Transcripts For CSPAN2 PHH Corporation V. Consumer Financial Protection Bureau 20170616

First congress on each occasion the founders coated for a single individual rather than a plurality of the presidency of the structure best calculated to ensure a strong and vigorous and accountable executive the president alone shall take care of the law shall be faithfully executed that obligation according to James Madison in the Supreme Court just seven years ago with Free Enterprise and powers of president to keep them accountable to hold the power to remove them from office. Didnt that change with humphreys executor . That case that i just quoted was Free Enterprise that was many years later than humphreys executor but the Free Enterprise fund made it clear that there have been exceptions that the court has determined not to revisit with the Free Enterprise fund but there has been exceptions under narrow circumstances but that experiment by congress to take power away from the president are limited to those exceptions. And those that are uniquely diminished. Tavis is any worse than that . Humphries executor to examine the agency that was described by the Supreme Court in the case to have limited jurisdiction with quasi legislation and it did not have the powers of the fcc to enforce the law. That was later described as executive power. There is a distinction with the ftc and humphreys executor they are both executives. Examining the ftc in 1935 with limited powers subsequent it was the inferior officer it with the Free Enterprise fund says we will win intrusions with the exclusive power of the president to be accountable faithfully to execute the laws. But im asking how was this different to diminish the power of the president . Spinning disk goes further than Anything Congress has ever attempted to do in history. How is the president s power with the same removal removal . And to recognize it was going further than it ever thought before. In limiting the president s power and first of all, the removal power is limited first is a Single Person. And some of which would be appointed. If you only have to get rid of one person. But with that debate 1787 focuses when you concentrate power on one individual you have a concentration of power, humphreys executor recognized and this gore recognized in the Panel Decision if you disbursed the power among five individuals the director of this bureau in the home office yet cannot be replaced by the president without the Senate Congressional authority. A bad is different than all of the other in agencies and how they operate. They all have multiple members with staggered terms as well as the president s ability to with most of those independent agencies. So the ftc, sec all within the inauguration and that fcc. Is important here in answer to your question to put this agency into context the power to appoint every Single Person from the agency without the Senate Involvement that the director has restricted by statute from even communicating. How does that further diminish the president s removal power . All of the statutes one of them takes the power of the president what the director says to interpreting statutes and retrospect to looking and regulations and with that exclusive power to decide what to prosecute. And there was day constitutional flaw. But with respect to that is not it at all the context that was stated by congress with respect to this agency. And get this director one individual but that is not the only thing. That is by a series of statutes of love which are intended by congress to make this Agency Completely independent and completely unaccountable so the president. As the chief justice said it diffuses accountability. And it is not as though there is accountability for appropriations they have to go before different committees every year and they dont understand the role or the argument. It is the accumulation of power. This agency does not. But most agencies do not have annually appropriated budget. Executive agencies. Banking regulatory agencies have annual appropriations . Or self funding mechanism . Each of them are different some of them do not have to go because there is a separate way so each one is different. In this on the director is more accountable. How was this director accountable to anyone . A the president wishes to say so anything this bureau does dont look at me. That that is an attack on all independent agencies that means we cannot do that that is a serious problem we cannot do that i know you have preserved your arguments from another court but we cannot do that but isnt the fact the president can replace the frequency will get to replace this person had only a fiveyear term . Or cause could be found the individual could be removed so that is no different so where is humphreys executor with these multi member . Many of them specified so many from each party so it is an intrusion of president ial power to say you can make an appointment for you have to appoint somebody from the opposite party that isnt happening here. The president has more authority. Actually this transition ends next year with respect to this director but unless the senate decides to approve the president ial appointment this director could serve another 10 or 15 years. The Panel Decision in this case talked about various ways the body such as the ftc or the others have to diffuse because they have to talk to one another in their individual staggered so the president has employed over a period of time with respect to selecting the chairman and the responsibility for individuals to talk to one another before making decisions. I sanders than the principal restricting it isnt interested in real object to that we make that point but the court cannot change humphreys executor but we wish that it could. Get also cannot change morrison verses olson. But you say it is different because of the in the vessel independent counsel . But the core itself to the Administrative Agency that have Civil Enforcement power just like this one just like the ftc. So what could be more powerful to indict the highest officials . That is correct and is the jurisdiction it is much more powerful in terms of the ability to impair the power of the president the independent counsel was much more threatened and this zero. Judge tatel, we simply object to restricting of a president s power faithfully to execute in the independent counsel statute from the cftc but what they said with a Free Enterprise fund whenever those limitations were, they are not before us because they have not asked us. Were the Appeals Court and bound by Supreme Court precedent. And i have not seen an argument in your brief, even if i did read that there is a serious risk for the removal provisions. Even if i agreed with you i dont see how as a judge on the Appeals Court found by morrison and humphries i can go there. I dont see where this court to gets that. I understand the point and i understand the restriction were faced with because this is the intermediate Appellate Court so what it comes down to is unless you say this decision is dictated by humphreys executor or more since morrisons everything this director is given all love the power is subsumed in no power just like morrison then we are bound by that. But i have not heard from you yet