Fifth Circuit upholds limits on presidential removal power over CFPB head

A panel of judges on the U.S. Court of Appeals for the Fifth Circuit decided 2-1 to uphold the structure of the Consumer Financial Protection Bureau (CFPB). The court’s March 3 opinion said that the legal restrictions on the president’s authority to remove the head of the agency were “valid and constitutional.”

Judge Stephen Higginson, an Obama appointee, delivered the opinion of the court, saying that “neither the text of the Constitution nor the Supreme Court’s previous decisions” support the argument that the CFPB has an unconstitutional structure.

Judge Patrick Higginbotham, a Reagan appointee, wrote a concurring opinion joined by Higginson, arguing that the president may still exert authority over the CFPB through the Financial Stability Oversight Council, which can veto CFPB rules. He said that the U.S. Supreme Court has approved presidential removal power restrictions similar to those protecting the head of the CFPB.

Judge Jerry Edwin Smith, a Reagan appointee, filed a dissenting opinion, arguing that recent Fifth Circuit precedent suggested that the structure of the CFPB was unconstitutional.

The appointment and removal power refers to the authority of an executive to appoint and remove officials in the various branches. The Appointments Clause of the United States Constitution vests the president with the authority to appoint officers of the United States, including federal judges, ambassadors, and Cabinet-level department heads. The president has the authority to remove his appointees from office, but the heads of independent federal agencies can only be removed for cause.

The Fifth Circuit published its decision on the same day the U.S. Supreme Court heard oral argument in another case challenging the structure of the CFPB,  Seila Law v. Consumer Financial Protection Bureau. A U.S. Supreme Court decision that the U.S. Constitution forbids protecting the director of the CFPB from presidential removal might give the president more control of other leaders of independent administrative agencies. Also, CFPB decisions made under a director with removal protections might become invalid following the ruling.

Click here to read the Fifth Circuit decision and here to learn more about Seila Law v. Consumer Financial Protection Bureau.

Additional reading:
Executive appointment and removal power: a timeline
Taxonomy of arguments about executive appointment and removal_power
List of court cases relevant to executive appointment and removal_power
List of legislation relevant to executive appointment and removal power
Reform proposals related to executive appointment and removal power