Returning to the Constitution

By IHE Fellow Emmett McGroarty

This past June, in Seila Law LLC v. Consumer Financial Protection Bureau, the Supreme Court held that the 2010 Dodd-Frank Wall Street Reform and Consumer Protection Act violated the Constitution’s separation of powers doctrine. The decision is sure to invite further cases challenging the constitutionality of various independent federal agencies. In fact, in its opinion the Court discussed two other recently created independent agencies that rest on shaky constitutional grounds.

The salient facts in Seila are straightforward. Congress established the Consumer Financial Protection Bureau (CFPB) and vested it with immense powers, including the enforcement of nineteen federal consumer protection statutes. It housed CFPB within the Federal Reserve System as an independent bureau and placed it under the leadership of a single director, appointed by the President and confirmed by the Senate.

CFPB opened a civil investigation of the petitioner and, pursuant to that, demanded certain records. The petitioner objected, asserting that the CFPB structure violated the Constitution’s separation of powers doctrine—the Constitution’s apportionment of specific powers among the executive, legislative, and judiciary branches. More precisely, unlike most other independent agencies, which are headed by multimember boards or commissions, the CFPB is led by a single director. The president may fire the Director only on the limited grounds of “inefficiency, neglect or duty, or malfeasance in office.”

Under the Constitution, all executive power is vested in the President. The Framers expected that the President would rely on subordinate officers and therefore invested the presidency with the power to supervise them, including the authority to fire them. The Court had previously recognized only two exceptions to this rule. In one line of cases, the Court had held that Congress could provide tenure protections to certain inferior officers with narrowly defined duties (e.g., civil service jobs) and no policymaking or administrative authority. In another line of cases, the seminal case of which is Humphrey’s Executor v. United States, 295 U.S. 602 (1935), the Court found that Congress could create independent, expert agencies led by a group of principal officers removable by the President only for good cause.

In Humphrey’s Executor, the Court had considered structure of another independent agency, the Federal Trade Commission. The Court rationalized that, although the agency was part of the executive branch, it was actually exercising power in discharge of “quasi-legislative or quasi- judicial powers” and that its duties were “neither political nor executive” but instead necessitated “the trained judgment of a body of experts.”

The Court in Seila, in an opinion authored the Chief Justice, held that CFPB’s structure did indeed run afoul of the separation of powers doctrine. The Court noted that, “aside from the sole exception of the Presidency, [the Constitution] scrupulously avoids concentrating power in the hands of any single individual.” The Framers “made the President the most democratic and politically accountable official in Government,” a feature that the Court noted was enhanced by the “solitary nature of the Executive Branch.” The Court found that the “CFPB’s single-Director structure contravenes this carefully calibrated [Constitutional structure] by vesting significant governmental power in the hands of a single individual accountable to no one.” It further observed that, “with no colleagues to persuade, and no boss or electorate looking over her shoulder, the Director may dictate and enforce policy for a vital segment of the economy affecting millions of Americans.”

But rather than overturn the rule in Humphrey’s Executor, the Court merely declined to extend that line of precedent to the facts in Seila. On that part of the opinion, the Chief Justice was joined by Justices Thomas, Alito, Gorsuch, and Kavanaugh. Justice Thomas issued a separate opinion in which he dissented in part (with respect to another part of the case—the Court’s finding that the constitutional infirmities of the CFPB statute did not invalidate the whole statute) and concurred in part. Justice Thomas opined that “the Court takes a step in the right direction by limiting Humphrey’s Executor to ‘multimember expert agencies that do not wield substantial executive power.’”

Quoting one of his prior opinions, Justice Thomas called for the Court to be courageous and vigorous in defense of the Constitution: “We have a ‘responsibility to ‘examin[e] without fear, and revis[e] without reluctance,’ any ‘hasty and crude decisions’ rather than leaving ‘the character of [the] law impaired, and the beauty and harmony of the [American constitutional] system destroyed by the perpetuity of error.” With regard to the rationalization of quasi-judicial and quasi-legislative functions, Justice Thomas reasoned:

“No such powers or agencies exist. Congress lacks the authority to delegate its legislative power, and it cannot authorize the use of judicial power by officers acting outside of the bounds of Article III. Nor can Congress create agencies that straddle multiple branches of Government.”

The independent agencies are thus unconstitutional and leaving them in place “subverts political accountability and threatens individual liberty.” Justice Thomas noted that, with its decision in Seila, along with other recent decisions, the Court “has repudiated almost every aspect of Humphrey’s Executor.” He declared that, “in a future case, I would repudiate what is left of [that] erroneous precedent.”

For well over 50 years, the Court succumbed to progressive arguments to corrupt the constitutional structure in order to transfer power from the states to the federal government and from Congress to the bureaucracy and to then limit the President’s authority over the bureaucracy. From the progressive viewpoint, the Constitution, as written, does not leave room for experts to wield the necessary power to manage society. In furtherance of that, from 1887 through 2010, Congress created at least twenty-five major independent agencies (with well over half having been created after 1966). Justice Thomas’s dissenting opinion lays down the marker for a full return to the Constitution.

Emmett McGroarty, J.D., is the Director of the Program on Subsidiarity and the Constitution at the Institute for Human Ecology.