Court of Appeals agrees to rehear CFPB case, agency to fight "unconstitutional" ruling
Full court will rehear PHH case
If President Donald Trump wants to fire Consumer Financial Protection Bureau Director Richard Cordray, he’s going to have to wait a little longer to do it, as the U.S. Court of Appeals for the District of Columbia Circuit ruled Thursday in favor of the CFPB. The ruling allows the embattled agency to defend the constitutionality of its leadership structure.
The ruling stems from the CFPB’s fight against PHH, which started with a $103 million increase to a $6 million fine initially levied against PHH for allegedly illegally referring consumers to mortgage insurers in exchange for kickbacks.
The fight ended, or so it appeared, with the CFPB’s leadership structure being declared unconstitutional by the U.S. Court of Appeals for the District of Columbia Circuit in a 2-1 vote.
The CFPB fought that ruling, asking the court to rehear the case en banc, meaning that it wanted the entire court to hear the case, rather than the three judges who ruled on the case in October.
And Thursday, the full court of appeals granted that request, meaning the CFPB can now defend its constitutionality before the full court.
In agreeing to rehear the case en banc, the decision from October that declared the CFPB’s leadership structure unconstitutional is vacated.
And that means the CFPB can continue to operate as is until further notice. That also means that President Trump cannot fire Cordray unless it’s for cause. The previous decision made the CFPB director fireable at will, but that’s not the case anymore.
According to the court, arguments in the appeal are scheduled for May 24, 2017.
The court’s ruling dictates that the parties should address the following issues at the hearing:
1. Is the CFPB's structure as a single-Director independent agency consistent with Article II of the Constitution and, if not, is the proper remedy to sever the for-cause provision of the statute?
2. May the court appropriately avoid deciding that constitutional question given the panel's ruling on the statutory issues in this case?
3. If the en banc court, which has today separately ordered en banc consideration of Lucia v. SEC, 832 F.3d 277 (D.C. Cir. 2016), concludes in that case that the administrative law judge who handled that case was an inferior officer rather than an employee, what is the appropriate disposition of this case?
The full ruling can be read here.