Separation of Powers Blog Essay

Community Financial Services and the Intramural Debate over Novelty and Tradition


On May 16th, the Supreme Court handed down CFPB v. Community Financial Services Association of America, rejecting the Fifth Circuit’s conclusion that the CFPB’s funding structure violated the Appropriations Clause.  The Fifth Circuit reasoned that because the CFPB’s organic statute authorized it to “draw funds from the combined earnings of the Federal Reserve System” subject only to a cap, the Bureau’s funding was not an “[A]ppropriation[] made by Law.”  In a 7–2 decision authored by Justice Thomas, the Court disagreed, holding that because an appropriation is “simply a law that authorizes expenditures from a specified source of public money for designated purposes,” the CFPB’s funding mechanism was constitutional.  Justice Alito, joined by Justice Gorsuch, dissented, while Justices Kagan and Jackson authored separate concurrences.

The immediate practical effect of Community Financial Services is that the CFPB, though war-worn after multiple structural constitutional challenges, will live to see another day.  Perhaps more interesting, however, are the methodological divisions exposed by the four opinions in the case.  Especially in recent Terms, the Roberts Court has gravitated toward “court-led historical inquiries” to determine the scope of amorphous constitutional concepts and provisions.  Community Financial Services is no exception: three of the four opinions — all save Justice Jackson’s short concurrence — canvass centuries of history to discern the meaning of the Appropriations Clause.  But the opinions diverge sharply on which history matters and why.  That debate implicates a broader one over the appropriate scope of the federal judicial power in separation-of-powers cases.  As the Court continues to grapple with the role history should play in such cases, it should follow Justice Kagan’s concurrence, which provides that when the political branches have engaged in a long-standing and consistent course of conduct, the Court should be reluctant to disrupt things by divining a separation-of-powers violation out of whole cloth.

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Start with the granular debate over the relevant history.  Justice Thomas’s opinion for the Court relied solely on “the Constitution’s text, the history against which that text was enacted, and congressional practice immediately following ratification” to conclude that the CFPB’s funding structure accorded with the Appropriations Clause as it was understood at the Founding.  This methodology mirrors his opinion in New York State Rifle & Pistol Association, Inc. v. Bruen, which deployed a Second Amendment test grounded in “text, as informed by [English and early American] history.”  But even if one embraces originalism, Justice Thomas’s analysis may be flawed in the separation-of-powers context.  As others have explained in these pages, the concept of the separation of powers lacked a fixed meaning at the time of the Founding.  Instead of being enforced by federal courts, separation-of-powers questions were typically worked out by the political branches over time, resulting in the gradual development of norms with no judicial involvement.  To be sure, the twentieth century brought with it an increased “judicialization” of these norms.  But to the extent the Roberts Court is inclined to wade into separation-of-powers disputes involving Articles I and II — and apply an originalist lens to such disputes — post-ratification courses of conduct by the political branches should guide the inquiry.

Justice Kagan’s concurrence — which Justices Sotomayor, Kavanaugh, and Barrett joined — made precisely this point, arguing that “‘“[l]ong settled and established practice” may have “great weight”’ in interpreting constitutional provisions about the operation of government.”  As Justice Kagan explained, “[f]or over 200 years,” Congress has “exercised broad discretion in crafting appropriations” to the Executive Branch.  This “unbroken congressional practice,” she wrote, “provides another reason to uphold Congress’s decision about how to fund the CFPB.”  Indeed, looking to post-ratification practice for insight into how to resolve nebulous separation-of-powers questions is itself traditional, embraced by the Court almost a century ago in the Pocket Veto Case and more recently in NLRB v. Noel Canning.  

In dissent, Justice Alito, despite disclaiming the relevance of post-ratification history in a footnote, nevertheless attempted to rebut Justice Kagan’s arguments by pointing out that the CFPB’s funding structure lacked a precise historical analog. Quoting past cases, Justice Alito argued that the “most telling indication of [a] severe constitutional problem” with the Bureau was the “lack of historical precedent” supporting it.  This presumption against novelty, which Professors Leah Litman and Daniel Deacon have analyzed at length, has become an outcome-determinative feature of the Court’s separation-of-powers decisions, including recent cases involving presidential removals, standing, and the major questions doctrine.  But despite paying lip service to long-standing courses of conduct on the part of the political branches, the presumption against novelty fails to acknowledge the fluid nature of separation-of-powers norms.  Instead, the Court’s application of the presumption results in an ossification of such norms, itself a distinctly ahistorical result. 

