The case the justices are hearing involves the Consumer Financial Protection Bureau, the agency Congress created in response to the 2008 financial crisis. It was the brainchild of Massachusetts senator and Democratic presidential candidate Elizabeth Warren.
Experts say a decision could ultimately affect not only the CFPB but also how easily the president can fire a host of other independent agency heads, including leaders of the Federal Reserve, Federal Deposit Insurance Corporation, Federal Trade Commission, Federal Communications Commission, Securities and Exchange Commission and Social Security Administration.
The president can and has ousted executive branch officials, including FBI Director James Comey, national security adviser John Bolton and Secretary of State Rex Tillerson. But the heads of independent agencies are different because laws insulate them from being fired without reason.
Experts on both sides of the issue agree the impact of the Supreme Court case could be vast. “This case could potentially put the legality of many government agencies in doubt," said Georgetown University law professor Adam Levitin, who believes Congress can limit the president's ability to fire the CFPB director.
Oliver Dunford, an attorney with the Pacific Legal Foundation who believes the CFPB's structure is unconstitutional, agreed the case has “long-term implications.” Conservatives have long argued that independent agencies created by Congress such as the CFPB have gotten out of control, violating the Constitution's separation of powers principles by limiting the power of the president.
But defenders of the CFPB's structure say such agencies were set up to insulate them from political pressure and from strong-arming by the president. Boston College law professor Patricia McCoy, a former CFPB official, says the structure of independent agencies is “a very longstanding tradition that has served the economy, the American people, well.”
Under the Dodd-Frank Act, the CFPB director is appointed by the president and confirmed by the Senate and serves a five-year term. The president can only remove a director for “inefficiency, neglect of duty or malfeasance in office." That means that a new president usually can't immediately fire the head who was appointed in the previous administration. The structure also means a president can't pressure the agency's director to take action by threatening to fire him or her, McCoy said.
But the Trump administration is arguing that the Constitution requires that the president have unrestricted power to fire people who hold certain important government positions. It says the restriction on the president's ability to fire the CFPB director is unconstitutional. The position is a reversal from the Obama administration, which had defended the CFPB's structure.
The case was brought to the court by the Orange County, California-based consumer law firm Seila Law. As part of an investigation, the CFPB demanded information and documents from the firm, which is run by a solo practitioner. Seila Law responded by challenging the CFPB's structure. Two lower courts ruled against the law firm.
Lawyers for the House of Representatives are arguing to the Supreme Court that the CFPB's structure is constitutional. But Seila Law's attorneys say the CFPB's structure “unduly inhibits the President's ability to supervise the exercise of the executive power” and “badly flouts the separation of powers.” They're urging the justices to invalidate the agency entirely or to let Congress redo the agency's structure. The Trump administration, for its part, says the court can simply strike from the law the restriction on removing the agency's head.
A decision in the case, Seila Law LLC v. Consumer Financial Protection Bureau, 19-7, is expected by the end of June.