Consumer Financial Protection Bureau Structure Unconsitutional
On October 11, 2016, the U.S. Court of Appeals for the D.C. Circuit ruled in PPH Corp. v. Consumer Financial Protection Bureau. Although initially conceived as a “multi-member independent agency” in its final form approved by Congress, the CFPB is “an independent agency headed not by a multi-member commission but rather by a single Director. Because the CFPB is an independent agency headed by a single Director and not by a multi-member commission, the Director of the CFPB possesses more unilateral authority – that is, authority to take action on one’s own, subject to no check –than any single commissioner or board member in any other independent agency in the U.S. Government. Indeed, as we will explain, the Director enjoys more unilateral authority than any other officer in any of the three branches of the U.S. Government, other than the President.” The opinion notes the great power held by the director and describes it as “massive in scope, concentrated in a single person, and unaccountable to the President [and thus] triggers the important constitutional question at issue in this case.” Examining historical precedent and discussing the lack of checks on the director’s power under the current structure which (the court described as a “threat to individual liberty posed by a single-Director independent agency”), the court held “that the CFPB is unconstitutionally structured.”
The court looks next at the appropriate remedy, with the Plaintiff arguing the agency should be shuttered. Instead, the court severed the offending language in the statute, to provide “the President … the power to remove the Director at will, and to supervise and direct the Director.” The court goes on at length (and acknowledges this) to explain its ruling, and to also address the Plaintiff’s challenge to the fine imposed against it by the CFPB.
The CFPB therefore will continue to operate and to perform its many duties, but will do so as an executive agency akin to other executive agencies headed by a single person, such as the Department of Justice and the Department of the Treasury. Those executive agencies have traditionally been headed by a single person precisely because the agency head operates within the Executive Branch chain of command under the supervision and direction of the President. The President is a check on and accountable for the actions of those executive agencies, and the President now will be a check on and accountable for the actions of the CFPB as well.
The opinion is available here.