the argument how i can conclude that we are not bound by that the independent counsel was tenure limited. As a superior officer of the United States and the limited tenure with respect to one investigation. But the question is what is the effect to what extent does it in power compare the power of the president . It doesnt make any difference how long the tenure is but the independent counsel had to indict and prosecute those ties officials of government i cannot imagine anything to more significantly impair than that. I submit to you the invitation of the narrow limitation with respect to the powers of that. I understand the power to indict is serious that the cftc cfpb does that have but to impose for violation and that is a serious problem goes letter given to you cfpb. You keep saying it is serious but how seriously it limits the president s power. That is the question. I will put it this way because i think you have to look at the broad powers given to this agency to decide if theyre only within the scope of humphreys executor. The Supreme Court was very serious seven years ago when it said we will not go any further or any further experimentation has to be looked at carefully in the context of history and this agency has more power. There are three things. That were analyzing i think , uh the contour is of the of countries countries exception. The Free Enterprise fund says look at history at the historical roots. Laddie a fact of those individuals and president ial power so is there a further diminishment of president ial power by humphries executor . They said yes maybe arithmetic from humphries executor alone and from that further diminishment. That is what judge tatel is asking but it seems we have to compare to the multi member agencies operate and under president ial control day turned over quickly with the new president we have seen that with the independent agencies they have staggered terms. This does not turn over quickly so does that matter . Thank you for answering my question. [laughter] i am trying. It takes it as far as it goes. But the statute went further than that to limit the president s ability to control or have communications with congress and took away power with respect to the budget and the process of appropriation and power from the president to have anything to do. Be more specific look at the ftc today that is not going on with the sec or the sec or nlrb. Why . The way congress has structured these independent agencies all the studies and academics have shown there is . Turnover with a new administration. This will not after this appointment will be the third year of the next president and that the fourth year of that president if they win on a platform of Consumer Protection has to live with president johnson appointee. President trumps appointee. That is the point. Does that matter with the agency that you dont control. It does matter is here and now that restriction and diminishment of the president s power and in the future for those points are absolutely correct. So staggered terms are constitutionally required . What i think it gore is saying in the Free Enterprise fund but not to be narrowly constrained. But it seems like it has to be in a way that matters with the diminished and the president ial power i am not quite sure ive understand the situation to remove 100 percent of officers. He can. Vendor states ended his five years so there is the 80 percent chance. But my question is if you have a fairly robust authority to remove the one person that everybody gets to do that but some are. If you compare that to raise situation of multiple members and a greater likelihood each president can remove one but perhaps a lesser likelihood each president can remove a majority, and then that is a wash everything is else is weld constant been the only difference is to remove one person and that is everybody and that may or may not be a majority. Is there room the a difference . I believe what the Supreme Court said in a Free Enterprise fund is that the baseline was decided in 1777, 78 and 79 congress has decided to restrict the power and created an individual that a president can appoint. So the reserve board goes down because those are 14 year terms so no president has the authority to appoint the majority to have policy preferences. But the chairman does not. I understand that but you dont have president ial control so this is a pattern in the financial regulatory agencies to have some amount of separation and i am thinking that is consistent with the constitution and the executive authorities to be faithfully executed to have those removable with malfeasance. But not have the removal because it is a policy matter. You cannot avoid the financial cronyism the you say that is out of bounds . It is. We elected a unitary president i looked at the debates between june 1st of 77 it was debated the vote was seven three because execution of the law is not just enforcement of laws for indictment is policy decisions with how they are enforced. But july 2018 the president has the ability to replace the director of the bureau with anyone he wants. Through Senate Confirmation so lets imagine a democratic seat opens up on the cfpb commission the president can fill that one but by statute passed to a point somebody from the democratic party. So my question to you so what is the greater intrusion . The replacement of some one of your choice or forcing a president to appoint someone of another party for the commission . On that date you refer to the president may or may not be able to appoint a new director. If the senate does not give permission. That is the same for the Federal Reserve board and a number of other agencies. But to get back to my question so when the president exercised his power of the people which is the greater intrusion . If you take the decisions that were made and reaffirmed seven years ago by the United States Supreme Court is the power of appointment is extremely important for the court goes on to say. A power to remove is the same for the commissioners and the director of the bureau the or not answering my question. Could you agree the president has more of that power to replace the director than replacing a number of the commission . A particular president at a particular point and time with the right circumstances may have more power with respect to the individual but the next president may not so that power may not be there. I would like to reserve the remainder of my time for rebuttal. So to return to my perspective, this debate about the difference of multi member agencies is fascinating. But i dont understand how Orson Morrison not only up held but excess up exercises power is analogous so you need to go back to the Supreme Court and say take a more careful look how these agencies are very different but from where we sit, i dont see how this can go beyond the court. If you feel or you conclude this goes no further bin humphries executor bin the next up is the Supreme Court. But i submit this agency with its collective power one individual to appoint everybody can hire and fire nowhere else in the federal government is very limited proposal answer it this way judge tatel. If the powers and given to the epa and the treasury in the antitrust agencies are all vested in one individual