The Hill: Supreme Court will take on ‘fourth branch’ of bureaucracies

October 21, 2019 | By OLIVER DUNFORD
Supreme Court will take on 'fourth branch' of bureaucracies

As every schoolchild knows, the federal government is divided into the legislative, executive and judicial branches. This separation of powers was designed to ensure that government does not become oppressive. As James Madison put it, combining these powers into one branch would be “the very definition of tyranny.”

Unfortunately, the three branches of government have surrendered some of their powers to an unofficial “fourth branch” composed of government agencies that combine legislative, executive and judicial powers. This fourth branch doesn’t wield all of the government’s power — the three traditional branches still function — so we don’t live under tyranny in America. But as we allow unaccountable bureaucrats to accumulate more and more power, we move closer to the tyranny feared by Madison.

On Friday, the U.S. Supreme Court announced it would consider the constitutionality of one particularly unaccountable federal agency: the Consumer Financial Protection Bureau (CFPB). Created in response to the 2008 financial crisis, the CFPB enjoys vast legislative, executive and judicial powers. And is it virtually immune from oversight.

Here’s why this is problematic. The CFPB may prescribe rules and regulations under various consumer-protection laws; enforce conduct that it may define as “unfair, deceptive or abusive”; and adjudicate its own enforcement actions and impose legal and equitable remedies. Right away, you’ll notice by that brief description that the CFPB captures the roles and responsibilities of all three branches of government under one roof. So much for separation of powers.

So let’s say your company is accused of violating a CFPB rule. The CFPB can sue you in court or — at its sole discretion — subject you to an administrative-enforcement hearing, administered by the CFPB. If you don’t like the CFPB’s in-house decision, you can appeal — to the CFPB’s director. And only after the director’s decision could you seek review in a court of law.

But the deck is stacked even then, because courts are required to defer to the CFPB’s factual findings and legal conclusions. The ultimate outcome of this concentration of discretionary power, together with its significant independence of the three traditional branches of government, is arbitrary and abusive government.

In wielding these vast, discretionary powers, the CFPB is largely immune from oversight by the other branches of government. For example, the agency receives funding outside the appropriations process, so it doesn’t have to answer to Congress. Further, the agency is led by single “director,” who is appointed to a five-year term and cannot be removed by the president except for “inefficiency, neglect of duty or malfeasance in office” — even if the agency director carries out policies contrary to the wishes of the democratically elected president.

Supporters of rule by unaccountable “fourth branch” agencies argue that their independence and discretionary powers insulate them from politics, which supposedly allows them to respond quickly and efficiently to the complexities of the modern world. But it’s dubious, at best, to believe that government employees are immune from politics, and efficiency and convenience do not trump constitutional protections.

But leaving those questions aside, imagine if we applied the arguments made by “fourth branch” enthusiasts to law enforcement. Imagine that the police not only could interpret or rewrite criminal statutes as they wish but also could act as prosecutor and judge. What do you think a defendant’s chances of success would be?

But it gets worse. Under current Supreme Court jurisprudence, agencies are allowed to establish new rules through litigation. This means that administrative agencies can prosecute you for conduct that was previously legal.

So, imagine a cop pulls you over for driving 30 mph in a 35-mph zone. Again, the police decide to prosecute you themselves, instead of in court. At the hearing, you make the reasonable argument that you can’t be guilty, since you were driving under the speed limit. No matter. The department’s prosecutor argues that, upon further consideration and for the public’s safety, it’s too dangerous to drive over 25 mph in that zone. The department’s “judge” agrees, and finds you guilty.

Small businesses and individuals face the same kind of arbitrary, change-the-rules-as-you-go treatment from the CFPB. It’s hard to run a business and plan for the future if you don’t know what the rules are and can’t predict with some reasonable certainty what they’ll be next week. And if a small business happens to catch the CFPB’s attention, it must defend itself in an administrative proceeding in which constitutional protections are watered down, if not ignored.

The good news is that there’s a way forward that would help restore the federal separation of powers to its rightful place in government: The Supreme Court can put an end to the arbitrary power wielded by the CFPB ­and other “fourth branch” agencies. Pacific Legal Foundation has asked the court to do just that in a friend-of-the-court brief. By granting this case, the court can help ensure that we have “a government of laws, and not of men.”

This op-ed was originally published by The Hill on October 21, 20219.