Constitutional law and separation of powers

• Pages: 49-77

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Constitutional Law and

Separation of Powers*

CHAPTER 2

* By William Funk, Lewis & Clark Distinguished Professor of Law, Emeritus.

This chapter does not deal with constitutional issues involved in criminal

law and procedure. Nor does it deal with Article III standing issues, which

are considered in the chapter involving the availability of judicial review.

1. 881 F.3d 75 (D.C. Cir. 2018) (en banc).

2. 332 F.Supp. 3d 729 (S.D.N.Y. 2018).

3. 896 F.3d 640 (5th Cir. 2018).

I. THE PRESIDENT’S REMOVAL AUTHORITY

Last year we reported on PHH Corp. v. CFPB,1 in which an en banc D.C.

Circuit held that the for-cause removal protection for the Director of the

Consumer Finance Protection Bureau (CFPB) was constitutional, rejecting a

panel opinion authored by then-Judge Brett Kavanaugh to the contrary that

the protection unconstitutionally interfered with the President’s Article II

powers. We also reported on CFPB v. RD Legal Funding,2 in which a district

court in the Second Circuit held the same for-cause removal protection un-

constitutional, literally adopting Judge Kavanaugh’s dissenting opinion in the

en banc PHH Corp. case. The district court, however, departed from Judge

Kavanaugh’s proposed remedy—severing the for-cause removal provision

from the statute—and instead literally adopted Judge Henderson’s opinion

dissenting in the same case, finding the provision non-severable, thereby

declaring the agency unconstitutional. Finally, we reported on Collins v.

Mnuchin,3 in which a Fifth Circuit panel held that the for-cause removal

protection for the Director of the Federal Housing Finance Agency was un-

constitutional, largely for the same reasons as expressed in Judge Kavanaugh’s

panel opinion in PHH Corp. There have been further developments.

50 Developments in Administrative Law and Regulatory Practice

First, the CFPB has appealed the district court decision in RD Legal

Funding, and that appeal is pending as of this writing, with oral argument

scheduled for the week of November 18, 2019. Second, the Fifth Circuit

granted a request for en banc consideration of Collins, but the en banc court

reinstated the panel opinion that concluded the for-cause removal protection

for the Director of the FHFA was unconstitutional.4 Also like the panel, the

en banc court’s remedy was simply to declare the particular provision uncon-

stitutional, leaving the FHFA intact but absent the for-cause removal protec-

tion for the Director. Third, the Ninth Circuit in CFPB v. Seila Law LLC5

held that the for-cause removal protection for the Director of the CFPB is

constitutional. Like the en banc D.C. Circuit, the Ninth Circuit panel found

Humphrey’s Executor v. United States,6 in which the Supreme Court upheld

the constitutionality of the for-cause removal protection of members of the

Federal Trade Commission (FTC), to be indistinguishable. The one differ-

ence between the two cases, that the FTC was made up of five members while

the CFPB had only one head, the panel said, arguably gave the President

more control over the CFPB than over the FTC. On October 18, the Supreme

granted certiorari in the case.

Before the Court, the Justice Department on behalf of the United States

has taken the position that the for-cause removal protection for the Director

is unconstitutional. In addition, the CFPB, which in March filed a brief in the

Second Circuit arguing that the for-cause removal provision is constitutional,

has changed its mind and joins in the Justice Department’s argument that the

provision is unconstitutional. Because both the petitioner, Seila Law LLC,

and the respondent, CFPB, agree that the protection is unconstitutional, the

Court appointed former Solicitor General, Paul Clement, to argue on behalf

of the constitutionality of the provision.

To understand the argument against the constitutionality of the for-cause

removal protection for the Director of the CFPB, one should go back to then-

Judge Kavanaugh’s opinion for the panel decision in PHH. Leaning heavily

on the Supreme Court’s decision in Free Enterprise Fund,7 he began his analysis

by saying that “in order to maintain control over the exercise of executive

power and take care that the laws are faithfully executed, the President must

be able to supervise and direct . . . subordinate executive officers.”8 Never-

4. Collins v. Mnuchin, 938 F.3d 553 (5th Cir. 2019) (en banc).

5. 923 F.3d 680 (9th. Cir. 2019).

6. 295 U.S. 602 (1935).

7. 561 U.S. 477, 497–502 (2010).

8. PHH, 839 F.3d at 12.