then why not . If it can be done with his name can be done with other people then what is left . Are like to reserve the balance of my time. If it may please the court judge griffith that the function of executive in nature is a critical observation because it tells us the rationale of humphries executor cannot be based on function of the ftc. Lusby based on Something Else and we submit that is the structural features of the ftc because what the court was concerned about what is the multi remember bodies. And never framed the analysis in those terms but they never made these arguments of the multi member. Panel think that is fair from the entire opinion if you read it not just the section that discusses the analysis but why congress made it the way it was they did emphasize it was a multi member body. Why wouldnt they discuss that if it was relevant . It is there, your honor into sentences the first sentence that part of the opinion start says it is the administrative body so when they talk about it being the administrative body they are getting at the multi member delivered in the body at the end of that analysis it says officers of this type for character so what that has to be getting at is the courts rationale that these are different. So that is the body they were dealing with. It was a multi member body. Exactly. Those are the facts that were before them just not widely assume. So what is the constitutional provision mistake . What are we looking at . The point is the removal power and must we removed that will that humphries executor is a narrow exception and of rationale of that exception has to be based. How does that tell us if you are even correct . Because under Free Enterprise the Supreme Court assumes those sec commissioners that could cause provisions the Supreme Court also held that was sufficient control that indirectly gave sufficient control. So if there was an exception that was created, it was at least recognized in Free Enterprise. It is a multi member body so the rationale to be limited to this deliberative body that could be characterized by the Supreme Court as cause ive legislative we dont take issue with that. But we are suggesting that to that structural feature there is no living principle to countries humphries executor the function that the ftc had is the exact same function of the treasury. So what to do with morrison verses olson . We are bound by that. Yes you are. That case did not involve principal and if you look at Free Enterprise that is exactly how it was described it starts by talking about the general rule in says humphries executor is the exception for principal bin turns the Free Enterprise fund precludes morrison as a sweeping exception and if it were otherwise been the position to just there would be a restriction for the secretary of treasury or the Labor Department for health and Human Services because that is the exact same type and is still think anybody who has read that. Card day is the sec a principal commissioner . Yes they are. Of Free Enterprise fund recognizes that humphries executor protections apply to principal officers . Yes. The sole exception the Supreme Court has ever recognized is humphries executor. The key to that it is a multi number. If you are focusing on that part of the agency so your view it is will the member or single director does all the work that the switch from the multi in the virtues in the director diminishes president ial power. Impasse to with your view . Two points. Yes but it does not matter. Two sides of the same going but humphries executor is already an intrusion on president ial power but it had a rationale it was quasi legislative but if the structure is not there then the intrusion of humphries executor. Suppose we dont agree with that. If you dont. That will be headed agency was critical then what . Our submission is based on the critical difference. But if we dont agree, the backup argument. There is no one in this case , your honor. But the switch between multi member withy agencies does diminish power. I did now the panel would be taking a position one way or another. [laughter] i stand corrected. So explain why we think there is not a greater intrusion on the president s power from a single entity . Of quintessential hallmark of president ial power the founders made it very clear that is why the invested in a unitary executive. With a principal officer who can unilaterally make decisions over the for the economy but then the is the accountability that is critical but on the other hand to have that the liberal live multan member body it could be less accountable or less of an intrusion that is not the quintessential beecher. It is less appoint a ball and less removable. So you have to say it is worse than that. So we have two different points the first is the rationality to does not obtain even with sustained levels it is that justification in that level of intrusion is not valid. This recognizes that double for cause there was a problem and it didnt purport to say that it was adopting a rule for every double for call as many other agencies or officers that have double for cause and despite the justice objection that the court was wayne and that they would take it one at a time. Can you write an opinion here that would say the director of the bureau is constitutionally impermissible but in doing so, adopt a rule that would protect independent councils, Social Security administrators and any other single heads . The key would be the first step would be the rationale itself doesnt pertain because of the single eight entity. At that point, the next step, would be to say nothing about the cfp being military every other metric it is a quintessential executive agency and operates with a jurisdiction engaging in against private parties. Some of those factors are not indicated by Social Security, office of special counsel and others, were not suggesting those ultimately matter that we havent taken a position on it and they should be cited in a future case but the decision in this case will result. All you need to do in this case is to recognize that once you take from a multi member to a single entity, its not distinguishable from the secretary of treasury and the secretary of labor and unless this court is prepared to say that humphreys executor means that a four cause restriction is permissible for cabinet secretaries, the position that i dont think any fair reading of Free Enterprise fund would lead to. Thats not in the statute. No statute says the cabinet secretaries have the humphries executive. Thats right, your honor. It would be a green light for congress to do that tomorrow. The postmaster general used to be a member of the cabinet and then Congress Change that and is now removable under four cause standard. At the hearing what you said. The postmaster general used to be a member of the cabinet and then Congress Changed its status. You cant say this looks like a cabinet member may do and therefore you cant do it. Youre not depending on either. Im not sure about the current structure but i would say that i dont think any fair reading of enterprise or morrison would suggest that a four cause restriction on secretary of treasury is consistent with article two or myers. Certainly, somebodys executor didnt suggest that and no