CFPB Gets Full Federal Circuit Rehearing in its Constitutionality Case

2/16/2017 2:00:00 PM

The D.C. Circuit Court of Appeals will hear arguments again in a case that calls into question whether the CFPB’s governance structure is unaccountable and subject to overstepping its authority.

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The U.S. Court of Appeals for the District of Columbia Circuit issued an order on Thursday in PHH Corp., et al. v. Consumer Financial Protection Bureau, No. 15-01177 (D.C. Cir. Feb. 16, 2017), granting the Consumer Financial Protection Bureau a rehearing en banc by the full D.C. Circuit in a case in which the appeals court panel previously found the CFPB’s structure was unconstitutional.  Rehearings en banc are generally disfavored and granted only for matters of “exceptional importance.”   However, the PHH case could determine whether CFPB Director Richard Cordray can keep his job until his term expires in July 2018, or if President Donald Trump can fire him at will. 

As ACA reported previously, the appeals court panel ruled last October in a 2-1 split decision that a provision of the Dodd-Frank Act allowing the CFPB’s director to be removed only for cause was unconstitutional.  The panel sought to strike that provision, allowing the president to remove the director at any time.  However, the panel’s October 2016 judgment is now vacated pursuant to the appellate court’s order giving the CFPB another shot at defending its single-director structure. 

In the order, the Federal Circuit instructed the parties to answer the following questions in their briefs:

  1. Is the CFPB’s structure as a single-Director independent agency consistent with Article II of the Constitution and, if not, is the proper remedy to sever the for-cause provision of the statute?
  2. May the court appropriately avoid deciding that constitutional question given the panel’s ruling on the statutory issues in this case?
  3. If the en banc court, which has today separately ordered en banc consideration of Lucia v. SEC, 832 F.3d 277 (D.C. Cir. 2016), concludes in that case that the administrative law judge who handled that case was an inferior officer rather than an employee, what is the appropriate disposition of this case?

Briefing in the case is scheduled to begin on March 10, 2017, and conclude by April 10, 2017, with oral argument scheduled for May 24, 2017. 

ACA will continue to follow the PHH Corp. case and will keep its members posted on any new developments.  If you want to read more about the most recent significant judicial and CFPB decisions involving the credit and collection industry, ACA members can always find concise case summaries at

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