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The Fifth Circuit sat en banc last month for oral argument in Collins v. Mnuchin, 17-20364. The case addresses whether the Federal Housing Finance Agency is constitutionally structured. The plaintiffs argue that the FHFA violates separation-of-powers principles because it is headed by a single Director who is removable only “for cause” and it does not depend on congressional appropriations to function. The plaintiffs also raise statutory questions concerning the scope of FHFA’s authority.
In a splintered decision, a panel held that the FHFA operated within its statutory authority (Chief Judge Stewart and Judge Haynes) but that the agency is unconstitutionally structured (Judges Haynes and Willett). The Fifth Circuit took the case en banc and asked questions on both issues during oral argument. Though the court focused on the statutory questions, likely because the Department of Justice (on behalf of party-defendant Department of Treasury) and the FHFA (separately represented) agree that FHFA’s structure is unconstitutional. They argue instead that plaintiffs do not have standing to challenge its constitutionality.
Similar structural arguments were recently raised in a challenge to the constitutionality of the Consumer Financial Protection Bureau in the D.C. Circuit. In an opinion by then-Judge Kavanaugh, the panel held that CFPB was unconstitutionally structured. PHH Corp. v. Consumer Fin. Prot. Bureau, 839 F.3d 1, 5 (D.C. Cir. 2016). But the court took the case en banc and reversed the panel in a 7-3 vote. PHH Corp. v. Consumer Fin. Prot. Bureau, 881 F.3d 75 (D.C. Cir. 2018). A final holding that the FHFA is unconstitutionally structured would therefore create a circuit split on whether single-director independent agencies are permissible.