one has ever understood that to be that way. In the history. On history, generally, one of the things we have to take Free Enterprise from the history and honesty that one of the things we focused on at the panel level. The question, that it raises is that history, where congress has always done it multimember with one or two exceptions for 100 years, was that an accident . Or is there a reason that congress did it . And what do you think mark you have a lot of questions that theres really no difference but why if theres no difference, is this repeated over and over again . I think the reason i think the reason it was repeated over and over again is as some of the reports we cited in our brief that the notion of an independent agency was inextricably bound together with the idea that its permanent deliberative body. That is why again and again. Quite the thing that . Because it could be a permanent deliver a bold body of one. A single individual can ask with vigor that characterizes an executive agency. The idea that that was permissible is radically different notion than the idea that you could have a multimember body that lacks the vigor specs for the constitutio i thought the problem here was that Congress Took away from the president the authority to enforce a full range of statutes right market and put it in someone who could only be terminated for cause. Thats the trenching upon the president s power, not whether the agency is run by one or five or ten that crime, kravis edward, the trenching occurred when the president took away the president to enforce the statute. I agree but why isnt humphreys executor to the spring court upheld that limitation. All im suggesting is that if you read the opinion from as a whole, cannot be based on the functions because as you suggested, its quintessentially executive and the only rationale that make sense and the rationale is born out of if you read the opinion as a whole in terms of why congress created this agency is because it was a multimember body that functions in a deliberate fashion. That was based on the notion i think it was based on the notion come if you read humphries, and its an odd notion from todays perspective but this idea they were creating a quasi legislative, mini legislator and creating a million many Appellate Court as well as some Law Enforcement functions. All in one. When you think about a legislative, multiple people propelled multiple court, morrison dropkick that rationale and thats no longer the governing rationale. Because it is does the vision, justice sutherlands, cause i and why should it . Free enterprise says it does. It discusses humphrey and revise the cause i legislative, quasijudicial distinction. The rationale of humphrey. It relegates more sentence case about inferior officers. It does not suggest that morrison is a freefloating that even for principal officers we wouldnt have a legislator of one. Thats unthinkable. We wouldnt have a Supreme Court, imagine a Supreme Court of one. I dont think anyone want that, depending on who it is. Thats what humphries thought they were creating but i think the problem is that rationale seems to have submerged. What youre saying is Free Enterprise read through that line. And say two things. One, Free Enterprise did redraw that line and the second is that Free Enterprise didnt draw the line it would necessarily lead to the problem of does this mean that companies executor unknown to everyone today means that you can impose for cause restrictions on cabinet officers for executive function. Even morrison says even in the context of inferior officers, there are certain officials who can be subject to four cause restrictions and i wouldve thought it wouldve been inconceivable so that the treasury secretary could be for cause removal restrictions. Its not only conceited but its also embraced. Is in the idea of the cabin officers that the president s control over them is that he needs a cabinet officer so that he can take care, but the law is faithfully executed and the treasury secretary isnt an analog to the director of the copd to the extent that the secretary is to whom the president turns to advice on policy, domestic policy, all sorts of things that the president constitutionally has to do. Whereas here you have someone whos charge is limited to carrying out anti fraud statutes in the financial sector. That something where theres a charter, duties, laws, do them impartially, effectively, if youre inefficient where you fall down the neck, ill remove you. But have at it. Thats a different kind of function and doesnt seem to be clear why that is impinges on the take Care Authority and responsibility of the executive. And think thats true for most cabinet sectors. It might be true that certain temperatures implements of the president inherent article to, sector defense but the labor secretary for the health of Human Service xray are not implanting any article two powers there and committing acts of congress, no different than the act of congress that the copd the freezer down, how does the exemption from the appropriations process. Your argument . We dont rely on that position. We think the key here is that the multi Member Agency and the rationale is that humphries doesnt obtain and is greater intuition on the president s power. You would agree, would you not that the exemption from the appropriations process doesnt deal with the executive but diminishes the constitutional function of congress . I suppose thats right, your honor but again in the article two were not relying on the exemption. Why does your analogy have to be cabinet secretaries. I can see the argument that those are not the same but it seems to me that the logic of whats going on here is that if you can have this single director who is only removable for cause, takes under his purview a huge part of what clearly used to be the business of executive agency, couldnt you just have four or five or six of those that take all of this thing by subject matter and then you would end up with a nominal presidency and a bunch of single directors accountable to no one. Thats exactly right, your honor. With one final point let me segue to what was made earlier which is it true that intrusions on the president s officers in case of like morrison to wound the president but support to remember that the powers of the president are best in him for his own sake but for the people to assure account ability to the people. Wiping out the president s ability to control agency that regulates is much more serious intrusion on the president s executive power whether individual cabinet member can be prosecuted. Individual cabinet members can be replaced and the ability to regulate the entire economy, that can be changed and thats what the court was talking about in morrison when it said its limited tenure and limited jurisdiction. The cabinet is not a statutory concept, correct . Its just a custom. Thats right. From individual presence can put into in and out of the cabinet based on lots of things but the judge browns question is the entire domestic policy of the United States could be put in enforcement of all laws that are domestic at least carving out, carving out one or more independent agency head practice absolute right, your honor. It wasnt a structural sense