SCOTUS blog series reviews background and possible outcomes of Seila Law v. Consumer Financial Protection Bureau.
2/14/2020 12:30
Does the Consumer Financial Protection Bureau’s leadership structure violate the constitution? Should it be up to the courts or Congress to decide and restructure the bureau?
Representatives with varying positions and backgrounds on the matter are weighing in through a series of articles on the Supreme Court of the United States Blog leading up to the March 3 oral arguments in Seila Law v. Consumer Financial Protection Bureau.
In the case, Seila Law reportedly violated the telemarketing sales rules and declined to respond fully to the bureau’s request for information and documents, writes Amy Howe, a reporter for the SCOTUS Blog, in one article titled “Justices to Consider Constitutionality of CFPB Structure.” The CFPB sought a ruling in California federal court to enforce its request for information and the law firm countered that the CFPB did not have the authority to issue the request in the first place.
“The law firm argued that the CFPB’s structure is unconstitutional because the bureau is headed by only one director who wields significant power but can only be removed ‘for cause’ rather than ‘at will’—that is, for any reason,” Howe writes.
Looking at cases with similar challenges to the leadership structure of federal government agencies, PHH Corporation v. CFPB and Humphrey’s Executor v. United States (which focuses on the Federal Trade Commission), Howe outlines the argument of why Seila Law chose to contest the CFPB’s authority to request information in the case and what would happen if the Supreme Court were to rule the bureau’s leadership structure is unconstitutional. Would the court take it a step further and invalidate the Dodd-Frank Act statute that created the CFPB or rule Congress should make the decision?
“But the long-term remedy for the problems in the CFPB’s structure is a job for Congress, Seila Law maintains, rather than the Supreme Court,” Howe writes.
Representing the CFPB, U.S. Solicitor General Paul Clement argues the constitutionality of the bureau’s leadership structure has nothing to do with the case at hand against Seila Law.
“It seems unlikely that there was ever ‘any real connection’ between the CFPB’s request for information from Seila Law and the president’s ability to remove the CFPB’s director, Clement posits,” Howe writes. “But even if the previous director’s decision to authorize the petition to enforce the request for documents and information was influenced by the director’s belief that he could only be fired for cause, Clement continues, the current head of the CFPB, Kathy Kraninger, believes that the president can remove her for any reason – but has nonetheless not dropped the enforcement petition. If it had a choice, Seila Law predicts, Congress would have chosen a third option—making the CFPB a multimember commission like the FTC. Because the Supreme Court can’t transform the CFPB into such a commission, Seila Law asserts, the justices should give Congress time to decide how to proceed from here. But if the court still opts to reach the question of severability, Seila Law concludes, it should invalidate the entire statute creating the CFPB.”
Howe concludes, “the court’s ruling will likely have ripple effects well beyond the CFPB.”
ACA Daily will feature additional articles from the SCOTUS series before the March 3 oral arguments. Hear more insights on the case on a recent episode of ACA Cast: Legal Review: Understanding the Challenge to the Constitutionality of CFPB’s Leadership Structure.