Category Archives: Whistleblower

Smuggling Network, Terror Hotbeds, Southern Border

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Smuggling network guided illegals from Middle East terror hotbeds to U.S. border

WashingtonTimes: A smuggling network has managed to sneak illegal immigrants from Middle East terrorism hotbeds straight to the doorstep of the U.S., including helping one Afghan man authorities say was part of an attack plot in North America.

Immigration officials have identified at least a dozen Middle Eastern men smuggled into the Western Hemisphere by a Brazilian-based network that connected them with Mexicans who guided them up to the U.S. border, according to internal government documents reviewed by The Washington Times.

Those smuggled included Palestinians, Pakistanis and the Afghan man who Homeland Security officials said had family ties to the Taliban and was “involved in a plot to conduct an attack in the U.S. and/or Canada.” He is in custody but the Times is withholding his name at the request of law enforcement to protect ongoing investigations.

Some of the men handled by the smuggling network were nabbed before they got to the U.S., but others actually made it into the country, including the Afghan man who was part of a group of six from so-called “special interest countries.”

The group, guided by two Mexicans employed by the smuggling network, crawled under the border fence in Arizona late last year and made it about 15 miles north before being detected by border surveillance, according to the documents, which were obtained by Rep. Duncan Hunter, California Republican.

Law enforcement asked The Times to withhold the name of the smuggling network.

It’s unclear whether the network succeeded in sneaking other “special interest” illegal immigrants by border officials, but the documents obtained by Mr. Hunter confirm fears of a pipeline that can get would-be illegal immigrants from terrorist hotbeds to the threshold of the U.S.

Just as troubling, the Border Patrol didn’t immediately spot the Afghan man’s terrorist ties because the database agents first checked didn’t list him. It wasn’t until they also checked an FBI database that they learned he may be a danger, the documents say.

“It’s disturbing, in so many ways,” said Joe Kasper, Mr. Hunter’s chief of staff. “The interdiction of this group validates once again that the southern border is wide open to more than people looking to enter the U.S. illegally strictly for purposes of looking for work, as the administration wants us to believe. What’s worse, federal databases weren’t even synched and Border Patrol had no idea who they were arresting and the group was not considered a problem because none of them were considered a priority under the president’s enforcement protocol. That’s a major problem on its own, and it calls for DHS to figure out the problem — and fast.”

Mr. Hunter wrote a letter to to Homeland Security Secretary Jeh Johnson this week demanding answers about the breakdowns in the process.

Both U.S. Immigration and Customs Enforcement, which is the chief agency charged with sniffing out smuggling networks, and Customs and Border Protection, which oversees the Border Patrol and which initially failed to sniff out the terrorist connections, declined to comment. Homeland Security, which oversees both agencies, didn’t provide an answer either.

The group of six men nabbed after they already got into the U.S. — the Afghan and five men identified as Pakistanis — all made asylum claims when they were eventually caught by the Border Patrol. Mr. Hunter said his understanding is that the five men from Pakistan were released based on those claims, and have disappeared.

The government documents reviewed by The Times didn’t say how much the smugglers charged, but did detail some of their operation.

Would-be illegal immigrants were first identified by a contact in the Middle East, who reported them to the smuggling network in Brazil. That network then arranged their travel up South America and through Central America, where some of them were nabbed by U.S. allies.

In the case of the Afghan man with terrorist ties, he was smuggled from Brazil through Peru, then Ecuador, Colombia, Panama, Costa Rica, Nicaragua, Honduras, Guatemala and finally Mexico.

He was caught near a ranch 15 miles into the U.S., after his group’s movements were detected by one of the Border Patrol’s mobile detection trucks. He told agents his group had crawled under the border fence near Nogales.

In the documents obtained by Mr. Hunter, Homeland Security officials said they considered the case a victory because it showed how they can use apprehensions on the southwest border to trace smuggling networks back to their source.

But the documents had worrying signs as well. When agents first ran the man through the Terrorist Screening Data Base, he didn’t show up as a danger. Indeed, a November report from KNXV-TV in Arizona said authorities said “records checks revealed no derogatory information about the individuals.”

That turns out not to be true, according to the documents. The Afghan man was listed in the FBI’s Terrorist Identities Datamart Environment (TIDE) database as having suspect relations.