but it was a very important agencies that is inconceivable that countries executor justifies a four cause restriction. I want to verify your point on it. Would your position be the same if instead of making the head of hr js removable for cause they replace the head with a threemember body removable for cause. Would that be okay to your place is a single replacement . Would fall within the rationale of humphreys executor and much more likely that would be headed to the speaker to revisit humphreys executor but i think its no surprise that that is a hypothetical. Reception the cabinet secretaries would be especially the longstanding would be a dramatic step whereas 74 cause restriction on those agencies would be a lot easier to do and it is notable that no one has ever tried to do that in the 7080 years. What about the department of justice . I doubt that can be done because i think the department of justice does implement at least inherent article to. I think the problem you would say is not that the multimember first single but if there are just some things like meyer said that have to be removable at will. When we talked about the cabinet members, the problem there is more function than youd object as much to the multimember. So, if possible, your honor, that courts could draw those lines but it be difficult to do so precisely because of what we noted in the outset the functions are executive in nature. You have to draw some sort of line about which functions are to big and which are not. That is not the sort of distinctions the Supreme Court has made clear and are very important in separation of powers dispute because they will be the only thing that judicially suspenseful in the heat of conflict. Thank you. Thank you very much. Judge henderson, may it please the court, before i forget i like to address one point that was raised by ph h here and that deals with the holdover persuasion in the Consumer Financial protection act. This gives the director a fiveyear term and a provides that after that fiveyear term of the director may hold over until a successor has been appointed and confirmed but this court explained in swan versus clinton, 1996 decision, 19073 that where a statute permits an official to hold over this court will not infer that for cause removal protection applies during the holdover. Unless the statute makes specific provision for that. There is no provision for that in the consumer. That the position of the agency. That is our position, yes. After his fiveyear term expires in july of next year, yes, he is removable at will by the president. Now, judge, you raise the point that the president may have more control over the head of the bureau that he does over the five members of the Transit Commission and, in fact, we have done the math they are. The bureau, as you said, with respect to the bureau, the president has an 80 chance, for this chance to have an opportunity to guarantee an opportunity to replace the bureaus director. With respect to the five members of the title federal trade commission who serve staggered sevenyear terms is a 47 chance to his guaranteed an opportunity to replace the, 58 . The history, culture, law and of independent agencies, you know this, very well, im busy, they turn over to control by the president s party either immediately as happened with President Trump came in with almost all the independent agencies or pretty quickly. That is in part because of the staggered terms, in part because of the chair designations. The ftc, like i said, all those have turned over and are now controlled by the party of the president. Thats been the practice, as i understand it, going way back and that doesnt happen with this agency. The question i have is doesnt that matter . In other words, does it matter that theres a turnover and not here. With respect to the ftc, at the time of abuse executive, the president. I understand that. This came into being in the late 40s as a practice, as i understand. The turnover and chair designation but since then, as i understand it, theres been a tradition and thats why all those independent agencies quickly became headed by trumpet designated chairs within a week of the inauguration. That has not happened and cannot happen with the cfpb and into my mind, that seems like its a question boils down to have a history and we had the effect on liberty but is there a real effect on the president. That seems like a further diminution of president ial authority in preventing that process that takes place at the other agencies. I want your response to that because i know their answers. My understanding, your honor, the president has no automatic authority to change the chairman of the board of governors and the Federal Reserve system. That term expires next february and the agency that controls the Monetary Policy of the United States and back to the mathematics, judge, with respect to the board of governors and is the other judge noted, because there are other Seven Members who serve staggered 14 year terms the president is never guaranteed an opportunity. Never guaranteed an opportunity to appoint a controlling majority. Its true that on occasion that positions may turn over and there may be vacancies but. I agree the feds an interesting hybrid and the agencies that are now analogous to this one there is historically the immediate turnover. Heres the problem. The last seven pages of Morrison V Olson dissent they are instructive on this because Justice Scalia didnt just analyze the history and he said heres whats going to happen. Heres is going to happen and laid it out in the next ten years it was like he had written the script for what was going to happen. Then everyone realize, this is a problem. I want to try to put myself in the shoes of figure out what will happen. President trump will appoint someone 2018, july 2018 and that person serves till july of 2023, the new president might be a different party, might have run on a platform of Consumer Protection, maybe the person who created the person Protection Agency and will not have the authority to do anything about that for three years contra how he or she would be able to handle all these other independent agencies. Thats the reality. Lets say he goes to terms and then it goes to 2028 so the president comes in in 2024 and mightve run on a policy of Consumer Protection and cant do it for four years until right before the 2028 election. I look at that reality and i say, that sounds crazy. As a matter of constitutional fact in history and structure and common sense, frankly. So, why would we buy into a concept that will lead to this oddity that we never had before. Thats where history we never had this employee that seems to affect the liberty, at least i think it does, diminish presence power. Its a bizarre situation where a key element of the presence platform the present cant do a thing about it. Its no different than respect to other agencies where the president doesnt get an opportunity to a controlling majority. It may be that with respect to the federal trade commission. What were living for, thats why this argument is timely compared to a year ago we just let the realtime example of how this works. I got the charts almost all have turned over or will turnover are almost all did in the first week of the