U.S. Supreme Court

Consumer agency survives SCOTUS challenge but not for-cause removal of its chief

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Consumer Financial Protection Bureau logo

The U.S. Supreme Court ruled Monday that the structure of the Consumer Financial Protection Bureau violates the separation of powers because it concentrates power in a single director who is removable only for cause.

Chief Justice John G. Roberts Jr. wrote the majority opinion in the constitutional challenge by Seila Law, a debt-relief law firm based in California.

The CFPB survives, however, because Roberts said the removal protection for the CFPB director can be severed from the rest of the law creating the agency.

“The agency may therefore continue to operate, but its director, in light of our decision, must be removable by the president at will,” Roberts said.

The CFBP was created in the wake of the 2008 financial crisis to ensure that consumer debt products were safe and transparent. In organizing the CFPB, “Congress deviated from the structure of nearly every other independent administrative agency in our history,” Roberts wrote.

“Instead of placing the agency under the leadership of a board with multiple members, Congress provided that the CFPB would be led by a single director, who serves for a longer term than the president and cannot be removed by the president except for inefficiency, neglect or malfeasance. The CFPB director has no boss, peers or voters to report to. Yet the director wields vast rule-making, enforcement and adjudicatory authority over a significant portion of the U.S. economy.”

Roberts said the Constitution vests executive power in the president, who must have power to remove a subordinate officer like the CFPB director.

Roberts’ holding that the CFBP structure is unconstitutional was joined by Justices Clarence Thomas, Samuel A. Alito Jr., Neil M. Gorsuch and Brett M. Kavanaugh.

The portion of Roberts’ opinion holding that the for-cause removal provision could be severed from the rest of the law was joined by Alito and Kavanaugh. The court’s four liberal justices concurred in the judgment as to severability.

The case is Seila Law v. Consumer Financial Protection Bureau.

Hat tip to SCOTUSblog, which had early coverage of the opinion.

See also:

ABAJournal.com: “Judge rules Consumer Financial Protection Bureau is unconstitutionally structured and can’t sue”

ABAJournal.com: “Ruling in law firm’s case, 9th Circuit upholds structure of US consumer agency”

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