Elena Kagan’s Fiery Defense of the Administrative State

Selia Law v. CFPB wasn’t among the highest-profile cases of this Supreme Court term, but it was far from insignificant. In a 5–4 decision along the usual partisan lines, the court struck down part of a federal law that said the director of the Consumer Financial Protection Bureau could only be fired by the president for cause. Such protections aren’t uncommon at the federal level, especially among financial regulators, but they are unusual for a post like the one in question.

“In addition to being a historical anomaly, the CFPB’s single-director configuration is incompatible with our constitutional structure,” Chief Justice John Roberts wrote for the court. “Aside from the sole exception of the Presidency, that structure scrupulously avoids concentrating power in the hands of any single individual.” Though some had urged the court to strike down the entire agency or curb its enforcement powers, a 7–2 majority instead opted to make the director fireable at will by the president.

Writing for the dissenters was Elena Kagan, who hammered the majority at length for what she saw as its error. “In second-guessing the political branches, the majority second-guesses as well the wisdom of the Framers and the judgment of history,” she wrote in her dissent. “It writes in rules to the Constitution that the drafters knew well enough not to put there. It repudiates the lessons of American experience, from the 18th century to the present day. And it commits the nation to a static version of governance, incapable of responding to new conditions and challenges.”

The dueling opinions laid out two starkly different versions of what the federal government should look like. To Roberts and the conservatives, regulatory agencies like the CFPB pose an inherent threat to Americans’ liberty unless presidents can closely supervise them. Kagan’s dissent offers a competing vision, one where Congress’s ability to structure and experiment with the federal bureaucracy is a testament to American self-governance instead of a threat to it. The future of that bureaucracy may depend on whether Kagan can convince the rest of the court.

The underlying facts behind Selia Law are neither exciting nor interesting. The California law firm in question came under investigation by the CFPB for unlawful debt-relief practices. When the agency issued a subpoena of sorts to Selia Law in 2017, the firm resisted turning over its records by arguing that the CFPB’s structure violated the separation of powers. Generally speaking, presidents can fire the heads of most federal departments and agencies for any reason—or for none at all. But provisions in the Dodd-Frank Act only allow the president to fire the CFPB’s director for “inefficiency, neglect of duty, or malfeasance in office.”

While the Constitution itself makes clear that the Senate must approve high-level presidential appointments, its text is silent on their removal. A medley of Supreme Court cases over the past century filled that void. In the 1926 case Myers v. United States, the court ruled against an Oregon postal official who claimed Woodrow Wilson needed the Senate’s assent to remove him. Roughly a decade later, in Humphrey’s Executor v. United States, the justices sided with a deceased member of the Federal Trade Commission who had been dismissed by Franklin D. Roosevelt. And in the 1988 case Morrison v. Olson, the court signed off on the Independent Counsel Act, which set up a special prosecutor’s office to lead criminal investigations into top executive-branch officials. Unlike every other federal prosecutor, however, this one would be appointed by a three-judge panel and not the president himself.

Humphrey’s Executor and Morrison are frequent targets of criticism from the conservative legal movement. Morrison is best known today for the impassioned solo dissent by Antonin Scalia, who saw the ruling as an unconscionable injury to presidential power. “Frequently an issue of this sort will come before the Court clad, so to speak, in sheep’s clothing,” he wrote. “But this wolf comes as a wolf.” Legal conservatives also often deride Humphrey’s Executor for recognizing Congress’s power to create independent regulatory agencies like the Federal Trade Commission and the Securities and Exchange Commission, which helped nurture the growth of the modern “administrative state.” Both rulings run counter to the strictest version of the unitary executive theory, where presidents wield mostly unfettered control over the workings and personnel of the executive branch.

How the justices view these three precedents influenced how they decided Selia Law. To Roberts and the conservatives, the court had correctly recognized a broad presidential removal power in Myers, then found a series of exceptions to the general rule. “We are now asked to extend these precedents to a new configuration: an independent agency that wields significant executive power and is run by a single individual who cannot be removed by the president unless certain statutory criteria are met,” he wrote. “We decline to take that step.” He avoided addressing outright whether Humphrey’s Executor or Morrison were in error, noting simply that the justices “need not and do not” revisit them this time.

