140 S. Ct. 2183 (2020)
Following the 2008 financial crisis, Congress created the Consumer Financial Protection Bureau as part of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010.1 The agency was tasked with implementing and enforcing a large body of federal consumer financial protection statutes, including the Fair Credit Reporting Act, the Fair Debt Collection Practices Act, and the Truth in Lending Act, along with a new prohibition on unfair, deceptive, or abusive acts or practices in the consumer-finance sector.2 The CFPB is led by a single Director appointed by the President with the advice and consent of the Senate for a five-year term, during which the President may remove the Director only for inefficiency, neglect of duty, or malfeasance in office.3 The agency receives its funding directly from the Federal Reserve rather than through the annual appropriations process.4
In 2017, the CFPB issued a civil investigative demand to Seila Law LLC, a California-based law firm that provides debt-related legal services to clients.5 The demand sought information and documents related to the firm’s business practices to determine whether Seila Law had engaged in unlawful acts or practices in the advertising, marketing, or sale of debt relief services.6 Seila Law asked the CFPB to set aside the demand on the ground that the agency’s single-Director structure with for-cause removal protection violated the separation of powers.7 When the CFPB declined, Seila Law refused to comply, and the CFPB filed a petition in federal district court to enforce the demand.8
The district court rejected Seila Law’s constitutional challenge and ordered the firm to comply with the demand.9 The Ninth Circuit affirmed, concluding that Seila Law’s arguments were foreclosed by Humphrey’s Executor v. United States and Morrison v. Olson.10 The Supreme Court granted certiorari to address the constitutionality of the CFPB’s structure and, if necessary, the severability of the Director’s removal protection from the remainder of the Dodd-Frank Act.11
Whether the Consumer Financial Protection Bureau’s leadership by a single Director removable only for inefficiency, neglect of duty, or malfeasance in office violates the separation of powers?12
Article II vests the executive power in the President. The President must take care that the laws be faithfully executed. The President’s removal power over principal officers exercising executive authority is the rule. This power is subject only to narrow exceptions for multimember expert bodies performing quasi-legislative or quasi-judicial functions under Humphrey’s Executor or inferior officers with limited duties and no policymaking authority under Morrison.13
Yes. The CFPB Director is a principal officer who unilaterally exercises substantial executive power by promulgating rules under 19 statutes, initiating enforcement actions, imposing civil penalties up to $1 million per day, and conducting administrative adjudications.14 The single-Director structure lacks the partisan balance, staggered terms, and multimember character of the FTC upheld in Humphrey’s Executor and exceeds the limited jurisdiction of the independent counsel in Morrison.15 The for-cause removal restriction therefore prevents the President from holding the Director accountable for the exercise of executive power, violating the constitutional design that ensures presidential oversight of those who wield executive authority on his behalf.16
The CFPB’s single-Director structure with for-cause removal protection violates the separation of powers.17
Related opinions on this issue
Joined by Justice Gorsuch
Justice Thomas joined the majority opinion but wrote separately to state that Humphrey’s Executor was wrongly decided from the outset.18 He would overrule that precedent entirely because the Constitution permits no congressional limits on the President’s removal power over principal officers.19 In his view the CFPB Director is a principal officer, so the for-cause provision is unconstitutional without need for the majority’s narrower distinction between single and multimember agencies.
Thomas emphasized that the Constitution’s structure demands full presidential accountability over all principal executive officers.20
Joined by Justices Ginsburg, Breyer, And Sotomayor
Justice Kagan dissented on the merits.21 She argued that the Constitution grants Congress broad latitude to structure administrative agencies and that for-cause removal protections for the CFPB Director are consistent with historical practice and precedent.22 She viewed the majority’s formalistic approach as inconsistent with the flexible design of the separation of powers and would have upheld the agency’s structure.23
Kagan stressed that Congress has long created independent agencies to perform functions requiring insulation from direct political pressure.24
Whether the for-cause removal provision protecting the CFPB Director is severable from the remainder of the Dodd-Frank Wall Street Reform and Consumer Protection Act?25
When a statutory provision is unconstitutional, the remainder is severable if the surviving provisions are capable of functioning independently and Congress would have preferred the statute without the invalid provision. An express severability clause creates a presumption of severability absent strong evidence to the contrary.26
Yes. The Dodd-Frank Act contains an express severability clause providing that if any provision is held unconstitutional the remainder shall not be affected.27 The CFPB’s substantive powers to enforce consumer-protection statutes remain fully operative once the Director is made removable at will.28 Nothing in the text or history indicates Congress would have preferred no agency at all to an agency whose Director is accountable to the President.29
The for-cause removal provision is severable; the CFPB may continue to operate with a Director removable at will by the President.30
Related opinions on this issue
Joined by Justice Gorsuch
Justice Thomas dissented from the Court’s decision to sever the removal restriction. He would have resolved the case by simply denying enforcement of the civil investigative demand without addressing severability, expressing discomfort with modern severability doctrine as exceeding traditional judicial power by editing statutes rather than refusing to enforce an unconstitutional provision.31
Joined by Justices Ginsburg, Breyer, And Sotomayor
Justice Kagan agreed with the majority that the removal provision is severable.32 She stated that if the agency’s removal provision is unconstitutional it should be severed so that the CFPB can continue to function under a Director removable at will, thereby preserving Congress’s broader consumer-protection scheme.33