Court Opinion

ID: 4436414
Source: CourtListenerOpinion
Date Created: 2019-09-07 00:00:21.575894+00
Date Added: 2024-06-11T14:46:10.017486
License: Public Domain

Case: 17-20364   Document: 00515108825    Page: 1   Date Filed: 09/06/2019

        IN THE UNITED STATES COURT OF APPEALS
                FOR THE FIFTH CIRCUIT    United States Court of Appeals
                                                  Fifth Circuit

                                                                    FILED
                                                               September 6, 2019
                                No. 17-20364
                                                                  Lyle W. Cayce
                                                                       Clerk
PATRICK J. COLLINS; MARCUS J. LIOTTA; WILLIAM M. HITCHCOCK,

             Plaintiffs–Appellants,

v.

STEVEN T. MNUCHIN, SECRETARY, U.S. DEPARTMENT OF
TREASURY; DEPARTMENT OF THE TREASURY; FEDERAL HOUSING
FINANCE AGENCY; MARK A. CALABRIA, DIRECTOR OF THE FEDERAL
HOUSING FINANCE AGENCY,

             Defendants–Appellees.

                Appeal from the United States District Court
                     for the Southern District of Texas

Before STEWART, Chief Judge, JONES, SMITH, DENNIS, OWEN, ELROD,
SOUTHWICK, HAYNES, GRAVES, HIGGINSON, COSTA, WILLETT, HO,
DUNCAN, ENGELHARDT, and OLDHAM, Circuit Judges.

DON R. WILLETT, Circuit Judge, joined by JONES, SMITH, OWEN, ELROD,
HO, DUNCAN, ENGELHARDT, and OLDHAM, Circuit Judges:

      The bicentennial of the United States Constitution in 1987 celebrated
our Founding generation’s ingenious system of separated powers: legislative,
executive, and judicial. The Constitution inaugurated a revolutionary design.
Madisonian architecture infused with Newtonian genius—three separate
branches locked in synchronous orbit by competing interests. “Ambition . . .
made to counteract ambition,” explained Madison, making clear that this law
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of constitutional motion, using friction to combat faction, was a feature, not a
bug. 1 Our Constitution’s most essential attribute, the separation of powers,
presumes conflict, which, counterintuitively, produces equilibrium as the
branches behave not as willing partners but as wary rivals. And our
Constitution’s paramount aim, preserving individual liberty, presumes that
branches will behave neither centripetally (seizing other branches’ powers) nor
centrifugally (ceding their own), but jealously (defending their assigned powers
against encroachment). No mere tinkerers, the Framers upended things. Three
rival branches deriving power from three unrivaled words—“We the People”—
inscribed on the parchment in supersize script. In an era of kings and sultans,
nothing was more audacious than the Preamble’s first three words, a script-
flipping declaration that ultimate sovereignty resides not in the government
but in the governed.
       The Constitution’s 200th birthday coincided with a centennial, the 100th
birthday of the federal administrative state. 2 Congress’s passage in 1887 of the
Interstate Commerce Act, making railroads the first industry subject to federal
regulation, and the Act’s creation of the nation’s first federal regulatory body,
the Interstate Commerce Commission, profoundly altered the Framers’
tripartite structure. The ICC was an amalgam of all three powers, blending
functions of all three branches. The administrative state has sprouted since

       1 THE FEDERALIST NO. 51, at 349 (James Madison) (J. Cooke ed., 1961); see also
Mistretta v. United States, 488 U.S. 361, 380 (1989) (“This Court consistently has given voice
to, and has reaffirmed, the central judgment of the Framers of the Constitution that, within
our political scheme, the separation of governmental powers into three coordinate Branches
is essential to the preservation of liberty.”).
       2 An Act to Regulate Commerce (Interstate Commerce Act), ch. 104, 24 Stat. 379

(1887). While many scholars peg the birth of the federal administrative state to the Interstate
Commerce Commission, others point to other enactments, like the Pendleton Civil Service
Reform Act of 1883, which created the United States Civil Service Commission, or the
Steamboat Act of 1852, which created the Steamboat Inspection Service.
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then. But this iron truth endures: Even the most well-intentioned bureaucrats,
no less than presidents, legislators, and judges, are bound by constitutional
principles. An agency is restrained by the four corners of its enabling statute
and “literally has no power to act . . . unless and until Congress confers power
upon it.” 3 And Congress, when creating agencies, is itself constrained—at all
times—by the separation of powers.
                                   *      *      *
      The plaintiffs (the Shareholders) own shares in Fannie Mae and Freddie
Mac. In 2008 Fannie and Freddie’s new regulator, the Federal Housing
Finance Agency, placed them in conservatorship. FHFA secured financing
from the Treasury to keep Fannie and Freddie afloat. That relationship
continued, and in 2012 FHFA and Treasury adopted a Third Amendment to
their financing agreements. Under the Third Amendment, Fannie and Freddie
give Treasury nearly all their net worth each quarter as a dividend.
      The Shareholders have two principal objections to this arrangement:
      First, the Third Amendment exceeded FHFA’s statutory powers. FHFA’s
enabling statute gives it general powers to use as either conservator or
receiver. The statute grants other, more directed powers to FHFA as
conservator or receiver respectively. As conservator, the agency may take
actions “(i) necessary to put the regulated entity in a sound and solvent
condition; and (ii) appropriate to carry on the business of the regulated entity
and preserve and conserve the assets and property of the regulated entity.” 4
These enumerated conservator powers don’t vanish in the glare of the more
general ones. Congress created FHFA amid a dire financial calamity, but

      3 New York v. FERC, 535 U.S. 1, 18 (2002) (quoting La. Pub. Serv. Comm’n v. FCC,
476 U.S. 355, 374 (1986)).
      4 12 U.S.C. § 4617(b)(2)(D).

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expedience does not license omnipotence. The Shareholders plausibly allege
that the Third Amendment exceeded FHFA’s conservator powers by
transferring Fannie and Freddie’s future value to a single shareholder,
Treasury. In Parts I–VI of this opinion, a majority of the en banc court holds
that this claim survives dismissal under Federal Rule of Civil Procedure
12(b)(6).
      Second, the Shareholders argue that FHFA lacked authority to adopt the
Third Amendment because its Director was not removable by the President.
We adhere to the panel’s reasoning and conclusion that FHFA’s design, an
independent agency with a single Director removable only “for cause,” violates
the separation of powers. 5 In Parts VII–VIII of this opinion, a majority of the
en banc court holds that the Director’s “for cause” removal protection is
unconstitutional.
      The remaining question is what remedy the Shareholders are entitled to.
A different majority of the en banc court holds that prospective relief is the
proper remedy. In Judge Haynes’s opinion, 6 a majority holds that the
Shareholders can only obtain a declaration that the FHFA’s structure is
unconstitutional.
      We REVERSE the judgment dismissing Count I and REMAND that
claim for further proceedings. We AFFIRM the judgment dismissing Counts II
and III. The court REVERSES the judgment as to Count IV and REMANDS
that claim for entry of judgment that the “for cause” removal limitation in 12
U.S.C. § 4512(b)(2) is unconstitutional.

      5  Id. § 4512(b)(2).
      6  Chief Judge Stewart, Judge Dennis, Judge Owen, Judge Southwick, Judge Graves,
Judge Higginson, Judge Costa, and Judge Duncan join Judge Haynes’s constitutional remedy
opinion.
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                                              I
       During last decade’s housing-market crisis, Congress passed and
President George W. Bush signed the Housing and Economic Recovery Act of
2008 (HERA). 7 The statute created FHFA as an independent agency to oversee
the Federal National Mortgage Association (Fannie Mae) and the Federal
Home Loan Mortgage Corporation (Freddie Mac). Fannie and Freddie are
government-sponsored entities (GSEs) that also have private shareholders,
including the plaintiffs in this case. Some background on FHFA and the GSEs
is useful. 8
                                              A
       Congress created Fannie Mae in 1938. 9 Its purposes include “provid[ing]
stability in the secondary market for residential mortgages,” “increasing the
liquidity of mortgage investments,” and “promot[ing] access to mortgage credit
throughout the Nation.” 10 Congress created Freddie Mac in 1970 to “increase
the availability of mortgage credit for the financing of urgently needed
housing.” 11 Among other activities, Fannie and Freddie purchase mortgages
originated by private banks, bundle the mortgages into income-producing
securities, and sell the securities to investors.
       In 2007, mortgage delinquencies and defaults sparked a bank liquidity
crisis that kindled a recession. At the time, Fannie and Freddie controlled

       7  Pub. L. No. 110-289, 122 Stat. 2654 (codified in various sections of 12 U.S.C.).
       8  The facts relevant to Counts I–III (the APA claims) are taken from the Shareholders’
complaint and are viewed in the light most favorable to them as the nonmovants. See Ashcroft
v. Iqbal, 556 U.S. 662, 678 (2009). The facts relevant to Count IV (the constitutional claim)
are undisputed unless otherwise noted. See Celotex Corp. v. Catrett, 477 U.S. 317, 323–24
(1986).
        9 National Housing Act Amendments of 1938, Pub. L. No. 75-424, 52 Stat. 8, 23.
        10 12 U.S.C. §§ 1716, 1717.
        11 Federal Home Loan Mortgage Corporation Act, Pub. L. No. 91-351, preamble, 84

Stat. 450.
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combined mortgage portfolios of approximately $5 trillion—nearly half the
United States mortgage market. They suffered multi-billion dollar losses.
Indeed, the GSEs lost more in 2008 ($108 billion) than they had earned in the
previous thirty-seven years combined ($95 billion). 12 But they remained
solvent because they had taken a relatively conservative mortgage-investing
approach. They continued to support the United States home-mortgage system
as distressed banks failed.
      In 2008, the President signed HERA into law to protect the national
economy from further losses. HERA established FHFA as an “independent
agency of the Federal Government” and classified Fannie and Freddie as
“regulated entit[ies]” under FHFA. 13
                                           B
      A single Director leads FHFA. 14 He is “appointed by the President, by
and with the advice and consent of the Senate.” 15 The Director serves a term
of five years, “unless removed before the end of such term for cause by the
President.” 16 The Director designates three Deputy Directors. 17 In case of a
vacancy in the Director office, “the President shall designate [one of the Deputy
Directors] to serve as acting Director until the return of the Director, or the
appointment of a successor.” 18

      12  Office of Inspector General (OIG), FHFA, Analysis of the 2012 Amendments to the
Senior Preferred Stock Purchase Agreements 5 (Mar. 20, 2013), https://www.fhfaoig.gov/
Content/Files/WPR-2013-002_2.pdf.
       13 12 U.S.C. § 4511(a), (b).
       14 Id. § 4512(a).
       15 Id. § 4512(b)(1).
       16 Id. § 4512(b)(2).
       17 Id. § 4512(c)–(e) (providing for Deputy Director of the Division of Enterprise

Regulation, Deputy Director of the Division of Federal Home Loan Bank Regulation, and
Deputy Director for Housing Mission and Goals).
       18 Id. § 4512(f).

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      Other features strengthen FHFA’s independence. It runs on annual
assessments collected from the GSEs, not public or appropriated money. 19 It is
“advise[d]” by the Federal Housing Finance Oversight Board: the Secretary of
the Treasury, the Secretary of Housing and Urban Development, the
Chairman of the Securities and Exchange Commission, and the FHFA
Director. 20 But the Board’s power is Lilliputian. It “may not exercise any
executive authority, and the Director may not delegate to the Board any of the
functions, powers, or duties of the Director.” 21
      FHFA regulates normal GSE operations. The Director must issue
regulations, guidelines, or orders necessary to oversee the GSEs and ensure
their sound operations. 22 FHFA also has enforcement authority. The Director
may bring charges against a GSE for unsound practices or violating the law. 23
He may issue cease-and-desist orders, require the GSE to remedy any
violations, and impose penalties. 24
                                             C
      FHFA is not just a regulator. Under 12 U.S.C. § 4617 it may serve as
conservator or receiver for the GSEs. FHFA has discretion to appoint itself
conservator or receiver in some cases, and receivership is mandatory in other
critical insolvency situations. 25 Conservatorship and receivership are mutually
exclusive: Appointing FHFA as receiver “shall immediately terminate any
conservatorship established for the regulated entity under this chapter.” 26

      19 Id. § 4516.
      20 Id. § 4513a(a)–(c).
      21 Id. § 4513a(b).
      22 Id. § 4526(a); see id. § 4513.
      23 Id. § 4631(a)(1).
      24 Id. § 4631(c); see id. §§ 4632(e), 4635, 4636, 4641.
      25 Id. § 4617(a)(3) (discretionary appointment), (a)(4) (mandatory receivership).
      26 Id. § 4617(a)(4)(D).

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                                           D
      Section 4617 next provides FHFA’s general powers as conservator or
receiver. In either role, FHFA is a successor to the GSE:
      The Agency shall, as conservator or receiver, and by operation of
      law, immediately succeed to—
      (i) all rights, titles, powers, and privileges of the regulated entity,
      and of any stockholder, officer, or director of such regulated entity
      with respect to the regulated entity and the assets of the regulated
      entity . . . . 27
Similarly, FHFA in either role may operate the GSE:
      The Agency may, as conservator or receiver—
      (i) take over the assets of and operate the regulated entity with all
      the powers of the shareholders, the directors, and the officers of
      the regulated entity and conduct all business of the regulated
      entity;
      (ii) collect all obligations and money due the regulated entity;
      (iii) perform all functions of the regulated entity in the name of the
      regulated entity which are consistent with the appointment as
      conservator or receiver;
      (iv) preserve and conserve the assets and property of the regulated
      entity; and
      (v) provide by contract for assistance in fulfilling any function,
      activity, action, or duty of the Agency as conservator or receiver. 28
And FHFA in either role may exercise incidental powers to carry out those
enumerated:
      Incidental powers
      The Agency may, as conservator or receiver—
      (i) exercise all powers and authorities specifically granted to
      conservators or receivers, respectively, under this section, and
      such incidental powers as shall be necessary to carry out such
      powers; and

      27   Id. § 4617(b)(2)(A).
      28   Id. § 4617(b)(2)(B).
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      (ii) take any action authorized by this section, which the Agency
      determines is in the best interests of the regulated entity or the
      Agency. 29
FHFA in either role may also order a shareholder, director, or officer to perform
any function. 30 And in either role it may transfer or sell any GSE asset or
liability without consent. 31 FHFA in either role also benefits from an anti-
injunction provision:
      Except as provided in this section or at the request of the Director,
      no court may take any action to restrain or affect the exercise of
      powers or functions of the Agency as a conservator or a receiver. 32
                                         E
      Other powers depend on capacity. Section 4617 grants some powers to
FHFA as conservator only:
      Powers as conservator
      The Agency may, as conservator, take such action as may be—
      (i) necessary to put the regulated entity in a sound and solvent
      condition; and
      (ii) appropriate to carry on the business of the regulated entity and
      preserve and conserve the assets and property of the regulated
      entity. 33
It grants other powers to FHFA as receiver only:
      Additional powers as receiver
      In any case in which the Agency is acting as receiver, the Agency
      shall place the regulated entity in liquidation and proceed to
      realize upon the assets of the regulated entity in such manner as
      the Agency deems appropriate . . . . 34

      29 Id. § 4617(b)(2)(J).
      30 Id. § 4617(b)(2)(C).
      31 Id. § 4617(b)(2)(G).
      32 Id. § 4617(f).
      33 Id. § 4617(b)(2)(D).
      34 Id. § 4617(b)(2)(E).

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Receivership, then, grants a power and duty to liquidate the GSE.
Unsurprisingly, § 4617 next provides a regime for the receiver’s orderly
processing of creditor claims.
      It is extensive. As receiver FHFA must publish and mail notice to
creditors to present their claims. 35 It generally must allow or disallow a claim
within 180 days of filing. 36 It must expedite certain secured claims with
potential for irreparable injury. 37 It may also make rules for allowing and
disallowing claims. 38 And it must allow proven claims. 39 Creditors may
alternatively pursue their claims in U.S. district court. 40 The receivership
scheme qualifies the succession provision by carving out surviving shareholder
and creditor rights:
      [T]he appointment of the Agency as receiver . . . and its succession,
      by operation of law, to the rights, titles, powers, and privileges
      described in subsection (b)(2)(A) shall terminate all rights and
      claims that the stockholders and creditors of the regulated entity
      may have against the assets or charter . . . except for their right to
      payment, resolution, or other satisfaction of their claims, as
      permitted under subsections (b)(9), (c), and (e). 41
In short, FHFA as receiver must divide the GSEs’ assets between creditors and
shareholders according to law.

