Collins v. Yellen
594 U.S. 220
SCOTUS2021Background
- In 2008 Congress created the Federal Housing Finance Agency (FHFA) with a single Director removable by the President only "for cause," and authorized the FHFA to act as conservator or receiver for Fannie Mae and Freddie Mac (Housing and Economic Recovery Act).
- FHFA placed Fannie and Freddie into conservatorship; Treasury bought preferred stock and received a fixed quarterly dividend; three later amendments altered funding/dividend terms.
- The 2012 "third amendment" (the "net worth sweep") replaced the fixed dividend with a variable formula that required payment of nearly all quarterly net worth above a small capital reserve to Treasury, transferring large sums to the Government.
- Shareholders sued, alleging (1) the FHFA exceeded its conservator authority in adopting the third amendment (statutory claim) and (2) the FHFA’s single‑Director, for‑cause removal protection violates separation of powers (constitutional claim).
- District Court dismissed the statutory claim and upheld constitutionality; Fifth Circuit reversed on both; Supreme Court granted certiorari.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Scope of judicial review under §4617(f) (anti‑injunction clause): whether FHFA exceeded its conservator authority by adopting the third amendment | Collins: the net‑worth sweep exceeded conservator powers and courts may enjoin/examine it | FHFA/Treasury: conservatorship grants broad authority including acting "in the best interests of the regulated entity or the Agency," and §4617(f) bars courts from restraining conservator actions | Court: Anti‑injunction clause bars statutory claim because FHFA acted within its broad conservator powers (claim dismissed) |
| Separation of powers: whether §4512(b)(2) (for‑cause removal of FHFA Director) is constitutional | Collins: for‑cause removal unduly insulates a single Director and violates Article II | FHFA/Treasury & amicus: removal restriction is permissible given FHFA’s limited/regulatory role; acting‑Director issue limits challenge | Court: removal restriction is unconstitutional under Seila Law reasoning (restriction invalidated) |
| Standing and justiciability (traceability, mootness, succession clause, acting Director) | Collins: shareholders suffered pocketbook injury traceable to FHFA actions; retrospective relief remains despite later fourth amendment | Federal parties: challenge barred by succession clause, moot as to prospective relief, and Acting Director was removable at will so no Article II injury | Court: shareholders have standing to seek retrospective relief; succession clause does not bar claim; Acting Director not entitled to for‑cause protection (Acting Director removable at pleasure); claim not moot as to retrospective relief |
| Remedy for constitutional violation: whether to vacate/undo third amendment and disgorge payments | Collins: third amendment adopted by an unconstitutionally insulated Director is void and must be set aside with disgorgement/return of dividends | FHFA/Treasury: confirmed Directors were validly appointed; remedy should be limited or none; laches and Treasury reliance weigh against disgorgement | Court: appointment was valid so actions are not void ab initio; remands for lower courts to determine whether and what retrospective relief is appropriate (sever removal clause; do not automatically vacate third amendment) |
Key Cases Cited
- Free Enterprise Fund v. Public Co. Accounting Oversight Bd., 561 U.S. 477 (2010) (upheld standing to challenge removal protections; discussed limits on removal protections)
- Myers v. United States, 272 U.S. 52 (1926) (presidential removal power and its importance to executive control)
- Humphrey’s Executor v. United States, 295 U.S. 602 (1935) (upholding for‑cause removal for multimember independent agency exercising quasi‑legislative/judicial functions)
- Bowsher v. Synar, 478 U.S. 714 (1986) (holding that legislative‑branch official could not exercise executive power)
- Youngstown Sheet & Tube Co. v. Sawyer, 343 U.S. 579 (1952) (limits on executive power and separation‑of‑powers principles)
- Lujan v. Defenders of Wildlife, 504 U.S. 555 (1992) (standing: injury in fact, traceability, redressability)
- Allen v. Wright, 468 U.S. 737 (1984) (traceability analysis for Article III standing)