Case Status: Victory

Seila Law LLC v. CFPB

  • U.S. Supreme Court
“cfpb 36794” by Ted Eytan licensed under CC BY-SA 2.0.

Loosening the grip of the administrative state

In Seila Law LLC v. CFPB, the Supreme Court voted 5-4 to take an important first step in restraining the nearly unchecked power of independent agencies by ruling that the structure of the Consumer Financial Protection Bureau is unconstitutional.  The CFPB is an independent agency in charge of regulating consumer debt products. The law creating the CFPB structured the agency to be governed by a single director who could only be removed from office for inefficiency, neglect, or malfeasance. As a result, the law shielded the director’s policy decisions from presidential oversight, and by extension, democratic accountability.

CIR, in partnership with the Cato Institute and Americans for Prosperity, filed an amicus brief arguing that proper respect for the separation of powers and the president’s responsibility to faithfully execute the law requires that the president retain the authority to remove administrative officers who wield executive power as he deems necessary.  This removal authority was severely diminished in a 1935 Supreme Court decision, Humphrey’s Executor.  CIR’s amicus brief asked the court to narrow Humphrey’s Executor to bring it in line with the Constitution’s allocations of power.

Though the court did not go as far as comprehensively reforming the law under Humphrey’s Executor, Justice Thomas wrote a concurring opinion that was joined by Justice Gorsuch explaining that the Court “took a step in the right direction by limiting Humphrey’s Executor.”  Thomas’ opinion anticipates a future case in which the problems of Humphrey’s Executor will be more thoroughly confronted once and for all.