Last October, in connection with the appeal by a business of an enforcement action by the Consumer Financial Protection Bureau (CFPB), a three-member panel of the US Court of Appeals for the District of Columbia Circuit ruled that the structure of the CFPB was unconstitutional, but that the violation was easily remedied by severing the part of the statute that allowed the CFPB Director to be fired only for cause and instead giving the President the authority to fire the Director at any time. You can read our post on the October 11, 2016, decision, here.

The CFPB filed a petition for the case to be reheard en banc, that is, by the entire Court of Appeals. On February 11, 2017, the Court granted the petition for rehearing en banc, vacated the October 11, 2016, judgment and ordered oral argument to be heard May 24, 2017, with written briefs due in March and April. In granting the petition, the Court of Appeals directed the parties to include three issues in their briefs, one of them being “Is the CFPB’s structure as a single-Director independent agency consistent with Article II of the Constitution and, if not, is the proper remedy to sever the for-cause provision of the statute?”

While prior to the inauguration of Donald Trump, the US Justice Department had been supportive of the position of the CFPB, that support ended decisively March 17, when the US government filed an amicus brief arguing that the October ruling that the current structure of the CFPB was unconstitutional was indeed the correct decision. An amicus, or friend of the court, brief is filed in a case by a non-party that may otherwise have a strong interest in the case. The brief was submitted at the request of the Court; US Courts sometimes may request the Justice Department to offer its views when a US interest may be involved.

As discussed in the brief, the Justice Department only addressed the constitutionality of the current structure, arguing that the reasoning behind the appellate panel’s decision was correct: the President’s authority to remove an agency head at will was applicable to the CFPB, and a Supreme Court case that imposed restrictions on the President’s authority to remove members of multi-member regulatory commissions should not be extended to agencies headed by a single person (such as the CFPB):

A single-headed agency, of course, lacks those critical structural attributes that have been thought to justify “independent” status for multi-member regulatory commissions. Moreover, because a single agency head is unchecked by the constraints of group decision-making among members appointed by different Presidents, there is a greater risk that an “independent” agency headed by a single person will engage in extreme departures from the President’s executive policy.

The Justice Department also argued that it does not see a need to invalidate the entire existence of the CFPB, noting that “[p]recedents of the Supreme Court and [the Court of Appeals for the District of Columbia Circuit] leave no doubt that the remedy for the asserted constitutional violation would be to sever the provision limiting the President’s authority to remove the CFPB’s Director, not to declare the agency unconstitutional.”