The Supreme Court has agreed to hear arguments on the constitutionality of the Consumer Financial Protection Bureau’s single director setup in the case Seila Law LLC v. CFPB. The case comes to the Supreme Court from the U.S. Court of Appeals for the Ninth Circuit, which upheld the for-cause removal provision as one that did not “impede the President’s ability to perform his constitutional duty to ensure that the laws are faithfully executed.

The Ninth Circuit and the U.S. Court of Appeals for the DC Circuit have affirmed the constitutionality of the Bureau’s single directorship, while the U.S. Court of Appeals for the Fifth Circuit has held the other way regarding the Federal Housing Finance Agency’s single directorship.

In addition to arguments regarding the constitutionality of the Bureau, the Court has directed the parties to brief and argue the following question on the appropriate remedy: “If the Consumer Financial Protection Bureau is found unconstitutional on the basis of the separation of powers, can 12 U.S.C. §5491(c)(3) be severed from the Dodd-Frank Act?”

This remedy, severing the for-cause removal provision and effectively making the CFPB Director removable at will by the president, was favored by (then judge) Justice Brett Kavanaugh in an early case involving the constitutionality of the Bureau in a DC Circuit panel decision that was overturned on that point by the en banc DC Circuit.

The Bureau itself, along with the Department of Justice, supported the Supreme Court taking the case, and have advocated for striking the for-cause removal provision. In a September 17 letter to Congress, Director Kathy Kraninger stated that the constitutional uncertainty around the Bureau has caused significant delays to some CFPB enforcement and regulatory actions, and poses a question that must be addressed either by Congress or the Supreme Court. With oral arguments likely to be scheduled early next year, and with a decision to follow by summer 2020, the Supreme Court now may resolve this uncertainty. We will continue to keep an eye on developments.