U.S. Supreme Court rules Federal Housing Finance Agency has unconstitutional structure

In Collins v. Yellen, the U.S. Supreme Court held that restrictions on the president’s authority to remove the director of the Federal Housing Finance Agency (FHFA) violated the separation of powers. In its June 23 decision, the court also rejected the argument that the FHFA actions at issue in the case went beyond the agency’s legal authority.

Justice Samuel Alito delivered the opinion of the court, writing that the Housing and Economic Recovery Act (HERA) blocks shareholders from challenging FHFA decisions in court since the agency acted within the bounds of its powers. However, he also wrote that “the Constitution prohibits even ‘modest restrictions’ on the President’s power to remove the head of an agency with a single top officer.” The end of the opinion says that FHFA officers were properly appointed but that lower courts should resolve whether the unconstitutional restriction on the president’s removal power inflicted harm that gives the shareholders a right to request relief in federal court.

Justice Clarence Thomas wrote a concurring opinion arguing that actions taken by federal officials are not necessarily unlawful just because a restriction on the president’s removal power over them is unlawful in the abstract.

Justice Neil Gorsuch wrote an opinion concurring in part in which he argued that the distinction between unconstitutionally _appointed_ officials and unconstitutionally _insulated_ officials should not prevent the court from ruling that an official acted without constitutional authority.

Justice Elena Kagan wrote an opinion concurring in part and concurring in the judgment and Justices Stephen Breyer and Sonia Sotomayor joined part II of her opinion. Kagan agreed with the majority that the FHFA did not exceed the limits of its powers, but she only agreed to hold the agency structure unconstitutional out of respect for precedent. Part II of her opinion agreed with the majority that it would be right to undo the FHFA’s actions only if the president’s inability to fire the director affected those actions.

Justice Sonia Sotomayor wrote an opinion concurring in part and dissenting in part, joined by Justice Breyer. Sotomayor agreed with the parts of the majority opinion upholding the FHFA’s actions under the HERA and discussing potential remedies following remand of the case. Regarding the constitutional question, she argued that the court misapplied the precedent from Seila Law (2020). She wrote, “The Court has proved far too eager in recent years to insert itself into questions of agency structure best left to Congress.”

The court’s decision to hold the structure of the FHFA unconstitutional articulated limits on the kinds of administrative agencies Congress may create and reaffirmed the court’s decision in Seila Law. Each of the Justices’ opinions referenced arguments from the debate surrounding presidential control over administrative officials across the federal government.

The case was consolidated with Yellen v. Collins.

To learn more about the case or executive control of agencies see here:

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Link to the U.S. Supreme Court decision: