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President Can Fire Agency Head Only for Cause

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By William Vogeler, Esq. on February 02, 2018 10:45 AM

During his State of the Union address, President Trump urged Congress to allow government officials to fire workers who "undermine the public trust or fail the American people."

But under a federal court decision issued the next day, it's not going to be that easy even for the president. The U.S. Circuit Court of Appeals for the District of Columbia said the head of a consumer protection agency can only be fired for cause.

PHH Corporation v. Consumer Financial Protection Bureau is not a big setback for the "You're fired" president, but it is a huge affirmation of the power of an administrative agency.

Not At-Will

The en banc panel of the DC Circuit said a president can only remove the director of the consumer bureau for cause. The director does not work at-will.

"Applying binding Supreme Court precedent, we see no constitutional defect in the statute preventing the president from firing the CFPB director without cause," Judge Nina Pillard wrote for the divided court.

The 7-3 decision reversed a ruling by a three-judge panel, which struck down the agency's structure. Judge Brett Kavanaugh, who wrote the opinion in 2016, dissented in the en banc decision.

Independent agencies hold enormous power and they "collectively constitute, in effect, a headless fourth branch of the U.S. government," he said. To mitigate that power, independent agencies have historically been headed by multiple commissioners or board members.

No Signigicant Consequences

Observers say the ruling won't have "significant consequences" in the short-term because the president has already installed an interim director for the agency. However, there is still the matter of a $109 million fine.

PHH, which challenged the agency in the case, can still fight the fine for alleged misconduct. Meanwhile, the deputy director of the agency is fighting the president's interim director in a separate case.

At the end of the day, somebody is going to be out of a job.

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