Amicus Brief: Patrick J. Collins, et al. v. Janet L. Yellen, Secretary of the Treasury, et al.

Washington, DC (June 23, 2021) – Today, a divided Supreme Court held that the structure of the Housing and Economic Recovery Act of 2008 violated the separation of powers. The law ran afoul of the Constitution by restricting the President’s power to remove the Director of the Federal Housing Finance Agency (FHFA). The New Civil Liberties Alliance, a nonpartisan, nonprofit civil rights group, filed an amicus brief in September 2020 arguing that the FHFA Director’s protection from removal denied the President’s power to control the actions of Executive Branch officials. The victory today vindicates separation-of-powers principles and protects Americans’ right to a republican form of government, which unaccountable independent agencies thwart.

In Justice Alito’s opinion for the Court, the judgment of the Fifth Circuit was affirmed under reasoning that the prohibition against independent agencies headed by a single official applies broadly. The Court fully endorsed last year’s holding in Seila Law LLC v. Consumer Financial Protection Bureau, which held that it was unconstitutional for the Director of CFPB to be insulated from presidential removal. As NCLA argued, virtually all the factors cited by Seila Lawas reasons for concluding that CFPB’s structure ran afoul of separation-of-powers principles are fully applicable to FHFA’s structure: each is headed by a single Director who is appointed to a five-year term and may not be removed by the President before the end of that term except for cause.

The Court rejected arguments that Seila Law was distinguishable and should only be applied to some federal agencies but not others. Seila Law applies to any statute that interferes with the President’s authority to remove an agency head. The Court also held that, in light of the constitutional violation, it was remanding the case to the lower courts to decide the remedy to which plaintiffs are entitled.

Congress sought to protect the Director of FHFA from removal, thus depriving Americans of their constitutional right to live under a government in which executive power is accountable to them through the President. NCLA seeks to protect these rights by participating in cases such as this one and by challenging CFPB’s unconstitutional funding structure in the case of Bureau of Consumer Financial Protection v. Law Offices of Crystal Moroney, P.C., now pending in the Second Circuit. CFPB’s design—like FHFA’s—combines extraordinary power with unparalleled and unprecedented financial independence from Congress.

NCLA released the following statements:

“The Supreme Court made absolutely clear that it will not tolerate any restrictions on the President’s authority to remove the head of a federal agency. This is an important victory for separation-of-powers principles. The removal power ensures that Executive Branch officials serve the American people effectively in accordance with the policies that they elected the President to promote.”
— Rich Samp, Senior Litigation Counsel, NCLA

“As NCLA predicted last fall, the Supreme Court shot down removal protections for FHFA’s Director today. The FHFA—like the CFPB reined in by Seila Law last June—is an unconstitutional abomination. The Court has now addressed the problem with presidential control over these agency heads. It still remains to address the unconstitutional way these agencies are funded.”
— Mark Chenoweth, Executive Director and General Counsel, NCLA

For more information visit the case page here.

ABOUT NCLA

NCLA is a nonpartisan, nonprofit civil rights group founded by prominent legal scholar Philip Hamburger to protect constitutional freedoms from violations by the Administrative State. NCLA’s public-interest litigation and other pro bono advocacy strive to tame the unlawful power of state and federal agencies and to foster a new civil liberties movement that will help restore Americans’ fundamental rights.

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Washington, DC (September 23, 2020) – The New Civil Liberties Alliance, a nonpartisan, nonprofit civil rights group, filed an amicus brief today in the U.S. Supreme Court taking aim at the unconstitutional structure of the Federal Housing Finance Agency (FHFA). NCLA asks the Court to (1) set aside the final agency action FHFA took against Petitioners while it was unconstitutionally structured and (2) grant them meaningful relief in Patrick J. Collins, et al. v. Steven T. Mnuchin, Secretary, U.S. Department of Treasury, et al.

The Court should affirm the Fifth Circuit’s holding that the statute granting FHFA’s director protection from removal by the President—except for cause—violates the separation of powers. But the Court should reverse the appeals court’s award of merely prospective relief to Petitioners. NCLA supports strict enforcement of separation of powers among the three branches of government and opposes efforts by Congress to undermine the constitutionally protected powers of the President of the United States. NCLA’s amicus argues that the President cannot effectively control the actions of FHFA’s Director if he may not remove the Director at will.

FHFA is an independent agency headed by a single director, who may only be removed by the president “for cause” and is exempt from the congressional appropriations process. Such a structure denies the President the ability to control the actions of Executive Branch officials and thus violates the Constitution’s separation-of-powers principles. The President cannot effectively carry out his duties unless he has the power to fire any principal officers whom he thinks are inadequately executing his directives—including the FHFA Director.

In a recent Supreme Court decision, Seila Law LLC v. CFPB, the Supreme Court declared that it was unconstitutional for the Director of the Consumer Financial Protection Bureau (CFPB) to be insulated from presidential removal. FHFA’s structure has identical defects. NCLA argues that the Seila Law decision compels a ruling that, for the same reasons, FHFA’s structure also violates the separation of powers.

NCLA is currently challenging the CFPB’s unconstitutional funding structure in the case of Bureau of Consumer Financial Protection v. Law Offices of Crystal Moroney, P.C. CFPB’s design—like FHFA’s—combines extraordinary power with unparalleled financial independence, compounding its dysfunction with scorn for civil liberties and Presidential control.

FHFA is the federal agency that regulates Fannie Mae and Freddie Mac, two government-sponsored enterprises that provide liquidity to the national mortgage market by buying up home loans from banks and other mortgage lenders across the country. FHFA essentially nationalized those two financial services companies when, in its role as their conservator, it agreed that all future corporate profits should be paid to the U.S. Treasury. The Petitioners, shareholders of Fannie Mae and Freddie Mac, object to the companies’ nationalization, arguing (among other things) that FHFA’s unconstitutional structure made it not authorized to act.

NCLA released the following statements:

“Americans enjoy a constitutional freedom to elect the President, the person in whom the Constitution vests the executive power. The Constitution thereby makes the exercise of power accountable to the people. But that accountability is lost if the President is denied authority to control the actions of FHFA’s Director.”

— Rich Samp, Senior Litigation Counsel, NCLA

“The CFPB and FHFA are unconstitutional abominations. The Supreme Court shot down removal protections for CFPB’s Director in Seila Law, it will shoot down removal protections for FHFA’s Director here, and it should shoot down the unconstitutional financing of these agencies when that issue eventually reaches the justices. Meanwhile, the Court should also unwind FHFA’s unlawful previous actions challenged in this case.”

— Mark Chenoweth, Executive Director and General Counsel, NCLA 

To read the full case summary of Bureau of Consumer Financial Protection v. Law Offices of Crystal Moroney, P.C., click here.

 ABOUT NCLA

NCLA is a nonpartisan, nonprofit civil rights group founded by prominent legal scholar Philip Hamburger to protect constitutional freedoms from violations by the Administrative State. NCLA’s public-interest litigation and other pro bono advocacy strive to tame the unlawful power of state and federal agencies and to foster a new civil liberties movement that will help restore Americans’ fundamental rights.

Download the full document