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en Banc Decision in PHH v CFPB

Sunday, February 4, 2018  
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DC Court of Appeals Hands Down an enBanc Decision in PHH v CFPB
by Arthur Davis III for the American Escrow Association

Majority Decision (Pillard, Tatel, Millet, Srinavasan, Wilkins, Rogers, Griffith): 
  • The en banc majority reinstated the panel's decision on the interpretation of RESPA and its application to PHH and Atrium in this case.  For a copy of the enBanc decision, click here.
  • However, the majority also held that Dodd-Frank's "for-cause" tenure protections for the CFPB Director are constitutional and do not impermissibly limit the President's removal power. 
    • First, the for-cause removal protection was a "wholly ordinary" means of giving the CFPB Director independence, which left the President with ample oversight authority. 
    • Second, such tenure protections were permissible considering the CFPB Director is a financial regulator-a role that traditionally calls for a measure of autonomy from the President (e.g., the FTC, as noted in Humphrey's Executor)-rather than an officer exercising "core" executive functions, like the Secretary of State, for example.
    • The court rejected PHH's constitutional arguments. 
      • The court held that the scope of the CFPB's authority is not overbroad, because the CFPB's powers are simply a conglomeration of powers previously housed in several other agencies, and because the CFPB's authority is more cabined than many other independent agencies.
      • The court concluded that the CFPB's single-director structure is not historically novel given the many other single-director independent agencies (e.g., Social Security Administration, Office of Special Counsel, Federal Housing Finance Agency).  And even if it were unique, the Constitution does not prohibit innovation in government.  Moreover, the court surmised, an agency headed by a single person might enhance presidential accountability since it is easier for the President to fire and replace one person than it is to fire and replace many...

To read the full report, click here.

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