There are two ways to read the Supreme Court decision in Seila Law v. CFPB, which aired on Monday.
But before we get to that, here are the basics of the case: The plaintiffs in this case asked the Court to invalidate the entire Consumer Financial Protection Bureau (CFPB), a federal agency, proposed in 2007 by then-professor Elizabeth Warren, to avoid predatory practices by many lenders. But the radical claim that the entire agency should go down gained little force in the Supreme Court. Instead, the judges focused largely on the question of whether the president can remove the CFPB acting director at will.
The majority of the Court agreed that a president can remove the CFPB director. In the short term, that decision could benefit presumptive Democratic presidential candidate Joe Biden, who may remove Trump’s CFPB director immediately if Biden becomes president. However, in the long term, the decision could potentially empower the president to manipulate the political process.
The first way to read Seila Law It is a minor decision that maintains that the unusual structure provided by Congress for the Office of Consumer Financial Protection is unconstitutional. The CFPB is one of the few federal agencies that is headed by a single director who cannot be removed at the will of the President of the United States. Seila Law He maintains that this abnormal way of structuring the leadership of a federal agency is unconstitutional.
The five appointed Republicans on the Court agreed with this decision, while the four appointed Democrats on the Court joined a dissenting opinion of Judge Elena Kagan.
However, the other way to read the decision is that it could be the first salvo. in an attack on other agencies that enjoy some degree of isolation from the president. These “independent” agencies include agencies like the Federal Reserve and the Federal Communications Commission (FCC), and there are vital reasons why the leadership of these agencies must remain independent of the president.
If the president can fire Federal Reserve governors at will, that president could pressure the Federal Reserve to win the economy in an election year, which will help the president’s reelection campaign and at the same time hurt the long-term economy. If the president can fire FCC members at will, they could pressure that agency to target the media outlets running a coverage that paints the president in an unfavorable light.
Lawyers who prefer the more limited first reading of Seila Law You can find a lot of language in the majority opinion of Chief Justice John Roberts that supports that reading. Meanwhile, lawyers eager to make the Fed a subsidiary of the White House may also find language to back up that result.
So the immediate result of Seila Law is that the CFPB survives this attempt to bring it down in its entirety, and Democrats gain the power to remove Trump’s CFPB director if Biden is sworn in next year. But we are unlikely to know the full meaning of Seila Law until the Court hears a new case that proves its meaning.
The “unitary executive” briefly explained
Seila Law it involves a long crusade by many conservative lawyers to expand the president’s power to fire top government officials.
Most federal agencies are under the full control of the President; if the president wants to fire a cabinet secretary, for example, the president can do it for whatever reason they choose. Meanwhile, a handful of agencies are “independent,” meaning that the president can only fire the heads of those agencies for one cause. Under the statute that was brought down in Seila LawFor example, the CFPB director could only be fired for “inefficiency, negligence in fulfilling the charge or misappropriation of the charge”.
Conservatives have waged a long struggle against such limitations on executive authority. In 1988, dissident in Morrison v. OlsonJudge Antonin Scalia suggested that isolating heads of independent agencies from presidential control in this way is unconstitutional.
The Constitution stipulates that “the executive power shall rest with a President of the United States.” This provision, according to Scalia, “does not mean some of executive power but everything the executive branch. “So if a federal official has the power to enforce a federal law, the president or someone else who can be accountable to the president should be able to fire him.
This theory, that all executive branch officials should be accountable to the president, is known as the “unitary executive” theory.
Morrison It was a 7-1 decision, Scalia dissented only for himself, but Scalia’s lone dissent gained cult following within the conservative legal community. Judge Brett Kavanaugh said in 2016 that he wanted to “put the final nail” in the Morrison majority opinion coffin.
In particular, the Court’s decision in Seila Law It doesn’t go that far. But it does suggest that there may be significant new limits on the power of Congress to create independent agencies.
Agencies with a single director are different from agencies run by a multi-member board
Most independent agencies, including the Fed and FCC, are chaired by a multi-member board.
The CFPB is unusual, although not entirely unique, as it is chaired by a single director that the president was unable to eliminate at will. This unusual leadership structure, in the majority opinion of Roberts, is not allowed. According to Roberts, the Constitution “scrupulously avoids concentrating power in the hands of a single individual.”
The only exception to this rule is the president. But Roberts says the president is different from all other government officials (except the vice president) in that they are “elected by the entire nation.” Therefore, as the only person chosen to lead in the entire country, the presidency provides “a single object for the jealousy and vigilance of the people.” If a president misbehaves, voters are likely to notice that behavior.
But this structure is weakened if another singular official, in this case, the head of the CFPB, can exercise the executive power on his own. In fact, Roberts asserts that because the CFPB director’s term is five years, rather than a presidential term, “an unfortunate president could be elected to a consumer protection platform and enter office only to meet a Remaining director of a competing political party who is against that agenda. “
The CFPB’s unusual leadership structure, in other words, potentially undermines democracy by creating a competing power center within government that is not accountable to the president-elect.
Fair enough. But, as mentioned earlier, there are very good reasons why we don’t want some agencies to be fully subject to presidential authority. If the president can threaten to fire Fed governors or FCC commissioners, those agencies could try to influence the outcome of an election illegitimately.
And while much of Roberts’ decision centered on the structure of a single CFPB director, is far from clear after Seila Law, if multi-member agencies like the FCC or the Fed can remain independent.
The uncertain future of Humphrey Executor
The concept of independent agency was confirmed by Executor of Humphrey v. U.S (1935), which allowed Congress to create multi-member agencies with some degree of isolation from the president. But Roberts’s opinion on Seila Law read Humphrey Executor tightly.
According to Roberts, “the contours of the Humphrey Executor the exception depends on the characteristics of the agency before the Court ”and on whether the agency can best be described as a complement to the executive branch, the legislature or the judiciary. Humphrey Executor allowed the agency in question in that case, the Federal Trade Commission, to operate independently of the president because the FTC “acted” as a legislative agency “by” doing research and reporting “to Congress and” as an agency of the judiciary “in making recommendations to the courts as a teacher in chancery. “
This is all very technical language that only the kind of person who meddles in debates about separation of powers could love, but here’s the point: Roberts’ majority opinion suggests that the CFPB is different from the FTC in that it is ” just a mere legislative or judicial aid. “
Instead of making reports and recommendations to Congress, as the 1935 FTC did, the Director has the authority to enact binding regulations that develop 19 federal statutes, including a broad ban on unfair and deceptive practices in a significant segment of the economy. In lieu of filing the recommended provisions in Article III court, the Director may unilaterally issue final decisions granting legal and equitable relief in administrative rulings.
The CFPB, in other words, wields significant power on its own. It is not limited to making “reports and recommendations” to other branches of government.
But similar things could be said about the Federal Reserve, which wields massive economic power that can plunge millions of Americans into unemployment or rescue the nation from recession.
Does this mean that the five judges who joined the Roberts decision also believe that the president should have the power to fire the Federal Reserve governors? The answer to that is not clear. Roberts’s opinion also goes several pages explaining why “the configuration of a single CFPB director is incompatible with our constitutional structure,” and arguing that this one-person structure is a “historical anomaly.”
So maybe holding Seila Law It is more limited. Perhaps it means that independent agencies are still allowed, as long as they’re chaired by multi-member boards.
We won’t know the answer to this dilemma until the Supreme Court hears another case challenging a multi-member agency under unitary executive theory. But what is at stake in this debate is profound. Because, if Congress cannot isolate certain politically sensitive government functions from the president, future presidents could gain new and broad power to pressure previously independent agencies to do them political favors.
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