The Constitution, The Supreme Court, And The Independence Of Regulatory Agencies: A Look At The Funding Of The Consumer Financial Protection Bureau

• Published date: 06 June 2023
• Law Firm: Thompson Coburn LLP
• Author: Mr Warren Dean Jr., Katie Kraft, Booker Shaw and Douglas Lang

The Supreme Court has agreed to hear another case addressing the extent to which administrative agencies can and should exercise power independent of meaningful supervision. In Consumer Financial Protection Bureau v. Community Financial Services Association of America, Ltd., No. 22-448 (cert. granted Feb. 27, 2023), the Court will consider the constitutionality of the funding structure of the Consumer Financial Protection Bureau (CFPB), an independent regulatory agency of the U.S. Government. Specifically, the Court will be asked to decide whether the Appropriations Clause of the Constitution, which requires an appropriation before funds may be "drawn from the Treasury," allows Congress to fund an independent regulatory agency outside of the congressional appropriations process.

A basic principle of our constitutional system is its division of government functions between three separate and co-equal branches: the legislative, executive, and judicial. This separation of powers is a key element of the checks and balances that are essential to ensuing fairness in the exercise of governmental power. As Madison observed in THE FEDERALIST NO. 48, the accumulation of the legislative, executive and judicial powers in the same hands might justly be described as the "very definition of tyranny."

Administrative agencies, sometime referred to as the fourth branch of government, operate in tension with separation-of-power principles. This is particularly true of regulatory agencies. When performing regulatory functions, regulatory agencies typically exercise all three functions of government - they "legislate" through rulemaking authority, they "execute" by investigating and enforcing the laws within their purview, often implemented by their own rules, and they "adjudicate" those controversies, effectively "fill[ing] in for the district court." Axon Enterprise, Inc. v. Federal Trade Commission, 598 U.S. --, 143 S. Ct. 890, 900 (2023).

To justify this...