      35 Id. § 4617(b)(3)(B)–(C).
      36 Id. § 4617(b)(5)(A).
      37 Id. § 4617(b)(8).
      38 Id. § 4617(b)(4).
      39 Id. § 4617(b)(5)(B).
      40 Id. § 4617(b)(6).
      41 Id. § 4617(b)(2)(K).

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                                                  F
        Congress also amended the GSEs’ charters by giving Treasury
temporary authority to purchase their securities. 42 In connection with any
purchase, it required Treasury to make an “[e]mergency determination” that
the purchase would “(i) provide stability to the financial markets; (ii) prevent
disruptions in the availability of mortgage finance; and (iii) protect the
taxpayer.” 43 Congress also prescribed six mandatory considerations for
exercising the authority, “[t]o protect the taxpayers.” 44 The temporary
purchase authority terminated on December 31, 2009, except for Treasury’s
rights under purchases already made. 45
                                                  II
        In September 2008, FHFA appointed itself a conservator for the GSEs.
The next day, Treasury and the GSEs entered Preferred Stock Purchase
Agreements. Treasury made a capital commitment, capped at $100 billion per
GSE, to keep them from defaulting. In return, Treasury received one million
senior preferred shares in each GSE. These shares entitled Treasury to:
        • a $1 billion senior liquidation preference;
        • a dollar-for-dollar increase in that preference each time a GSE
          drew on the capital commitment;
        • quarterly dividends of either an amount equal to 10% of the
          liquidation preference, or a 12% increase in the liquidation
          preference itself;
        • warrants allowing Treasury to purchase up to 79.9% of common
          stock;

        42   Id. §§ 1455(l)(1) (authority as to Freddie Mac), 1719(g)(1) (authority as to Fannie
Mae).
        43 Id. §§ 1455(l)(1)(B), 1719(g)(1)(B).
        44 Id. §§ 1455(l)(1)(C), 1719(g)(1)(C).
        45 Id. §§ 1455(l)(4), 1719(g)(4).

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      • and periodic commitment fees.
The Agreements also prohibited the GSEs from declaring a dividend or making
any other distribution without Treasury’s consent.
      Treasury and FHFA later amended the Agreements. In May 2009 they
adopted the First Amendment: Treasury agreed to double its funding
commitment to $200 billion per GSE. In December 2009 they adopted the
Second Amendment: Treasury agreed to an increased, adjustable commitment
to account for the GSEs’ losses. As of August 2012, the GSEs had drawn
approximately $187 billion from Treasury’s funding commitment. But they
lacked the cash to pay 10% dividends. So in August 2012 FHFA and Treasury
adopted the Third Amendment to the Agreements.
      The Third Amendment replaced the quarterly 10% dividend with
variable dividends equal to the GSEs’ entire net worth except a capital reserve.
The Shareholders call this arrangement the “net worth sweep.” The capital
reserve buffer started at $3 billion. It decreased annually until it reached zero
in 2018. This arrangement was a double-edged sword. The GSEs no longer
struggled to make dividend payments, but they would also no longer accrue
capital. Treasury also suspended the periodic commitment fees. Treasury
announced that the Third Amendment would “expedite the wind down of
Fannie Mae and Freddie Mac” and ensure that the GSEs “will be wound down
and will not be allowed to retain profits, rebuild capital, and return to the
market in their prior form.” 46 A federal official commented privately that the

      46Compl. ¶ 135 (quoting Press Release, Dep’t of Treasury, Treasury Department
Announces Further Steps to Expedite Wind Down of Fannie Mae and Freddie Mac (Aug. 17,
2012)).
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Third Amendment was designed to prevent Fannie and Freddie from
recapitalizing. 47
      The net worth sweep transferred a fortune from Fannie and Freddie to
Treasury. When this suit was filed, the GSEs had paid $195 billion in dividends
under the net worth sweep. Under the Agreements more broadly, Treasury had
disbursed $187 billion and recouped $250 billion, thanks largely to the net
worth sweep.
                                       III
      The Shareholders sued FHFA, its Director, Treasury, and its Secretary
(the Agencies). They assert four causes of action, three statutory and one
constitutional:
      • In Count I, they allege the Administrative Procedure Act (APA),
        5 U.S.C. § 706(2)(C), (D), affords relief because FHFA exceeded
        its statutory conservator authority under 12 U.S.C.
        § 4617(b)(2)(D).
      • In Count II, they allege the APA, 5 U.S.C. § 706(2)(C), (D),
        affords relief because Treasury exceeded its securities-purchase
        authority under 12 U.S.C. §§ 1455(l), 1719(g). Specifically, they
        allege that Treasury purchased securities after the sunset
        period, failed to make the required “[e]mergency
        determination[s],”        and       disregarded         statutory
        “[c]onsiderations.”
      • In Count III, they allege the APA, 5 U.S.C. § 706(2)(A), affords
        relief because Treasury’s adoption of the net worth sweep was
        arbitrary and capricious.
      • In Count IV, they allege FHFA violates Article II, §§ 1 and 3 of
        the Constitution because, among other things, it is headed by a
        single Director removable only for cause.

      47   Id. ¶ 107.
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The Shareholders seek a declaration that the net worth sweep violates HERA
and is arbitrary and capricious; a declaration that FHFA’s structure violates
the separation of powers; an injunction against Treasury to return net-worth-
sweep dividends (or treat them as paying down the liquidation preference);
vacatur of the net worth sweep; and an injunction against further
implementation of the net worth sweep.
      The Agencies each moved to dismiss all claims under Federal Rules of
Civil Procedure 12(b)(1) and 12(b)(6). And the Shareholders and FHFA both
moved for summary judgment on Count IV, the constitutional claim. The
district court granted the Agencies’ motions to dismiss Counts I–III based on
the anti-injunction provision. And it granted summary judgment to FHFA on
the merits of Count IV. The Shareholders appealed.
      A panel of this court affirmed as to the statutory claims and reversed as
to the constitutional claim. 48 We then granted rehearing en banc, vacating the
panel decision. 49 Before rehearing en banc, both FHFA and Treasury admitted
the merits of Count IV: FHFA’s structure violates the separation of powers.
But, several months after rehearing en banc, FHFA reversed its position again.
It now contends that FHFA’s structure is constitutional. Treasury stands by
its contrary position. And FHFA and Treasury maintain that for a number of
other reasons the Shareholders are not entitled to relief on Count IV.
                                              IV
      The rules governing jurisdiction and our standard of review are familiar.
      Jurisdiction. The district court had jurisdiction under 28 U.S.C. § 1331.
We have jurisdiction under 28 U.S.C. § 1291.

      48   Collins v. Mnuchin, 896 F.3d 640 (5th Cir. 2018) (per curiam).
      49   Collins v. Mnuchin, 908 F.3d 151 (5th Cir. 2018); 5TH CIR. R. 41.3.
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      Standard of review. “We review de novo a district court’s rulings on a
motion to dismiss and a motion for summary judgment, applying the same
standard as the district court.” 50 “To survive a motion to dismiss, a complaint
must contain sufficient factual matter, accepted as true, to ‘state a claim to
relief that is plausible on its face.’ ” 51 “A claim has facial plausibility when the
plaintiff pleads factual content that allows the court to draw the reasonable
inference that the defendant is liable for the misconduct alleged.” 52 Summary
judgment is proper if “there is no genuine dispute as to any material fact and
the movant is entitled to judgment as a matter of law.” 53 We may consider a
fact undisputed “[i]f a party . . . fails to properly address another party’s
assertion of fact.” 54
                                             V
      We begin with Counts I–III, the Shareholders’ statutory claims. Before
reaching the merits, we must decide whether they are justiciable under
HERA’s anti-injunction provision and succession provision.
                                             A
      HERA’s anti-injunction provision limits court action against FHFA’s
conservator or receiver powers:
      Except as provided in this section or at the request of the Director,
      no court may take any action to restrain or affect the exercise of
      powers or functions of the Agency as a conservator or a receiver. 55
To interpret this provision, we consult its plain meaning and its past judicial
interpretations (including in predecessor statutes).

      50 TOTAL Gas & Power N. Am., Inc. v. FERC, 859 F.3d 325, 332 (5th Cir. 2017).
      51 Iqbal, 556 U.S. at 678 (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007)).
      52 Id.
      53 FED. R. CIV. P. 56(a).
      54 FED. R. CIV. P. 56(e).
      55 12 U.S.C. § 4617(f).

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       The Supreme Court instructs that plain meaning comes first: “Statutory
construction must begin with the language employed by Congress and the
assumption that the ordinary meaning of that language accurately expresses
the legislative purpose.” 56 Under the anti-injunction provision’s plain meaning,
we may not grant any relief that interferes with—“restrain[s] or affect[s]”—
FHFA’s conservator powers. Logically, then, we may still grant relief against
action taken outside those powers. The anti-injunction provision deflects
claims about how the conservator used its powers, not claims it exceeded the
powers granted. It distinguishes improperly exercising a power (not
restrainable) from exercising one that was never authorized (restrainable).
       Past judicial interpretations confirm this view. Congress borrowed much
of HERA’s text from the Financial Institutions Reform, Recovery, and
Enforcement Act of 1989 (FIRREA). 57 FIRREA authorizes the Federal Deposit
Insurance Corporation (FDIC) to act as conservator or receiver for distressed
banks. 58 FIRREA’s vintage conservator and receiver scheme, including the
anti-injunction provision, is materially similar to HERA’s. 59 So is one of
FIRREA’s own predecessors, the Financial Institutions Supervisory Act of
1966 (FISA), which governed conservatorship and receivership by the Federal

       56 Engine Mfrs. Ass’n v. S. Coast Air Quality Mgmt. Dist., 541 U.S. 246, 252 (2004)
(quoting Park ‘N Fly, Inc. v. Dollar Park & Fly, Inc., 469 U.S. 189, 194 (1985)).
       57 Pub. L. No. 101-73, 103 Stat. 183 (codified at 12 U.S.C. § 1811 et seq.); see Michael

Krimminger & Mark A. Calabria, The Conservatorships of Fannie Mae and Freddie Mac:
Actions Violate HERA and Established Insolvency Principles 19 (Cato Inst., Working Paper
No. 26, 2015) (“Staff quite literally ‘marked-up’ Sections 11 and 13 of the [Federal Deposit
Insurance Act (FDIA), a FIRREA predecessor] as the base text for HERA.”).
       58 12 U.S.C. § 1821(c).
       59 Compare 12 U.S.C. § 4617(f) (HERA), with id. § 1821(j) (FIRREA) (“Except as

provided in this section, no court may take any action, except at the request of the Board of
Directors by regulation or order, to restrain or affect the exercise of powers or functions of
the Corporation as a conservator or a receiver.”).
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Savings and Loan Insurance Corporation (FSLIC). 60 If FIRREA is HERA’s
parent, FISA is a grandparent.
       The    Supreme       Court     tells   us    that    those     provisions’    judicial
interpretations guide our analysis of HERA. “[W]here, as here, Congress
adopts a new law incorporating sections of a prior law, Congress normally can
be presumed to have had knowledge of the interpretation given to the
incorporated law, at least insofar as it affects the new statute.” 61 “And when
‘judicial interpretations have settled the meaning of an existing statutory
provision, repetition of the same language in a new statute indicates, as a
general matter, the intent to incorporate its judicial interpretations as well.’” 62
       The Supreme Court interpreted FISA’s anti-injunction provision in
Coit. 63 It held the provision did not strip federal jurisdiction over claims in a
FSLIC receivership. 64 Rather, it “simply prohibit[ed] courts from restraining
or affecting . . . those receivership ‘powers and functions’ that have been
granted by other statutory sources.” 65 So the anti-injunction provision didn’t
affect whether a particular power existed in the first place. 66
       We have applied Coit to FIRREA’s anti-injunction provision. In Onion
we held that the provision prevented a federal court from stopping a

       60 Pub. L. No. 89-695, 80 Stat. 1028, 1033 (“Except as otherwise provided in this
subsection, no court may take any action for or toward the removal of any conservator or
receiver, or, except at the instance of the Board, restrain or affect the exercise of powers or
functions of a conservator or receiver.”).
       61 Lorillard v. Pons, 434 U.S. 575, 581 (1978).
       62 Merrill Lynch, Pierce, Fenner & Smith Inc. v. Dabit, 547 U.S. 71, 85 (2006) (ellipsis

omitted) (quoting Bragdon v. Abbott, 524 U.S. 624, 645 (1998)).
       63 Coit Indep. Joint Venture v. FSLIC, 489 U.S. 561, 574–77 (1989) (interpreting FISA,

80 Stat. 1033).
       64 Id.
       65 Id. at 574.
       66 Id. (“[T]his language does not add adjudication of creditor claims to FSLIC’s

receivership powers.”).
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conservator’s foreclosure and sale. 67 In Ward, relying on Onion, we held that
the anti-injunction provision stopped a federal court from rescinding a
receiver’s sale. 68 We elaborated that there is a “difference between the exercise
of a function or power that is clearly outside the statutory authority of the RTC
on the one hand, and improperly or even unlawfully exercising a function or
power that is clearly authorized by statute on the other.” 69
       Ward is the anti-injunction provision’s strongest expression. We declined
to review even whether the receiver breached its express statutory duty to
maximize the property’s value. 70 But we did so based on the understanding
that, even if the receiver sold the property for inadequate value, it had
“improperly or unlawfully exercised an authorized power or function,” not
“engage[d] in an activity outside its statutory powers.” 71 Ward’s facts are
different from this case. In Ward, selling low instead of high was an improper
use of the receiver’s power to liquidate assets. But here, FHFA as conservator
essentially liquidated assets without ever being appointed receiver.
Improperly exercising a power is not restrainable, but exercising one beyond
statutory authority is.
       Other circuits follow the same interpretation. Even our sister courts that
rejected claims like Counts I–III acknowledge the same rule: “Section 4617(f)
will not protect the Agency if it acts either ultra vires or in some third capacity”

       67   281-300 Joint Venture v. Onion, 938 F.2d 35, 39 (5th Cir. 1991) (citing Coit, 489 U.S.
at 574).
       68 Ward v. RTC, 996 F.2d 99, 103 (5th Cir. 1993).
       69 Id.; see also Carney v. RTC, 19 F.3d 950, 956 (5th Cir. 1994) (holding that FIRREA
anti-injunction provision deprived court of jurisdiction because RTC’s action was within
statutory powers).
       70 Ward, 996 F.2d at 103.
       71 Id.

