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On October 18, the Supreme Court granted certiorari in Seila Law v. Consumer Financial Protection Bureau (CFPB). The question presented before the Court is “whether the substantial executive authority yielded by the CFPB, an independent agency led by a single director, violates the separation of powers.”  In addition, the Court requested that the parties brief and argue an additional question: “If the Consumer Financial Protection Bureau is found unconstitutional on the basis of the separation of  powers, can 12 U.S.C. § 5491(c)(3) [the for-cause removal provision] be severed from the Dodd-Frank Act?”

The Dodd-Frank Act established the CFPB as an independent bureau within the Federal Reserve System in 2010. The Bureau has the power to implement and enforce nineteen enumerated federal consumer protection statues. The Director of the CFPB is appointed by the President with the advice and consent of the Senate. However, under 12 U.S.C. 5491(c)(3), the Director may not be removed by the President absent “inefficiency, neglect of duty, or malfeasance in office.” In its petition for certiorari from the Court of Appeals for the Ninth Circuit, the petitioner argues that this restriction on removal unconstitutionally insulates the Director from the President’s control and therefore interferes with his executive power of removal. CFPB Director Kathleen Kraninger has publicly announced the CFPB’s determination that the for-cause removal provision is unconstitutional, which is contrary to the position the CFPB has previously taken in litigation.

If the Court determines that the CFPB’s current structure is unconstitutional, it will have to fashion the appropriate remedy and therefore determine whether the entire CFPB must be struck down or whether the “for cause” removal provision is severable from other provisions of the Dodd-Frank Wall Street Reform and Consumer Protection Act, CFPB’s enabling statute. As noted above, the Court has ordered the parties to brief the question of whether the removal provision may be severed from the Dodd-Frank Act.  Notably, in October 2016, then-Judge, now Justice, Brett Kavanaugh, declared that the structure of the CFPB violated Article II’s Vesting and Take Care Clauses but could be cured by severing the “for cause” removal provision in deciding a similar challenge to the CFPB’s constitutionality in PHH Corp. v. Consumer Financial Protection Bureau. In January 2018, the D.C. Circuit en banc reversed this portion of then-Judge Kavanaugh’s decision and upheld the constitutionality of the CFPB’s structure.

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