Kagan, by contrast, drew a much different conclusion from those precedents. She contends that the Constitution’s silence on removal actually reflects an unresolved debate among the Framers about its limits. In The Federalist Papers, Kagan noted, Alexander Hamilton and James Madison even envisioned that Congress could impose some limits on removal when it structured the federal bureaucracy. Then–Chief Justice William Howard Taft—“a judicial presidentialist if there ever was one,” notes Kagan—ignored that history while writing Myers to read an “illimitable power” for removal into the Constitution, she argued. In Kagan’s telling, Humphrey’s Executor, Morrison, and a handful of smaller cases aren’t exceptions to Myers but conscious efforts by subsequent justices to limit a flawed and overbroad holding.

This parting of the ways flows from the respective sides’ views of the executive branch. Roberts argued that the Framers saw legislative power “as a special threat to individual liberty,” and thus crafted a strong, unitary presidency to resist it. “To justify and check that authority—unique in our constitutional structure—the Framers made the president the most democratic and politically accountable official in government,” he wrote, quoting Hamilton in The Federalist Papers. “Only the president (along with the vice president) is elected by the entire nation. And the president’s political accountability is enhanced by the solitary nature of the executive branch, which provides ‘a single object for the jealousy and watchfulness of the people.’”

This is a dubious understanding of the presidency, both as it was drafted in 1787 and as it functioned in the early republic after 1789. The Electoral College is an explicit check on the people’s ability to choose the president, and it can even overrule them. Our current predicament shows how this flaw can undermine the office’s supposedly democratic and politically accountable nature. What’s more, early Americans often didn’t get to vote for the president or for the electors at all. That task instead fell to some state legislatures, especially in Southern states, until 1832. And the vice presidency wasn’t truly designed as an elected office at all, since it simply went to the presidential runner-up.

Roberts nonetheless makes the case for a clear separation of powers among the three branches of government and a high wall between them when it comes to their respective domains. “The resulting constitutional strategy is straightforward: divide power everywhere except for the presidency, and render the president directly accountable to the people through regular elections,” he concluded. “In that scheme, individual executive officials will still wield significant authority, but that authority remains subject to the ongoing supervision and control of the elected president.”

Kagan dismissed Roberts’s narrative as the “civics class version of separation of powers—call it the Schoolhouse Rock definition of the phrase” for its excessive simplicity. She noted the other Framers feared a constitutional breakdown “where the whole power of one department is exercised by the same hands which possess the whole power of another department,” as Madison explained in The Federalist Papers. Early Americans expected that while each branch would be sovereign and independent of the other, there would also be collaboration, cooperation, and interdependence to carry out the people’s work. “The problem lies in treating the beginning as an ending too—in failing to recognize that the separation of powers is, by design, neither rigid nor complete,” she explained.

Though all of this might sound arcane and somewhat abstract, it has profound implications for American governance. “Diverse problems of government demand diverse solutions,” Kagan explained. “They call for varied measures and mixtures of democratic accountability and technical expertise, energy and efficiency. Sometimes, the arguments push toward tight presidential control of agencies. The president’s engagement, some people say, can disrupt bureaucratic stagnation, counter industry capture, and make agencies more responsive to public interests.” As a citation for “some people say,” she directed readers to her own Harvard Law Review article in 2000 on the matter.

“At other times, the arguments favor greater independence from presidential involvement,” she added. “Insulation from political pressure helps ensure impartial adjudications. It places technical issues in the hands of those most capable of addressing them. It promotes continuity, and prevents short-term electoral interests from distorting policy. (Consider, for example, how the Federal Reserve’s independence stops a President trying to win a second term from manipulating interest rates.)” Kagan urged the judiciary to take a more humble approach to these questions, arguing that presidents and lawmakers are better equipped to determine the structure of the federal bureaucracy than them.

Recall again how this dispute got started. In the midst of the Great Recession, Congress and the President came together to create an agency with an important mission. It would protect consumers from the reckless financial practices that had caused the then-ongoing economic collapse. Not only Congress but also the President thought that the new agency, to fulfill its mandate, needed a measure of independence. So the two political branches, acting together, gave the CFPB Director the same job protection that innumerable other agency heads possess. All in all, those branches must have thought, they had done a good day’s work. Relying on their experience and knowledge of administration, they had built an agency in the way best suited to carry out its functions. They had protected the public from financial chicanery and crisis. They had governed.

