Notice & Comment

Why the CFPB Director Shouldn’t Be Going Anywhere, by Brianne Gorod

brianne-gorod-cacThere’s been a lot of talk in Washington lately about the people President-elect Trump has chosen to fill various executive branch positions, but there’s one position we shouldn’t be hearing talk about him filling: Director of the Consumer Financial Protection Bureau (CFPB).

When Congress created the CFPB, it deliberately chose to insulate the CFPB Director from political influence, giving him a five-year term and making him removable only for “inefficiency, neglect of duty, or malfeasance in office.” Although in PHH Corp. v. CFPB, a panel of the United States Court of Appeals for the D.C. Circuit recently held, in a divided vote, that the removal provision is unconstitutional, the full D.C. Circuit is currently deciding whether to rehear the case. If it decides to do so, that decision will vacate the panel’s judgment, restoring the status quo. In other words, if the D.C. Circuit decides to rehear the case, the law creating the CFPB would continue to operate as Congress intended, and the CFPB Director would not be removable at will by the President.

One law professor, Aditya Bamzai, recently suggested that, whatever the D.C. Circuit may do, President Trump can ignore the law and remove the current CFPB Director anyway, and that the CFPB Director could not remain in office while resisting his removal. Both propositions are wrong.

To start, there’s no question that if the President were to attempt to remove the current Director, the Director could challenge his removal in court. In Swan v. Clinton, 100 F.3d 973 (D.C. Cir. 1996), the D.C. Circuit considered a lawsuit brought by Richard Swan after President Clinton removed him from his position as a member of the Board of the National Credit Union Administration. Although the court ultimately concluded that Congress did not extend removal protection to officers in Swan’s position, the court made clear that it had jurisdiction to consider Swan’s claims. Id. at 981.

Moreover, contrary to Bamzai’s suggestion, the current Director would not even have to leave his position in order to challenge an attempted removal in court. In fact, despite the relative rarity of Presidents challenging the validity of for-cause removal provisions, there are a number of examples in which officers resisted a removal order until a court could decide whether the removal was proper.

In 1981, for example, President Reagan sought to remove William Borders, a member of the District of Columbia Judicial Nomination Commission who had been appointed the previous year by President Carter. President Reagan did not claim there was cause to remove Borders; he simply felt that he had a right to appoint someone who would represent him. Borders sued, and asked the D.C. district court to enter an “injunction compelling the President” to “withdraw the certificate purporting to appoint [his replacement] to the Commission.” Borders v. Reagan, 518 F. Supp. 250, 251 (D.D.C. 1981). The court considered whether the President had the right to remove Borders at will and concluded that he did not. According to the court, “the purported removal here was invalid, and . . . the plaintiff, since he has neither completed the statutorily-fixed term, resigned nor been removed for cause, is still a member of the District of Columbia Judicial Nomination Commission” and has “been a member of that Commission throughout the entire period since his appointment.” Id. at 268. Although the D.C. Circuit subsequently vacated the opinion and remanded to the district court to dismiss the case as moot (Borders had subsequently resigned for unrelated reasons), 732 F.2d 181 (D.C. Cir. 1982), the case nonetheless illustrates courts’ willingness to entertain suits for injunctive relief by officers who are resisting removal.

Similarly, two years later, President Reagan sought to remove certain members of the Commission on Civil Rights. The commissioners sued and sought to “enjoin the President of the United States from removing them as Commissioners.” Berry v. Reagan, 1983 WL 538 (D.D.C. Nov. 14, 1983). Here, too, the President’s claim that he had unlimited discretion to remove the Commissioners was unsuccessful before the district court, which concluded there was a substantial likelihood that the plaintiffs would prevail on the merits of their claims that the President’s attempt to remove them was unlawful. After also concluding that plaintiffs would suffer irreparable injury in the absence of an injunction and that the public interest favored issuance of an injunction, the district court “preliminarily enjoined [the President] from preventing or interfering with plaintiffs service as members of the U.S. Commission on Civil Rights.” Id. at 5. (Berry remained on the Commission after the district court ruled and was subsequently reappointed by Congress to an enlarged commission.)

Finally, in 1993, President George H.W. Bush sought to remove members of the Board of Governors of the Postal Service Board, and those members also resisted the attempted removal. They sued in the D.C. district court. As in the cases just discussed, they stayed in office and sought a temporary restraining order preventing the President from removing them. Mackie v. Bush, 809 F. Supp. 144 (D.D.C. 1993). The court concluded that, given related litigation before the court of appeals, the President should not be able to remove the members: “Temporary postponement of the President’s removal order would not appear to cause any damage to his interest or to that of the United States. On the other hand, removal of the majority of the Postal Service Board . . . could be irrevocably disruptive of the Board’s function and plaintiffs’ legal responsibility for carrying it out, all to the damage of the public interest.” Id. at 146. Accordingly, the court “ordered the President to defer . . .” termination of those members. Id. at 148. In sum, there’s clear precedent that the current Director of the CFPB could resist his removal by bringing an action for injunctive relief if President Trump were to try to remove him.

