in January 2018. In June 2018, Judge Loretta Preska of the United States District Court for the Southern District of New York also found the structure of the CFPB to be unconstitutional. Judge Preska’s ruling is pending appeal before the United States Court of Appeals for the 2nd Circuit.