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besides conservator or receiver. 72 So have circuits deciding unrelated cases
against FHFA. To quote the Ninth Circuit, “the anti-judicial review provision
is inapplicable when FHFA acts beyond the scope of its conservator power.” 73
And the Eleventh Circuit holds that “[t]he FHFA cannot evade judicial scrutiny
by merely labeling its actions with a conservator stamp.” 74
       The provision’s plain meaning, FIRREA precedent, and HERA precedent
show that we may grant relief if FHFA exceeded its statutory powers. The
Agencies primarily contend that the Third Amendment falls within the
conservatorship powers, 12 U.S.C. § 4617(b)(2). As we explain below, that is
incorrect, at least at the pleading stage. But first, we address the Agencies’
arguments from disconnected provisions.
       The Agencies suggest Treasury’s temporary purchase authority
authorized the Third Amendment. 75 Congress authorized Treasury to
“purchase any obligations and other securities issued by the [GSEs] . . . on such
terms and conditions . . . and in such amounts as the Secretary may
determine.” 76 It also authorized Treasury “at any time[] [to] exercise any rights
received in connection with such purchases.” 77

       72  Roberts v. FHFA, 889 F.3d 397, 402 (7th Cir. 2018); see Jacobs v. FHFA, 908 F.3d
884, 889 (3rd Cir. 2018) (“Section 4617(f) bars claims when 1) the government acts as a
conservator, 2) it does not exceed its statutory authority, and 3) the remedy sought would
affect the exercise of that authority.”); Saxton v. FHFA, 901 F.3d 954, 957 (8th Cir. 2018)
(“[T]his provision bars only equitable relief, and only does so if the challenged action is within
the powers given FHFA by HERA.”); Perry Capital LLC v. Mnuchin, 864 F.3d 591, 606 (D.C.
Cir. 2017) (“The plain statutory text draws a sharp line in the sand against litigative
interference . . . with FHFA’s statutorily permitted actions as conservator or receiver.”).
        73 County of Sonoma v. FHFA, 710 F.3d 987, 992 (9th Cir. 2013).
        74 Leon County v. FHFA, 700 F.3d 1273, 1278 (11th Cir. 2012).
        75 See 12 U.S.C. §§ 1455(l)(1)(A), 1719(g)(1)(A).
        76 Id. §§ 1455(l)(1)(A), 1719(g)(1)(A).
        77 Id. §§ 1455(l)(2)(A), 1719(g)(2)(A).

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          But these provisions cannot sustain the Agencies’ argument. “Congress
. . . does not alter the fundamental details of a regulatory scheme in vague
terms or ancillary provisions—it does not, one might say, hide elephants in
mouseholes.” 78 Authorizing Treasury to enter an open-ended category of
transactions does not override the elaborate powers scheme in FHFA’s
enabling statute. 79
          The Agencies also contend that Congress ratified the Third Amendment
in the Consolidated Appropriations Act of 2016. 80 This act restricted Treasury
from disposing of certain shares, specifically including its rights under the
Third Amendment, until 2018. 81 The statute’s most favorable reading for
Treasury is that, in directing Treasury to retain its Third Amendment interest,
Congress recognized or enacted that interest’s lawfulness. 82
          The Appropriations Act does not support that reading. In directing
Treasury to retain preferred shares, it speaks to future conduct, not past
action. The Supreme Court has “recognized congressional acquiescence to
administrative interpretations of a statute in some situations, [but] ha[s] done
so with extreme care.” 83 Treasury faces “a difficult task in overcoming the plain

          78 Whitman v. Am. Trucking Ass’ns, 531 U.S. 457, 468 (2001).
          79 See id.
          80 Pub. L. No. 114-113, § 702, 129 Stat. 2242, 3024–25 (2015).
          81 Id.
          82 The statute also included a “Sense of Congress” provision:

          It is the Sense of Congress that Congress should pass and the President should
          sign into law legislation determining the future of Fannie Mae and Freddie
          Mac, and that notwithstanding the expiration of subsection (b), the Secretary
          should not sell, transfer, relinquish, liquidate, divest, or otherwise dispose of
          any outstanding shares of senior preferred stock acquired pursuant to the
          Senior Preferred Stock Purchase Agreement until such legislation is enacted.
Id. § 702(c).
          83   Solid Waste Agency of N. Cook Cty. v. U.S. Army Corps of Eng’rs, 531 U.S. 159, 169
(2001).
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text and import of [HERA]” with a later enactment. 84 Here, the Appropriations
Act only established a going-forward requirement to maintain the status quo.
That is not enough to show that the Agencies’ past actions accorded with
HERA. The Agencies’ conservatorship theory looms large over markets and
federal conservatorships, so we presume Congress did not stealthily ratify it in
an appropriations rider—hiding an elephant in a mousehole. 85
       It follows that whether the anti-injunction provision bars relief on
Counts I–III depends entirely on whether the net worth sweep exceeded
FHFA’s statutory conservatorship powers. 86
                                                B
       The Agencies next invoke HERA’s succession provision as a defense.
When appointed conservator, FHFA succeeds to certain shareholder rights:
       The Agency shall, as conservator or receiver, and by operation of
       law, immediately succeed to . . . all rights, titles, powers, and
       privileges of the regulated entity, and of any stockholder, officer,
       or director of such regulated entity with respect to the regulated
       entity and the assets of the regulated entity . . . . 87
The Agencies say that FHFA succeeded to the Shareholders’ right to bring
derivative suits, and Counts I–III are derivative. Generally speaking, “[t]he
derivative form of action permits an individual shareholder to bring ‘suit to
enforce a corporate cause of action against officers, directors, and third
parties,’ ” whereas a direct cause of action belongs to the shareholder himself. 88

       84  Id. at 170.
       85   See Whitman, 531 U.S. at 468 (“Congress, we have held, does not alter the
fundamental details of a regulatory scheme in vague terms or ancillary provisions—it does
not, one might say, hide elephants in mouseholes.”).
        86 See, e.g., Saxton, 901 F.3d at 959 (concluding that anti-injunction analysis is similar

for net-worth-sweep claims against both FHFA and Treasury).
        87 12 U.S.C. § 4617(b)(2)(A).
        88 Kamen v. Kemper Fin. Servs., Inc., 500 U.S. 90, 95 (1991) (quoting Ross v. Bernhard,

396 U.S. 531, 534 (1970)).
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       Other circuits have held that FHFA succeeded to derivative claims but
not direct. 89 They have textual support: The succession provision transfers
shareholders’ rights “with respect to the regulated entity and [its] assets.” 90
Simultaneously, under a separate provision, shareholders and creditors retain
“their right to payment, resolution, or other satisfaction of their claims” in the
receivership claim-processing scheme. 91 This means some claims survive the
succession provision. And it makes sense to define those claims as direct ones.
The ordinary meaning of claims “with respect to” a GSE and its assets does not
include a shareholder’s personal claims. And FIRREA decisions took a similar
view. 92
       To decide whether Counts I–III are direct or derivative, we begin with
the cause of action. Counts I–III assert rights under the APA. Under 5 U.S.C.
§ 702, “[a] person suffering legal wrong . . . or adversely affected or aggrieved
by agency action within the meaning of a relevant statute is entitled to judicial
review.” And under 5 U.S.C. § 706, “[t]he reviewing court shall . . . hold
unlawful and set aside agency action” that is arbitrary and capricious, exceeds
statutory authority, or is otherwise unlawful.
       The APA cause of action is broad. The “Administrative Procedure Act . . .
embodies the basic presumption of judicial review to one ‘suffering legal wrong
because of agency action, or adversely affected or aggrieved by agency action
within the meaning of a relevant statute.’” 93 “[J]udicial review of a final agency

       89  See Roberts, 889 F.3d at 408; Perry Capital, 864 F.3d at 624.
       90  12 U.S.C. § 4617(b)(2)(A).
        91 Id. § 4617(b)(2)(K)(i).
        92 Roberts, 889 F.3d at 408 (citing Levin v. Miller, 763 F.3d 667, 669 (7th Cir. 2014);

Courtney v. Halleran, 485 F.3d 942, 950 (7th Cir. 2007)).
        93 Abbott Labs. v. Gardner, 387 U.S. 136, 140 (1967) (quoting 5 U.S.C. § 702),

abrogated by statute in other part as recognized in Califano v. Sanders, 430 U.S. 99, 105
(1977).
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action by an aggrieved person will not be cut off unless there is persuasive
reason to believe that such was the purpose of Congress.” 94 An APA claim must
be justiciable under Article III, but otherwise who may sue is in Congress’s
hands. 95 Congress has granted an APA claim to any party that alleges “the
challenged action had caused them ‘injury in fact,’ and . . . the alleged injury
was to an interest ‘arguably within the zone of interests to be protected or
regulated’ by the statutes that the agencies were claimed to have violated.” 96
       “Whether a plaintiff comes within the zone of interests . . . requires us to
determine, using traditional tools of statutory interpretation, whether a
legislatively conferred cause of action encompasses a particular plaintiff’s
claim.” 97 The Supreme Court once considered the zone of interests a matter of
“prudential standing,” but now calls it one of statutory interpretation. 98 The
Court “ha[s] said, in the APA context that the test is not ‘especially
demanding.’” 99 It has “conspicuously included the word ‘arguably’ in the test

       94  Bowen v. Mich. Acad. of Family Physicians, 476 U.S. 667, 670 (1986) (quoting Abbott
Labs., 387 U.S. at 140); see Barlow v. Collins, 397 U.S. 159, 166 (1970) (“[P]reclusion of
judicial review of administrative action adjudicating private rights is not lightly to be
inferred. Indeed, judicial review of such administrative action is the rule, and
nonreviewability an exception which must be demonstrated.” (citations omitted)).
        95 Sierra Club v. Morton, 405 U.S. 727, 732 n.3 (1972).
        96 Id. at 733 (quoting Ass’n of Data Processing Serv. Orgs., Inc. v. Camp, 397 U.S. 150,

153 (1970)); see Bennett v. Spear, 520 U.S. 154, 175 (1997) (“In determining whether the
petitioners have standing under the zone-of-interests test to bring their APA claims, we look
. . . to the substantive provisions of the [Endangered Species Act of 1973], the alleged
violations of which serve as the gravamen of the complaint.”).
        97 Lexmark Int’l, Inc. v. Static Control Components, Inc., 572 U.S. 118, 127 (2014)

(internal quotation marks omitted).
        98 Id. (applying zone-of-interests test and disapproving “prudential standing” label);

see Bank of Am. Corp. v. City of Miami, 137 S. Ct. 1296, 1302 (2017) (“In Lexmark, we said
that the label ‘prudential standing’ was misleading, for the requirement at issue is in reality
tied to a particular statute.”).
        99 Id. at 130 (quoting Match–E–Be–Nash–She–Wish Band of Pottawatomi Indians v.

Patchak, 567 U.S. 209, 225 (2012)).
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to indicate that the benefit of any doubt goes to the plaintiff.” 100 “[T]he test
‘forecloses suit only when a plaintiff’s interests are so marginally related to or
inconsistent with the purposes implicit in the statute that it cannot reasonably
be assumed that’ Congress authorized that plaintiff to sue.” 101 The zone of
interests “is to be determined not by reference to the overall purpose of the Act
in question . . . but by reference to the particular provision of law upon which
the plaintiff relies.” 102
       Count I, to the extent it has merit, is a direct claim. The Shareholders
suffered injury in fact—they were excluded from the GSEs’ profits. And they
are within the zone of interests HERA protects. Count I alleges that FHFA
violated 12 U.S.C. § 4617(b)(2)(D)—the grant of conservator powers. The
Shareholders’ economic value is “arguably within the zone of interests” for this
provision. 103 It is axiomatic that shareholders are the residual claimants of a
firm’s value. 104 They are among the first beneficiaries of the “sound and solvent
condition” that a conservator is empowered to pursue. 105 And they ordinarily
have a claim on the “assets and property” that a conservator is empowered to
“preserve and conserve.” 106 For example, in James Madison, the D.C. Circuit

       100    Id. (quoting Patchak, 567 U.S. at 225).
       101    Id. (quoting Patchak, 567 U.S. at 225).
          102 Bennett, 520 U.S. at 175–76.
          103 City of Miami, 137 S. Ct. at 1303.
          104 Cf. FDIC v. Morley, 867 F.2d 1381, 1391 (11th Cir. 1989) (stating that “Congress

enacted the [Federal Deposit Insurance Act, a FIRREA precedessor] to protect depositors and
bank shareholders”).
          105 12 U.S.C. § 4617(b)(2)(D); see Compl. ¶¶ 35–37, 44, 109, 114, 142–43 (alleging

Shareholders’ holdings, accompanying rights, and effect of net worth sweep).
          106 12 U.S.C. § 4617(b)(2)(D); see Compl. ¶ 114 (“The effect of the Net Worth Sweep is

. . . to immediately nullify the rights of private shareholders to any return of their principal
or any return on their principal (i.e., in the form of dividends).”).
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held a bank shareholder could challenge the FDIC’s appointment as the bank’s
receiver under FIRREA. 107
       Plus, HERA elsewhere states that the succession provision does not
extinguish the Shareholders’ right to pursue their claims in receivership. 108
This matters because Count I essentially alleges that an improper
conservatorship preempted rights that could have been redeemed in
receivership. 109 Because the Shareholders are within the zone of interests
protected by HERA’s enumeration of conservator powers, they have a direct
claim.
       And the prudential shareholder-standing rule does not change this
analysis. The rule is “a strand of the standing doctrine that prohibits litigants
from suing to enforce the rights of third parties.” 110 But for APA claims,
“Congress itself has pared back traditional prudential limitations.” 111 The APA
does not abolish the shareholder-standing doctrine. But it limits it in some
cases. James Madison is one example, because the court held it had jurisdiction
to review the shareholder’s APA action against appointment of a receiver. 112
The Supreme Court decisions City of Miami and Lexmark also support this
point: For very broad statutory rights like the APA, an injury in fact and

       107 James Madison Ltd. ex rel Hecht v. Ludwig, 82 F.3d 1085, 1094 (D.C. Cir. 1996).
       108 12 U.S.C. § 4617(b)(2)(K)(i).
       109 See, e.g., Compl. ¶¶ 7 (“Indeed, a receivership that liquidates the Companies would

have more economic value to the private shareholders than the conservatorship as it was
structured and operated in practice.”), 56 (alleging no regulator before has imposed
conservatorship on healthy company while “simultaneously avoiding the organized claims
process of a receivership”).
       110 Nocula v. UGS Corp., 520 F.3d 719, 726 (7th Cir. 2008).
       111 FAIC Secs., Inc. v. United States, 768 F.2d 352, 357 (D.C. Cir. 1985) (Scalia, J.).
       112 82 F.3d at 1094.

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inclusion in the zone of interests can add up to a right of action, even if
prudential standing limits would have blocked it. 113 That is the case here.
       In so holding, we do not say that there is no direct–derivative distinction
for APA claims. Nor is it true that any shareholder may obtain review of agency
action affecting his holdings. In Thompson v. North American Stainless, LP,
the Supreme Court rejected the “absurd” proposition that shareholders could
sue under Title VII employment protections. 114 Shareholders are not within
Title VII’s zone of interests because “the purpose of Title VII is to protect
employees from their employers’ unlawful actions.” 115 But a corporate
reorganization statute is a different animal. Shareholders may be within its
zone of interests, and here they are. 116
       Counts II and III, however, are not within the asserted statutes’ zone of
interests. In Count II the Shareholders allege that Treasury violated 12 U.S.C.
§§ 1455(l), 1719(g), which granted it authority to purchase securities in the
GSEs. They say the net worth sweep effectively purchased securities after
these provisions’ 2009 sunset and otherwise exceeded the purchase

       113  See City of Miami, 137 S. Ct. at 1302 (“This Court has also referred to a plaintiff’s
need to satisfy ‘prudential’ or ‘statutory’ standing requirements. In Lexmark, we said that
the label ‘prudential standing’ was misleading, for the requirement at issue is in reality tied
to a particular statute. The question is whether the statute grants the plaintiff the cause of
action that he asserts.” (citations omitted)); Lexmark, 572 U.S. at 128 (“Just as a court cannot
apply its independent policy judgment to recognize a cause of action that Congress has
denied, it cannot limit a cause of action that Congress has created merely because ‘prudence’
dictates.” (citation omitted)).
        114 562 U.S. 170, 176–77 (2011).
        115 Id. at 178.
        116 See James Madison, 82 F.3d at 1092–94 (“[R]equiring stockholders of wrongfully

seized national banks to wait on the sidelines while the FDIC liquidates their institutions
conflicts with Congress’s apparent desire . . . that seized institutions act quickly in
challenging the FDIC’s appointment.”); Morley, 867 F.2d at 1391 (“Congress enacted the
FDIA [a FIRREA predecessor] to protect depositors and bank shareholders . . . .”).
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authority. 117 In Count III they allege that Treasury acted arbitrarily and
capriciously under those same sections because it never made the requisite
“[e]mergency determination.” 118
       Congress granted this purchase authority to protect markets,
consumers,      and     taxpayers,      not    GSE     stakeholders.       The    emergency
determination asks whether a purchase will stabilize markets, prevent
disruptions in mortgage finance, and protect taxpayers. 119 And the statutes’
mandatory “[c]onsiderations” are likewise public-oriented: Treasury must
consider the GSEs’ condition, and any transaction’s structure, “[t]o protect the
taxpayers.” 120 So we agree with the district court, though for a different reason,
that Counts II and III must be dismissed.
                                              VI
       We now consider Count I’s substantive allegation that the net worth
sweep exceeded FHFA’s conservator powers. Like any federal agency, FHFA
“literally has no power to act . . . unless and until Congress confers power upon
it.” 121 This principle is enshrined in statute: “The reviewing court shall . . . hold
unlawful and set aside agency action, findings, and conclusions found to be . . .
in excess of statutory jurisdiction, authority, or limitations . . . .” 122 It is
recognized in prominent Supreme Court decisions and implicit in countless

       117 See 12 U.S.C. §§ 1455(l)(4) (providing that purchase authority “shall expire
December 31, 2009”), 1719(g)(4) (same).
      118 Id. §§ 1455(l)(1)(B) (“In connection with any use of this authority, the Secretary

must determine that such actions are necessary to—(i) provide stability to the financial
markets; (ii) prevent disruptions in the availability of mortgage finance; and (iii) protect the
taxpayer.”), 1719(g)(1)(B) (same).
      119 Id. §§ 1455(l)(1)(B), 1719(g)(1)(B).
      120 Id. §§ 1455(l)(1)(C), 1719(g)(1)(C).
      121 New York v. FERC, 535 U.S. at 18 (quoting La. Pub. Serv. Comm’n, 476 U.S. at

374).
      122 5 U.S.C. § 706.

