The views expressed by contributors are their own and not the view of The Hill

The D.C. Circuit demotes Richard Cordray

Getty Images

Quick—if President Obama is the most powerful official in the U.S. government, who was the second most powerful official as of this time last week? The Speaker of the House? The Chief Justice? The Senate Majority Leader? The Attorney General, Secretary of State, or Secretary of Defense? The Chair of the Federal Reserve Board? The CIA Director? The Vice President?

No, no, no, no, no, no, no, no, and, of course, no. According to Judge Brett Kavanaugh of the U.S. Court of Appeals for the D.C. Circuit, it was Richard Cordray, Director of the Consumer Financial Protection Bureau (CFPB).

{mosads}No doubt that came as news to Cordray. But by the time he got the news, it was no longer true. Judge Kavanaugh and his colleague, Senior Judge A. Raymond Randolph, in their opinion this past Tuesday in PHH Corporation v. CFPB, took away that supposed power by giving Cordray a quick demotion.

Specifically, the court held that the provision in the Dodd-Frank Act that says the CFPB’s director can be removed by the President only for cause—“inefficiency, neglect of duty, or malfeasance in office”—violates constitutional separation-of-powers principles. The remedy, the court held, is not to take away any of the powers of the CFPB, but to make its director terminable at will by the President. Under the court’s ruling, the President can fire Cordray at any time, for any reason, or for no reason at all.

The decision is the latest episode in a long-running constitutional debate over whether Congress can delegate authority to officials who are not subject to direct presidential supervision. In its 1926 decision in Myers v. United States, the Supreme Court seemed to hold that all federal officers exercising executive power have to be removable at will by the President.

In 1935, however, the Court reversed course, holding in a case called Humphrey’s Executor v. United States that a law protecting the commissioners of the Federal Trade Commission from removal by the President was constitutional. Humphrey’s Executor paved the way for the creation of a wide range of independent agencies exercising broad powers. And in 1988, the Court went even further in Morrison v. Olson, upholding the independent counsel statute and ruling that Congress may confer the power of criminal prosecution on an officer who is independent of the President.

In enacting Dodd-Frank, Congress apparently thought Humphrey’s Executor and Morrison put it on safe ground in making the CFPB an independent agency and protecting its director against removal at will by the President. But in the PHH decision, the D.C. Circuit said otherwise.

Humphrey’s Executor, the court held, permits Congress to create independent agencies only if they are headed by multi-member commissions or boards. As for Morrison, the PHH opinion mostly relies on Justice Scalia’s dissent in the case, and it says that there is “nearly universal consensus” that the now-expired independent counsel statute was a “mistake” and that Justice Scalia was right to view it as unconstitutional.

Ironically, Judge Kavanaugh was a deputy in the Whitewater Independent Counsel’s Office. Rightly or wrongly, the Whitewater investigation contributed greatly to the impression that the independent counsel statute was a mistake as a policy matter. However widespread that impression may be, it is startling to find in a federal appellate decision an assertion that there is near-universal agreement that a relatively recent Supreme Court opinion was wrongly decided.

The central thrust of the PHH opinion is that, regardless of the validity of Humphrey’s Executor and Morrison, an independent agency headed by a single officer lacks a sufficient historical pedigree to pass muster constitutionally. And although the court acknowledged that such an agency doesn’t interfere with presidential power any more than does a multi-member agency, the court considered it more of a threat to liberty because a single director’s power is not checked by co-equal officers whose concurrence is required before the agency can act.

Under the PHH court’s “history-focused approach,” the Supreme Court probably wouldn’t have upheld the independence of the FTC in Humphrey’s Executor or the independent counsel statute in Morrison. But given Judge Kavanaugh’s expressed doubts about the validity of both those decisions, that consideration probably was of less concern to the court than was the fact that appeals to “history” were central to Justice Breyer’s recent opinion in another major separation-of-powers case, NLRB v. Noel Canning, which limited the use of recess appointments.

Indeed, Judge Kavanaugh’s opinion invokes Justice Breyer’s name over a dozen times, more than that of any other Supreme Court Justice except Scalia. Those mentions are a telling reminder that, while it may remain open to further debate whether the President has the power to fire Director Cordray, there is no doubt that the Supreme Court has the power to reverse the D.C. Circuit.

Scott L. Nelson is Attorney with Public Citizen Litigation Group.

The views expressed by authors are their own and not the views of The Hill.


Copyright 2023 Nexstar Media Inc. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.

More Judicial News

See All
See all Hill.TV See all Video

Most Popular

Load more


See all Video