The President’s Removal Power and the PHH Litigation
Last Friday, the Consumer Financial Protection Bureau filed a petition for en banc review in PHH Corp. v. CFPB. The petition challenges Judge Kavanaugh’s opinion for two judges of a panel of the D.C. Circuit, which declared unconstitutional the statute limiting the President’s authority to remove the CFPB’s Director, Richard Cordray. In doing so, the petition, rather self-consciously, raises the constitutional stakes of the appeal about as high as they can possibly go — characterizing the agency’s challenge to the panel opinion as “set[ting] up what may be the most important separation-of-powers case in a generation, since the independent counsel statute was challenged in Morrison v. Olson, 487 U.S. 654 (1988).”
In this post, I won’t attempt to resolve the dispute over the constitutionality of the statutory restriction on the President’s authority to remove the CFPB Director. In light of the CFPB’s petition, there’ll be time yet to address the legality of that statute, which provides that the Director may be fired only for “inefficiency, neglect of duty, or malfeasance in office” during a five-year term. (For those interested, the panel decision has already been discussed in these pages by Aaron Nielson and Jack Beermann.)
Instead, I’ll address the distinct, but related, question whether the new President, on taking office in January, would have to wait until the culmination of the PHH litigation before removing Mr. Cordray. Several news outlets (as well as reports from law firms and commentators) appear to assume that the new President would be obligated to let the litigation run its course before acting to remove Mr. Cordray. A representative quotation from the Washington Post: “The [panel] decision, if unchallenged, could have allowed Director Richard Cordray to be replaced by President-elect Donald Trump before the end of his term, which expires in 2018.” Or in the words of the National Law Journal: The President “will be powerless on Jan. 20, when he takes office to remove Cordray without cause,” because the “challenge to the panel ruling could run for months, if not more than a year” and “[u]ntil then, the panel decision’s ruling against the CFPB cannot be enforced.” (See also here, here, here, here, and here.) The (sometimes unstated) premise in these various articles and reports is that the CFPB’s pending challenge to the panel decision somehow prevents any attempt to oust Mr. Cordray.
Such a premise appears to rest on two mistaken assumptions: (1) that the President cannot exercise his removal authority absent an Article III judgment authorizing such removal, especially when a pending case may address the very same legal question; and (2) that the CFPB Director could resist a presidential order to vacate his office. Neither assumption is correct. If the Executive Branch determines that the statute restricting the CFPB Director’s removal is unconstitutional, the President can remove Mr. Cordray before the D.C. Circuit resolves the appeal and before any judgment becomes final.
First, the President has the authority to remove the CFPB Director absent a court decision and, therefore, before the PHH litigation runs its course. This authority follows logically from the principle that the Executive Branch may assess the constitutionality of a statute, and then act on its assessment without preexisting judicial imprimatur. As President Jefferson put the point in a letter defending his Administration’s refusal to enforce the Alien and Sedition Acts (notwithstanding judicial determinations of their validity), “the executive, believing the law to be unconstitutional, was bound to remit the execution of it” — i.e., not enforce the statute. That understanding is repeated in modern treatments of this question, such as a 1994 Office of Legal Counsel memorandum characterizing as “uncontroversial” the “proposition” that “there are circumstances in which the President may appropriately decline to enforce a statute that he views as unconstitutional,” particularly “to resist unconstitutional provisions that encroach upon the constitutional powers of the Presidency.” Presidential Authority to Decline to Execute Unconstitutional Statutes, 18 Op. O.L.C. 199, 199, 201 (1994).