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others. 123 The warning that “[i]f we are to continue a government of limited
powers, these agencies must themselves be regulated” remains as fresh as
ever. 124
                                              A
       To define FHFA’s statutory authority, we “follow the cardinal rule that
a statute is to be read as a whole, since the meaning of statutory language,
plain or not, depends on context.” 125 Emphasis on isolated provisions at the
expense of other, more applicable ones is “hyperliteral and contrary to common
sense.” 126 As Learned Hand explained, “[w]ords are not pebbles in alien
juxtaposition; they have only a communal existence.” 127 Our analysis proceeds
in three parts: HERA’s plain meaning, its past judicial interpretations
(including FIRREA precedent), and insight from common-law conservatorship.
                                              1
       Under HERA’s plain meaning, FHFA as conservator has limited,
enumerated powers. To begin with, conservator and receiver are distinct and
mutually exclusive roles. HERA says FHFA may “be appointed as conservator
or receiver for the purpose of reorganizing, rehabilitating, or winding up the
affairs of a regulated entity.” 128 In ordinary use, the word “or” is “almost always

       123 See, e.g., Maislin Indus., U.S., Inc. v. Primary Steel, Inc., 497 U.S. 116, 134–35
(1990) (holding that agency “does not have the power to adopt a policy that directly conflicts
with its governing statute”); La. Pub. Serv. Comm’n, 476 U.S. at 374 (holding that “a federal
agency may pre-empt state law only when and if it is acting within the scope of its
congressionally delegated authority”).
       124 Felix Frankfurter, The Growth of American Administrative Law, 37 HARV. L. REV.

638, 639 (1924) (book review) (quoting Elihu Root, Address of the President, 41 AM. BAR ASS’N
REP. 356–69 (1916)).
       125 King v. St. Vincent’s Hosp., 502 U.S. 215, 221 (1991) (citation omitted).
       126 RadLAX Gateway Hotel, LLC v. Amalgamated Bank, 566 U.S. 639, 645 (2012).
       127 N.L.R.B. v. Federbush Co., 121 F.2d 954, 957 (2d Cir. 1941) (quoted in King, 502 U.S.

at 221).
       128 12 U.S.C. § 4617(a)(2) (emphasis added).

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disjunctive, that is, the words it connects are to be given separate meanings.” 129
So FHFA may not occupy both roles simultaneously. To the same point, “[t]he
appointment of the Agency as receiver . . . shall immediately terminate any
conservatorship.” 130 Similarly, the incidental powers provision authorizes
FHFA to “exercise all powers and authorities specifically granted to
conservators or receivers, respectively, under this section, and such incidental
powers as shall be necessary to carry out such powers.” 131 In short, the FHFA
Director may appoint the agency as either conservator or receiver, but once he
does so, FHFA’s powers depend on the role.
      Some powers do overlap. HERA grants general powers to FHFA as either
conservator or receiver. In either capacity, FHFA is a successor to the GSE. 132
It succeeds to the GSE’s and its stakeholders’ “rights, titles, powers, and
privileges . . . with respect to the regulated entity and [its] assets.” 133 Similarly,
FHFA in either capacity has power to operate the GSE. 134 This includes taking
over its assets, operating its business, collecting obligations, performing its
functions, preserving and conserving its assets and property, and entering
contracts. 135 The list goes on: In either role FHFA may transfer assets or

      129 Loughrin v. United States, 573 U.S. 351, 357 (2014) (quoting United States v.
Woods, 571 U.S. 31, 45 (2013)).
      130 12 U.S.C. § 4617(a)(4)(D).
      131 Id. § 4617(b)(2)(J) (emphasis added).
      132 Id. § 4617(b)(2)(A).
      133 Id. § 4617(b)(2)(A)(i).
      134 Id. § 4617(b)(2)(B).
      135 Id.

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liabilities 136;   cause      other      stakeholders         to       perform   functions 137;   pay
obligations 138; issue subpoenas 139; and exercise incidental powers. 140
       But that list has an end. Other powers depend on which role FHFA
occupies. The statute enumerates FHFA’s separate “[p]owers as conservator”:
       The Agency may, as conservator, take such action as may be—(i)
       necessary to put the regulated entity in a sound and solvent
       condition; and (ii) appropriate to carry on the business of the
       regulated entity and preserve and conserve the assets and
       property of the regulated entity. 141
Then it enumerates “[a]dditional powers as receiver”:
       “In any case in which the Agency is acting as receiver, the Agency
       shall place the regulated entity in liquidation and proceed to
       realize upon the assets of the regulated entity in such manner as
       the Agency deems appropriate, including through the sale of assets
       . . . .” 142
The receiver powers also include organizing a successor enterprise 143 and
administering a detailed claim-processing scheme. 144
       The receiver powers stand in contrast to the conservator powers. As
receiver, FHFA gains the power to liquidate the GSE and realize on its
assets. 145 It also gains the power to notice, review, and determine creditors’
claims. 146 A conservator does not have these powers. If it did, a conservator

       136 Id. § 4617(b)(2)(G).
       137 Id. § 4617(b)(2)(C).
       138 Id. § 4617(b)(2)(H).
       139 Id. § 4617(b)(2)(I).
       140 Id. § 4617(b)(2)(J).
       141 Id. § 4617(b)(2)(D).
       142 Id. § 4617(b)(2)(E).
       143 Id. § 4617(b)(2)(F).
       144 Id. § 4617(b)(3), (b)(4), (b)(5), (b)(7), (b)(8), (b)(9).
       145 Id. § 4617(b)(2)(E).
       146 Id. § 4617(b)(3), (b)(4), (b)(5), (b)(7), (b)(8), (b)(9).

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could liquidate the GSE’s assets without following HERA’s detailed claim-
processing scheme.
      The Agencies contend that the general powers to “operate the regulated
entity” and “conduct all [its] business,” 147 or “transfer or sell any asset or
liability of the regulated entity in default,” 148 authorize the net worth sweep.
But if read so broadly, these provisions would obliterate the receivership claim-
processing duties. If a conservator or receiver may enter any transaction as
part of “operat[ing]” the GSE and “conduct[ing]” its business, 149 there is no bar
to circumventing HERA’s creditor and shareholder protections.
      That would raze the receiver’s duties to notice and adjudicate claims. 150
It would also be inconsistent with creditors’ and shareholders’ right to have
their claims paid in receivership. 151 So it cannot be a correct reading. “In
construing a statute we are obliged to give effect, if possible, to every word
Congress used.” 152 And “the canon against surplusage is strongest when an
interpretation would render superfluous another part of the same statutory
scheme.” 153
      Rather than give the general powers their broadest possible meaning, we
give them a meaning consistent with the separate conservator and receiver
powers. A coherent interpretation of these provisions is not just reasonable, it
is mandatory. In RadLAX, the Supreme Court held that when “a general
authorization and a more limited, specific authorization exist side-by-side” in

      147 Id. § 4617(b)(2)(B)(i).
      148 Id. § 4617(b)(2)(G).
      149 Id. § 4617(b)(2)(B)(i).
      150 Id. § 4617(b)(3), (b)(4), (b)(5), (b)(7), (b)(8), (b)(9).
      151 Id. § 4617(b)(2)(K)(i).
      152 Reiter v. Sonotone Corp., 442 U.S. 330, 339 (1979); see ANTONIN SCALIA & BRYAN

A. GARNER, READING LAW: THE INTERPRETATION OF LEGAL TEXTS 176 (2012).
      153 Marx v. Gen. Revenue Corp., 568 U.S. 371, 386 (2013).

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the same statute, “the particular enactment must be operative, and the general
enactment must be taken to affect only such cases within its general language
as are not within the provisions of the particular enactment.” 154 In this
situation “[t]he general/specific canon . . . avoids not contradiction but the
superfluity of a specific provision that is swallowed by the general one.” 155
Other Supreme Court authority similarly warns against applying a general
provision at the expense of more specific ones. 156
       Applying this to HERA, § 4617(b)(2)(D) enumerates the conservator’s
specific powers to “put the regulated entity in a sound and solvent condition,”
“carry on [its] business,” and “preserve and conserve” its assets. The shared
conservator-receiver powers are more general and would swallow the rest of
the statute if interpreted broadly. So the more “particular enactment must be
operative.” 157 “[M]ay means may” and “‘may’ is, of course, ‘permissive rather
than obligatory.’” 158 But here “may” is a grant of power that enables FHFA to
act. FHFA as conservator may not exercise a power beyond the ones granted. 159
       The incidental-powers provision does not change this. It gives FHFA
other powers “necessary to carry out” its enumerated ones. 160 We doubt that
Congress “in fashioning this intricate . . . machinery, would thus hang one of

       154   RadLAX Gateway Hotel, LLC v. Amalgamated Bank, 566 U.S. 639, 645–46 (2012)
(quoting United States v. Chase, 135 U.S. 255, 260 (1890)).
         155 Id. at 645.
         156 See Bloate v. United States, 559 U.S. 196, 207 (2010) (“[G]eneral language of a

statutory provision, although broad enough to include it, will not be held to apply to a matter
specifically dealt with in another part of the same enactment.” (quoting D. Ginsberg & Sons,
Inc. v. Popkin, 285 U.S. 204, 208 (1932))).
         157 RadLAX, 566 U.S. at 646 (quoting Chase, 135 U.S. at 260).
         158 Perry Capital, 864 F.3d at 607 (first quoting U.S. Sugar Corp. v. EPA, 830 F.3d
579, 608 (D.C. Cir. 2016); then quoting Baptist Mem’l Hosp. v. Sebelius, 603 F.3d 57, 63 (D.C.
Cir. 2010)).
         159 E.g., La. Pub. Serv. Comm’n, 476 U.S. at 374 (“[A]n agency literally has no power

to act . . . unless and until Congress confers power upon it.”).
         160 12 U.S.C. § 4617(b)(2)(J).

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the main gears on the tail pipe.” 161 Including near-unlimited conservatorship
powers in this provision would swallow a large chunk of HERA. And incidental
powers are those “necessary to carry out” the powers granted to “conservators
or receivers, respectively.” 162 This links incidental powers to enumerated ones
and recognizes the conservator-receiver distinction. In short, any exercise of
an incidental power must serve an enumerated power. 163 Beyond limited
powers to “preserve and conserve” the GSEs’ assets and property, FHFA would
lack any intelligible principle to guide its discretion as conservator. This would
permit essentially any action that could be characterized as “reorganizing” the
GSEs and would eviscerate many pages of 12 U.S.C. § 4617.
      The best-interests clause is also consistent with this reading. That
clause, within the incidental-powers provision, authorizes FHFA to “take any
action authorized by this section, which the Agency determines is in the best
interests of the regulated entity or the Agency.” 164 Permitting the conservator
to act in its own interest may appear to depart from the traditional view of a
conservator as fiduciary. But the best-interests clause modifies FHFA’s
authority “as conservator or receiver,” 165 and it only affects actions that are
otherwise “authorized by this section.” 166 So FHFA may pursue its own
interests only within the conservator’s enumerated powers. It may not, for
example, wind down a GSE and jettison receivership protections all in its own
best interests. That would not be “authorized by this section.” Instead, this

      161  Brannan v. Stark, 342 U.S. 451, 463 (1952).
      162  12 U.S.C. § 4617(b)(2)(J)(i).
       163 Cf. RadLAX, 566 U.S. at 645 (holding that general authority should not be

interpreted to make specific authority superfluous).
       164 12 U.S.C. § 4617(b)(2)(J)(ii) (emphasis added).
       165 Id. § 4617(b)(2)(J).
       166 Id. § 4617(b)(2)(J)(ii).

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clause is a modest addition to traditional conservatorship powers. It may
permit related-party transactions that would otherwise be inconsistent with
fiduciary duties. 167
                                               2
       FIRREA       decisions      also    demonstrate       the    conservator’s      limited,
enumerated powers. 168 FIRREA’s conservator-powers provision is materially
identical to HERA’s. 169 In McAllister we interpreted that provision to “state[]
explicitly that a conservator only has the power to take actions necessary to
restore a financially troubled institution to solvency.” 170 We are in good
company—the Fourth, Eighth, Ninth, Eleventh, and D.C. Circuits have
articulated similar views. 171 Under FIRREA, a conservator has power to
steward the bank’s assets, not to make every conceivable use of them.

       167     See Perry Capital, 864 F.3d at 643 (Brown, J., dissenting in part).
       168     Cf. Merrill Lynch, 547 U.S. at 85 (stating that incorporation of language from
existing statute generally incorporates its judicial interpretations as well); Lorillard, 434
U.S. at 581 (“Congress is presumed to be aware of an administrative or judicial interpretation
of a statute and to adopt that interpretation when it re-enacts a statute without change
. . . .”).
           169 Compare 12 U.S.C. § 4617(b)(2)(D) (HERA), with id. § 1821(d)(2)(D) (FIRREA).
           170 201 F.3d 570, 579 (5th Cir. 2000).
           171 See Elmco Props., Inc. v. Second Nat’l Fed. Sav. Ass’n, 94 F.3d 914, 922 (4th Cir.