presidency and that just gives me pause about the ramifications of this. I think a lot of the when were here in 2022 are going to say wait, we want that cfp director who was appointed by president john, we want about and all the positions are going to be like this and i was just as sickly as wisdom in it morrison to see how it would impact and have an effect in the future. I think we need to think about this consequence. Your honor, humpys executor and morrison verse olson is the point they made thats crucial for the president is that the official be of recently accountable. The presence removable authority, those cases make clear, the presence removable authority is not limited both. I agree. Let me give you a couple questions on hypotheticals just to see where this is going besides the hypothetical i just gave. Could Congress Passed a statute say the majority of the commissioners of an independent agency, multimember must be of the opposite party from the president . I dont know, your honor. I dont know whether the president could do that. The congress, to the congress do that . I dont know. That issue has. Thats de facto what happened here. The other thing we have to be careful about, dont we, history versus what statutes provide. A lot of people resign before their terms are up and most of these agencies had sixyear term so you wouldnt get this automatic turnover and at least, during my lifetime, ive seen a lot of people resign early. So, i dont think that history is quite as solid as is suggested in terms of the definition of president ial power. Thats the issue here, isnt it . Sorry, did you ever response. Yes, judge rogers, the key here is whether, the issue thats been raised is whether the amount of what it says in the Consumer Financial protection asked whether that act, the structure created by the act, not in terms of what happened are few of the Bureau Directors could resign but whether the acts, in and of itself is unconstitutional because of the way it structured. Yes,. What is your response to the United States assertion that your position is correct then our congress could choose to make secretary of the treasury removal only for cause . I dont have an answer to that question and i dont think this court, in this case, needs to answer the question. For 130 years, congress has created a wide variety of administrative agencies, structured somewhat differently and headed by sometimes threefive, seven or 11 let me get your reaction for one sentence from the brief and 26. Never before has so much scheduled power been concentrated in the hands of one person so thoroughly shielded from constitutional accountability. React to that. Is that true bismarck does make a difference . It doesnt make a difference because i thought the basis is it true . Is it terms and true in the terms of power . Yes the direct person, not just the bureau. Is it true that no many power has been concentrated in the hands of one for power. I dont know and i would like to speculate as a power of the chairman of the Federal Reserve board which is a very powerful position. How about if Congress Passes a statute before the next appointment of the cfp director and says that the next copd director has a 30 year term . Is that constitutional . In the case the 193 decision of the Supreme Court the court had to deal with a situation where there was no tenure limit whatsoever and the court held that was problematic at the present and therefore could remove that official, is appraiser. That was tenure, talking about a term that makes it better, a 20 year term for the next copd director that the president will appoint in july of 2018, if Congress Passes that, is the logic of your position thats fine, anything goes. I wouldnt think that the logic of my positions back so, what is the position, while with abby based ons work history, youll like to look at history. I do like to look at history and im trying to draw you. That sounded worse than a minute. What this court has to deal with is a director has a fiveyear term, federal trade commission will serve seven your terms and im not going to speculate as to whether it was a ten year term or if it was a 15 year term. You can draw me out. My point is simply that there is no limit, you dont look at historical practice is some kind of anchor here, whose ox will get bored, that will shift. My anger here is that with all of these agencies, all are different, no two are exact. The example of one person for 20 years, do you think thats a problem that its a meaningful different problem that another statue which says to persons for 20 years not staggered. It could be a different issue. Again, i dont know. We have one person here for five years and these two agencies, all the agencies that the government is created its hard to see the two agencies are more similar than the bureau and the federal trade commission and the federal trade commission for cause removal which is identical to the for cause removal in the financial protection act was upheld in humphries executive case. What the court has looked to his accountability and whether the president can take care that the laws be faithfully executed and the court held so long as the president could remove the official, at least for good cause, the president has sufficient. But the court not also warned us about novelty in this area. Were suspicious of significant changes and this is a significant change, right . Theres nothing like this. No two agencies are exactly like. One versus five, multimember was never a consideration in any of the Supreme Court cases discussing. Because you have anyone before. There is nothing puppies executor case functions on the functions of the title federal trade commission with the constitutional for cause removal not the agencies structure. There is no reason to believe that the president has less accountability over an agency with thats headed by a single director as opposed to a. Thats where the terms may be a clue about the structure. So, they refer to it as a quasi legislative and quasijudicial. When you look at the history, and where the his terms come from . They were thinking about independent agencies as essentially a combination of function and were recreating in one group a legislator and a court, among other things. The model, the reason, i believe, they had the multiple members is because Appellate Courts have multiple levels and when you divorce when you say humphries executive say about it, i think it says a lot about it when it talks about the quality of the quasi legislative and quasijudicial. The focus heavily on i want a multiMember Agency and set up singlemember and that has to be executive because there recreating this deliberative body and thats gone when you just have one person. They also were trying to get bipartisan bodies and thats been the tradition as well. One person cant simultaneously be both parties. Actually, its not bipartisan, the federal trade Commission Says no more than three members of one political party, and in fact, during the Reagan Administration when president reagan had a vacancy and three republicans on the commission he appointed an independent and his next appointment was someone who is described as a reagan democrat. The statute removing from the president any of the communications with