Mr. Hunter told Mr. Johnson the discrepancy between the databases was troubling.

The government documents also said some of the special interest aliens caught at the border were previously identified by authorities in other Latin American countries — but had different sets of biometric identifiers associated with them. That raised questions of whether those countries are sharing accurate information with the U.S.

Networks capable of smuggling potential terrorists has long been a concern, but the Obama administration had tamped down those worries, arguing that the southwest border wasn’t a likely route for operatives.

Still, evidence has mounted over the last couple of years, including a smuggling ring that snuck four Turkish men with ties to a U.S.-designated terrorist group into the U.S. in 2014. they paid $8,000 apiece to be smuggled from Istanbul through Paris to Mexico City, where they were stashed in safe houses before being smuggled to the border.

At the time, Mr. Johnson said the men were actually part of a group that was fighting against the Islamic State, and questioned whether they should have even been designated as part of a terrorist group.

But behind the scenes Mr. Johnson’s agents were already at work trying to roll up smuggling rings under an action dubbed Operation Citadel.

Lev Kubiak, assistant director at ICE Homeland Security Investigations’ international operations branch, testified to Congress earlier this year that Operation Citadel resulted in 210 criminal arrests in 2015. One part of the effort, known as Operation Lucero, dismantled 14 human smuggling routes, including some operations designed to move people from the Eastern Hemisphere to Latin America and then into the U.S., he said.

Next up is the U.S. State Department Report by Country on Terrorism

Country Reports on Terrorism 2015

Chapters –Chapter 1. Strategic Assessment
–Chapter 2. Country Reports: Africa Overview
–Chapter 2. Country Reports: East Asia and Pacific Overview
–Chapter 2. Country Reports: Europe Overview
–Chapter 2. Country Reports: Middle East and North Africa Overview
–Chapter 2. Country Reports: South and Central Asia Overview
–Chapter 2. Country Reports: Western Hemisphere Overview
–Chapter 3: State Sponsors of Terrorism Overview
–Chapter 4: The Global Challenge of Chemical, Biological, Radiological, or Nuclear (CBRN) Terrorism
–Chapter 5: Terrorist Safe Havens (Update to 7120 Report)
–Chapter 6. Foreign Terrorist Organizations
–Chapter 7. Legislative Requirements and Key Terms

Annexes

–National Consortium for the Study of Terrorism and Responses to Terrorism: Annex of Statistical Information [Get Acrobat Reader PDF version   ]
–Terrorism Deaths, Injuries and Kidnappings of Private U.S. Citizens Overseas in 2015

Full Report

–Country Reports on Terrorism 2015 (PDF)

DHS Approves/Admits 4700 Syrians + 7900?

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4,700 Syrian refugees approved resettlement to U.S.: Homeland Security chief

Reuters: The United States has approved 4,700 Syrian refugees who are awaiting resettlement to the country, while an additional 7,900 are awaiting security review, U.S. Homeland Security Secretary Jeh Johnson said on Thursday.

Syrian refugee children play as they wait with their families to register their information at the U.S. processing centre for Syrian refugees, during a media tour held by the U.S. Embassy in Jordan, in Amman, Jordan, April 6, 2016. REUTERS/Muhammad Hamed

Johnson, speaking to a homeland security advisory panel at the Department of Homeland Security, was defending against critics who say the Obama administration is falling behind meeting its goal of bringing in 10,000 Syrian refugees into the country by the end of fiscal year 2016.

Meanwhile:

Sanctioned Syrian Official Invited To D.C. Event Delivers Outrageous Defense Of Assad

There is no moderate opposition and nobody is starving in Syria, according to Bouthaina Shaaban.

HuffPo: WASHINGTON — A panel discussion that had been billed as an effort to create a global alliance to defeat the so-called Islamic State spiraled downward Thursday into a tense two-and-a-half hour event dominated by a top Syrian official who has been sanctioned by the U.S. government. She insisted that her country’s brutal crackdown on its own people is just part of the war on terrorism.

Khaled al-Hariri/Reuters
Bashar Assad spokeswoman Bouthaina Shaaban was invited to speak via Skype despite facing U.S. sanctions.

“There is no such thing as moderate opposition,” Bouthaina Shaaban, spokeswoman for Syrian President Bashar Assad, said during the event hosted by an obscure group called the Global Alliance for Terminating ISIS/al-Qaeda (GAFTA).

