The fate of the Consumer Financial Protection Bureau appeared Tuesday to be in the hands of a U.S. Supreme Court struggling to define Congress’ authority to limit a president’s power to remove the director.
In the case Seila Law v. CFPB, which arrived from the U.S. Court of Appeals for the Ninth Circuit, the justices were asked two questions: Does the restriction on removing the bureau’s director only “for cause” limit the power of the president to direct the executive branch? And if it does, can the removal provision be severed or must the entire law fall?
“There are at least two other [agencies], the Office of Special Counsel and the Social Security Administration, with single heads,” Justice Sonia Sotomayor said at one point. “I see the Social Security Administration as more powerful than this agency. I don’t think that this is so unprecedented as you claim.”
Sotomayor was pushing back at Seila Law’s lawyer, Kannon Shanmugam of Paul, Weiss, Rifkind, Wharton & Garrison, who opened his argument with a claim that the CFPB’s independent structure was “unprecedented and unconstitutional.”
Tuesday’s arguments featured a trio of former clerks to the late Justice Antonin Scalia: Shanmugam; Paul Clement of Kirkland & Ellis; and Noel Francisco, the U.S. solicitor general. Clement was appointed to defend the bureau after the Trump Justice Department sided with Seila Law’s challenge.
Throughout the quick-paced, 70-minute argument, the justices raised questions about the actual meaning of “for cause” removal and whether it was a weak or strong restraint on a president; whether multihead agencies posed a lesser threat to a president’s authority than a single director, and if Congress could extend for-cause removal to cabinet officials.
“This is a very modest restraint which stops a president from removing someone at whim for someone who is loyal to the president instead of the consumers that Congress intended,” Justice Ruth Bader Ginsburg told Shanmugam.
Shanmugam countered that for-cause removal “has never been read as ‘modest.’ Congress was trying to create an agency insulated from control.”
Francisco, who agreed with Shanmugam that the for-cause removal provision violates the separation of powers, urged the justices—in disagreement with Shanmugam—to rule that the provision could be severed from the rest of the act creating the CFPB. He urged them not to extend their ruling in 1935 upholding that type of removal for multihead agencies to single-head agencies because that would be a “revolution” that could lead to for-cause removal of cabinet officials.
How the justices deal with the “severability” of the removal provision could provide hints of how they will approach a different and major severability issue next term involving the Affordable Care Act. The court will hear arguments on whether the individual mandate to have health insurance—deemed unconstitutional by the Fifth Circuit—can be separated from the rest of the health law or whether the entire law must fall.