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[1] (June 1, 2016)

handle is hein.crs/crsmthabfyp0001 and id is 1 raw text is: CRS Reports & Analysis Legal Sidebar Constitutional Limits to Agency Independence 06/01/2016 Congressional authority to establish federal agencies with independence from political control is under scrutiny in a case pending before the U.S. Court of Appeals for the District of Columbia Circuit (D.C. Circuit). At issue in PHH Corp. v. CFPB is whether the Consumer Financial Protection Bureau's (CFPB) structure violates the constitutional principle of separation of powers. The CFPB is headed by a single director who enjoys a certain amount of protection from removal by the President, and the agency is funded outside of the annual appropriations process. As elaborated below, PHH claims that the restrictions on the President's power to remove the Director improperly encroach on the executive power vested in the President under Article II of the Constitution, and that the combination of insulation from executive control and independence from yearly congressional appropriations violates separation of powers by shielding the agency from democratic accountability. The Constitution divides the power of the federal government among the legislative, judicial, and executive branches. While the text does not contain a separation of powers provision, the Supreme Court has recognized a separation of powers principle that underlies the constitutional division of the federal government's authority. Among other things, this doctrine prevents one branch of government from impermissibly encraching on the powers of another or inappropriately delegating its own authority to another branch of government. These limits, in turn, shape the structure of federal agencies that exercise governmental power. For example, a recurring theme in separation of powers cases is the extent to which Congress may impose restrictions on the President's power to remove executive officers. ArticlellI of the Constitution vests the executive power in the President, and the President is authorized to keep executive officers accountable by removing them. However, the Supreme Court has recognized that this power is not absolute. In HumDhrev 's Executor v. United States, the Court held that Congress could establish independent agencies overseen by officers whom the President could only remove for good cause. The Court upheld similar restrictions on the President's authority to remove lower-level officials in Morrison v. Olson. In Free Enterprise Fund v. Public Companv Oversight Board however, it invalidated the combination of these two otherwise permissible features - removal restrictions on both the principal and certain inferior officers within a single agency - as violating Article II's vesting of executive power in the President because it improperly impeded his constitutional obligation to ensure the faithful execution of the laws. Another constitutional provision that informs separation of powers is Article I's prohibition on drawing money from the Treasury unless authorized by Appropriations made by Law. Congress thus has the power of the purse and controls the funding of executive branch agencies. While the Court has not faced a challenge to an independent agency receiving funds outside of the annual appropriations process, various federal entities, such as the Federal Reserve Board, are currently funded through their own earnings, rather than through the appropriations process. The CFPB was established by the Dd&Frank Wall Street Refom and Consumer Financial Protein A which consolidated and expanded federal regulation of consumer financial products. Broadly, the Act gave the CFPB rulemaking, supervisory, and enforcement power over certain financial institutions. It also bestowed rulemaking and enforcement power under various consumer financial protection statutes, and more generally the authority to deter unfair, deceptive, or abusive practices by regulated entities. In this case, the Director of the CFPB concluded that a mortgage lender, PHH, violated the Real Estate Settlement Procedures Act, imposed injunctive relief to prevent further violations, and required PHH to disgorge kickback payments it had received in violation of the Act. PHH appealed

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