The paradigm case of a presidential challenge to a provision encroaching on Article II is Myers v. United States, which addressed a postmaster’s claim for backpay after President Wilson fired him. In removing the postmaster, Wilson had acted in defiance of a statute limiting presidential removal authority and without the blessing of any court. The Supreme Court decided that the statute unconstitutionally limited the President’s removal power, with no member of the Court suggesting that Wilson was obligated to comply with the statute until an Article III court told him otherwise. As OLC said during the Carter Administration, “Myers is very nearly decisive” on the point that “the President’s constitutional duty does not require him to execute unconstitutional statutes; nor does it require him to execute them provisionally, until the day that they are declared unconstitutional by the courts.” The Attorney General’s Duty to Defend and Enforce Constitutionally Objectionable Legislation, 4A Op. O.L.C. 55, 59 (1980). Thus, the President “cannot be required by statute to retain postmasters against his will unless and until a court says that he may lawfully let them go. If the statute is unconstitutional, it is unconstitutional from the start.” Id.; see also Issues Raised by Provisions Directing Issuance of Official or Diplomatic Passports, 16 Op. O.L.C. 18, 36 (1992) (rejecting “the argument that the President may not treat a statute as invalid prior to a judicial determination”).
The key takeaway is that President Wilson removed Myers; he did not direct his Attorney General to file a declaratory judgment action (or its then-existing functional equivalent) seeking permission to remove Myers. While I am not aware of a case addressing the President’s authority to fire an officer whose status is being litigated at the time of the presidential removal order, I’m hard-pressed to understand why a pending case (as opposed to a contrary judgment) affects the constitutional calculus. Leaving to one side the optics of acting while a case is awaiting disposition, there’s no “pending litigation” exception to the President’s authority to construe the Constitution. President Jefferson, for example, terminated pending prosecutions under the Sedition Act on constitutional grounds, notwithstanding the possibility that, had those prosecutions proceeded, a court may well have upheld the Act’s constitutionality. See Saikrishna Bangalore Prakash, The Executive’s Duty to Disregard Unconstitutional Laws, 96 Georgetown L.J. 1613, 1617 (2007). The same fundamental logic applies here to authorize the President to remove the CFPB Director before a court judgment, if the Executive Branch determines that the statutory restriction on removal is unconstitutional.
Second, in prior scenarios where the President has exercised the removal power, the officer has been unable to resist the order, but rather vacated his office and then challenged the legality of the removal through a personal lawsuit. That’s the avenue through which the issue was litigated in Myers itself. Moreover, on both occasions that the Supreme Court has held that the President unlawfully removed a subordinate — Wiener v. United States and Humphrey’s Executor v. United States — the removed officer ultimately vacated the office and sought remedies in an individual capacity. In both Wiener and Humphrey’s Executor, the Supreme Court ordered the government to grant backpay without addressing whether reinstatement (or comparable relief under the writ of quo warranto) was appropriate — in Humphrey’s Executor, because Mr. Humphrey’s death following his removal mooted the question and in Wiener because the issue wasn’t before the Court. E.g., Cass R. Sunstein, Constitutionalism after the New Deal, 101 Harv. L. Rev. 421, 498 n.361 (1987) (observing that Humphrey’s Executor “held only that a discharged member of the FTC has a right to back pay” and “did not involve a suit for reinstatement, and thus the court did not conclude that Congress may ensure job tenure—only that compensation is due to those whom the President discharges”). It thus remains an open question whether federal courts have the power to direct the President to reinstate a fired officer. E.g., Aziz Z. Huq, Removal as a Political Question, 65 Stan. L. Rev. 1, 74 n.358 (2013) (“injunctive relief against an executive branch official in the form of a reinstatement order would raise substantial constitutional issues”). Be that as it may, there is no precedent for the far broader argument that a subordinate officer can resist being fired by refusing to vacate an office on receiving a presidential order.
None of this is to say that a presidential order removing Mr. Cordray would be constitutional — a question outside the scope of this post. Nor does it establish the wisdom of removing Mr. Cordray. The fundamental point is that the removal may occur before, and in the absence of, a court order sanctioning it, because the President has the authority to independently construe the Constitution and the CFPB Director cannot insist that he be allowed to stay in his office following a presidential order to vacate it.
Aditya Bamzai is an Associate Professor of Law at the University of Virginia School of Law. Follow him on Twitter here.