Justice Alito’s dissent illustrates the ossification problem in practice.   On his account, all previous entities with “unusual” funding structures were “presumptively constitutional” under the Appropriations Clause.   But the CFPB contained certain features that made it different from these entities, rendering it too “unprecedented” and too “unaccountable” to Congress.  If accountability is the concern, however, why draw the line at the CFPB and not the Federal Deposit Insurance Corporation or another entity with an unusual funding mechanism?   The mere fact that the CFPB has unique features can’t justify such a result; to reason otherwise would be circular.   Moreover, what about the fact that the CFPB is already accountable to the democratically elected President?  The Court repeatedly hammered the importance of this sort of accountability in Seila Law LLC v. CFPB, which concluded — in an opinion joined by Justice Alito — that the CFPB head’s tenure protections unduly limited the President’s removal authority.  The upshot, as I have explained, is that applying the presumption against novelty to conclude that an entity is too new, and thus constitutionally infirm, creates arbitrary rules that are themselves novel.  In so doing, the Court disrupts settled understandings of the separation of powers through unwarranted judicial intervention — the very harm the presumption against novelty is ostensibly designed to prevent.

The specter of unwarranted judicial intervention tees up the second debate the various Community Financial Services opinions illustrate: when should the Court wield its own power to limit the power of the political branches?  Both Justice Thomas’s majority opinion and Justice Alito’s dissent assume the propriety of such intervention whenever the Court concludes that Congress or the Executive has transcended (what the Court believes to be) the appropriate bounds of its authority.  Justice Jackson’s pithy concurrence pushes back on this view.  As she argues, “[w]hen the Constitution’s text does not provide a limit to a coordinate branch’s power, we should not lightly assume that Article III implicitly directs the Judiciary to find one.”  On her read, because the Appropriations Clause did not plainly proscribe the CFPB’s funding scheme, the issue is simple: “the Constitution places primary responsibility for checking the political branches with the People,” and it is up to them, acting through their duly elected representatives, to answer “any remaining policy questions posed by today’s case.”   Justice Kagan’s concurrence, which contemplates a high degree of deference to consistent courses of conduct on the part of the political branches, implicitly takes a similar tack. 

There is much to commend about the restrained approach espoused by Justices Jackson and Kagan.  Thirty-five years ago, Judge J. Harvie Wilkinson III observed that “any governmental body that defines the powers of other governmental bodies must possess some fixed idea of the limits of its own.”  “Without this idea,” he wrote, “the democratic balance is distorted, because there is nothing more dispiriting than the guardians of the law bending it to suit their predilections.”  Asserting the power of judicial review to aggressively invalidate political branch action for violating unwritten separation-of-powers norms, especially norms that were historically unenforced by the courts, risks the appearance (deserved or not) that the “Court is overstepping its proper role” to “upend settled divisions of authority between the three branches.”  This, in turn, erodes the Court’s own legitimacy as a guardian of the Constitution.  On the other hand, a reluctance to interfere with a coordinate branch’s power evinces a respect for the democratic process and an appropriately limited view of the judicial role.   As noted, it also accords with the manner in which separation-of-powers disputes were resolved in the early years of the Republic, which should be outcome determinative for an originalist Court.

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The four opinions in Community Financial Services illustrate emerging divisions within the Supreme Court about how to handle novel separation-of-powers claims.  Assuming that the Court will continue to emphasize “text, history, and tradition” as the lodestar of constitutional interpretation, it should follow Justice Kagan’s concurrence, which emphasizes that for much of American history from the Founding onward, Congress and the Executive developed separation-of-powers norms over time with minimal judicial interference.  Given the threat such interference poses to the Court’s legitimacy as a “distinct branch with limited authority,” the Court should be reticent to police the allocation of authority between the political branches unless a particular action clashes with the Constitution’s plain text or departs from a consistent course of conduct on the part of Congress and the Executive.