In a lengthy pre-recorded speech, which was aired at the National Press Club event, Shaaban blasted Turkey, Saudi Arabia and Western countries for backing Syrian opposition fighters in her country’s civil war. She accused them of directly aiding both the Islamic State, also known as ISIS, and Jabhat al-Nusra, an al-Qaeda offshoot.

During a subsequent question-and-answer session, Shaaban sparred with reporters via Skype, dismissing accusations that the Assad regime had blocked humanitarian groups from delivering food to besieged areas of Syria and had aided ISIS by releasing its members from prison and purchasing oil from the terrorist group.

“It is a very fertile land. Nobody is starving in Daraya,” Shaaban said, despite well-documented reports of the Assad regime’s “surrender or starve” tactics in areas like Daraya and Madaya.

In 2011, the U.S. sanctioned Shaaban, along with Assad and a handful of other regime officials, in response to the Syrian government’s violent repression of its people. The sanctions froze any assets the officials had in the U.S. and prohibited Americans from providing “financial, material, or technological support” to them.

It is unclear whether GAFTA, a Florida-based nonprofit, violated the sanctions by hosting Shaaban electronically. Ghassan Mansour, GAFTA’s treasurer, claimed that the group did not know about the sanctions until the day before the event.

A Treasury spokeswoman declined to comment on the specific case, only vaguely suggesting that the arrangement could be problematic. “Transactions with designated persons are generally prohibited,” she told The Huffington Post.

GAFTA founder Ahmad Maki Kubba, speaking at the event, defended the invitation to Shaaban as part of an effort to hear from all parties involved in the fight against ISIS and claimed that the group has no allegiance to either side. But the Thursday discussion was decidedly one-sided, and there are indications that GAFTA itself is sympathetic to Assad and his allies.

The organization’s Facebook page contains numerous news stories that frame the Assad regime and its ally Russia in a flattering light. Mansour himself was previously accused by the U.S. Department of Justice of participating in a money-laundering operation to aid the Lebanese militia group Hezbollah, which has fought on behalf of Assad in Syria. Mansour denies the 2011 allegation.

“We are not associated with [Shaaban] or anybody,” he told HuffPost in a phone interview. “We’re trying to fight an evil. Is there sanctions against that?”

 

In the lead-up to the panel discussion, critics of the Assad regime accused GAFTA of providing a propaganda platform for a top-level Syrian official in violation of the spirit of the sanctions, if not the law itself.

“The point of sanctioning someone is to change their behavior, isolate them and force them to reconsider the actions they were taking. This is not in line with that,” one House Republican aide said of inviting Shaaban.

Mansour said his group has reached out to members of Congress but has had little luck securing meetings in Washington.

 

Others accused GAFTA of undermining the United Nations-led peace process by giving Assad’s spokeswoman a direct line to a U.S. audience. “She is regularly the one who speaks for the regime,” said Joseph Bahout, a visiting fellow at the Carnegie Endowment for International Peace. “She’s been propagandizing, denying the use of chemical weapons, denying massacres.”

Bahout rejected GAFTA’s argument that hearing from the Syrian regime at Thursday’s event was part of an effort to resolve the civil war.

“I’m sorry to be blunt, but this is the classical, usual bullshit used every time someone is trying to open a channel with the regime. If you want to negotiate with the regime, there are proper channels in Geneva,” Bahout said, referring to the U.N.-led talks.

 

The Syrian American Council, a U.S.-based group that has lobbied for more support for the Syrian opposition, said that it had pushed the National Press Club to remove Shaaban from the event, but as of Wednesday evening, had not heard back from Bill McCarren, executive director of the club. McCarren also did not respond to a request for comment from HuffPost.

“This is supposed to be about combating ISIS, and the Assad regime is directly responsible for not only fueling the rise of ISIS, but for supporting it financially through lucrative oil deals,” said Mohammed Ghanem, director of government relations for the Syrian American Council. “It’s unacceptable for a prestigious venue such as the National Press Club to be turned into a platform to spew propaganda.”

