After lengthy litigation on which we have commented extensively (see here and here), the US Court of Appeals for the District of Columbia Circuit issued an en banc opinion vacating and reversing in part a decision of a panel of that court, and holding that the Bureau of Consumer Financial Protection (Bureau, and formerly the CFPB), was not unconstitutionally structured. PHH Corp. v. Consumer Financial Protection Bureau, 881 F.3d 75 (DC Cir. 2018). For reasons not directly relevant to the instant matter, that litigation has ended and the Bureau has ended its administrative proceedings against PHH.
Now, a petition for certiorari filed by a small Texas bank that has engaged in contentious litigation against the Bureau challenges anew the constitutional underpinnings of the Bureau. The State National Bank of Big Spring seeks a determination from the court that Congress constitutionally may not abdicate its oversight authority, whether previous law dating to 1935 that limits the US president’s authority to remove certain officers is constitutional, and whether the Appropriations Clause permits Congress to authorize unreviewable funding streams drawn from other agencies that are themselves unreviewable, such as the Federal Reserve Board. Read the petition.
The timing here is propitious. As we have previously written, a panel of the DC Circuit had originally held, in a strongly-worded opinion authored by Judge Brett Kavanagh, that the Bureau’s structure was, in fact, unconstitutional in that its director may only be removed for cause, is not subject to a review by a multi-member commission of any sort, and has no appropriations restraints because his Bureau draws funding from the Federal Reserve Board. Although the full circuit vacated and effectively reversed that judgment, then Judge and (depending on Senate action) soon-to-be Justice Kavanagh may entertain this petition and any ensuing proceeding as a member of the US Supreme Court should the petition be granted. Moreover, the Bureau is now under the control of a new acting director, and the US Department of Justice has changed its position on the Bureau’s constitutionality from defending the Bureau in 2016 to siding with PHH at or about the time of the change in administration in early 2017. Therefore, it is fair to expect that the Justice Department, if asked by the court or otherwise, would side with the petitioner on the current petition.
In sum, the future of the Bureau and how it may be structured remains uncertain, and that uncertainty may play out through the courts, if not through Congress.