A Big Dispute Over Agency Power Looks Primed For Supreme Court Review

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Kevin Daley Supreme Court correspondent
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The Washington-based federal appeals court affirmed the legality of the Consumer Financial Protection Bureau’s (CFPB) leadership structure in a 6-3 vote Wednesday, likely sending a major dispute over agency power to the Supreme Court.

Judge Nina Pillard wrote the court’s main opinion. Judges Karen Henderson, Brett Kavanaugh, and Raymond Randolph dissented. All three are Republican appointees.

Critics of the agency say its command structure is unconstitutional, as its director — unlike most agency heads — can only be fired for cause. Insulating the director from dismissal at the president’s pleasure, they argue, compromises his exclusive authority to supervise and direct executive branch agencies.

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Pillard disagreed, gesturing toward a 1935 Supreme Court decision which sanctioned a similar power arrangement at the Federal Trade Commission.

“Congress’s decision to provide the CFPB Director a degree of insulation reflects its permissible judgment that civil regulation of consumer financial protection should be kept one step removed from political winds and presidential will,” Pillard wrote.

Though the ruling vindicates the agency’s structure, the decision is technically a win for the company that brought the case. The court found that the CFPB erred in assessing additional penalties against them during a 2014 enforcement action. That could complicate the chances the Supreme Court reviews the case because the justices do not usually review cases at the request of the prevailing party.

In dissent, Judge Brett Kavanaugh argued the CFPB’s structure is a threat to personal freedom, as it prevents the political branches from constraining the agency’s power.

“The purpose ‘of the separation and equilibration of powers in general, and of the unitary Executive in particular, was not merely to assure effective government but to preserve individual freedom,'” he wrote, quoting Justice Antonin Scalia. Kavanaugh is considered a frontrunner for President Donald Trump’s next appointment to the Supreme Court.

The decision is a blow to the Trump administration, which has sought to exercise greater control over the agency. The president appointed White House OMB Director Mick Mulvaney as acting director of the CFPB in November 2017, when former director Richard Cordray abruptly resigned to launch a campaign for governor of Ohio. The administration is involved in separate litigation over the legality of Mulvaney’s appointment.

A three judge panel of the D.C. Circuit invalidated  the agency’s power structure in October 2015.

The decision will almost certainly be appealed to the Supreme Court.

Send tips to kevin@dailycallernewsfoundation.org.

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