Seila Law LLC v. Consumer Financial Protection Bureau
140 S. Ct. 2183, 207 L. Ed. 2d 494 (2020)
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Rule of Law:
A federal agency led by a single principal officer who wields significant executive power cannot be structured with a for-cause removal restriction, as this unconstitutionally insulates the officer from presidential control in violation of the separation of powers.
Facts:
- In response to the 2008 financial crisis, Congress enacted the Dodd-Frank Wall Street Reform and Consumer Protection Act.
- The Act created the Consumer Financial Protection Bureau (CFPB), an independent federal agency tasked with regulating consumer financial products and services.
- The statute vested the CFPB's leadership authority in a single Director, appointed by the President with the advice and consent of the Senate for a five-year term.
- The statute provided that the President could only remove the Director for 'inefficiency, neglect of duty, or malfeasance in office.'
- The CFPB issued a civil investigative demand (CID) to Seila Law LLC, a law firm, seeking documents and information regarding the firm's business practices.
- Seila Law refused to comply with the CID, challenging the demand on the grounds that the CFPB's structure was unconstitutional.
Procedural Posture:
- The CFPB filed a petition in the U.S. District Court for the Central District of California to enforce a civil investigative demand against Seila Law.
- Seila Law opposed enforcement, arguing the CFPB's structure was unconstitutional.
- The District Court rejected Seila Law's constitutional challenge and ordered enforcement of the demand.
- Seila Law, as appellant, appealed to the U.S. Court of Appeals for the Ninth Circuit, with the CFPB as appellee.
- The Ninth Circuit affirmed the district court's decision, holding the CFPB's for-cause removal provision was constitutional.
- The U.S. Supreme Court granted certiorari.
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Issue:
Does the for-cause removal protection for the single Director of the Consumer Financial Protection Bureau (CFPB) violate the constitutional separation of powers?
Opinions:
Majority - Roberts
Yes, the for-cause removal protection for the single Director of the CFPB violates the constitutional separation of powers. Article II vests the entire 'executive Power' in the President, which includes the power to supervise and remove executive officers to ensure the laws are faithfully executed. While the Court has upheld for-cause removal restrictions for multimember expert commissions (Humphrey's Executor) and inferior officers with limited duties (Morrison), this case presents a new situation. The CFPB Director is a principal officer who wields immense executive power alone, including rulemaking, enforcement, and adjudication authority over a significant portion of the U.S. economy. Such a structure, which consolidates power in a single individual unaccountable to the President, is a historical anomaly and contravenes the Constitution's design of dividing power to protect liberty while ensuring the President remains accountable for the actions of the Executive Branch.
Concurring in part and dissenting in part - Thomas
Yes, the removal restriction is unconstitutional, and the Court is correct to limit Humphrey's Executor. This concurrence agrees with the majority's conclusion that the CFPB's structure violates the separation of powers. However, it dissents from the Court's decision to sever the unconstitutional removal provision. The proper judicial role is to refuse to enforce the unconstitutional statute in the case at hand, which means denying the CFPB's petition to enforce its demand. The Court should not engage in the legislative act of rewriting the statute through severability, especially when it is unnecessary to resolve the specific dispute before it.
Dissenting - Kagan
No, the for-cause removal protection for the CFPB Director does not violate the separation of powers. The Constitution grants Congress broad authority under the Necessary and Proper Clause to structure the Executive Branch, and history is replete with independent agencies created to meet new challenges, particularly in financial regulation. Precedent from Humphrey's Executor to Morrison establishes that for-cause removal is permissible so long as it does not impede the President's ability to perform his constitutional duties, which this standard does not. The majority's distinction between a single director and a multimember commission is novel and not grounded in constitutional text or values; in fact, a single director is often more, not less, accountable to the President than a board. The Court improperly substitutes its own judgment for that of the political branches on matters of administrative design.
Analysis:
This decision significantly strengthens the unitary executive theory by narrowing the scope of permissible independence for federal agencies. It establishes a clear rule that a single principal officer leading an agency cannot be insulated from at-will presidential removal, effectively limiting the Humphrey's Executor precedent to multimember commissions. This holding creates a significant constitutional constraint on Congress's ability to design independent agencies, likely impacting the structure of other single-director agencies like the Federal Housing Finance Agency (FHFA). The decision signals a move away from a functional balancing test for removal restrictions towards a more formalist, categorical approach based on agency structure.