congress all of the other aspects that when combined with the removal distinguishes from morrison to make it unconstitutional. With respect , your honor the bureau is funded much like the other regulatory agencies than twothirds of the government, outside the annual appropriations process. But did not have told restriction. This does. They do and the board and was funded outside the annual appropriations process that puts no restriction on the president he is always free to propose anything he wants with respect to the bureau and the puts no restriction on congress either because as the panel recognizes it is free at any time to change the source of the bureaus findings or even eliminate them altogether the. Me be each of these individually you can combine them all with the restriction on removal with a fiveyear term so if they all add up. Am just asking the question whether or not morrison controls the case because if you add all of these up the difference is of the institutions which is a greater threat to the ability of the president to execute the law. Morrison does control this case your honor and if you look at those restrictions none of them were to go one by one but none would restrict the president whatsoever the fact we went through that budget in authority with respect to a certain committees in congress can oversee the budget has no effect on the president s authority from one hell did more said what held it morrison that at least for cause it has sufficient authority. Now Phh Corporation also made arguments the bureau was more powerful than the federal trade commission in 1935 i would draw the attention to the courts decision of National Petroleum refiners that cited in the Phh Corporation reply brief on page six. The issue in the case is whether the federal trade commission had the authority to issue the rule and that is the Phh Corporation focus that the ftc could not to issue rules in 1935 the bureau would issue them. But this court was asked to see if the ftc the original statute as enacted 1914 whether they had Rulemaking Authority and to conclude that it did before reaching that conclusion this court and served that it was a quibble to distinguish the ftc authority but it was a quibble to distinguish from that of other regulatory agencies that could lead engaged in substantive rulemaking in the court also noted on the same page that the ftc based solely on its authority to pursue administrative adjudication adjudication, the ftc is referred to as a powerful regulatory fact over Business Practices and over 1935 and still today the ftc has authority over virtually every part of the economy with the bureau is over Consumer Financial product. Something that was mentioned earlier was to the point of taking all of these things together that congress could always change the statute again say that theyre not limited in the appropriations process but he is with source of funding so is part of the response that it is true there is the accumulation that congress made the bureau is part of the Federal Reserve and that in itself could be viewed in a number of different ways. So like the central bank concept in the power of the Federal Reserve so in that area it has been different so the combination doesnt necessarily have the same impact to repair the president s power as it might outside the Federal Reserve or is that a false analysis . It is not that congress can change the provision, it is just that the other provisions have no impact on the power of congress or the president so they have no impact on the separation of powers issue. Each of those analyzed separately. But viewed in the totality, the response im trying to get is that because it is part of the Federal Reserve that that is the exception that historically has been recognized in the governmental system . I would not say that but the way the combination issue is resolved that each being separately is the row with the for cause removal argument is the web 0 o plus o at the end of the day you still have zero and half for cause removal provision that the court has explained in humphries executor and morrison that that does not impinge on the president s authority. Want to ask a question of the subject that goes back and forth in the brief so is it your position that the statute of limitations applies that it can bring cases such as this 10 or 20 or 30 years after the cause of action . Know, your honor we had some discussion about this we have discussed it a little more now. With respect to the threeyear statute of limitations applied with you look at the statutory addendum. I am asking from the administrative proceedings is is still the position no statute of limitation applies . Yes there is. It is in judicial code. 2462. 2462. Does that apply in this case . But the bureau did not challenge the limitations the bureau did not challenge any conduct more than five years. The reason i raise that is there is that very statute involved in the Supreme Court. So you take the position it does apply. So the fiveyear statute of limitation applies if the bureau was seeking the Supreme Court determines that goes to the treasury is covered by this statute of limitations that would apply although we are in that fiveyear with respect to other Equitable Relief and attwood o equitable provisions from conduct that seized 20 years ago to limit the bureaus authority but if the conduct is ongoing for war to reoccur that Phh Corporation will conduct is likely to occur it would happen to into relief. But in the statute part of the case what is your position that Phh Corporation what is on notice that this was some awful . It is based on a 1997 letter. What is the affirmative source . Negative actor in the market. What is your reading . This statute. Section 8 in that statutory right agenda if you look in the al left hand column and it says that no person shall accept a fee or kickback for the referrals. And appointed the neck section that says nothing in this section shall be construed as prohibiting of the payment to any person of a bonafide Salary Compensation or other payment or among other Things Service is actually performed. There are to require reciprocal requirement. So it must be commensurate with the value of the service in the other requirement is what is bonafide . In good faith. The Supreme Court in our brief on page 38, before the court then with a remedial statute and not with the purposes the deviation. I have a question if congress decides to combine the ftc and the sec and cfpb into one Single Agency that is fine . The issue there with respect to each agency during humphries executor the case while moving forward to the ftc that roosevelt wanted to get rid of teetwo. You have to look get the function of the agency that combine with the ftc the all combine together to look at that function that the agency performs. Those that are remarkably similar and this need go no further than humphries executor in those cases decide this case. All of those discussions about the for cause removal or perhaps relying on precedent that there was not for cause removal. With the president s ability to be held accountable. So can you give me any example to be successfully removed for cause . I cannot. So what happens in a situation like that the president begins to pursue for