On its Own Motion 5th Circuit Vacates CFPB Constitutionality Decision, Ordering En Banc Rehearing

The Fifth Circuit recently vacated a prior panel decision, on its own motion without any party having requested it, holding that the CFPB’s structure was constitutional and ordered an en banc rehearing of the case.  The central question for the court is whether it is constitutional for the CFPB to have a single agency head who is only removable for cause. 

The prior panel decision was released on the same day the Supreme Court of the United States heard oral arguments in a case involving the same question in another matter.  The prior panel held that the CFPB’s structure was constitutional in part because the President could remove the agency head without going through a layered removal process and could maintain control over the agency through the Financial Stability Oversight Council (FSOC).  The now-vacated panel decision rejected the argument that a prior Fifth Circuit case, which held the FHFA’s nearly identical structure unconstitutional, was controlling, citing the existence of the FSOC as the distinguishing factor.  The constitutionality of the CFPB’s structure will now be heard by the Fifth Circuit en banc.  This will occur in parallel with the Supreme Court’s review of the same question in Seila Law v. CFPB, although it is unclear whether the Fifth Circuit will complete rehearing prior to the Supreme Court’s decision, which is expected by the end of June 2020.

WBK previously covered the Fifth Circuit’s prior panel decision here.  WBK is also continuing to follow the Supreme Court developments in Seila Law v. CFPB available here.