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The Supreme Court just took aim at Congress’s ability to protect federal agencies from partisan politics

The conservative legal community has been playing a long game aimed at overturning New Deal decisions.

- July 1, 2020

On Monday, the Supreme Court’s five-justice conservative majority struck at Congress’s power to insulate the federal bureaucracy from political interference. In Seila Law v. Consumer Financial Protection Bureau (CFPB), Chief Justice John G. Roberts Jr. made a move in a long-game effort by the conservative legal movement to dismantle the so-called administrative state, as we’ll explain below.

More immediately, the court held that the independent watchdog’s structure was unconstitutional because the president must be able to remove the CFPB director at will. That wasn’t possible in the CFPB statute, by design; Congress wanted the agency to maintain some independence from the executive branch. Here’s what you need to know.

What the case is about

The Consumer Financial Protection Bureau, created in 2010, is a newcomer among the alphabet soup of federal agencies and commissions that expand on and enforce the policies Congress created by statute. Harvard Law School bankruptcy professor Elizabeth Warren — before she was a U.S. senator — worked with the Obama administration to create the agency to regulate consumer financial products, such as mortgages and student loans.

To preserve the agency’s independence, Congress wrote the statute to have a single director, appointed by the president to a five-year term, who could only be removed for inefficiency, neglect of duty, or malfeasance in office.” The independence was intentional; after the last recession, Warren and others wanted to protect the regulators from the influence of well-heeled banks.

Within the sprawling federal bureaucracy, regulatory agencies differ in design. Congress created some, such as the Federal Communications Commission and the Federal Election Commission, to be especially independent, led by bipartisan panels of commissioners. Some are led by a single director, with only a few protected from removal at the will of the president.

The ability to shape the personnel working throughout the bureaucracy is vital to a president’s agenda. Political scientists have demonstrated that the ways Congress structures agencies can make it easier or harder for presidents to influence the direction of policy. When a president can make partisan political appointments, that agency becomes less responsive to Congress and even less responsive to members of Congress from the party not in the White House. When appointees see their jobs as supporting the president’s party rather than channeling technical expertise, they will sideline those in Congress and the civil service who disagree.

The case decided this week began in 2017 when Seila Law LLC, a California-based law firm that provides debt-relief services, challenged a CFPB order to turn over documents. In the challenge, the firm claimed that the CFPB was unconstitutional because the bureau’s design deprived the president of rightful control.

Roberts concluded that Congress went too far when it combined “for cause” insulation with the single-director design. This doesn’t mean that the whole bureau is unconstitutional. The court left the CFPB in place with a director whom the president can now remove, appoint and replace at will.

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The court’s long game to unravel the New Deal

But the issue has implications much broader than the CFPB alone. In 1935, in Humphrey’s Executor v. U.S., the Supreme Court ruled that Congress could indeed prevent President Franklin D. Roosevelt from removing a member of the Federal Trade Commission without good cause. FDR had wanted to remove William Humphrey, one of the FTC commissioners, solely on the basis of political differences. That precedent allowed Congress to be creative in agency design. As Justice Clarence Thomas noted in his concurring opinion in Seila Law, Humphrey’s Executor illustrates the “pragmatic, flexible approach” to the Constitution that allowed Congress to create a powerful central government in the 20th century.

This may seem like a small point. But in fact, whether the president can run the executive branch without constraints — and therefore may remove agency heads at will — has always been tied to very different visions of the Constitution. For decades, the conservative legal movement has advanced a theory of the “unitary executive,” holding that the president must have control, unrestrained by Congress, over all decisions that are executive in nature. Groups like the Federalist Society, an organization of lawyers and judges dedicated to advancing conservative legal theories, have worked to fill the federal courts with conservatives judges schooled in this idea. In particular, since President Ronald Reagan began working to undo business regulations that executive branch agencies wrote to carry out congressional laws, conservatives have argued that presidential control would help undo burdensome, complex regulations written by civil servants unaccountable to voters.

Scholars have been watching Seila Law to see whether the court would advance the “unitary executive” vision — and if so, whether it would overturn Humphrey’s Executor, making agencies less beholden to Congress and more responsive to the president.

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What’s next

Seila Law was not a complete victory for champions of the unitary executive. In his opinion, Roberts didn’t overturn Humphrey’s Executor, which allowed Congress to restrict the removal power for a different type of agency: “multimember expert agencies that do not wield substantial executive power” like the Federal Trade Commission. The CFPB, Roberts thought, is a more extreme case.

But Thomas’s concurring opinion, which was joined by Justice Neil M. Gorsuch, emphasized Roberts’s words — whether an agency wields “substantial executive power” — as a potentially significant qualifier. More litigation challenging Congress’s oversight of the executive branch will follow.

President Trump, like many of his predecessors, has found the idea of the unitary executive convenient. In particular, the Trump administration has recently forced out agencies’ inspectors general (IGs) when their investigations clash with his interests. IGs, sometimes described as “moles” for Congress, are unique; they sit within the executive branch and investigate agencies independently, but report to the legislative branch — Congress, and often the public. The statute creating most IGs allows the president to remove them without showing “good cause,” but under changes made by Congress in 2008, the president must explain the removal to Congress at least 30 days beforehand. This relatively recent restriction, too, may run afoul of the theory that holds sway on the court.

Seila Law, then, left the door open to further challenges by presidents and conservative constitutional lawyers who wish to undo Congress’s constraints, whether those challenges come directly, by claiming that independent commissions are unconstitutionally wielding executive authority, or indirectly, by simply ignoring Congress. The conservative majority on the court is shifting the playing field for the federal bureaucracy.

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Patrick Schmidt (@pdwschmidt) is professor of political science and co-director of legal studies at Macalester College.

Margaret Moran (@mdmmargaret) is an undergraduate at Macalester College.