The Return of Independent Counsels?

What the recent Supreme Court ruling about the Consumer Financial Protection Bureau might portend for other ‘independent’ entities within the executive branch.
by Kim Wehle
July 16, 2020
Featured Image
White House Budget Director Mick Mulvaney, President Donald Trump's pick for acting director of the Consumer Financial Protection Bureau, walks back to the White House from the CFPB building after he showed up for his first day of work on November 27, 2017 in Washington, DC. (Photo by Alex Wong/Getty Images)

The Supreme Court’s recent decision in Seila Law LLC v. Consumer Financial Protection Bureau is notable not only because the majority struck down a key provision of the statute creating the Consumer Financial Protection Bureau (CFPB). It is also notable because of what conservatives on the Court did not do: wrangle a majority willing to hold unconstitutional any agency structure that places limits on the president’s appointment and removal power. What this means is that, under the next president and with a willing Congress, we could see constitutional legislation that once again creates a truly independent prosecutor who cannot be fired by a president gone rogue.

The brainchild of Senator Elizabeth Warren, the CFPB was created by Congress in the wake of the 2008 financial crisis in order to protect consumers from unfair, deceptive, or abusive practices by predatory lenders. The statute gives the agency authority to bring legal actions against credit reporting and debt collection companies on behalf duped consumers. But after Trump took office and put Mick Mulvaney—who, at the time, was also the director of the Office of Management and Budget—in charge of the CFPB, the agency’s pro-consumer enforcement actions plummeted. (As a member of the House of Representatives, Mulvaney had called the CFPB a “joke” in “a sick, sad kind of way” and took steps to abolish it. Putting him in charge of the CFPB was roughly the equivalent of putting a flat-earther in charge of NASA.)

However, the Trump administration’s destruction of the CFPB from the inside out is now beside the point. In Seila Law, the Court fractured the agency from the outside in too, holding that its configuration—“run by a single individual who cannot be removed by the President unless certain statutory criteria are met”—violates the separation of powers and is therefore unconstitutional. The underlying notion is that presidents must be able to hire and fire principal officers, such as cabinet members, in order to be able to effectively execute the law under Article II of the Constitution.

This is not a novel interpretation—even though Article II itself only references the president’s appointment power and says nothing about removal. The Supreme Court instead inferred the president’s power to fire officers within the executive branch at will from the silent text of the Constitution (demonstrating once again that pure textualism is not a feasible means of consistent constitutional interpretation).

Nonetheless, the Supreme Court has long held that “independent” agencies—such as the agencies with the word “commission” in their names because they are headed not by a single person but by a panel of individuals from competing political parties who can only be fired for cause and whose terms are staggered—are constitutional. I won’t get into the wonky details here, but suffice it to say that this line of authority is hardly airtight as an analytical matter. The Court has vacillated in its reasoning to the point where Chief Justice Roberts admits in his Seila Law opinion for the 5-4 majority that “we need not and do not revisit our prior decisions allowing certain limitations on the President’s removal power.”

This aside by Roberts is significant, because the other prior decision of note on this topic is Morrison v. Olson (1988), which upheld as constitutional the provisions of the 1978 Ethics in Government Act that had created the office of the independent counsel. More than a dozen investigations were carried out by independent counsels under this post-Watergate authority, including Lawrence Walsh’s investigation of Iran-Contra. Most prominently, it is under this authority that Kenneth W. Starr investigated President Bill Clinton with scant interference or oversight from the White House—because Starr could not be fired except for cause, and not by the president personally. The difference between that law and the legal framework governing former Special Counsel Robert Mueller’s work during the Trump administration is that the latter fell under federal regulations that give the attorney general a great deal of power over the investigation and its aftermath. Mueller was a glorified line prosecutor; Starr was his own man, so to speak.

So how did Roberts justify striking down the CFPB structure but preserving regular independent agencies (including critical watchdogs like the Securities and Exchange Commission)? Well, he reasoned that someone like Starr was an “inferior officer,” while the CFPB director was not—the latter position is one that qualifies as a “principal officer” under the Constitution, giving the president unfettered (albeit inferred) removal power with respect to that office. Moreover, because there was only one person at the helm—not a panel or commission—the CFPB offended the Constitution, while the SEC and Independent Counsel Starr did not.

It would take a 70-page law review article to tease apart the mental gymnastics implicit in this analysis. If it evaded you, it’s not that important. The key takeaway for the separation of powers is not that the Court retained the CFPB itself—on the grounds that the provision requiring the agency to have a single head was severable from the rest of the statute, and there was no need to throw the baby out with the bath water—but that this conservative-leaning Court is willing to tolerate federal agencies that are not totally beholden to presidents.

Keep in mind that the Constitution does not create the vast federal bureaucracy that dots Washington, D.C.—Congress did. And despite the textualist ideology of Justices Roberts, Thomas, Alito, Gorsuch, and Kavanaugh, all were in sync in terms of preserving quasi-independent law enforcement entities that cannot be totally controlled by presidents.

If a President Biden were to take office with a compliant Congress, it would behoove Democrats to take steps to restrain unbridled presidential power with new oversight legislation—the kind that came in spades after Watergate. After all, as this Supreme Court understands, the guardrails of democracy only work if they are enforced and enforceable.

Kim Wehle

Kim Wehle is a contributor to The Bulwark. She is a professor at the University of Baltimore School of Law, a former assistant U.S. attorney and associate independent counsel in the Whitewater investigation, and the author of How to Read the Constitution—and Why (HarperCollins). Her new book, What You Need to Know About Voting—and Why (HarperCollins) goes on sale today, June 16. Twitter: @kimwehle.