Clement files brief in Seila Law defending CFPB’s constitutionality

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Paul Clement, who was appointed amicus curiae by the U.S. Supreme Court to defend the Ninth Circuit’s ruling in Seila Law that the CFPB’s structure is constitutional, filed a brief with the Supreme Court this week in support of the ruling.

As an initial matter, Mr. Clement argues that the Court should deem the dispute over the Bureau’s constitutionality premature because Seila Law has not suffered an injury that is traceable to the constitutionality question.  He argues further that even if there was a sufficient connection to satisfy Article III, “prudential considerations would counsel against deciding this most consequential of constitutional issues in this most artificial of postures.”  (A similar jurisdiction argument was made in the amicus brief filed by Professor Alan B. Morrison of George Washington University Law School.)

With regard to traceability, Mr. Clement asserts that any connection to the CFPB’s issuance of the CID challenged by Seila Law or the Bureau’s decision to seek court enforcement of the CID has been “severed entirely” by subsequent events, namely that the CID was endorsed by Acting Director Mulvaney who was subject to at-will removal by the President and by Director Kraninger, a Senate-confirmed Director who agrees with the view that she is removable at will.  According to Mr. Clement, “Director Kraninger retains the ability to drop this enforcement petition.  That she has not done so despite her view that she serves at the pleasure of the President makes crystal clear that the enforcement action that forms the basis of petitioner’s injury has nothing to do with the constitutional issue it asks this Court to decide.”

With regard to prudential considerations, Mr. Clement asserts that “a contested removal is the proper context to address a dispute over the President’s removal authority.”  He observes that “here, not only does the President have his own person in the job, but she understands herself to serve at the pleasure of the President.  That is not the recipe for a ripe removal dispute.”  In addition to asserting that the dispute is unripe, Mr. Clement calls it “entirely theoretical” because “the whole notion that petitioner is victimized by an officer wielding executive power yet insulated from presidential control has been overtaken by events.”  Pointing to the Bureau’s change in position regarding its constitutionality, he asserts that “[w]hatever was true when this suit was first filed, the theory of the unitary executive appears alive and well in the Director’s office.”

Mr. Clement argues in the alternative that if the Supreme Court does reach the constitutionality question, it should hold that the Dodd-Frank Act’s “for cause” removal provision is constitutional.  He argues that the Constitution gives Congress substantial discretion to structure and organize executive branch departments and agencies, which includes the authority to limit the President’s discretion to remove certain officers.  He contends that Supreme Court precedent supports the Bureau’s constitutionality, stating that “every time this Court has confronted a provision that leaves the removal authority with the President, but imposes modest limits on his discretion, the Court has upheld the provision either unanimously or nearly so.”   

Responding to the CFPB’s and Seila Law’s attempt to distinguish the Supreme Court’s decision in Humphrey’s Executor that upheld a for-cause removal restriction on members of a multimember agency, Mr. Clement argues that “[n]ot only is that purported distinction unconvincing…but it cuts the wrong way and confirms that the CFPA is constitutional, a fortiori, in light of Humphrey’s Executor.  If it is unconstitutional to impose for-cause removal restrictions on one officer exercising executive power, imposing those restrictions on five officers exercising executive power would seem five times worse.”  While acknowledging that “Congress has also frequently assigned certain specialized responsibilities to multimember commissions, often with specific partisan-balance requirements,” he asserts that “there is not so much as a hint that Congress chose the multimember and partisan-balance format in an effort to grant the President greater control.  To the contrary, the same impetus that caused Congress to want to impose modest removal restrictions to insulate a particular function from unfettered Presidential control led Congress to go further in the direction of insulation by layering multimember and partisan-balance requirements on top of removal restrictions.” (emphasis included).   

He also argues that the Court should not overrule Humphrey’s Executor as urged by the CFPB and Seila Law.  He calls the case “the cornerstone of the constitutionality of roughly a third of our modern federal government” and asserts that, together with its progeny, it “provide[s] a perfectly workable standard: So long as Congress leaves removal authority with the President, and does not attempt to assign it elsewhere, it may impose modest restrictions on his authority.”  He claims that this “basic distinction is easy to apply and harmonizes all of this Court’s removal decisions.”

Mr. Clement concludes his brief by arguing that should the Court have “grave constitutional doubts” about the for-cause removal provision’s constitutionality, it “can and should construe the provision to resolve that doubt in favor of preserving it.”  Observing that the “gravamen of the parties’ challenge is that the inefficiency-neglect-or malfeasance standard imposes too much of a restriction on the President’s removal authority,” he asserts that unless “even the slightest restriction on the President’s removal authority crosses some implicit constitutional line,” the standard “can be interpreted to impose only a permissible degree of restraint.”  He adds that “in an actual contested removal, the President would be entitled to substantial deference in identifying inefficiency, neglect, or malfeasance.”

Mr. Clement acknowledges that “it is difficult to pinpoint the precise construction of the [removal] standard that would avoid the constitutional issue in this case,” but claims “that is because no Director has been removed for any reason, and the current Director believes she serves at the pleasure of the President.”  He asserts that if a CFPB Director is removed some day for a reason that the President deems sufficient but the Director deems insufficient, “there would be ample flexibility in the ‘very broad’ inefficiency-neglect-malfeasance standard to avoid any constitutional difficulty.”

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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