Overnight Regulations: Court revisits challenge to consumer bureau

Welcome to Overnight Regulation, your daily rundown of news from the federal agencies, Capitol Hill, the courts and beyond. It’s Wednesday evening here in Washington. 

 

THE BIG STORY 

The second-highest court in the land on Wednesday revisited a ruling that had declared the structure of the Consumer Financial Protection Bureau (CFPB) unconstitutional.

A three-judge panel on the D.C. Circuit Court of Appeals in October ruled against the CFPB, delivering a victory to industry groups and Republican lawmakers who have battled to limit the agency’s powers.

The full D.C. Circuit is now reviewing that ruling, with 11 of the court’s judges hearing the case. Judge Merrick Garland recused himself from the case.

The key issue is whether it’s constitutional for the CFPB, an independent agency created by the 2010 Dodd-Frank law, to be led by a single person.

{mosads}In the 2-1 ruling from October, all three judges were appointed by Republicans. Of the 11 judges who heard Wednesday’s arguments, six were appointed by Republicans.

PHH Corporation, a New Jersey mortgage lender that took the consumer bureau to court after it was fined $109 million for allegedly accepting kickbacks from mortgage insurers, says the answer is no. It argued Wednesday that the structure of the agency diminishes the president’s power under Article II of the Constitution to faithfully execute the laws.

Judge Thomas Griffith, a George W. Bush appointee, didn’t seem convinced that the president is powerless with a single director heading the CFPB.

“That would seem to me to strengthen the president’s power if you only have to get rid of one person,” he said.

Yet Griffith also noted that there has never before been a federal agency where so much power is in the hands of a single director.

The CFPB case is being closely followed in Washington, following months of speculation about whether Trump might fire the bureau’s director, Richard Cordray. Congressional Republicans have been pressing the president to do just that.

The courtroom was so packed for Thursday’s proceedings that spectators filled two overflow courtrooms to watch the proceedings via video stream.

PHH’s lawyer, the veteran Washington attorney Theodore Olson, argued that the Consumer Financial Protection Act expressly gives the director the exclusive power to interpret laws and to decide what to prosecute.

Judge Brett Kavanaugh, another George W. Bush appointee, said there is not the same Article II issue with the Federal Communications Commission, the Federal Trade Commission, the Securities and Exchange Commission or the National Labor Relations Board because Congress has historically structured these agencies with multi-member boards or commissions.

CFPB’s in-house lawyer Lawrence DeMille-Wagman argued court precedent states that if the president can remove an agency head for cause, then the president has sufficient authority.

“Can you give me an example where an agency head has been successfully removed for cause?” asked Judge Janice Rogers Brown, a George W. Bush appointee.

DeMille-Wagman wasn’t aware of an instance where the president has executed that power.

Click here for the story.

 

ON TAP FOR THURSDAY

Scott Gottlieb, the new commissioner of the Food and Drug Administration (FDA), will testify Thursday before a House appropriations panel to review the agency’s budget request.

Meanwhile, Treasury Secretary Steven Mnuchin will testify before the Senate Finance Committee about tax reform and the agency’s budget request.

 

TOMORROW’S REGS TODAY

Keep an eye on these rules in Thursday’s edition of the Federal Register:

–The U.S. Department of Agriculture (USDA) will issue new cauliflower standards.

The USDA’s Agricultural Marketing Service (AMS) says it is making changes to the grading standards for cauliflower.

All colors of cauliflower and small cauliflowers can now be graded.

The public has 30 days to comment.

–The USDA will issue new rules for spearmint.

The recommendation from the USDA’s Far West Spearmint Oil Administrative Committee will affect spearmint growers in western states including Washington, Oregon, Idaho, Nevada, and Utah.

The changes go into effect in one day.

–The USDA will also propose new rules for peanuts.

The peanut quality and handling requirements would “increase the allowance for damaged kernels” by 40 percent, according to the USDA’s Peanut Standards Board.

The public has 30 days to comment.

 

NEWS RIGHT NOW 

Vermont governor vetoes marijuana legislation 

SEC charges four in Medicare insider trading scheme 

Senate Democrats push Trump to stay in Paris climate deal

Trump still deciding on Paris climate agreement

Internet lobbying group is skeptical about new privacy bill

Federal officials consider tariffs on imported solar panels

Group accuses Comcast of trying to ‘censor’ pro-net neutrality site

EPA chief jabs California’s environment push

In a first for Asia, Taiwan moves to legalize same-sex marriage – Vox 

Betsy DeVos won’t say whether she’s withhold federal funds from private schools that discriminate – The Washington Post 

No fruit juice before age 1, say pediatricians – USA Today 

 

BY THE NUMBERS

5: Proposed rules

28: Final rules

(Thursday’s Federal Register)

 

QUOTE OF THE DAY

“I’m not philosophically opposed to ending the prohibition on marijuana,” said Vermont Gov. Phil Scott (R) on Wednesday. Scott, though, vetoed legislation that would have allowed for recreational marijuana in the Green Mountain State, a blow to backers of legalization. He said he would seek changes in the bill from the state legislature. Click here for the story.