Facts
- Congress created the Consumer Financial Protection Bureau (CFPB) in the Dodd–Frank Act and transferred administration of numerous consumer-finance statutes to it.
- The CFPB was given substantial regulatory and enforcement authority, including investigations, subpoenas/civil investigative demands, administrative adjudication, and civil actions in federal court.
- The CFPB is headed by a single Director appointed by the President with Senate confirmation for a five-year term.
- The statute limited the President’s ability to remove the Director to removal for “inefficiency, neglect of duty, or malfeasance in office.”
- During an investigation into possible violations of the Telemarketing Sales Rule, the CFPB issued a civil investigative demand (CID) to Seila Law LLC seeking information and documents.
- Seila Law refused to comply, arguing the CID was invalid because the CFPB’s leadership structure violated Article II separation of powers.
- The district court enforced the CID, and the Ninth Circuit affirmed, concluding the for-cause removal restriction did not improperly impair presidential duties.
- The Supreme Court granted review to decide the constitutionality of the Director’s removal protection and, if unconstitutional, whether that protection was severable from the CFPB’s statutory scheme.
Issues
- Whether Congress violates separation of powers by vesting substantial executive authority in an agency headed by a single Director who is removable by the President only for cause.
- If the removal restriction is unconstitutional, whether it is severable such that the CFPB may continue to operate with the Director removable at will.
Decision
- The Court held (5–4) that the CFPB’s structure—substantial executive authority vested in a single Director protected by for-cause removal—violates separation of powers under Article II.
- The Court held (7–2 as to severability) that the statutory removal restriction, 12 U.S.C. § 5491(c)(3), is severable from the remainder of the CFPB provisions in Dodd–Frank.
- The Court vacated the Ninth Circuit’s judgment and remanded for further proceedings consistent with its opinion.
- As a result, the CFPB could continue operating, but the Director became removable by the President at will.
Legal Principles
- The President generally must be able to remove executive officers at will as part of Article II’s requirement of presidential control over execution of federal law.
- Existing precedent recognizes only limited categories in which Congress may impose for-cause removal restrictions: (1) certain multi-member expert commissions exercising regulatory functions; and (2) certain inferior officers with limited duties and no broad policymaking role.
- An agency design that concentrates significant executive power in a single principal officer insulated from at-will removal exceeds those limited categories and is unconstitutional.
- When a discrete statutory provision is unconstitutional, courts apply a presumption of severability (reinforced by an express severability clause) and will sever the invalid restriction if the remainder of the statute can function as law.
Conclusion
The Supreme Court held that Article II forbids insulating the head of an agency wielding substantial executive authority when that agency is led by a single Director removable only for cause, but it preserved the CFPB by severing the for-cause removal restriction and leaving the agency’s remaining authorities in place.