1996) (“[A] conservator’s function is to restore the bank’s solvency and preserve its assets.”);
James Madison, 82 F.3d at 1090 (“The principal difference between a conservator and
receiver is that a conservator may operate and dispose of a bank as a going concern, while a
receiver has the power to liquidate and wind up the affairs of an institution.”); Del E. Webb
McQueen Dev. Corp. v. RTC, 69 F.3d 355, 361 (9th Cir. 1995) (“The RTC, as conservator,
operates an institution with the hope that it might someday be rehabilitated. The RTC, as
receiver, liquidates an institution and distributes its proceeds to creditors according to the
priority rules set out in the regulations.”); RTC v. United Tr. Fund, Inc., 57 F.3d 1025, 1033
(11th Cir. 1995) (“The conservator’s mission is to conserve assets which often involves
continuing an ongoing business. The receiver’s mission is to shut a business down and sell
off its assets.”); RTC v. CedarMinn Bldg. Ltd. P’ship, 956 F.2d 1446, 1450 (8th Cir. 1992)
(“Had Congress intended RTC’s status as a conservator or a receiver to be mere artifice, it
would have granted all duties, rights, and powers to the Corporation.”).
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                                              3
       The common-law meaning of “conservator” also shows it has limited
powers. The Supreme Court recognizes a “settled principle of interpretation
that, absent other indication, Congress intends to incorporate the well-settled
meaning of the common-law terms it uses.” 172 And “absence of contrary
direction may be taken as satisfaction with widely accepted definitions, not as
a departure from them.” 173
       There is no shortage of authority for traditional conservatorship. Well
before HERA, or even FIRREA, the Supreme Court recognized that a
conservator has limited powers and must conserve the ward’s property. 174
Under the Uniform Probate Code, a “conservator” is a fiduciary held to the
same standard of care as a trustee. 175 And according to the Congressional
Research Service, “[a] conservator is appointed to operate the institution,
conserve its resources, and restore it to viability.” 176 Black’s Law Dictionary
defines “conservator” as “[a] guardian, protector, or preserver . . . the modern
equivalent of the common-law guardian,” and it defines “managing

       172  United States v. Castleman, 572 U.S. 157, 162 (2014) (quoting Sekhar v. United
States, 570 U.S. 729, 732 (2013)).
        173 Morissette v. United States, 342 U.S. 246, 263 (1952); see Bond v. United States,

572 U.S. 844, 861 (2014) (“In settling on a fair reading of a statute, it is not unusual to
consider the ordinary meaning of a defined term, particularly when there is dissonance
between that ordinary meaning and the reach of the definition.”).
        174 See Deputy v. du Pont, 308 U.S. 488, 496 (1940) (holding that purchasing stock for

executive incentives is not an “expense which a conservator of an estate . . . would ordinarily
incur”); United States v. Chem. Found., 272 U.S. 1, 10–11 (1926) (holding that enemy-
property custodian “was a mere conservator and was authorized to sell only to prevent
waste”).
        175 UNIF. PROB. CODE § 5-418(a).
        176 DAVID H. CARPENTER & M. MAUREEN MURPHY, CONG. RES. SERV., FINANCIAL

INSTITUTION INSOLVENCY: FEDERAL AUTHORITY OVER FANNIE MAE, FREDDIE MAC, AND
DEPOSITORY INSTITUTIONS 5 (2008), https://digital.library.unt.edu/ark:/67531/metadc
795484/m1/1/high_res_d/RL34657_2008Sep10.pdf.
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conservator” as “[a] person appointed by a court to manage the estate or affairs
of someone who is legally incapable of doing so.” 177
      Tethering the conservator’s powers to traditional principles of insolvency
is both sound and indispensable. FHFA’s present Director has explained that
“[a] market economy depends upon predictable rules to govern competition.
These rules must include . . . predictable and fair standards to allocate losses
and rehabilitate or liquidate a company when it cannot pay its debts.” 178
Considering this need for continuity, HERA’s conservator powers must be
interpreted    in    light   of   both     FIRREA      decisions     and    traditional
conservatorship. 179 These authorities “reflect a fundamental difference
between the missions of a conservator, which seeks to reorganize, and a
receiver, which seeks to liquidate.” 180
      Congress built FIRREA, and later HERA, on this common-law
understanding. Until recently, FHFA agreed. It told Congress in 2010 that
“[t]he purpose of conservatorship is to preserve and conserve each company’s
assets and property and to put the companies in a sound and solvent
condition.” 181 In 2011, it had a “statutory mission to restore soundness and
solvency to insolvent regulated entities and to preserve and conserve their
assets and property.” 182 In a 2012 regulation, it said “FHFA’s duties as

      177   Conservator, BLACK’S LAW DICTIONARY (11th ed. 2019).
      178   Michael Krimminger & Mark A. Calabria, The Conservatorships of Fannie Mae and
Freddie Mac: Actions Violate HERA and Established Insolvency Principles 8 (Cato Inst.,
Working Paper No. 26, 2015).
        179 See id. at 26–27.
        180 Id. at 42.
        181 Fed. Hous. Fin. Agency, Report to Congress: 2009, at i (May 25, 2010),

https://www.fhfa.gov/AboutUs/Reports/ReportDocuments/2009_AnnualReportToCongress_5
08.pdf.
        182 Conservatorship and Receivership, 76 Fed. Reg. 35724, 35726 (June 20, 2011)

(emphasis added).
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conservator require the conservation and preservation of the Enterprises’
assets. . . . [A]ny goal-setting must be closely linked to putting the Enterprises
in sound and solvent condition.” 183 These contemporary statements align with
the traditional understanding of conservatorship.
       Congress did not repudiate common-law conservatorship in FIRREA or
HERA. Instead, it consistently authorized the FDIC and then FHFA to put
entities in a “sound and solvent condition,” “carry on th[eir] business,” and
“preserve and conserve th[eir] assets and property.” 184 Neither HERA’s general
powers, implied powers, nor right to act in FHFA’s own best interest is the
kind of “contrary direction” that quells common-law conservatorship. 185 A
conservatorship of Fannie Mae or Freddie Mac (here, both) sways an entire
industry. Given the potential effect on markets, firms, and consumers, partial
suggestions are not enough to show that HERA inverted traditional
conservatorship. 186 “Conservator” is an old role’s anchor, not a new role’s
banner. 187
                                             B
       Now to apply this understanding of conservator powers to the Third
Amendment. We hold the Shareholders stated a plausible claim that the Third
Amendment exceeded statutory authority. Transferring substantially all

       183 2012-2014 Enterprise Housing Goals, 77 Fed. Reg. 67535, 67549–50 (Nov. 13, 2012)
(emphasis added); see also Fannie Mae and Freddie Mac Loan Purchase Limits: Request for
Public Input on Implementation Issues, 78 Fed. Reg. 77450, 77451 (Dec. 23, 2013) (describing
authority to “preserve and conserve” GSEs’ assets as “FHFA’s conservator obligation”).
       184 12 U.S.C. §§ 4617(b)(2)(D) (HERA), 1821(d)(2)(D) (FIRREA).
       185 Morissette, 342 U.S. at 263.
       186 See FDA v. Brown & Williamson Tobacco Corp., 529 U.S. 120, 160 (2000) (“[W]e

are confident that Congress could not have intended to delegate a decision of such economic
and political significance to an agency in so cryptic a fashion.”).
       187 See Castleman, 572 U.S. at 162 (stating that Congress intends to incorporate

settled meaning of common-law terms it uses); Morissette, 342 U.S. at 263 (holding that
Congress, in using term of art, presumably adopts its legal tradition and meaning).
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capital to Treasury, without limitation, exceeds FHFA’s powers to put the
GSEs in a “sound and solvent condition,” “carry on the[ir] business,” and
“preserve and conserve [their] assets and property.” 188 We ground this holding
in statutory interpretation, not business judgment.
      In adopting the net worth sweep, the Agencies abandoned rehabilitation
in favor of “winding down” the GSEs. Treasury announced that the Third
Amendment would “expedite the wind down of Fannie Mae and Freddie Mac”
and ensure that the GSEs “will be wound down and will not be allowed to retain
profits, rebuild capital, and return to the market in their prior form.” 189 The
FHFA acting Director also said that the Third Amendment “reinforce[d] the
notion that the [GSEs] will not be building capital as a potential step to
regaining their former corporate status.” 190 In a report to Congress, FHFA
explained that it was “prioritizing [its] actions to move the housing industry to
a new state, one without Fannie Mae and Freddie Mac.” 191 For reasons we are
about to explain, this “wind down” exceeded the conservator’s powers and is
the type of transaction reserved for a receiver.
      As a textual matter, the net worth sweep actively undermined pursuit of
a “sound and solvent condition,” and it did not “preserve and conserve” the
GSEs’ assets. 192 Treasury has collected $195 billion under the net worth
sweep. 193 This alone exceeds the $187 billion it invested. 194 After paying back

      188   12 U.S.C. § 4617(b)(2)(D).
      189   Compl. ¶ 135 (quoting Press Release, Dep’t of Treasury, Treasury Department
Announces Further Steps to Expedite Wind Down of Fannie Mae and Freddie Mac (Aug. 17,
2012)).
        190 Id. ¶ 140 (quoting Edward J. DeMarco, Acting Director, FHFA, Statement Before

the U.S. Sen. Comm. on Banking, Hous., & Urban Affairs (Apr. 18, 2013)).
        191 Id. (quoting FHFA, Report to Congress 2012, at 13 (June 13, 2013)).
        192 12 U.S.C. § 4617(b)(2)(D).
        193 Compl. ¶¶ 25, 87.
        194 Id.

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more than the initial investment, the GSEs remain on the hook for Treasury’s
entire $189 billion liquidation preference. 195 And under the net worth sweep,
Treasury has a right to the GSEs’ net worth in perpetuity. 196
       FHFA had authority, of course, to pay back Treasury for the GSEs’ draws
on the funding commitment. The funding commitment provided liquidity and
took on risk, so Treasury was also entitled to compensation for the cost of
financing. But the net worth sweep continues transferring the GSEs’ net worth
indefinitely, well after Treasury has been repaid and the GSEs returned to
sound condition. That kind of liquidation goes beyond the conservator’s powers.
       FIRREA precedent confirms that this exceeds statutory conservator
powers. In Elmco Properties, the Fourth Circuit held that a creditor was
unlawfully deprived of its claim because it never received notice of the
receivership. 197 The creditor had notice of a conservatorship. But “the RTC as
conservator cannot . . . liquidate a failed bank. Instead, the conservator’s
function is to restore the bank’s solvency and preserve its assets.” 198 Dividing up
and distributing the institution’s property is inconsistent with a conservator’s
powers, so the creditor in Elmco was not on inquiry notice to pursue its
claim. 199 To “wind down” the GSEs’ affairs here, FHFA needed to follow
HERA’s carefully crafted receivership procedures. But FHFA was never
appointed receiver, so it lacked authority to bleed the GSEs’ profits in
perpetuity.

       195 The $189 billion figure is $187 billion drawn, plus an initial $1 billion liquidation
preference per GSE. Id. ¶¶ 8, 87, 152.
       196 Id. ¶ 25.
       197 Elmco Props., Inc. v. Second Nat’l Fed. Sav. Ass’n, 94 F.3d 914, 922 (4th Cir. 1996).
       198 Id. (emphasis added).
       199 See id.

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       Finally, based on the Shareholders’ allegations, the net worth sweep is
inconsistent with conservatorship’s common-law meaning. In United States v.
Chemical Foundation, the Supreme Court characterized a wartime enemy-
property custodian as “a mere conservator” with “the powers of a common-law
trustee.” 200 And a common-law conservator may not give the ward’s assets to a
single shareholder, just as a fiduciary or trustee may not do so. 201 Admittedly,
HERA modified the common-law meaning in some ways, such as by permitting
use of enumerated powers in FHFA’s best interest. 202 But in more relevant
areas HERA provided no “contrary direction” against the common-law
meaning: 203 It did not authorize a conservator to “wind down” the ward’s affairs
or perpetually drain its earnings. Under traditional principles of insolvency,
investors and the market reasonably expect a conservator to “operate,
rehabilitate, reorganize, and restore the health of the troubled institution,” not
summarily take its property. 204 The Third Amendment inverts traditional
conservatorship.
       It is worth noting that the facts at this stage are distinguishable from
those in some sister-circuit decisions. The Shareholders appeal from a
dismissal under Rule 12(b)(6). The complaint alleges facts showing ultra vires
action that were not present in some other cases. For example, emails suggest

       200 272 U.S. at 10 (interpreting Trading with the Enemy Act of October 6, 1917, Pub.
L. No. 65-91, § 12, 40 Stat. 411, 423 (codified as amended at 50 U.S.C. § 4312)).
       201 See UNIF. PROB. CODE § 5-418(a) (“A conservator . . . is a fiduciary and shall observe

the standards of care applicable to a trustee.”); Conservator, BLACK’S LAW DICTIONARY (11th
ed. 2019) (defining “conservator” as “[a] guardian, protector, or preserver”).
       202 12 U.S.C. § 4617(b)(2)(J)(ii); cf. Perry Capital, 864 F.3d at 643 (Brown, J.,

dissenting in part) (stating limited interpretation of best-interests clause).
       203 Morissette, 342 U.S. at 263.
       204 Michael Krimminger & Mark A. Calabria, The Conservatorships of Fannie Mae and

Freddie Mac: Actions Violate HERA and Established Insolvency Principles 42–43 (Cato Inst.,
Working Paper No. 26, 2015).
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that the Agencies designed the Third Agreement to prevent Fannie and
Freddie from recapitalizing. National Economic Council advisor Jim Parrott,
who worked with Treasury in developing the net worth sweep, allegedly wrote:
“[W]e’ve closed off [the] possibility that [Fannie and Freddie] ever[] go
(pretend) private again.” 205 Similarly, when Bloomberg published a comment
that “[w]hat the Treasury Department seems to be doing here, and I think it’s
a really good idea, is to deprive [Fannie and Freddie] of all their capital so that
[they can not go private again],” Parrott emailed the source: “Good comment in
Bloomberg—you are exactly right on substance and intent.” 206 The emails
reinforce that the Third Amendment “deprive[d]” the GSEs of their capital,
keeping them in a permanent state of suspension, which is not authorized by
statutory conservator powers. 207 The pleadings in Jacobs v. Federal Housing
Finance Agency 208 and Perry Capital LLC v. Mnuchin 209 appear to lack similar
allegations. That factual difference distinguishes them.
      But Saxton v. Federal Housing Finance Agency 210 and Roberts v. Federal
Housing Finance Agency 211 had facts similar to the Shareholders’ allegations
here. So we recognize that our decision conflicts with at least some other
circuits. The conflict is whether HERA authorized FHFA to adopt the Third
Amendment. We think that, in interpreting HERA’s conservatorship and

      205 Compl. ¶ 107 (alterations in original).
      206 Id.
      207 Compl. ¶ 107.
      208 908 F.3d 884 (3d Cir. 2018).
      209 864 F.3d 591 (D.C. Cir. 2017).
      210 901 F.3d 954, 957 (8th Cir. 2018); see Amended Complaint ¶ 92, Saxton v. FHFA,

No. 15–CV–47–LRR (N.D. Iowa Feb. 9, 2016), ECF No. 61 (alleging similar email
communications).
      211 889 F.3d 397, 402 (7th Cir. 2018); see Amended Complaint ¶ 106–07, Roberts v.

