“Confirmed Judges, Confirmed Fears” is a blog series documenting the harmful impact of President Trump’s judges on Americans’ rights and liberties. Cases in the series can be found by issue and by judge at this link.
Trump Supreme Court Justices Brett Kavanaugh and Neil Gorsuch cast deciding votes to eliminate the independence established by Congress for the Consumer Financial Protection Bureau (CFPB), ruling 5-4 that the president must be allowed to fire the CFPB director at will. This was despite the explicit provision in the law Congress passed that said that the director could only be fired for cause. The June 2020 decision is Seila Law LLC v. CFPB.
For many years, as part of their efforts to undermine the social safety net, advocates of increased presidential power have argued that Congress cannot insulate agencies that protect Americans’ health, safety and consumer interests from political influence by providing that their directors cannot be fired at will by the president. California law firm, Seila Law LLC, argued as much after refusing an investigative demand from the CFPB, claiming that the demand was invalid because the CFPB itself is unconstitutional, since the president can only fire its director for cause, rather than at will and for any reason. The Ninth Circuit rejected that argument, and the Supreme Court agreed to consider the case.
In a 5-4 decision written by Chief Justice John Roberts, the Court ruled that it was unconstitutional for Congress to establish the CFPB as an independent agency whose director could not be fired by the president at will. The ruling was foreshadowed by a previous dissenting opinion by Kavanaugh, who argued, then as a judge on the D.C. Circuit, that the CFPB was unconstitutional for that reason.
The majority distinguished previous decisions in which the Court had upheld such independence for the multi-member Federal Trade Commission and for “inferior” officers like the special counsel created by Congress. At the very least, it ruled, agencies like CFPB headed by a single director cannot be insulated from presidential firing without violating the Constitution’s provisions that give the president the power to “remove those who assist him in carrying out his duties.”
On behalf of the four moderate justices, Justice Elena Kagan strongly dissented. She carefully reviewed the Constitution’s text and history, as well as the Court’s past precedents, and explained that contrary to the majority’s conclusion, they “bestow discretion on the legislature to structure administrative institutions as the times demand,” including insulating their directors from being fired at will to help resist political pressure, as long as the president can discharge them for cause. In fact, she went on, it was precisely to provide such independence in light of the financial crises that led to the CFPB that Congress structured the agency as it did, with the approval of the president at the time. The majority’s decision, Kagan concluded, “wipes out a feature” of the CFPB that “its creators thought fundamental to its mission—a measure of independence from political pressure.”
The longer-term consequences of the ruling remain unclear. Thanks in part to the agreement of the dissenting justices with a small part of Roberts’ opinion, the CFPB’s investigative demand of Seila Law LLC will not necessarily be invalidated; instead, the case will be sent back to the lower courts to determine whether the ratification of that demand by the current acting CFPB director, who can be removed at will by the president, renders it valid. But many previous CFPB actions that have protected consumers have not been so ratified, and the effect of the majority’s decision on those actions has yet to be determined. And as Sen. Elizabeth Warren, who helped create the CFPB, has noted, the decision “handed over more power to Wall Street’s army of lawyers and lobbyists to push out a director who fights for the American people.”
And what about other agencies created by Congress to have some independence from the president? The majority’s opinion itself suggests that those headed by a single individual like CFPB, most notably the commissioner of the Social Security Administration, are “controversial” and “contested” – in other words, they could be ruled unconstitutional in future cases. And as one commentator has noted, the majority’s decision “chips away at the validity of independent agencies” more generally, and could make their work “vulnerable to legal challenge,” particularly in light of justices like Kavanaugh and Gorsuch who are generally hostile to such agencies.