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Independent Agencies Must Follow the President’s Interpretations of Law

President Trump must soon decide whether to say “You’re fired” to Richard Cordray, the Director of the Consumer Financial Protection Bureau (CFPB). Cordray’s policies are clearly at odds with the deregulatory impulse of the administration, whose fate depends  on whether it can substantially increase prosperity beyond the sluggish growth of the Obama years.

The obstacle to getting rid of Cordray is that the statue setting up the CFPB permits the President to fire Cordray only on the basis of “inefficiency, neglect of duty, or malfeasance in office.” One possibility would be to fire him anyway on the theory that the restriction is unconstitutional.   Indeed, in PHH Corp. v. CFPB, a panel of the District of Columbia Circuit held that it was unconstitutional to limit the President’s removal power over the director. It acknowledged that the Supreme Court has upheld insulating other executive agencies, like the FTC, from presidential removal.   But those independent agencies were directed by multi-member commissions composed of members from different parties. The panel concluded that CFPB lacks the important check of collegial, bipartisan control, concentrating power in a single official.  Thus, the Constitution required that the President have the power to remove him at will.

The difficulty with acting on the panel’s analysis is that the full District of Columbia Circuit has vacated the PHH ruling to hear the case en banc.  It is true that the President could still follow the reasoning of the panel ruling and dismiss Cordray. But that action would be portrayed by the press as flouting a judicial order, even though the President is not a party to PHH v. CFPB.   Moreover the President’s substantial latitude to decline to follow statutes that violate his constitutional authority is premised in part on the need to obtain judicial resolution. But here the issue would already be before a court.

The President has a better option, because he has the constitutional duty to “take Care that the Laws be faithfully executed. “If he believes that the Cordray is not always following the law (and there is some reason to believe that is the case), the President can dismiss Cordray for that reason.  Indeed, the term “malfeasance” in the statute might be interpreted to encompass the situation where the President has a good faith reason to believe an independent agency head is not acting within the law.  (For an excellent discussion of the statutory terms, see this post by Aditya Bamzai and John Duffy). Otherwise the statute is unconstitutional for that reason alone.

The best way to proceed would be to ask the Attorney General to determine whether Cordray is out of compliance with the law. If so, the President would then order him into compliance. If Cordray refused, he would be fired.

Another advantage of this approach is that it would strengthen the President’s power over all independent agencies. The D.C. Circuit panel gave the President the authority to fire the CFPB Director at will, but, even if upheld, this ruling depends on the peculiar structure of the CFPB, which is replicated in few other agencies. The precedent the President could set through the Take Care Clause would also apply to the more common kind of independent agencies with multi-member commissions.   These agencies would enjoy some policy discretion, but the President would determine the bounds of that discretion by his own good faith legal interpretations.

Reader Discussion

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on February 26, 2017 at 22:06:29 pm

I think the standard is actually even lower then you suggest for the president to remove him. As the Supreme Court said in Myers v. United States, 272 U.S. 52, 135 (1926): "Then there may be duties of a quasi-judicial character imposed on executive officers and members of executive tribunals whose decisions after hearing affect interests of individuals, the discharge of which the President cannot in a particular case properly influence or control. But even in such a case, he may consider the decision after its rendition as a reason for removing the officer, on the ground that the discretion regularly entrusted to that officer by statute has not been, on the whole, intelligently or wisely exercised. Otherwise, he does not discharge his own constitutional duty of seeing that the laws be faithfully executed."

So "seeing that the laws be faithfully executed" requires the president to remove officers who fail to act "intelligently or wisely" in their discretion exercised. This applies even to quasi-judicial officers with for cause protection. Also I think Free Enterprise Fund v. PCAOB (2010) was very clear that "good cause" included the ability for the president to remove officers for what the president believes is the failure to faithfully execute the law.

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Devin Watkins
on February 27, 2017 at 13:40:30 pm

"... was very clear that “good cause” included the ability for the president to remove officers for what the president believes is the failure to faithfully execute the law."

Yep, BUT then there is also this view:
"It is emphatically the province and duty of the judicial department to SAY what the law is. Those who apply the rule to particular cases must of necessity EXPOUND (expand, perhaps?) and interpret that rule. If two laws conflict with each other, the COURTS must decide on the operation of each." (John Marshall)

Boy, that certainly leaves the Black Robes some discretion, and as it turns out in practice, with little remaining for the Executive and / or Legislative.

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gabe
on February 27, 2017 at 15:31:43 pm

The courts do have a duty to determine what they believe the meaning of the law is. But what is the remedy if they disagree with the executive? To throw out the prosecution brought before them. They have no authority or power to order the executive to prosecute anyone (that is the power of the sword). And so, what happens if the executive determines that a statute is unconstitutional and refuses to enforce it? There is nothing the courts can do about it, and that is appropriate. That is why the executive is a co-equal branch with the judiciary, not subservient to the court's interpretation of the Constitution and laws. Both branches have the opportunity, if they choose, to declare a statute unconstitutional and prevent the execution. That leaves the executive branch is a lot of potential discretion. And of course, the legislature created the statute in the first place and can always choose to repeal it.

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Devin Watkins
on February 27, 2017 at 16:36:54 pm

Devin:

I suspect that you know we are in agreement on this.
My point, unstated as it was, is that the other Branches *ought* to exercise their own constitutional review given that the Black robes have seemingly arrogated to themselves the "exclusive" right of review.
This obeisance to the Judiciary has gone quite far enough and to use Yuval Levin's term "Legislative ambition" needs to be reinvigorated. Of course, it would help were they to at least recognize it.

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gabe

Law & Liberty welcomes civil and lively discussion of its articles. Abusive comments will not be tolerated. We reserve the right to delete comments - or ban users - without notification or explanation.