FHFA, No. 1:16-cv-2107 (N.D. Ill. Apr. 5, 2016), ECF No. 22 (alleging similar email
communications).
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receivership scheme, FHFA’s general powers should not render specific ones
meaningless. This is especially true because, although HERA qualifies
traditional conservatorship, it does not eviscerate it. So traditional principles
of insolvency and FIRREA decisions remain relevant. And they counsel against
a near-limitless view of FHFA’s conservator powers.
       The complaint states a plausible claim that FHFA exceeded its statutory
authority. Judge Haynes’s dissent suggests that the Shareholders could waive
the legal standard for reviewing the grant of a motion to dismiss. But the
Supreme Court explained in Iqbal that “[t]o survive a motion to dismiss, a
complaint must contain sufficient factual matter, accepted as true, to ‘state a
claim to relief that is plausible on its face.’” 212 The standard is generally
applicable, and we see no exception here. When we reverse the grant of a
motion to dismiss, the district court may decide if fact issues require trial or if
summary judgment should be granted. 213 The proper remedy is to reverse the
motion-to-dismiss denial and remand Count I for further proceedings.
                                            VII
       We now turn to Count IV, the Shareholders’ constitutional claim.
Although the Shareholders could theoretically obtain full relief under Count I
alone, they appeal from the dismissal of that count, so the parties have yet to
litigate it to judgment. On the constitutional claim, in contrast, both sides
moved for summary judgment in the district court. So we consider whether the
212556 U.S. at 678 (quoting Twombly, 550 U.S. at 570).
       213 See Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 250 (1986) (holding that trial
court shall grant a motion for summary judgment if there is no genuine issue for trial); 5B
CHARLES ALAN WRIGHT & ARTHUR R. MILLER, FEDERAL PRACTICE AND PROCEDURE § 1349
(3d ed. 2019) (“These seven defenses [in Rule 12(b)(1)–(7)] are permitted to be asserted prior
to service of a responsive pleading because they present preliminary or threshold matters
that normally should be adjudicated early in the action.”).
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Shareholders are entitled to some or all of their requested relief on this record
alone. We first consider Count IV’s justiciability based on standing and the
succession provision. 214
                                            A
      Federal courts have power to decide “Cases” and “Controversies.” 215
“That case-or-controversy requirement is satisfied only where a plaintiff has
standing.” 216 At its “irreducible constitutional minimum,” standing requires
plaintiffs to show they suffered “an injury in fact,” the injury is “fairly
traceable” to the defendant’s actions, and the injury will “likely . . . be redressed
by a favorable decision.” 217 “The party invoking federal jurisdiction bears the
burden of establishing these elements.” 218 Here, the summary-judgment
standard applies to jurisdictional facts. 219
      The Shareholders suffered injury in fact. The required injury to
challenge agency action is minimal: The Supreme Court has “allowed
important interests to be vindicated by plaintiffs with no more at stake in the
outcome of an action than a fraction of a vote, a $5 fine and costs, and a $1.50
poll tax.” 220 The Agencies contend that, by the time of the net worth sweep, the
Shareholders had no rights to dividends and their shares were delisted from

      214  For completeness, we note the Agencies do not argue that the anti-injunction
provision prevents relief on Count IV.
       215 U.S. CONST. art. III, § 2.
       216 Sprint Commc’ns Co., L.P. v. APCC Servs., Inc., 554 U.S. 269, 273 (2008).
       217 Lujan v. Defenders of Wildlife, 504 U.S. 555, 560–61 (1992) (alterations and

internal quotation marks omitted).
       218 Id. at 561.
       219 See id.
       220 United States v. Students Challenging Regulatory Agency Procedures (SCRAP), 412
U.S. 669, 689 n.14 (1973) (citations omitted).
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the New York Stock Exchange. But pumping large profits to Treasury instead
of restoring the GSEs’ capital structure is an injury in fact. 221
       The Shareholders’ injury is traceable to the removal protection. The
Agencies contend that the President’s undisputed control over FHFA’s
counterparty, Treasury, shows that a President-controlled FHFA would have
adopted the net worth sweep. But standing does not require proof that an
officer would have acted differently in the “counterfactual world” where he was
properly authorized. 222 In Free Enterprise Fund, the Supreme Court explained
that “the separation of powers does not depend on the views of individual
Presidents, nor on whether ‘the encroached-upon branch approves the
encroachment.’” 223 And in Bowsher v. Synar, the Court said that “[t]he
separated powers of our Government cannot be permitted to turn on judicial
assessment of whether an officer exercising executive power is” likely to be
fired. 224 The Shareholders observe that FHFA’s status as an “independent”
counterparty could actually have boosted the Third Amendment’s political
salability. Fortunately, under Synar and Free Enterprise Fund, we need not
weigh in on that counterfactual.

       221  See Perry Capital, 864 F.3d at 632 (finding injury in fact because shareholders
alleged that “the Third Amendment, by depriving them of their right to share in the
Companies’ assets when and if they are liquidated, immediately diminished the value of their
shares”).
        222 Free Enter. Fund v. Pub. Co. Accounting Oversight Bd., 561 U.S. 477, 512 n.12

(2010).
        223 Id. at 497 (citations omitted) (quoting New York v. United States, 505 U.S. 144, 182

(1992)).
        224 478 U.S. 714, 730 (1986); see also Landry v. FDIC, 204 F.3d 1125, 1131 (D.C. Cir.

2000) (“There is certainly no rule that a party claiming constitutional error in the vesting of
authority must show a direct causal link between the error and the authority’s adverse
decision . . . . Bowsher v. Synar extended this principle to general separation-of-powers
claims.” (citation omitted)).
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       And the relief sought would redress the Shareholders’ injury. The
Agencies contend that vacating past agency action is improper in a removal
case and in this case particularly. But the form of injunctive or declaratory
relief is a merits question. 225 The Shareholders seek, among other things,
vacatur of the net worth sweep. That would redress their injury.
       The Shareholders have standing.
                                              B
       The succession provision does not bar Count IV because it does not bar
any direct claims. 226 A plaintiff with Article III standing can maintain a direct
claim against government action that violates the separation of powers. 227 In
Bond v. United States the Supreme Court collected numerous separation-of-
powers cases litigated by individuals with an otherwise-justiciable case or
controversy. 228 “If the constitutional structure of our Government that protects
individual liberty is compromised, individuals who suffer otherwise justiciable
injury may object.” 229
       There is a separate reason the succession provision does not bar the
Shareholders’ constitutional claim. “[W]here Congress intends to preclude
judicial review of constitutional claims its intent to do so must be clear.” 230

       225 See Warth v. Seldin, 422 U.S. 490, 500–02 (1975) (presuming merits of complaint
for purposes of standing analysis).
       226 See 12 U.S.C. § 4617(b)(2)(A) (providing that FHFA succeeds to shareholder rights

“with respect to the regulated entity and the assets of the regulated entity”); Roberts, 889
F.3d at 408; Perry Capital, 864 F.3d at 624.
       227 See Free Enter. Fund, 561 U.S. at 487–91 (holding court had jurisdiction over

declaratory judgment action alleging violation of separation of powers).
       228 564 U.S. 211, 223 (2011) (citing Free Enter. Fund, 561 U.S. 477; Clinton v. City of

New York, 524 U.S. 417 (1998); Plaut v. Spendthrift Farm, Inc., 514 U.S. 211 (1995); Synar,
478 U.S. 714 (1986); INS v. Chadha, 462 U.S. 919 (1983); N. Pipeline Constr. Co. v. Marathon
Pipe Line Co., 458 U.S. 50 (1982); Youngstown Sheet & Tube Co. v. Sawyer, 343 U.S. 579
(1952); A.L.A. Schechter Poultry Corp. v. United States, 295 U.S. 495 (1935)).
       229 Id.
       230 Webster v. Doe, 486 U.S. 592, 603 (1988).

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Only a “heightened showing” in the statute may be interpreted to “deny any
judicial forum for a colorable constitutional claim.” 231 Here, the succession
provision does not cross-reference the Administrative Procedure Act’s general
rule that agency action is reviewable. 232 It does not directly address judicial
review at all. This is not the kind of “heightened showing” 233 or “‘clear and
convincing’ evidence” 234 required for Congress to deny review of constitutional
claims.
                                            VIII
        The Shareholders are entitled to judgment on Count IV.
                                              A
        HERA’s for-cause removal protection infringes Article II. It limits the
President’s removal power and does not fit within the recognized exception for
independent agencies. That exception, established in Humphrey’s Executor v.
United States, has applied only to multi-member bodies of experts. 235 A single
agency director lacks the checks inherent in multilateral decision making and
is more difficult for the President to influence. 236 We reinstate Part II B 2 of
the panel opinion, which holds that FHFA’s structure is unconstitutional. 237
That Part explains that the Director’s removal protection, in combination with

        231 Id.
        232 5 U.S.C. § 702.
        233 Webster, 486 U.S. at 603.
        234 Johnson v. Robinson, 415 U.S. 361, 373 (1974) (quoting Abbott Labs., 387 U.S. at

141).
          295 U.S. 602, 628–32 (1935).
        235

          See id. at 624 (stating that the Federal Trade Commission is a “body of experts”).
        236
       237 Collins, 896 F.3d at 659–75. This opinion supersedes the panel opinion in

remaining part. See, e.g., J.T. Gibbons, Inc. v. Crawford Fitting Co., 790 F.2d 1193, 1194 (5th
Cir. 1986) (en banc) (reinstating parts of panel opinion).
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other FHFA features, is inconsistent with Article II and the separation of
powers. It also distinguishes the D.C. Circuit’s PHH Corp. decision. 238
       We disagree with Judge Higginson’s attempt to distinguish this removal
protection from those the Supreme Court has held unconstitutional. He cites
scholarship that HERA’s “for cause” removal provision gives less protection
than statutes limiting removal to “inefficiency, neglect of duty, or malfeasance
in office.” 239 Initially, requiring “cause” for removal is well recognized as an
independent agency’s threshold feature. 240 And in Synar, when the Supreme
Court considered a statute permitting Congress to remove an official for
“inefficiency,” “neglect of duty,” or “malfeasance,” it held this alternative
language is quite broad. 241 True, the removal protection that Free Enterprise
Fund held unconstitutional was exceptionally strict. 242 But the Court held that
the proper amount of second-level removal protection there was none, not a
relaxed amount. 243
       Judge Higginson also points to uncertainty about whether and how a
removal would unfold. But the Court in Synar “reject[ed] [the] argument that
consideration of the effect of a removal provision is not ‘ripe’ until that
provision is actually used.” 244 In Synar this was because Congress’s removal

       238  PHH Corp. v. Consumer Fin. Prot. Bureau, 881 F.3d 75 (D.C. Cir. 2018) (en banc).
       239  Humphrey’s Ex’r, 295 U.S. at 619 (quoting Federal Trade Commission Act, 15
U.S.C. § 41).
        240 See Free Enter. Fund, 561 U.S. at 483 (“Congress can, under certain circumstances,

create independent agencies run by principal officers appointed by the President, whom the
President may not remove at will but only for good cause.”).
        241 Synar, 478 U.S. at 729.
        242 561 U.S. at 503 (“A Board member cannot be removed except for willful violations

of the Act, Board rules, or the securities laws; willful abuse of authority; or unreasonable
failure to enforce compliance . . . .”).
        243 Id. at 509 (“Concluding that the removal restrictions are invalid leaves the Board

removable by the Commission at will, and leaves the President separated from Board
members by only a single level of good-cause tenure.”).
        244 478 U.S. at 727 n.5.

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authority gave it effective control over the Comptroller in the status quo. 245
Although here the problem is an absence of control, not its misplacement, the
same “ripeness” principle applies.
                                              B
       The Agencies contend the Shareholders are not entitled to relief for other
reasons. They first say that the FHFA acting Director who adopted the Third
Amendment was, unlike a normally appointed Director, not insulated from
removal. Under 12 U.S.C. § 4512(b)(2), the Director serves for five years
“unless removed before the end of such term for cause by the President.” That
provision does not explicitly address acting Directors. Under 12 U.S.C.
§ 4512(f), the President chooses any acting Director from among the Deputy
Directors. And that provision does not explicitly address removal.
       But HERA unequivocally says what kind of agency it creates: “There is
established the Federal Housing Finance Agency, which shall be an
independent agency of the Federal Government.” 246 In history and Supreme
Court precedent, Presidential removal is the “sharp line of cleavage” between
independent agencies and executive ones. 247 So we do not read the procedural
guidance for choosing an acting Director to override the removal restriction,
much less FHFA’s central character. Instead, we read these provisions
together. 248 The removal restriction applied to the acting Director.
       Judge Costa’s contrary authorities are distinguishable. In Swan v.
Clinton, the D.C. Circuit held that the President could remove a National

       245  Id.
       246  12 U.S.C. § 4511(a).
        247 Wiener v. United States, 357 U.S. 349, 353 (1958).
        248 See King, 502 U.S. at 221 (applying “the cardinal rule that a statute is to be read

as a whole, since the meaning of statutory language, plain or not, depends on context”
(citation omitted)).
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Credit Union Administration Board member serving in a “holdover”
capacity. 249 But here the FHFA acting Director was not a holdover serving past
his term’s end. So at least one of Swan’s concerns, that “the absence of any
term limit in the NCUA holdover clause enables holdover members to continue
in office indefinitely,” is misplaced. 250 And, while HERA’s general removal
protection is unequivocal, 251 in Swan “[t]he NCUA statute d[id] not expressly
prevent the President from removing NCUA Board members except for good
cause.” 252 The court simply assumed the statute protected Board Members
during their normal terms, then held any such protection did not extend to
holdover Members. 253 In short, Swan interprets a different statute and has
limited value for generalizing a rule.
       Judge Costa also cites the Office of Legal Counsel opinion Designating
an Acting Director of the Bureau of Consumer Financial Protection. 254 That
opinion is about filling a vacancy under the CFPB’s enabling statute and the
Federal Vacancies Reform Act. Its reasoning includes a general rule that
statutory removal protection does not extend to anyone temporarily
performing an office. 255 But it relies principally on Swan for that proposition,
and it doesn’t explain why the same rule cuts across different enabling

       249  100 F.3d 973 (1996).
       250  Id. at 987.
        251 12 U.S.C. § 4512 (“The Director shall be appointed for a term of 5 years, unless

removed before the end of such term for cause by the President.”).
        252 100 F.3d at 981.
        253 Id. at 983 (“[W]e will assume arguendo that Board members have removal

protection during their appointed terms and focus instead on determining whether, even if
that is so, holdover members are similarly protected.”).
        254 41 Op. O.L.C. ___, 2017 WL 6419154 (Nov. 25, 2017) (interpreting 12 U.S.C. § 5491

and 5 U.S.C §§ 3345-3349d).
        255 Id. at *7.

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statutes. As a matter of statutory interpretation, HERA’s removal restriction
applied to the acting Director here.
                                             C
       Treasury also contends that FHFA in its conservator capacity does not
exercise executive power, so violating the separation of powers was harmless
here. Treasury cites Beszborn, where we held that the RTC as receiver
exercised nongovernmental power in suing on behalf of the institution in
receivership. 256   “[T]he    suit    was    purely     an   action    between      private
individuals.” 257 So later criminal prosecution of the same defendants did not
violate the Double Jeopardy Clause because the first “punishment,” the civil
suit, was not sought by a sovereign. 258 Treasury also observes that private
parties are sometimes appointed as receivers. 259
       Whether an agency exercises government power as conservator or
receiver “depends on the context of the claim.” 260 In Slattery, the Federal
Circuit held that the FDIC as receiver acted for the United States when it
retained a surplus from the seized bank’s assets. 261 “[T]he claims [we]re
asserted against the government, seeking return of the monetary surplus
obtained for the seized bank.” 262 So the bank’s former shareholders could
maintain their claims against the United States. 263

       256 United States v. Beszborn, 21 F.3d 62, 68 (5th Cir. 1994).
       257 Id.
       258 Id.
       259 See 12 U.S.C. § 191 (authorizing Comptroller of the Currency to appoint receiver);

12 C.F.R. § 51.2 (“The Comptroller . . . may appoint any person, including the OCC or another
government agency, as receiver for an uninsured bank.”).
       260 Slattery v. United States, 583 F.3d 800, 827 (Fed. Cir. 2009).
       261 Id. at 828.
       262 Id. at 827.
       263 Id. at 827–28.