Pigs Fly, the UN Finally Admitted Global Sex Violence/Trafficking

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Related reading: Child Sex Tourism
Alaska Man Receives Prison Term for Crimes Committed in Cambodia

Remarks at a UN Security Council Open Debate on Women Peace and Security: Sexual Violence in Conflict

Ambassador Michele J. Sison
U.S. Deputy Representative to the United Nations
U.S. Mission to the United Nations
New York City
June 2, 2016

AS DELIVERED

Thank you very much, Monsieur le Président, for chairing and organizing this open debate and for including the perspectives of civil society in our discussion. And thank you, also, Mr. Secretary-General, for your briefing and your leadership on this critical issue.

Special Representative Bangura, Special Rapporteur Giammarinaro, and Ms. Davis, thank you, as well, for your statements.

This Council has long recognized that sexual and gender-based violence not only abuses and violates the human rights of its victims, but also undermines the security, livelihood, and health of nations by suppressing survivors’ participation in civic, social, political, and economic life.

We have put in place many tools for countering conflict-related sexual violence inflicted by state and non-state armed groups, for improving accountability and bringing perpetrators to justice, and for documenting violations against marginalized groups of victims – including women and girls, men and boys, ethnic and religious minorities, and LGBTI individuals. But we must do a better job making use of these tools.

We commend Special Representative Bangura for her energetic efforts to translate the Council’s resolutions into real, on-the-ground action. Her work with the national militaries of the Democratic Republic of Congo and with armed groups on both sides of the conflict in South Sudan to help develop structures to hold perpetrators accountable for their actions has been particularly noteworthy. We also applaud her efforts to support the investigation of the 2009 Stadium Massacre in Guinea.

In addition to the Special Representative’s efforts, we value the work done by the Team of Experts on Rule of Law and Sexual Violence in Conflict, which has assisted countries in the areas of investigations and prosecution, in strengthening legal frameworks, and in ensuring protection of victims and witnesses.

However, significant challenges remain in countering sexual violence in conflict – especially when it comes to holding non-state armed groups and their partners and associates accountable for their crimes.

In resolution 2242, the Council recognized the nexus between sexual violence, terrorism, violent extremism – which can be conducive to terrorism. We have seen steady growth in the use of sexual violence against women and men, girls and boys, by terrorists not only in Iraq and Syria, but also in Somalia, Nigeria, and Mali. Non-state armed groups like ISIL use sexual violence in a pre-meditated and systemic way to recruit fighters, raise money, and intimidate and demoralize communities in order to consolidate their hold over territory.

Resolutions 2199 and 2253 not only strongly condemn such acts by ISIL, al-Qaida, and their associates, but also work to strengthen accountability by encouraging all state and non-state actors with evidence to bring it to the attention of the Council.

The 1267 Committee represents a vital tool for us to punish perpetrators, since any individual who makes funds or other financial and economic resources available to ISIL and other terrorist groups in connection with sexual violence is eligible for designation in the 1267 sanctions regime.

We must make full use of these tools, as noted by Special Rapporteur Giammarinaro, we also need to do more to protect displaced women and girls whose heightened vulnerability puts them at increased risk of sexual violence and trafficking.

Over the past year, we’ve seen the continuation of mass migration from Syria, Iraq, and the Horn of Africa. Reports of smugglers demanding sex as “payment of passage” are rampant, and part of a global surge in human trafficking. And with reference to Ms. Davis’ intervention, that’s why last month at the World Humanitarian Summit in Istanbul, the United States announced an additional $10 million dollar contribution to the “Safe from Start” Initiative to prevent and respond to gender-based violence in emergency situations.

The United States urges all Member States to condemn these crimes and those who commit them; to properly document the horrors, so that one day those responsible can be held accountable; to commit to ending the conflicts that provide an ideal climate for human traffickers; and to commit to eradicating the groups that use human trafficking and conflict-related sexual violence as a weapon of war. Member States must also work to ensure that labor practices – such as charging workers recruitment fees that can lead to debt bondage – do not contribute to human trafficking. We must teach people how to actually see the victims of trafficking. We must also make our resources for victims more victim- and survivor-centered, incorporating victims and survivors into the policy-making process to yield better solutions.

A further challenge, of course, is the lack of global documentation of the phenomenon of sexual and gender-based violence against all vulnerable communities, including those which are too often forgotten in this discourse: LGBTI individuals, as well as men and boys. These individuals are not only at a heightened risk of facing harassment, abuse, sexual violence by armed groups due to discriminatory social norms and attitudes, but they also face a strong stigma against reporting abuses.

