In Seila L. LLC v. Consumer Fin. Prot. Bureau, 140 S. Ct. 2183, 2199 (2020), the Supreme Court explained that Congress may restrict the President’s power to remove principal executive officers only for “multimember expert agencies that do not wield substantial executive power.” A divided panel of the Fifth Circuit found that the principal officers in charge of the Consumer Product Safety Commission wield “substantial executive power” but nevertheless upheld Congress’s decision to grant those officers for-cause removal protections. In its view, the Supreme Court’s 1935 decision in Humphrey’s Executor v. United States, 295 U.S. 602 (1935), compelled that result. And because in Seila Law the Court emphasized that it “d[id] not revisit Humphrey’s Executor or any other precedent,” the panel majority concluded that Humphrey’s Executor controlled.
While the panel majority acknowledged that the Commission “exercises substantial executive power,” it nevertheless concluded “that characteristic—standing alone—[does not] remove[] the Commission from the Humphrey’s exception” for three reasons. First, “unlike the agenc[y] at issue in Seila Law,” the Commission’s structure is not “historically unprecedented.” On the contrary, the Commission “is a prototypical traditional independent agency, run by a multimember board.”
Second, “the Commission does not share the defining feature that the Supreme Court relied on in Seila Law to hold the [Consumer Financial Protection Bureau (“CFPB”)] unconstitutional,” namely the vesting of “significant governmental power in the hands of a single individual accountable to no one.” If Seila Law applied to the Commission, which is structurally identical to that of the agency at issue in Humphrey’s Executor, the Supreme Court’s insistence that Seila Law did not revisit Humphreys Executor would make little sense.
Third, “the Commission … does not have any of the features that combined to make the CFPB’s structure ‘even more problematic’ in Seila Law.” The Commissioners’ staggered terms ensure that the President does “have an[] opportunity to shape [the Commission’s] leadership and thereby influence its activities.” Likewise, the Commission does not “recei[ve] funds outside the appropriations process,” meaning the President can use the budget process to “influence the Commission’s activities.” These features, which distinguish the Commission from the CFPB, prevented the panel majority from concluding that “the Commission ‘is an innovation with no foothold in history or tradition.’”
By an 8-9 vote, the Fifth Circuit rejected a petition to rehear the case en banc. Judge Oldham, joined by the other seven of his colleagues who favored en banc review, addressed the panel majority’s reasons for holding that Humphrey’s Executor controlled. Regarding the panel majority’s claim that Humphrey’s Executor applies to any independent agency . . . run by a multimember board,” Judge Oldham argued that characterization of Humphrey’s Executor in Seila Law was “not part of a legally significant statement” but instead was the Supreme Court’s “mere description of the way Congress designed the CFPB.”
As for the panel majority’s emphasis on the fact that the Supreme Court disclaimed “revisit[ing] Humphrey’s Executor or any other precedent” in Seila Law, Judge Oldham argued that was “entirely beside the point” because Humphrey’s Executor “is nowhere near as broad as the panel majority claimed.” In his view, that case “made no generalizations about independent agencies” but instead based its holding on the specific characteristics “of the 1935 FTC”—the agency at issue there. “[T]he Court did not,” he continued, “take a position on the question of whether Congress could restrict the President’s authority to remove executive branch officers that wield more executive power than the 1935 FTC.”
Finally, Judge Oldham noted that the panel majority’s reliance on the fact that “the Commission … does not have any of the features that combined to make the CFPB’s structure ‘even more problematic’ in Seila Law,” was based on the Fifth Circuit’s holding in Collins v. Mnuchin, 896 F.3d 640, 645 (5th Cir. 2018), as reinstated by Collins v. Mnuchin, 938 F.3d 553, 558 (5th Cir. 2019) (en banc), aff’d in part, vacated in part, rev’d in part sub nom. Collins v. Yellen, 141 S. Ct. 1761 (2021). According to Judge Oldham, “Collins is irrelevant because the framework it established was unequivocally undermined by Seila Law.” In his view, “the panel majority distorted Seila Law, then stretched the holding of Humphrey’s Executor, then halfheartedly invoked an irrelevant decision of this court, all to protect the Commissioners from the President’s constitutional power to remove them from office.”
The sharply divided Fifth Circuit did seem to agree about one thing, though. As Judge Willett, the author of the panel majority opinion, put it “th[e] cert petition [in this case] writes itself.”
