Supreme Court Divided on Trump’s Power to Fire Head of Consumer Bureau

WASHINGTON — Paul D. Clement, a lawyer appointed by the Supreme Court to defend the independence of the Consumer Finance Protection Bureau after the Trump administration refused, gave a timely example on Tuesday to illustrate why it can be a good idea for agencies to be insulated from politics.

“People are trying to make a political football out of dealing with a pandemic disease,” he said, referring to the coronavirus outbreak. A reasonable congressional response, he said, might be to make it harder to fire the director of the Centers for Disease Control and Prevention. “That is the kind of sensible decision that Congress has been making for over 100 years,” Mr. Clement said.

In the case before the justices, a challenge to the constitutionality of the consumer bureau’s leadership structure, the court’s conservative majority generally seemed open to setting limits on agencies’ independence.

The bureau is the brainchild of Elizabeth Warren, then a law professor at Harvard and now a Democratic senator and presidential candidate, and was created as part of the Dodd-Frank Act, which was passed in 2010 after the financial crisis. In an effort to protect the bureau from politics, the act said the president could remove its director only for cause, defined as “inefficiency, neglect of duty or malfeasance.”

That standard is used in many laws, but it tends to limit the president’s power to fire officials on multimember commissions.

Kannon K. Shanmugam, a lawyer for a firm challenging the bureau’s structure, said using that standard when an agency was led by a single director was novel and dangerous. “Never before in American history,” he said, “has Congress given so much executive power to a single individual who does not answer to the president.”

Justice Ruth Bader Ginsburg said the standard left presidents with plenty of control. “This is a very modest restraint,” she said. “It stops the president from at whim removing someone, replacing someone with someone who is loyal to the president rather than to the consumers that the bureau is set up to serve.”

Chief Justice John G. Roberts Jr. suggested that the court could avoid the weighty constitutional issues in the case by interpreting the standard to impose only modest limits on presidential power. “We might want to scrutinize a little bit how rigorous a limitation that is,” he said, “before we get to the point of striking down the statute.”

Justice Neil M. Gorsuch rejected that approach. He said it would be more honest to overrule precedents allowing limits on the president’s power to fire people than to water down the standard.

Republicans and business groups have long accused the bureau of regulatory overreach. Businesses have repeatedly challenged the limits on the president’s power to remove the consumer bureau’s director, saying they violated the separation of powers.

The Trump administration agreed with the challengers. The bureau once took the opposite position, but it changed its stance last year, agreeing that its director could be fired at will.

Justice Ginsburg asked Solicitor General Noel J. Francisco, who represents the administration in the Supreme Court, why it did not defend the challenged law. “Isn’t it uncommon for the Department of Justice not to defend a statute passed by Congress?” she asked.

Mr. Francisco responded that “we defend the acts of Congress unless it infringes upon the president’s own executive power.”

Though the law firm and the administration agreed that the bureau’s structure violated the Constitution, they were divided about whether actions taken by the director would have to be voided if the Supreme Court struck it down. Mr. Shanmugam said yes, while Mr. Francisco said no.

Since the two sides agreed on the basic issue, the court appointed Mr. Clement to defend the constitutionality of the law.

He was afforded no special courtesies. Justice Gorsuch, in an unusually testy exchange, accused him of dodging questions and being disrespectful to other lawyers.

“If we could avoid disparaging our colleagues and just answer my question, I would be grateful,” Justice Gorsuch said.

Mr. Clement, perhaps the most accomplished appellate lawyer of his generation, was making his 101st argument in the Supreme Court, and it was characteristically vigorous and clear. He seemed taken aback by Justice Gorsuch’s repeated hostile questions.

The case before the court, Seila Law LLC v. Consumer Finance Protection Bureau, No. 19-7, was brought by a law firm that objected to an investigation of aspects of its debt relief services. The firm challenged the bureau’s power to pursue the investigation, saying its director was unconstitutionally insulated from presidential control.

The firm lost in the United States Court of Appeals for the Ninth Circuit, in San Francisco, which concluded that Supreme Court precedents upholding limits on presidential power to remove officials on multimember commissions and independent counsels allowed the bureau’s structure.

In 2018, in a separate case, the District of Columbia Circuit upheld the contested provision. Justice Brett M. Kavanaugh, then a judge on that court, issued a 73-page dissent arguing that “the C.F.P.B. is unconstitutionally structured because it is an independent agency that exercises substantial executive power and is headed by a single director.”

Much of the argument explored the differences between single directors and commissions, and opinions varied on which structure provided for more independence.

“There are a thousand things that go into whether a president has influence over any particular agency,” Justice Elena Kagan said, “of which the question is it one or multiple members is not so important.”

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