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03/05/2020

Seila Law: Constitutional Case of the Year?
Michael Ramsey

From the Wall Street Journal's editors: Constitutional Case of the Year; Brett Kavanaugh gets his moment on the separation of powers (discussing Seila Law LLC v. Consumer Financial Protection Bureau, argued to the Supreme Court Tuesday).  From the introduction:

... This [case] goes to the heart of the separation of powers and whether the administrative state is accountable to the people.

Seila Law v. CFPB concerns whether a President can remove the bureau’s director only for “inefficiency, neglect of duty, or malfeasance in office.” This should be an easy call, but far more important is the remedy and whether the Justices merely sever the bureau’s mutant head from its unconstitutional body.

Democrats created the CFPB in 2010 as an independent agency within the Federal Reserve. Yet unlike other independent agencies, it was designed to be politically insulated. The bureau gets funding automatically upon its director’s request from the Fed, so it doesn’t need Congressional appropriations.

Most agencies are led by a multi-member bipartisan commission, but the CFPB has a single director whom the President can only fire for cause. Congress gave the bureau broad enforcement power to investigate and penalize almost any business with any relation to finance. But its rules and orders are exempt from review by the Fed, and it needn’t consult the White House budget office. The director, in short, is President of his own little government.

And in conclusion:

If the Supreme Court lets the CFPB stand as it is, and merely skirts around the edges of its illegality by barring the “for cause” provision, this will not be the last such agency that Congress creates. The administrative state will become even less accountable to political control than it already is.

Tossing the whole law would invalidate all CFPB actions to date, but the Court also did this when it overturned Barack Obama’s illegal recess appointments in Noel Canning (2014). In the CFPB there may be fewer reliance interests since reverting to the pre-Dodd Frank status quo would leave other independent agencies to enforce consumer financial laws.

Our suggestion is that the Court strike down the law but delay the ruling’s implementation for a year or so to give Congress and the President time to amend the law if they see fit. If the current Court is serious about reviving the original meaning of the separation of powers, the CFPB is an ideal opportunity to send a shot heard ’round Washington.

Agreed.  Except, really, the Court should "delay the ruling’s implementation for a year or so"?  I don't think courts can (or at least should be able to) work that way.

A wide-ranging opinion would be nice, but I suspect the decision will be narrow, as John McGinnis suggested last week.