June 29, 2020
Decided June 29, 2020
Seila Law LLC v. Consumer Financial Protection Bureau, No. 19-7
Today, the Supreme Court held 5-4 that the single-Director structure of the Consumer Financial Protection Bureau violates the Constitution’s separation of powers, but ruled 7-2 that the proper remedy is to sever the Director’s statutory for cause removal restriction, thereby making the Director removable by the President at will.
The Consumer Financial Protection Bureau (“CFPB”) was created as an independent federal agency by the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010. The CFPB enforces 19 federal consumer-protection statutes and is headed by a single Director who is removable by the President only “for cause,” not “at will” for mere policy disagreements with the President. The CFPB served a civil investigative demand on petitioner, a law firm that provides debt-collection services, and later sought to enforce that demand in federal court. Petitioner argued that the demand was invalid because the CFPB’s structure violated the Constitution’s separation of powers by vesting too much executive power in a single Director who does not answer to the President. The district court and the U.S. Court of Appeals for the Ninth Circuit both rejected the challenge, concluding that the CFPB is constitutionally structured.
Petitioner then sought and obtained Supreme Court review, supported by the United States and the CFPB itself, both of which agreed that the agency’s structure unconstitutionally limited the President’s removal authority. The parties disagreed, however, on whether the proper remedy for the constitutional violation was to sever the Director’s statutory “for cause” removal restriction, thereby making the Director answerable to the President, or instead to invalidate the entire statute creating the CFPB. The Supreme Court appointed amicus curiae counsel to defend the constitutionality of the CFPB’s structure, as the United States declined to do so.
Whether the CFPB’s structure as a powerful agency headed by a single Director removable by the President only “for cause” violates the Constitution’s separation of powers, and, if so, whether severing the statute’s “for cause” removal restriction to make the Director removable “at will” by the President cures the unconstitutionality.
The CFPB’s structure as a powerful federal agency headed by a single Director removable by the President only “for cause” violates the Constitution’s separation of powers. The violation is cured by severing the “for cause” removal restriction and making the Director answerable to the President.
“[A]n independent agency led by a single Director . . . lacks a foundation in historical practice and clashes with constitutional structure by concentrating power in a unilateral actor insulated from Presidential control.”
Chief Justice Roberts, writing for the Court
Gibson Dunn submitted an amicus brief on behalf of the Center for the Rule of Law in support of petitioner: Seila Law LLC
What It Means:
The Court’s opinion is available here.
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