We commend the Secretary-General for highlighting the victimization of men and boys; the UN and Member States must more fully embrace a gender-inclusive approach in sexual violence and gender-based violence programming. There is scant documentation with little understanding of the patterns, prevalence, and severity of conflict-related sexual and gender-based violence against males as compared to sexual and gender-based violence against girls and women.

In addition, the absence of targeted services for male victims not only fails to address the needs of boys and men, but could also contribute to the problem of underreporting. Now bilateral efforts to counter conflict-related sexual violence and to improve accountability and documentation, of course, are also crucial.

In 2014, the United States launched the “Accountability Initiative” to support the development of specialized justice sector mechanisms to improve access to justice for survivors of sexual and gender-based violence. We remain committed to strengthening efforts to protect all people from harm, exploitation, discrimination, abuse, gender-based violence, and trafficking, and we must hold perpetrators accountable – especially in conflict-affected environments as all of the speakers have noted to us.

The United States has also committed nearly $40 million for support to victims of sexual violence in conflict, including in Nigeria, where the United States supports UN agencies, community groups, and local non-governmental organizations that provide health care services, including appropriate psychosocial counseling for women and children who have survived Boko Haram’s horrific campaign.

However, we recognize that support programs are not enough. To combat sexual violence in conflict, women must have a seat at the table in resolving conflicts. Empowered women provide powerful antidotes to violent extremism and have critical contributions to make at every level of our struggle against sexual violence in conflict. We also need women in uniform to rebuild trust between law enforcement and communities; female corrections officers and female counselors to reach out to female inmates who are on the path to radicalization; and women legislators to support more inclusive public policies that address the unique grievances that drive individuals to terrorism.

As Secretary of State Kerry has said, fighting the scourge of sexual violence requires all of these tools, including UN Security Council resolutions, better reporting, and support to survivors. It especially requires holding criminals accountable, and ending impunity. Instead of shaming the survivors, we must punish the perpetrators, and we must be ready to support and empower the survivors as they work to rebuild their lives.

Thank you, Mr. President.

Judge Orders More Hillary Emails to be Released

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Judge orders Obama administration to release new Clinton emails

TheHill: A federal judge has ordered the Obama administration to release new emails connected to Hillary Clinton before Democratic National Convention in July.

In an order late on Wednesday, Judge Ketanji Brown Jackson told the U.S. Agency for International Development (USAID) to hand over to the Republican National Committee (RNC) whatever records it could as part of an RNC’s open-records lawsuit on July 11.

After that, USAID will need to consult with the State Department about hundreds of other pages of documents, which could be released at some point in the future.

The RNC sued the aid agency in March, seeking two sets of communications: those between USAID officials and former aides at the State Department, as well as those between USAID and private domain names associated with Clinton, former President Bill Clinton and others including the Clinton Foundation. The effort appeared to be related to allegations that the former secretary of State’s family foundation had undue influence on USAID.

The RNC lawsuit was one of several it has filed seeking records connected to Clinton, the likely Democratic presidential nominee, in a preview of a battle sure to last through the general election.

Before the U.S. District Court for the District of Columbia, USAID has claimed that it has discovered approximately 3,300 pages of records that it might be able to hand over to the Republican Party organization. But roughly 2,600 of those reportedly need to be cleared with the State Department before they can be released.

In her order on Wednesday, Jackson said USAID should release to the RNC what it can by July 11 and determine a schedule for releasing the rest.

The time frame would put the release of the first batch of emails just one week before the Republican National Convention in Cleveland on July 18 and two weeks before the Democratic convention begins on July 25.

Critics of Clinton, however, will likely be wary of the State Department, which is notoriously slow at responding to Freedom of Information Act requests and has been buried underneath a barrage of demands related to Clinton’s email history in recent months.

Separately late on Wednesday, the Obama administration filed a motion trying to kill a different RNC open-records lawsuit targeting the State Department. That suit is seeking email messages from a slew of Clinton’s former top aides.

***** 

WashingtonTimes: Hillary Clinton used a personal email account for official business during her tenure in the U.S. Senate and carried the practice over once she was at the helm of the State Department, an aide to the presumptive Democratic nominee for president said in sworn testimony released Tuesday.

