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Does Morrison v. Olson Govern the PHH case (concerning the Director of the CFPB)?

In my last post, I praised the D.C. Circuit’s opinion in PHH Corp. v. CFPB holding that the restriction on the President’s authority to remove the Director of the Consumer Financial Protection Bureau was unconstitutional.  In this post, I want to discuss the most important precedent.

In PHH, the D.C. Circuit held that precedent and practice allowed removal restrictions on agencies headed by commissions, but not by agencies headed by a single individual. In reaching this decision, the court had to distinguish the Supreme Court’s decision in Morrison v. Olson.   Some commentators have argued that Morrison governed this case, but I do not think so.

In Morrison, the Supreme Court approved the independent counsel statute, which had placed a similar removal restriction on the Attorney General’s authority to remove the independent counsel.  If the independent counsel could be protected from executive removal, why could not the Direction of the CFPB?       

In Morrison, the Court announced very vague tests for assessing the separation of powers issues.  These vague tests have advantages for the Court, since it has discretion to resolve specific controversies as it pleases.  But these tests also have disadvantages for the Court, because it allows circuit courts more discretion to resolve cases that come before them.

In this case, the question under Morrison is whether the removal restriction “unduly trammels on executive power.”  See Morrison (“we cannot say that the imposition of a ‘good cause’ standard for removal by itself unduly trammels on executive authority”).  What unduly trammels is very unclear and therefore this allows the D.C. Circuit discretion.

Morrison might still govern the resolution of PHH if the facts of the latter were not distinguishable from Morrison.  That is, the situations were so similar that PHH must have the same resolution as Morrison or if the arguments were unambiguously stronger for concluding that the removal restriction in PHH was constitutional.  But neither of these situations applies.  PHH is easily distinguishable from Morrison.

Several features suggest that the independent counsel was a less important official than the Director.  The Director is the head of a whole agency, whereas the IC was merely an inferior officer.  The Director controlled the entire agency, while the independent counsel had limited jurisdiction.  The Director has policy making authority, but the independent counsel did not.

But even more significant than the greater authority of the Director is that the reasons for the independent counsel’s independence were much greater than for the Director.  The independent counsel was investigating high executive officials, for which the President was reasonably thought to have a conflict of interest.  By contrast, there is no particular reason to make the Director of the Consumer Financial Protection Bureau independent.

It is true that Judge Kavanaugh suggested that the majority opinion in Morrison had lost authority due to the strong support among commentators for Justice Scalia’s dissent.  That was a questionable argument for a circuit judge to make.  But that questionable argument was entirely unnecessary.  PHH was easily distinguishable from Morrison.

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