But what about the first question – does the President have the authority to remove the CFPB Director at will even though the law says otherwise? According to Bamzai, the answer is yes: the “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.” This, too, is wrong. To be sure, the executive branch—through the Department of Justice’s Office of Legal Counsel (OLC)—has concluded that there are circumstances in which the President can decline to enforce a statute that he believes to be unconstitutional. But even assuming those opinions are correct (and there’s room to debate that point), those very opinions make clear that ignoring the law would be wholly inappropriate in this context.

As OLC has made clear, a presidential decision not to enforce the law is not something that should be taken lightly – the President, after all, has a constitutional obligation to “take Care that the Laws shall be faithfully executed,” U.S. const. art. II, § 3, and failing to enforce the laws does just the opposite. Thus, OLC has made clear that the President should proceed “with caution” before declining to enforce a law properly enacted by Congress. Presidential Authority to Decline to Execute Unconstitutional Statutes, 18 Op. O.L.C. 199, 203 (1994) [hereinafter Presidential Authority].

Significantly, a major reason why the President may sometimes decline to enforce a law enacted by Congress is to avoid taking action that is itself unconstitutional. As OLC has noted, “in serving as the executive created by the Constitution, the President is required to act in accordance with the laws—including the Constitution, which takes precedence over other forms of law.” Presidential Authority, supra, at 200. In other words, if a federal law compels the President to act in a way that he believes is unconstitutional, his obligation to the Constitution itself requires him not to enforce the law. That factor strongly counsels against failure to comply with the law here, given that compliance with the for-cause removal provision does not require the President to take any action that he believes is unconstitutional. After all, not even the staunchest critics of the CFPB have argued that the Director must be removed in order for the President to comply with the Constitution.

Even if this factor is not dispositive in the executive branch’s view (OLC has cited approvingly to a case in which the President removed an officer, notwithstanding federal law that limited his removal power, see, e.g., Presidential Authority, supra, at 199), other factors make clear why the President has no authority to disobey the law in this context. Most significantly, there is every reason to think that the courts will ultimately conclude that the CFPB’s for-cause removal provision is constitutional. As OLC has explained, the President should execute a statute, notwithstanding his own beliefs about its constitutionality, if he “believes that the Court would sustain a particular provision as constitutional.” Id. at 200. In short, it is one thing for a President to choose not to enforce a law when there is real reason to question its constitutionality; it is another thing altogether for him to do so when there is considerable case law supporting the constitutionality of the law.

Here, there is well-established case law going back to the 1930s that makes clear that the for-cause removal provision governing the CFPB Director is constitutional. See, e.g., Humphrey’s Ex’r v. United States, 295 U.S. 602 (1935). Indeed, that 1930s case upheld a for-cause removal provision that is identical to the one governing the CFPB Director. And that case has been reaffirmed repeatedly by the Supreme Court in the years since, including as recently as six years ago, Free Enter. Fund v. Pub. Co. Accounting Oversight Bd., 561 U.S. 477 (2010). To be sure, those cases involved multi-member commissions, rather than single-director agencies, but that is a distinction without a difference from a constitutional perspective, as colleagues and I explain in a white paper on the CFPB’s constitutionality.

Finally, OLC authority makes clear that another important reason why the President can sometimes decline to enforce a statute is to ensure that the legal issue can be set up for resolution by the courts. As OLC has explained, “the President may base his decision to comply (or decline to comply) in part on a desire to afford the Supreme Court an opportunity to review the constitutional judgment of the legislative branch.” Presidential Authority, supra, at 201. After all, there will be cases in which “[i]f the President does not challenge . . . provisions (i.e., by refusing to execute them), there . . . will be no occasion for judicial consideration of their constitutionality.” Id. Here, of course, that is not the case, as the pending D.C. Circuit case makes clear. Thus, this factor, too, counsels against a conclusion that the President can decline to respect governing law.

In sum, OLC has made clear that a President should proceed with the utmost caution before failing to comply with existing law. As one OLC opinion puts it, “unless the unconstitutionality of a statute is clear, the President should attempt to resolve his doubts in a way that favors the statute, and he should not decline to enforce it unless he concludes that he is compelled to do so under the circumstances.” Id. at 204 (quoting Memorandum for the Honorable Robert J. Lipshutz, Counsel to the President from John M. Harmon, Assistant Attorney General, Office of Legal Counsel (Sept. 27, 1977)). Under the circumstances here – where compliance would plainly not violate the Constitution, considerable Supreme Court case law supports the constitutionality of the provision, and non-compliance is unnecessary to secure judicial resolution – it would be plainly improper for the President to ignore the governing law.

Thus, assuming the full D.C. Circuit agrees to rehear the pending case and restores the CFPB Director’s for-cause removal protection, it would be unlawful for President Trump to try to remove the current CFPB Director on the ground that the Director’s for-cause removal protection is unconstitutional. But if Trump were to try it anyway, one other thing is also clear: the Director would be able to resist his removal by seeking redress in the courts, and the courts could prevent the President from removing him.


Brianne Gorod is Chief Counsel at the Constitutional Accountability Center and previously served as a law clerk to Justice Stephen Breyer and as an Attorney-Adviser in the Office of Legal Counsel at the U.S. Department of Justice. Follow her on Twitter here.

Print Friendly, PDF & Email