Cheryl Mills, Mrs. Clinton’s chief of staff during the White House hopeful’s four-year stint with the State Department, said her former boss relied on a personal email account provided by AT&T for about three months after being sworn in as secretary of state by President Obama in January 2009.

“Secretary Clinton continued a practice that she was using of [sic] her personal email,” Ms. Mills testified Friday, according to a transcript of her remarks released this week by Judicial Watch, a conservative watchdog group currently suing the State Dept. over Mrs. Clinton’s use of a nongovernmental email system while in office.

Ms. Mills’ admission comes amid an active FBI probe launched to investigate Mrs. Clinton’s use of a private email account while secretary of state, in addition to the Judicial Watch lawsuit. Leaked emails released to the media in 2013 first indicated that Mrs. Clinton used an account hosted at “clintonemail.com” in lieu of a government-provided account, raising questions regarding security concerns and, as argued by some, possible efforts to conceal correspondence from Freedom of Information Act requests.

As revealed through Friday’s sworn testimony, however, Mrs. Clinton relied on a separate, nongovernmental account through as late as April 2009 before she abandoned her AT&T account and began communicating through the clintonemail.com account.

“So Secretary Clinton used — always used one email account when she was using an email account,” Ms. Mills testified. “So when she initially arrived [at the State Dept.] she was continuing to use the AT&T accounts, and then transitioned to the .Clinton email, or Clintonemail.com account. And during her tenure those were the two addresses, if you will, that she used.”

“I don’t know that I could articulate that there was a specific discussion as opposed to her continuation of the practice she had been using when she was a senator. … I don’t have a specific memory of the conversations that may or may not have occurred. I know that I understood she was going to be using her personal email and that’s what she did,” Ms. Mills testified.

Christopher Soghoian, the principal technologist at the American Civil Liberties Union, tweeted Wednesday that Mrs. Clinton’s was likely not the only lawmaker on Capitol Hill to use personal email accounts for official business, but said it nevertheless poses “a huge cybersecurity problem.”

Rep. Jason Chaffetz, Utah Republican, acknowledged last year that his personal Gmail address is listed on his congressional business card in lieu of a government-provided email account, but explained to ABC News at the time that members of Congress are not subject to the Federal Records Act.

Mr. Chaffetz, who chairs the House Oversight and Government Reform, has overseen the federal investigation concerning the 2011 terrorist attack in Benghazi, and he has been among the most vocal critics in Congress with respect to Mrs. Clinton’s use of a personal email account in communicating official business in the immediate aftermath of the assault.

 

 

Examples of POTUS Power Over Agencies

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Primer: CFPB Director: PHH Corp. took kickbacks for mortgage insurance referrals

Requires firm to pay $109M to the CFPB

FAS: Congressional authority to establish federal agencies with independence from political control is under scrutiny in a case pending before the U.S. Court of Appeals for the District of Columbia Circuit (D.C. Circuit). At issue in PHH Corp. v. CFPB is whether the Consumer Financial Protection Bureau’s (CFPB) structure violates the constitutional principle of separation of powers. The CFPB is headed by a single director who enjoys a certain amount of protection from removal by the President, and the agency is funded outside of the annual appropriations process. As elaborated below, PHH claims that the restrictions on the President’s power to remove the Director improperly encroach on the executive power vested in the President under Article II of the Constitution, and that the combination of insulation from executive control and independence from yearly congressional appropriations violates separation of powers by shielding the agency from “democratic accountability.”

The Constitution divides the power of the federal government among the legislative, judicial, and executive branches. While the text does not contain a “separation of powers” provision, the Supreme Court has recognized a separation of powers principle that underlies the constitutional division of the federal government’s authority. Among other things, this doctrine prevents one branch of government from impermissibly encroaching on the powers of another or inappropriately delegating its own authority to another branch of government. These limits, in turn, shape the structure of federal agencies that exercise governmental power.

For example, a recurring theme in separation of powers cases is the extent to which Congress may impose restrictions on the President’s power to remove executive officers. Article II of the Constitution vests the executive power in the President, and the President is authorized to keep executive officers accountable by removing them. However, the Supreme Court has recognized that this power is not absolute. In Humphrey’s Executor v. United States, the Court held that Congress could establish independent agencies overseen by officers whom the President could only remove for “good cause.” The Court upheld similar restrictions on the President’s authority to remove lower-level officials in Morrison v. Olson. In Free Enterprise Fund v. Public Company Oversight Board, however, it invalidated the combination of these two otherwise permissible features – removal restrictions on both the principal and certain inferior officers within a single agency – as violating Article II’s vesting of executive power in the President because it improperly impeded his “constitutional obligation to ensure the faithful execution of the laws.”

