En Banc D.C. Circuit Hears Arguments On Constitutionality of CFPB
On May 24th, an en banc collection of eleven circuit court judges from the U.S. Court of Appeals of the District of Columbia heard oral arguments on the constitutionality of the structure of the Consumer Financial Protection Bureau (CFPB) in PHH v. CFPB. The en banc hearing comes after an October 2016 decision by a three-judge panel at the D.C. Circuit was appealed, and the court agreed to rehear the issues before the entire bench. The original panel found that the agency’s single independent director structure, in which the director can only be fired “for cause,” was unconstitutional.
The en banc panel was mostly split over the constitutionality of the agency. Some judges questioned whether the President could faithfully execute the law without exerting greater control over the CFPB. Judge Griffith conceded that there may not be another instance in American history in which a single agency director held so much power. Judge Brown noted that she could not name an instance in which a federal agency director had ever been fired “for cause,” alluding to the difficulty such a standard might pose.
The attorney for PHH Corporation, a mortgage service provider, argued that the agency’s lack of accountability to the President actually created a plurality in the executive branch that violates the U.S. Constitution. PHH is advocating to dissolve the entire agency, not just amend its administrative structure. In a unique twist, the U.S. Department of Justice is actually arguing against the CFPB and supported the restructuring of the agency.
This is not the only case currently being litigated about the CFPB, the constitutionality of the agency and the actions of its director. Another case is challenging the appointment of the agency’s director. The Ninth Circuit previously ruled that the appointment of CFPB Director Richard Cordray during a recess of Congress was valid and judgments entered during that time could be enforced. That case is currently being appealed to the Supreme Court. Ligitating the constitutionality of the agency may become moot if Congressional Republicans succeed in passing sweeping reforms to the Dodd-Frank Act, the legislation that created the CFPB. The D.C. Circuit has yet to announce when it will deliver an en banc opinion in the PHH case.