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       The Third Amendment has more in common with Slattery than with
Beszborn, showing that it invoked executive power. In Beszborn, we took care
to say the receiver’s action on the bank’s behalf benefited “all stockholders and
creditors of the bank” rather than “the United States Treasury.” 264 The Third
Amendment reversed this precisely. It transferred the wards’ assets to the
government, similar to retaining the liquidation surplus in Slattery. 265 FHFA
is a federal agency, empowered by a federal statute, enriching the federal
government. It adopted the Third Amendment with federal governmental
power. And that power was executive in nature. The Agencies do not contend,
nor could they, that the Third Amendment was quasi-legislative or quasi-
judicial. 266
       Treasury’s remaining arguments do not budge this point. It cites 12
U.S.C. § 191 and 12 C.F.R. § 51.2 as evidence that private parties can be
receivers. But every conservator or receiver relies on some public authority,
whether court or agency. 267 Even in Treasury’s example, “[t]he receiver
performs its duties under the direction of the Comptroller.” 268 In this case,
Congress empowered FHFA as a federal agency. 269 Absent that authority there

       264 21 F.3d at 68.
       265 See 538 F.3d at 827–28.
       266 Cf. First Fed. Sav. Bank & Tr. v. Ryan, 927 F.2d 1345, 1359 (6th Cir. 1991) (“[T]he

appointment of a conservator or receiver is not a ‘judicial power’ . . . . We believe that the
power given to the Director to appoint a conservator or receiver is an executive power.”).
       267 E.g. Booth v. Clark, 58 U.S. 322, 331 (1854) (“The receiver is but the creature of the

court; he has no powers except such as are conferred upon him by the order of his
appointment and the course and practice of the court . . . .”); see 28 U.S.C. § 959 (providing
that actions against court-appointed receivers are “subject to the general equity power of such
court so far as the same may be necessary to the ends of justice”); FED. R. CIV. P. 66 (“[T]he
practice in administering an estate by a receiver . . . must accord with the historical practice
in federal courts or with a local rule.”).
       268 12 C.F.R. § 51.2(a).
       269 12 U.S.C. § 4511(a) (“There is established the Federal Housing Finance Agency,

which shall be an independent agency of the Federal Government.”).
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would be no conservatorship and no Third Amendment. And every federal
agency must function within the federal Constitution’s checks and balances.
As then-Judge Kavanaugh explained in his PHH Corp. dissent, a
constitutional agency structure serves “to protect liberty and prevent arbitrary
decisionmaking by a single unaccountable Director.” 270
       Finally, Treasury’s attempt to distinguish the Third Amendment from
governmental power is not, in any event, a standing argument. In the
Appointments Clause case Freytag v. Commissioner, the Supreme Court held
that whether the official acted as an Officer of the United States in the
particular decision challenged was “beside the point” for standing purposes. 271
The Court rejected the Commissioner’s argument that the taxpayers lacked
standing to complain about the special trial judge’s role in other cases. 272 If by
statute he performed at least some duties of an Officer of the United States,
his appointment must accord with Article II. 273 This case is analogous. 274
                                      *      *      *
       The Constitution bounds Congress’s power to create agencies, draw their
structure, and grant them authority. Agencies with removal-protected
principal officers were a unique, but recognized, blend of legislative, executive,
and judicial powers long before the FHFA. Their unique position has also been
relatively static, until recently. The removal-protected FHFA Director is a new

       270 881 F.3d at 186 (Kavanaugh, J., dissenting).
       271 501 U.S. 868, 882 (1991).
       272 Id.
       273 Id.; see also Dep’t of Transp. v. Ass’n of Am. R.Rs., 135 S. Ct. 1225, 1232 (2015)

(holding Amtrak was a government entity in part because “rather than advancing its own
private economic interests, Amtrak is required to pursue numerous, additional goals defined
by statute”).
       274 See Free Enter. Fund, 561 U.S. at 497–98 (holding separation of powers requires

Presidential oversight of the executive power).
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innovation and falls outside the lines that Humphrey’s Executor recognized.
Granting both removal protection and full agency leadership to a single FHFA
Director stretches the independent-agency pattern beyond what the
Constitution allows.

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HAYNES, Circuit Judge, joined by STEWART, Chief Judge, and DENNIS,
OWEN, SOUTHWICK, GRAVES, HIGGINSON, COSTA, and DUNCAN,
Circuit Judges:
      Some of us 1 agree with the conclusion reached in Section VIII.A–C of the
majority en banc opinion that the FHFA is unconstitutionally structured, and
some of us 2 conclude otherwise, but we all agree that, given the holding of the
majority of the en banc court reversing the district court on this point and
finding the FHFA to be unconstitutionally structured, it is necessary to reach
the question of what remedy is appropriate for the structure found to be
unconstitutional by the majority. We now turn to the remedy question.
      When addressing the partial unconstitutionality of a statute such as this
one, we seek to honor Congress’s intent while fixing the problematic aspects of
the statute.       Thus, in this case, the appropriate—and most judicially
conservative—remedy is to sever the “for cause” restriction on removal of the
FHFA director from the statute. See 12 U.S.C. § 4512(b)(2).
      The remedial analysis here is informed by that in Free Enterprise Fund.
We start from the “normal rule that partial, rather than facial, invalidation is
the required course.” Brockett v. Spokane Arcades, Inc., 472 U.S. 491, 504
(1985); Free Enter. Fund v. Pub. Co. Accounting Oversight Bd., 561 U.S. 477,
508 (2010) (“‘Generally speaking, when confronting a constitutional flaw in a
statute, we try to limit the solution to the problem,’ severing any ‘problematic
portions while leaving the remainder intact.’” (quoting Ayotte v. Planned
Parenthood of N. New Eng., 546 U.S. 320, 328–29 (2006))). Just as in Free

      1  Judges Owen, Southwick, Haynes, Graves and Duncan agree that the FHFA is
unconstitutionally structured. Judges Southwick, Haynes, and Graves concur in that
conclusion only.
      2   Chief Judge Stewart and Judges Dennis, Higginson, and Costa.
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Enterprise Fund, if we declare the “for cause” removal restriction
unconstitutional, then the executive officer will immediately be subject to
sufficient Presidential oversight. 561 U.S. at 509. Finally, nothing in the
statutory scheme suggests that Congress would prefer a complete unwind of
actions taken by the FHFA to an FHFA director removable at will. Thus,
severance of the “for cause” restriction remedies the Shareholders’ injury as
found by the majority of this court of being overseen by an unconstitutionally
structured agency.
      Here it is also “true that the language providing for good-cause removal
is only one of a number of statutory provisions that, working together, produce
a constitutional violation.” Id. But, as the Supreme Court recognized, we
should not roam further to invalidate other provisions or modify the statute’s
requirements. The other options would be far more invasive and “editorial.”
Id. at 510. Instead, we pursue a path that respects the legislative decisions
made by the Congress that passed HERA and the legislative power of the
current Congress to amend the statute without unwarranted disruption.
      The Shareholders ask that we also invalidate the Net Worth Sweep,
claiming the remedy must resolve the injury. Assuming arguendo that an
injury in the form of an unconstitutionally structured agency exists, 3 the
Shareholders may not pick and choose among remedies based on their
preferences. The Shareholders’ complaint requested that a court invalidate
only the Net Worth Sweep. They never requested a declaratory judgment
about the PSPAs as a whole or even the Third Amendment. That is because
the rest of the deal is a pretty good one for them: who would not want a
virtually unlimited line of credit from the Treasury? Yet the Shareholders’

      3   As noted above, there are differing views surrounding the constitutionality issue.
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constitutional theory is that everything the FHFA has done since its inception
is void because it was an unconstitutionally structured agency. 4 They never
explain why if all acts were void (or voidable), they are entitled to pick and
choose a single provision to invalidate. That is inconsistent with the usual
course of remedies. See Fed. Ins. Co. v. Singing River Health Sys., 850 F.3d
187, 198 n.5 (5th Cir. 2017) (noting that accepting the premise that a party to
an invalid contract could pick which parts to enforce would lead to an “absurd
result”); RESTATEMENT (SECOND) OF CONTRACTS § 383 (AM. LAW. INST. 1981)
(“A party who has the power of avoidance must ordinarily avoid the entire
contract, including any part that has already been performed. He cannot
disaffirm part of the contract that is particularly disadvantageous to himself
while affirming a more advantageous part . . . .”).
       Generally, there are at least two classes of cases where the appropriate
remedy is to invalidate an action taken by an unconstitutional agency or
officer. First, the Supreme Court has invalidated actions by actors who were
granted power inconsistent with their role in the constitutional program. For
example, the Shareholders’ marquee case for their theory is Bowsher v. Synar,
478 U.S. 714 (1986).        There, Congress delegated executive authority to a
congressional officer. Id. at 732–34. But “Congress [could not] grant to an
officer under its control what it [did] not possess.” Id. at 726. The Supreme
Court declared unconstitutional the statutory power that impermissibly
empowered the congressional officer to exercise executive authority. Id. at

       4They attempt to temper that theory by arguing that legal challenges might still not
succeed due to standing, statutes of limitations, and potential ratification of past actions.
But their theory is nonetheless that everything the FHFA has done is void.
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734–36. 5 Because the officer never should have had the authority in the first
place, courts would naturally invalidate exercises of the authority. Id.; cf.
Nguyen v. United States, 539 U.S. 69, 71 (2003) (vacating and remanding a
case where an officer appointed under Article IV exercised Article III judicial
authority). The Supreme Court has also invalidated exercises of authority that
steal constitutionally specified power from other branches. See Clinton, 524
U.S. 417; INS v. Chadha, 462 U.S. 919 (1983).
      Second, the Court has invalidated actions taken by individuals who were
not properly appointed under the Constitution.              It has thus vacated and
remanded adjudications by officers who were not appointed by the appropriate
official, see Lucia v. SEC, 138 S. Ct. 2044, 2055 (2018), or who skipped Senate
confirmation through misuse of the Recess Appointments Clause, see NLRB v.
Noel Canning, 573 U.S. 513 (2014).
      A common thread runs through these two categories. In each, officers
were vested with authority that was never properly theirs to exercise. Such
separation-of-powers violations are, as the D.C. Circuit put it, “void ab initio.”
Noel Canning v. NLRB, 705 F.3d 490, 493 (D.C. Cir. 2013), aff’d but criticized,
573 U.S. 513.
      Restrictions on removal are different. In such cases the conclusion is
that the officers are duly appointed by the appropriate officials and exercise
authority that is properly theirs.        The problem identified by the majority
decision in this case is that, once appointed, they are too distant from
presidential oversight to satisfy the Constitution’s requirements.

      5  The Court in Bowsher determined that the “issue of remedy” for the separation-of-
powers violation at issue was “a thicket we need not enter,” because Congress had provided
“fallback” provisions in the statute in case it was invalidated. Id. at 734–35.
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       Perhaps in some instances such an officer’s actions should be
invalidated. The theory would be that a new President would want to remove
the incumbent officer to instill his own selection, or maybe that an independent
officer would act differently than if that officer were removable at will. We
have found no cases from either our court or the Supreme Court accepting that
theory.
       But even if that theory is right, it does not apply here for two reasons.
First, the action at issue is the adoption of the Net Worth Sweep, and the
President had adequate oversight of that action. The entire PSPAs, including
the Third Amendment’s Net Worth Sweep, were created between the FHFA
and Treasury. During the process, the Treasury was overseen by the Secretary
of the Treasury, who was subject to at will removal by the President. The
President, thus, had plenary authority to stop the adoption of the Net Worth
Sweep. This is thus a unique situation where we need not speculate about
whether appropriate presidential oversight would have stopped the Net Worth
Sweep. We know that the President, acting through the Secretary of the
Treasury, could have stopped it but did not. 6
       Second, we can take judicial notice of this reality: subsequent Presidents
have picked their own FHFA directors, allaying concerns that the removal
restriction prevented them from installing someone who would carry out their
policy vision. After the adoption of the Net Worth Sweep, President Obama
selected a Director who was confirmed by the Senate. Once confirmed, that

       6 We do not hold that plaintiffs asserting a separation-of-powers claim bear the burden
of proving a different outcome absent a removal restriction. See Free Enter. Fund, 561 U.S.
at 512 n.12. We hold only that plaintiffs may not sue to invalidate an agency action due to
lack of presidential oversight when their allegations show that the President had oversight
of the action.
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director authorized filings in this court that supported and defended the Net
Worth Sweep. He never questioned its propriety. President Trump later
selected an acting Director under the Vacancies Reform Act.          He never
questioned the propriety of the Net Worth Sweep and reaffirmed the previous
administration’s position. President Trump has since selected a new director.
He has not filed anything in this court or made any judicially noticeable
statement opposing the Net Worth Sweep. The Net Worth Sweep has thus
transcended political affiliations and traversed presidential administrations—
even when an issue like the constitutionality of the structure of the FHFA has
divided different directors.     Were these Presidents concerned about
invalidating the Net Worth Sweep, they could have picked different Directors
who would carry out that vision, either in action or in litigation.       These
subsequent picks’ affirmation of the Net Worth Sweep demonstrates without
question that invalidating the Net Worth Sweep would actually erode
executive authority rather than reaffirm it. See Lucia, 138 S. Ct. at 2055.
      Our decision not to invalidate the Net Worth Sweep is thus grounded in
our respect for the Constitution and our co-equal branches of government.
Undoing the Net Worth Sweep, as suggested by the dissenting opinion, would
wipe out an action approved or ratified by two different Presidents’ directors
under the guise of respecting the presidency; how does that make sense? Here,
the Constitution commits executive authority to the President. The President
had full oversight of the adoption of the Net Worth Sweep, and each President
since has appointed FHFA Directors who have affirmed it. We should not
invalidate those Presidents’ executive actions by invoking their need to
exercise executive authority.
      One final point: any remedy that invalidates the Net Worth Sweep
without a judgment that fixes the constitutional problems would be
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particularly perverse. The FHFA could not ratify any previous actions or even
continue operating because it would still suffer the same separation-of-powers
defects we have identified here—just without an explicit declaration fixing the
issue. We would invalidate an entire agency without any precedent directing
us to do so. Similarly, there is no virtue in declaring the agency action unlawful
then punting the form that judgment should take back to the district court.
The only judgment the Shareholders are entitled to is the one the Supreme
Court has given in similar removal-restriction cases, which is a declaration
removing the “for cause” provision found unconstitutional by a majority of this
court. Sending the case back for further litigation would cast one of the most
financially consequential agencies into chaos. It would also further muddy our
precedent on the appropriate remedy in removal-restriction cases.
      In summary, the Shareholders’ ongoing injury, if indeed there is one, 7 is
remedied by a declaration that the “for cause” restriction is declared removed.
We go no further. We will not let the Shareholders pick and choose parts of
the PSPAs to invalidate when the President had adequate oversight over their
adoption and particularly when two different presidents have selected agency
heads who have supported the Net Worth Sweep. The appropriate remedy is
the one that fixes the Shareholders’ purported injury. That is exactly what our
declaratory judgment does. Consequently, we decline to invalidate the Net
Worth Sweep or PSPAs. 8 Instead, we conclude, given that the majority of the
court has found the FHFA unconstitutionally structured, that the appropriate
remedy for that finding is to declare the “for cause” provision severed.

      7   See n.3 supra.
      8 Because we reject the Shareholders’ request to unwind the Net Worth Sweep, we do
not in this section address whether § 4617(f) would bar such relief if it were otherwise
necessary.
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                                 No. 17-20364
STUART KYLE DUNCAN, Circuit Judge, joined by OWEN, Circuit Judge,
concurring:

      While I join all of Judge Willett’s superb majority opinion, I do not join
his separate opinion that concludes the proper remedy for the separation-of-
powers violation here is to vacate the Third Amendment. To the contrary, the
proper remedy—as Judge Haynes cogently explains in her separate majority
opinion—is to sever the for-cause removal provision from the challenged
statute. See Free Enter. Fund v. Pub. Co. Accounting Oversight Bd., 561 U.S.
477, 508 (2010) (“PCAOB”) (“‘Generally speaking, when confronting a
constitutional flaw in a statute, we try to limit the solution to the problem,’
severing any ‘problematic portions while leaving the remainder intact.’”)
(quoting Ayotte v. Planned Parenthood of N. New Eng., 546 U.S. 320, 328–29
(2006)). I write separately to explain why I think the Supreme Court’s
precedents compel that narrower remedy.
      To justify vacating the Third Amendment, Judge Willett asserts that
“the action of an unconstitutionally-insulated officer . . . must be set aside.”
Willett Dissent at 1. I can find no support for that categorical proposition.
Judge Willett relies principally on Bowsher v. Synar, 478 U.S. 714 (1986), but
Bowsher is off-point. Bowsher involved a challenge—not to an executive-branch
official “insulated” from presidential oversight—but to the Comptroller
General, essentially a legislative officer, removable by Congress, who was
purporting to exercise executive power. See 478 U.S. at 728 (noting
Comptroller General was removable by joint resolution “at any time” so that
the officer “should be brought under the sole control of Congress”) (quotes
omitted); id. at 730 (noting “Congress has consistently viewed the Comptroller
General as an officer of the Legislative Branch”). This Article I creature,
Bowsher unsurprisingly told us, “may not be entrusted with executive powers.”
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Id. at 732. And, in any event, Bowsher concluded that the “issue of remedy” for
the separation-of-powers violation was “a thicket we need not enter,” because
Congress had provided a “fallback” provision should the act be invalidated. Id.
at 734, 735; see also id. at 718–19 (describing “fallback” process). Thus, I do not
read Bowsher as providing much, if any, guidance as to the remedy for an
unconstitutionally insulated agency.
      Putting Bowsher aside, more recent Supreme Court authority confirms
my view that severance is the proper remedy for the separation-of-powers
violation before us. In PCAOB, the petitioners argued that the agency’s
“freedom from Presidential oversight and control rendered it and all power and
authority exercised by it in violation of the Constitution.” 561 U.S. at 508
(quotes omitted). But the Court “reject[ed] such a broad holding” and deployed
the narrower remedy of severing the unconstitutional culprit—there, the
second layer of for-cause removal. Id. at 509–10. Moreover, for remedial
purposes PCAOB contrasted an unconstitutionally insulated officer with an
unconstitutionally appointed officer: The Court pointedly “[p]ut[ ] to one side
petitioners’ Appointments Clause challenges,” id. at 508, which it addressed
(and rejected) in another part of its opinion. Id. at 510–13. When the Court did
later find an Appointments Clause violation in Lucia, its remedy was to vacate
the prior actions of the invalidly appointed officers. See Lucia v. S.E.C., 138 S.
Ct. 2044, 2055 (2018) (concluding “the ‘appropriate’ remedy for an adjudication
tainted with an appointments violation is a new ‘hearing before a properly
appointed’ official”) (quoting Ryder v. United States, 515 U.S. 177, 183 (1995)).
That is the kind of backward-looking remedy—vacating the Third
Amendment—Judge Willett would apply here, but the Supreme Court’s cases
do not support applying it to fix an unconstitutionally insulated agency head.

