By Scott Nelson, Public Citizen
The Supreme Court issued its ruling in Seila Law v. CFPB today, holding by a 5-4 vote that the Congress violated the principle of separation of powers by placing the Consumer Financial Protection Bureau under a single director removable by the president only for cause. Chief Justice Roberts wrote the majority opinion, with Justice Kagan dissenting on behalf of herself and Justices Ginsburg, Breyer, and Sotomayor.
By a different majority (the Chief Justice and Justices Alito and Kavanaugh, together with the four dissenters on the separation-of-powers issue), the Court held that the for-cause-removal provision was severable from the remainder of the statutory provisions conferring authority on the CFPB. Thus, the agency may continue its operations going forward, but the president will now have the authority to fire the director at will.
Even so, the Court held that the specific issue giving rise to the case—whether a civil investigative demand must be set aside because it was issued while the tenure-protection provision was in place—requires a remand for the lower courts to determine whether the agency’s current leadership has validly “ratified” it. Justices Thomas and Gorsuch disagreed with the majority’s severability analysis and would have held that the civil investigative demand could not be enforced, period.
Chief Justice Roberts’s opinion was issued the same day he joined the Court’s more liberal judges in holding that adherence to precedent required the Court to strike down a Louisiana abortion restriction that was identical to a Texas law the Court held unconstitutional four years ago, before Justice Kennedy’s retirement from the Court and his replacement by Justice Kavanaugh. The Chief Justice disagreed with the earlier ruling in the Texas case but today ruled that the principle of treating “like cases alike” required him to vote to strike down the Louisiana law.
In Seila Law, Chief Justice Roberts also had a lot to say about precedents, but his effort was devoted to devising grounds to distinguish them rather than follow them. He reasoned that because prior precedents upholding limits on presidential removal power did not specifically address the constitutionality of an agency headed by a single, tenure-protected principal officer (as opposed to an agency headed by a tenure-protected multi-member commission, or an office headed by a single, tenure-protected “inferior” officer), those precedents did not “resolve whether the CFPB Director’s insulation from removal is constitutional.”
Instead, he found direction in long-discredited dicta in an older case, Myers v. United States, which he read to adopt the broad rule that the president must have power to remove executive officers at will. The Court’s later opinions, in Roberts’s revisionist reading, created only two narrow exceptions to this rule for agencies headed by multi-member commissions and for inferior officers. Although the Chief Justice declined to “revisit” those precedents, at least not “today,” he also declined to extend them.
Justice Kagan’s dissent, by contrast, offered a completely different reading of the Court’s precedents. In her view, the Court’s past opinions do not establish a “‘general rule’ of ‘unrestricted removal power’ with two grudgingly applied ‘exceptions.’” Instead, they “give Congress wide leeway to limit the President’s removal power in the interest of enhancing independence from politics in regulatory bodies like the CFPB.”
Justices Thomas and Gorsuch, on the other hand, would have done what Chief Justice Roberts was unwilling to do “today,” and would have overruled the precedents allowing “exceptions” to the principle of unfettered presidential removal power.
As far as the CFPB is concerned, one thing is settled, at least for now: The president can now remove the CFPB’s director for any reason, or no reason. That result, in the long term, is not a good one for an agency that requires the independence to stand up to powerful financial forces in the interest of consumers. Repeatedly over the last four years we have seen how officials who can be fired without cause by the president—such as the Attorney General—abandon principle and the rule of law when they get in the way of the president’s own interests, or those he favors.
In the medium term, however, the first CFPB director likely to be fired without cause may be the one installed by President Trump, Kathy Kraninger—if the president is not reelected. Consumer advocates may cheer that result. But even if that happens, it will not be the only fallout from today’s opinion.
To begin with, the remand to determine whether the civil investigative demand in the Seila Law case must be enforced is likely to be the first of many cases in which parties argue over whether today’s opinion requires some action taken by the agency to be set aside. Such litigation is likely to become its own cottage industry.
In addition, we have seen in other areas how the approach of limiting precedents to their particular circumstances, treating them as never-to-be-extended “exceptions” to other principles, may eventually lead the Court to treat them as doctrinal orphans ripe for overruling because subsequent developments in the case law have undermined their rationales. Advocates of expanded presidential power, and industries that would perceive a benefit in eliminating independent regulators, are likely to press on for overruling of the Court’s decisions allowing independent multi-member commissions.
Whether they ultimately succeed may depend on how the Court’s composition changes in the next few presidential terms. In the long run, it may be Seila Law that turns out to be the orphan, but surely there will be plenty of litigation in the meantime.