Another constitutional provision that informs separation of powers is Article I’s prohibition on drawing money from the Treasury unless authorized by “Appropriations made by Law.” Congress thus has the “power of the purse” and controls the funding of executive branch agencies. While the Court has not faced a challenge to an independent agency receiving funds outside of the annual appropriations process, various federal entities, such as the Federal Reserve Board, are currently funded through their own earnings, rather than through the appropriations process.

The CFPB was established by the Dodd-Frank Wall Street Reform and Consumer Financial Protection Act, which consolidated and expanded federal regulation of consumer financial products. Broadly, the Act gave the CFPB rulemaking, supervisory, and enforcement power over certain financial institutions. It also bestowed rulemaking and enforcement power under various consumer financial protection statutes, and more generally the authority to deter unfair, deceptive, or abusive practices by regulated entities. In this case, the Director of the CFPB concluded that a mortgage lender, PHH, violated the Real Estate Settlement Procedures Act, imposed injunctive relief to prevent further violations, and required PHH to disgorge “kickback payments” it had received in violation of the Act. PHH appealed the decision to the D.C. Circuit, claiming that, among other things, the agency’s structure violates separation of powers.

The legislation establishing the CFPB provided the agency with a structure intended to ensure independence from the political influence of Congress and the President. The CFPB is headed by a single Director who is appointed by the President to a five-year term and removable by the President only for cause. Although established within the Federal Reserve System, the agency is considerably independent from the Federal Reserve Board’s authority, and the Federal Reserve Board is barred from intervening in the CFPB’s decisions or directing its employees. However, a supermajority of the Financial Stability Oversight Council—of which the Chairman of the Federal Reserve is a voting member—may veto CFPB regulations that would put the safety of the banking system or the financial system’s stability at risk.

Finally, the agency is funded via a transfer from the Federal Reserve System’s earnings, rather than through annual appropriations.

PHH argues that the combination of these features insulates the agency from “democratic accountability” and violates separation of powers. First, PHH claims that while Humphrey’s Executor upheld removal restrictions for nonpartisan,  multi-member expert boards, its logic does not support upholding the restrictions here because the CFPB is headed by a single director and is not intended to be “non-partisan.” Further, PHH argues that just as the combination of two otherwise-permissible removal restrictions in Free Enterprise violated separation of powers, the marriage of removal restrictions with an independent funding stream is entirely unprecedented and grants the agency novel freedom from both presidential and congressional control. In response, the CFPB disputes PHH’s reading of Humphrey’s Executor, arguing that the Court upheld removal restrictions for agency heads because of the functions the officers performed, which mirror the duties of the CFPB Director. In addition, the CFPB distinguishes the principles announced in Free Enterprise – in that case, two otherwise-permissible removal restrictions combined to impede the President’s power under Article II. Here, in contrast, “each branch retains its constitutional powers” because the removal restriction does not reduce Congress’s authority over appropriations under Article I, and the independent funding mechanism does not hamper the President’s Article II duty to execute the law.

At oral arguments before a panel of the D.C. Circuit, Judge Kavanaugh, who has articulated a broad reading of Free Enterprise in the past, questioned CFPB’s counsel about the nature of the agency’s independence. In particular, he focused on whether restrictions on the President’s removal power were permissible for agencies headed by a single director. He noted that historically, most removal restrictions for independent agencies applied to multi-member commissions, rather than agencies with a single head. The justification being, he noted, that while typical agency heads must be subject to presidential control, removal restrictions are appropriate for a multi-member board because it is nonpartisan or bipartisan.

 

Resolution of the case may have important implications for the structure of the executive branch and the scope of presidential control over “independent” agencies. Several other agencies, whose principal officers enjoy removal protection, are also headed by a single director, including the Social Security Administration, the Office of Special Counsel, and the Federal Housing Finance Agency. Further, given the D.C. Circuit’s exclusive jurisdiction to hear challenges to a variety of federal agency actions, the court’s reading of Free Enterprise will be an important guidepost concerning future challenges to agency structural features.