And now consider how the dispute ends—with five unelected judges rejecting the result of that democratic process. The outcome today will not shut down the CFPB: A different majority of this Court, including all those who join this opinion, believes that if the agency’s removal provision is unconstitutional, it should be severed. But the majority on constitutionality jettisons a measure Congress and the President viewed as integral to the way the agency should operate. The majority does so even though the Constitution grants to Congress, acting with the President’s approval, the authority to create and shape administrative bodies. And even though those branches, as compared to courts, have far greater understanding of political control mechanisms and agency design.

Roberts and the conservative majority disagreed. He dismissed the idea that lawmakers and presidents could try to structure federal agencies in novel ways to better carry out their duties. A staid and simplistic vision for American governance and self-governance, purportedly rooted in a Constitution that made no mention of it, carried the day. “Today, as always, the urge to meet new technological and societal problems with novel governmental structures must be tempered by constitutional restraints that are not known—and were not chosen—for their efficiency or flexibility,” Roberts wrote.

The outcome in Selia Law was no surprise. Indeed, the Supreme Court’s conservative bloc openly describes the modern administrative state as semi-tyrannical and likely unconstitutional. In a concurring opinion, Thomas argued that the court should go further and embrace an unrestrained approach to the removal power. “Continued reliance on Humphrey’s Executor to justify the existence of independent agencies creates a serious, ongoing threat to our government’s design,” he wrote. “Leaving these unconstitutional agencies in place does not enhance this court’s legitimacy; it subverts political accountability and threatens individual liberty.”

Neil Gorsuch, who joined Thomas’s concurrence in Selia Law, has also taken radical stances in other cases. In Gundy v. United States last year, a Kagan-led majority upheld a federal law on sex-offender registries that gave broad discretion to the executive branch when implementing it. Gorsuch argued in dissent that the court should revisit the nondelegation doctrine, which would allow the courts to intervene when they think Congress delegated too much power to the executive branch. Kagan, writing then for the court, noted the breathtaking scope of his claim. “Indeed, if SORNA’s delegation is unconstitutional, then most of government is unconstitutional—dependent as Congress is on the need to give discretion to executive officials to implement its programs,” she warned.

Brett Kavanaugh, the court’s newest justice, also shares his conservative colleagues’ aversion to federal regulatory power. While he served on the D.C. Circuit Court of Appeals, he wrote a lengthy dissent from that court’s ruling in another case on the CFPB director’s for-cause protection in 2018. It foreshadowed the language that Roberts would use in Selia Law: The new agency, Kavanaugh warned, was effectively a quasi-dictator who “wields enormous power over American businesses, American consumers, and the overall U.S. economy.” This structure, he argued, “departs from history, transgresses the separation of powers, and threatens individual liberty.” Individual liberty, in this context, is apparently the freedom of consumer-fraud investigation targets to lobby the president to intervene on their behalf.

The clash in Selia Law is worth noting not just because it’s important on its own merits or because it pits the court’s two best writers against each other. Kagan is perhaps the most respected member of the court’s liberal wing in right-wing legal circles. As the dean of Harvard Law School, she made a conscious effort to add conservative scholars like Jack Goldsmith and Adrian Vermeule to the school’s mostly left-of-center faculty. After David Souter retired in 2009, Scalia privately lobbied one of Barack Obama’s top White House aides to name Kagan to fill the vacancy. (The seat went to Justice Sonia Sotomayor, though Obama nominated Kagan after John Paul Stevens retired the following year.)

Part of that respect among legal conservatives also comes from fear. Of the court’s liberal justices, Kagan is the most adept at reaching out to—and even swaying—her colleagues on the right. National Review and The Wall Street Journal both reported in November that she was trying to persuade Roberts and Gorsuch to interpret Title VII’s ban on sex discrimination to apply to gay and transgender workers in Bostock v. Clayton County. Those rumors ultimately proved true this month when both men joined Kagan and the court’s other three liberals to deliver a surprise victory for LGBT rights on textualist grounds.

When it comes to right-wing attacks on federal regulatory powers, Kagan’s record of success is more limited. In addition to last term’s ruling in Gundy, where Alito broke from his conservative colleagues to uphold the law in question, she also managed to persuade Roberts to join her side in Kisor v. Wilkie. That ruling limited how much deference the courts will give to an agency’s interpretation of its own regulations but fell short of conservative hopes by declining to abandon that deference altogether. Unless the court’s composition shifts again, the future of the administrative state—as well as the American people’s ability to govern themselves through it—may depend on Kagan’s ability to persuade her colleagues that she’s right.