cause removal. Not with humphries executor. But humphrey did leave the agency. Maliki got the letter from president roosevelt. But he did so what happened he was selling for back pay. And now some Congress People no president has every move that the four cars removal to enhance congressional judicial public stringy. In with that for cause removal that was used successfully sunday issue was knighted in munition of authority but if the president retains sufficient authority to make sure the laws are faithfully executed. So those congressmen may have said something that the president can use. That they do have to leave if a president removes you for cause regardless if you disagree. He did not remove a humphrey for cause. But it is your position if you are removed for cause you can get the injunction or back pay . I dont know what could apply i think some agency specified. That is the point has not happened. It has not. But i would note in the panels decision with the independent regulatory agencies they thought for cause removal of melted amounted to what . It is the power the president has to make sure those officials are operating honestly and are competent however i do agree there is a licenced instance where he is exercise that power. I am trying to figure out to followup on the judges question because i thought about this i have seen other commentary that since even though there is of lorcas protection under humphries executor the only remedy available is that day that there has never been the case and lots of commentators believe no court would have the jurisdiction so with our analysis is that a toothless protection or does that mean , how should we think about that . I think with respect to that analysis the separation of powers issue the court has held as long as the president can hold at least for cause to be assured he is performing his or her duty but not simply for policy disagreements. Didnt the majority opinion in morrison say that . As a meaningful authority . Yes. I think both humphries executor and also morrison morrison, the one thing the court has decided. Was policy disagreement cause . To make it think that is what happened. So reseau celebrate to have a man and that is what he said. I believe that is correct so even though that is what the court held it was humphries executor because he was still alive. He would not get his job back. And pay for the rest of the term even if the Court Disagrees later. Even with the humphries executor. Data now that would play out but not add a situation the statute on the face. Any more questions . There has never been an agency like this all of those things that congress carefully put in the statutes to ensure the independence of this agency is not 0 o plus o is significant each and every respect so that sum total that creates the most powerful agency this is give it the power to enforce 19 supper Consumer Financial statutes that come from all different agencies this is a very powerful agency. Does that president under the Free Enterprise fund have the authority to be accountable with respect to those 19 statutes . The president has none. To use that in the Supreme Court with the Free Enterprise fund the buck stops somewhere else. Unless he steals or does Something Like that i cannot remove him. We start with the proposition what this agency is doing is performs executive functions very broad executive functions there is no stopping point it could be the Treasury Department over the environmental Protection Agency or any other of the government and we can have those same arguments were having here. It is part of hud if that was taking given to this agency and a bunch of other agencies so what the Supreme Court said is that illegitimate and unconstitutional practices get there first footing by the silent approach from legal loads of procedure that is what the Supreme Court said. This is either silent nor slight as Justice Scalia would have said it comes as a wolf of principle that the cfpb advances would allow the entire executive branch to be swallowed up by independent agencies and congress will do this. What was said in the federalist papers, congress will do this all the time. That is all great arguments against humphries executor. [laughter] but Free Enterprise fund looked at humphries executor and the context of humphries executor to say this is a body of experts with quasi judicial and legislative functions and at that time. That they would require the expertise based on humphries executor. I did not get that. Theyre not hired based on their expertise but the rationale was they would acquire expertise so just to put aside humphries executor which you have definitely reserved, so if we assume humphries executor remains the law would cfpb still have a constitutional argument if there were two or three people instead of one . Were excepting humphries executor but this goes vastly further than that. If there was two or three with a multi number . In my judgment and makes no difference. So if you disperse the power to stagger the terms it has the effect to limit the authority and this is different and you can tell from our briefs much further than what the Panel Decision was willing to do. Suggests that removal provision does not take out all of these zeros given to the agency they are not zeros. No doubt that the executive function the founders of our country 77, 88, 89 meet the same decision over and over we will not have a plural executive we have the cfpb is a plurality and theres no stopping point. Ice understand as we stated here today with morrison but the Supreme Court analyze that and to make it very clear but was very skeptical about those intrusions it to the executive authority and the Supreme Court instructed that is as far as it will go and our submission that this agency and director in individual who can fire at will with no sense of participation to have authority to hire and fire people basically do whatever he wants to do and with respect to pending legislation to bring enforcement action with Litigation Authority and each one of those you could unpacked those and i could understand why no big deal but each of those are a big deal though he put them together is a very big deal and there is no stopping point. And this is bound by limitations and it doesnt go any further unless it is that within the narrow confines of humphries executor it is nothing like what we have here today. This agency is unconstitutional and inconsistent and i have to say one more thing thats because there are very different interpretations of the statute that our eric articulated in the Panel Opinion that are not challenge your it is very important that whatever happens the decisions on those issues be reinstated and the issue of the footnote to be resolved as well if possible but because those decisions with respect to the statute was manifest it correct, not a close case as part of the unanimous Panel Decision to be reinstated it is very important to an industry as people have to understand the rule of law. After that, a look at the 1999 white house president ial medal of freedom ceremony honoring helmet coal who died today at the age of 87. Now, a discussion on how western societies can combat radical extremism hosted boy the national institute. This is just over 90 minutes