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      Instead, as PCAOB indicates, the cure for that malady is narrower.
Stripping away the FHFA Director’s unconstitutional insulation is the
“minimalist remedy” that “maintain[s] presidential control while leaving in
place the regulatory functions of an agency.” Neomi Rao, Removal: Necessary
and Sufficient for Presidential Control, 65 Ala. L. Rev. 1205, 1261 (2014)
(discussing PCAOB). Consequently, to remedy the separation-of-powers
violation presented here, I would sever the for-cause removal provision,
rendering the agency properly responsive to the President’s “general
administrative control of those executing the laws.” Myers v. United States,
272 U.S. 52, 164 (1926).

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                                        No. 17-20364
ANDREW S. OLDHAM and JAMES C. HO, Circuit Judges, concurring in part
and dissenting in part:

       We join Judge Willett’s opinion. 1 We write separately in response to the
suggestion that there is no constitutional problem because this case does not
involve the Public Company Accounting Oversight Board (“PCAOB”), the
Comptroller General, or the Postmaster General. Post, at 97–107 (Higginson,
J.). Our learned colleague suggests that: (I) the Constitution’s original public
meaning offers little guidance on the scope of the removal power; (II) the
Supreme Court’s precedents don’t help the shareholders here; and (III) even if
they did, we have the “judicial” power to rewrite Congress’s law. With greatest
respect, that’s all wrong.
                                               I.
       The Constitution vests in the President the power to remove executive
officers. Any intimation to the contrary must be rejected.
                                               A.
       Traditionally, the executive power allowed the head of state to appoint
and remove his ministers, as well as his judges, at will.                    See 1 WILLIAM
BLACKSTONE,           COMMENTARIES             *260       [hereinafter        BLACKSTONE’S
COMMENTARIES] (describing English efforts to “remove all judicial power out of
the hands of the king’s privy council”); id. at *261–63 (explaining that “the king
is . . . the fountain of honour, of office, and of privilege,” that the king holds

       1 We have lingering doubts about the meaning of the Housing and Economic Recovery
Act’s so-called “succession provision,” 12 U.S.C. § 4617(b)(2)(A)(i). But we agree with Judge
Willett’s opinion for the Court that, whatever the meaning of that provision, it’s insufficiently
clear to displace the presumption of reviewability under the Administrative Procedure Act.
See Bowen v. Mich. Acad. of Family Physicians, 476 U.S. 667, 670 (1986); Abbott Labs. v.
Gardner, 387 U.S. 136, 140 (1967), abrogated by statute in other part as recognized in
Califano v. Sanders, 430 U.S. 99, 105 (1977).
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“the prerogative of erecting and disposing of offices,” and that “the king . . . is
the best and only judge, in what capacities, with what privileges, and under
what distinctions, his people are the best qualified to serve, and to act under
him”); 2 THOMAS RUTHERFORTH, INSTITUTES OF NATURAL LAW 60 (1756)
(noting that officers “are the agents of the executive power; and consequently
the appointment of them belongs to this power”).                 The American colonies
chafed at the corrupting effects of this unbridled power.                        See, e.g.,
DECLARATION OF INDEPENDENCE para. 11 (1776) (“[The King] has made Judges
dependent on his Will alone, for the tenure of their offices, and the amount and
payment of their salaries”); DECLARATION OF RIGHTS AND GRIEVANCES para. 4
(1774)    (condemning      as    “impolitic,     unjust,   and     cruel,   as   well   as
unconstitutional” the Massachusetts Government Act, 14 Geo. 3 c. 45, which
empowered the King’s representative to appoint and remove—at will—the
Province’s officers and judges).
      In response, some early State constitutions limited the executive power
to appoint judges and officers. See, e.g., S.C. CONST. of Mar. 26, 1776 art. XXII
(assigning to the legislature the power to choose “the commissioners of the
treasury, the secretary of the colony, register of mesne conveyances, attorney-
general, and powder receiver”); VA. CONST. of 1776 paras. 35, 36 (requiring
legislative approval for the governor’s judicial appointments). Others limited
the removal power, and granted civil and judicial officers freedom from
executive interference “during good behavior.” 2                 N.Y. CONST. of 1777,
art. XXIV. See also MD. CONST. of 1776 art. XL (granting “good behaviour”

      2  This phrase derives from the English Act of Settlement, which stripped the Crown
of the power to remove judges at will, and guaranteed judicial commissions “quamdiu se bene
gesserint” (‘during good behavior’). Act of Settlement, 1701, 12 & 13 Will. 3 c. 2 § 3.
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tenure to the attorney-general); id. art. XLVIII (permitting the governor to
remove only those “civil officer[s] who ha[ve] not a commission during good
behavior”); MASS. CONST. of 1780 pt. 2, ch. III, art. 1 (providing that “[a]ll
judicial officers . . . shall hold their offices during good behavior,” but allowing
the governor to remove them “with consent of the council . . . upon address of
both houses of the legislature”).
       When the Framers drafted the federal Constitution, they had the same
options before them. Ultimately, they chose to give Article III judges “good
Behaviour” protection from presidential interference, see U.S. CONST. art. III,
§ 1, cl. 2, and mandated Senate approval for appointments of superior officers,
see U.S. CONST. art. II, § 2, cl. 2. The Constitution therefore took away the
traditional executive power to remove judges and to appoint officers
unilaterally. But the Framers chose not to grant “good behavior” tenure to
officers, as some States had done. By that omission, the Framers kept for the
President the executive’s traditional at-will removal power over superior
officers. 3 See Steven Calabresi & Saikrishna Prakash, The President’s Power
to Execute the Laws, 104 YALE L.J. 541, 597 (1994).

       3  Congress may also remove “civil officers” for “Treason, Bribery, or other High Crimes
and Misdemeanors” through impeachment and conviction. U.S. CONST. art. II, § 4. But this
provision was inserted to limit Congress’s impeachment power, rather than to abrogate the
executive’s removal power: In Britain at the time, “all the king’s subjects, whether peers or
commoners, [we]re impeachable in parliament.” JOSEPH STORY, COMMENTARIES ON THE
CONSTITUTION § 283 (1833). Peers could be impeached “for any crime.” 4 BLACKSTONE’S
COMMENTARIES, supra, at *257. And some State constitutions permitted impeachment for
“maladministration” in addition to misconduct. See, e.g., MASS. CONST. of 1780 pt. 2, ch. I,
§ 2, art. VIII. The impeachment power in Article II therefore represents a narrowing of the
legislature’s traditional ability to interfere with executive affairs.
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                                       B.
      What the text and structure of the Constitution provide, the historical
practice confirms. Start with the very first Congress.
      On March 4, 1789, Congress convened in New York City. 1 ANNALS OF
CONG. 15, 95 (1789). One of its first orders of business was to propagate the
Executive Branch. Representative James Madison moved “that there shall be
established an Executive Department, to be denominated the Department of
Foreign Affairs, at the head of which there shall be an officer, to be called the
Secretary to the Department of Foreign Affairs, who shall be appointed by the
President, by and with the advice and consent of the Senate; and to be
removable by the President.” Id. at 370–71.
      The motion sparked a debate “centered around whether the Congress
‘should recognize and declare the power of the President under the
Constitution to remove the Secretary of Foreign Affairs without the advice and
consent of the Senate.’ ” See Bowsher v. Synar, 478 U.S. 714, 723 (1986)
(quoting Myers v. United States, 272 U.S. 52, 114 (1926)). And it culminated
in the famed “Decision of 1789” in which a majority of both legislative
chambers agreed that “the Constitution’s grant of executive power authorized
the President to remove executive officers.” Saikrishna Prakash, New Light
on the Decision of 1789, 91 CORNELL L. REV. 1021, 1023 (2006) [hereinafter
Prakash, Decision of 1789]; see also 1 ANNALS OF CONG. at 399.
      Up until the Civil War, there was virtually no doubt that the Decision of
1789 was correct. Presidents Washington, Adams, and Jefferson relied on that
power to remove over 170 officers. Prakash, Decision of 1789, supra, at 1066.
In their respective Commentaries in the 1820s and 1830s, Chancellor James
Kent and Justice Joseph Story considered the matter settled and beyond
alteration. See Myers, 272 U.S. at 148–50.
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      Congress briefly flirted with revisiting the issue after the Civil War. In
1867, Congress passed the Tenure of Office Act (over the President’s veto),
reversed its longstanding position, and claimed for itself the power to condition
removal on the advice and consent of the Senate. See Tenure of Office Act, ch.
154, 14 Stat. 430 (1867). But even then, it was questionable whether Congress
considered the Act to be constitutional. See Free Enterprise Fund, 561 U.S. at
494 n.3 (noting that the law “was widely regarded as unconstitutional and void
(as it is universally regarded today)”). Its passage was undoubtedly motivated
by animus towards President Johnson.             See GROVER CLEVELAND, THE
INDEPENDENCE OF THE EXECUTIVE 29 (1913).           Less than two months into
President Grant’s tenure, it was repealed in part to permit the President to
suspend officers “until the end of the next session of the Senate.” 16 Stat. 6, 7.
It was repealed in its entirety in 1887. See 24 Stat. 500.
      The history of the use of the removal power—and congressional
acquiescence in that use—matters. In interpreting the Constitution, “we put
significant weight upon historical practice,” particularly where the issues
“concern the allocation of power between two elected branches of Government.”
NLRB v. Noel Canning, 573 U.S. 513, 524 (2014). Indeed, “a practice of at least
twenty years duration on the part of the executive department, acquiesced in
by the legislative department, is entitled to great regard in determining the
true construction of a constitutional provision the phraseology of which is in
any respect of doubtful meaning.” The Pocket Veto Case, 279 U.S. 655, 690
(1929) (quotation omitted).    We should therefore be especially hesitant to
interfere with an executive power that was exercised, unfettered by Congress,
for over 75 years.

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                                              II.
       The    Supreme       Court     first   squarely      addressed      the    President’s
constitutionally vested removal power in 1926. 4 But once proved not enough.
In the decades since, the Court has offered varying takes on the limits of that
power—all apparently still good precedent. See Free Enterprise Fund v. Public
Company Accounting Oversight Board, 561 U.S. 477, 483 (2010) (“The parties
do not ask us to reexamine any of these precedents, and we do not do so.”). Yet
none of those precedents supports the novel limits on removal found in the
Housing and Economic Recovery Act (“HERA”). Indeed, the lack of historical
precedent to support HERA may be “the most telling indication of the severe
constitutional problem” with it. Id. at 505 (quoting Free Enterprise Fund v.
Public Company Accounting Oversight Board, 537 F.3d 667, 699 (D.C. Cir.
2008) (Kavanaugh, J., dissenting)).
                                              A.
       Let’s start at the beginning. In Myers, the Court addressed “whether
under the Constitution the President has the exclusive power of removing
executive officers of the United States whom he has appointed by and with the
advice and consent of the Senate.” 272 U.S. at 60. The Court noted “[t]here is

       4 As to the pre-Myers corpus, Judge Higginson rightly notes that United States v.
Perkins, 116 U.S. 483 (1886), and United States v. Shurtleff, 189 U.S. 311 (1903), are not
especially salient for present purposes. Post, at 98 n.2 (Higginson, J.). That said, the Court’s
opinion in In re Hennen, 38 U.S. 230 (1839), offers insights into the Court’s view of the
Decision of 1789. Reflecting on the President’s power to remove officers whom he appointed,
the Court said “it was very early adopted, as the practical construction of the Constitution,
that this power was vested in the President alone. And such would appear to have been the
legislative construction of the Constitution.” Id. at 259. And, by 1839, it had become “the
settled and well understood construction of the Constitution, that the power of removal was
vested in the President alone . . . although the appointment of the officer was by the President
and Senate.” Ibid.
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no express provision respecting removals in the Constitution.” Id. at 109. But
it did not stop there.
      Instead, the Court considered the original meaning of the “executive
power,” the Decision of 1789, and the President’s duties under the Take Care
Clause. As to the original meaning of the “executive power,” the Court noted
that both the Congress constituted under the Articles of Confederation and the
British crown exercised executive power, and that as a part of that power, both
the Congress and the crown could appoint and remove executive officers. Id.
at 110, 118. The Court’s extensive discussion of the Decision of 1789, see id. at
111–63, underscored the importance of that Congress’s constitutional
deliberation and the ensuing “clear affirmative recognition of [the Decision of
1789] by each branch of the government,” id. at 163. And Chief Justice Taft
considered the duties of his former post. Speaking from experience, 5 the Chief
Justice explained that “when the grant of the executive power is enforced by
the express mandate to take care that the laws be faithfully executed, it
emphasizes the necessity for including within the executive power as conferred
the exclusive power of removal.” Id. at 122; see Jack Goldsmith & John F.
Manning, The Protean Take Care Clause, 164 U. PA. L. REV. 1835, 1836 (2016)
(“Chief Justice Taft invoked [the Take Care Clause] to hammer home the
implication that a President charged with exercising all of the executive power
must have the means to control subordinates through whom he or she would
necessarily act[.]”). On this point, text, history, and structure all aligned:

      5 Notably, when serving as President, Taft fired two members of the Board of General
Appraisers. According to Professor Bamzai, that “was the first presidential for-cause
removal.” Aditya Bamzai, Taft, Frankfurter, and the First Presidential For-Cause Removal,
52 U. RICH. L. REV. 691, 691–92 (2018).
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      The vesting of the executive power in the President was essentially
      a grant of the power to execute the laws. But the President alone
      and unaided could not execute the laws. He must execute them by
      the assistance of subordinates. . . . As he is charged specifically to
      take care that they be faithfully executed, the reasonable
      implication, even in the absence of express words, was that as part
      of his executive power he should select those who were to act for
      him under his direction in the execution of the laws. The further
      implication must be, in the absence of any express limitation
      respecting removals, that as his selection of administrative officers
      is essential to the execution of the laws by him, so must be his
      power of removing those for whom he cannot continue to be
      responsible. It was urged that the natural meaning of the term
      ‘executive power’ granted the President included the appointment
      and removal of executive subordinates. If such appointments and
      removals were not an exercise of the executive power, what were
      they? They certainly were not the exercise of legislative or judicial
      power in government as usually understood.
Myers, 272 U.S. at 117–18 (citations omitted).
      As the Court’s opinion drew to a close, it returned to the Decision of 1789.
The Court again emphasized that the first Congress “was a Congress whose
constitutional decisions have always been regarded, as they should be
regarded, as of the greatest weight in the interpretation of that fundamental
instrument.” Id. at 174–75. And because the Court “found [its] conclusion
strongly favoring the view which prevailed in the First Congress,” it “ha[d] no
hesitation in holding that conclusion to be correct.” Id. at 176. So the Court
held “that the Tenure of Office Act of 1867, in so far as it attempted to prevent
the President from removing executive officers who had been appointed by him
by and with the advice and consent of the Senate, was invalid.” Ibid.
      Under Myers, this would be an easy case: Any limit on the President’s
power to remove a principal executive officer is unconstitutional.

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      Our dissenting colleagues brush Myers aside based on this factual
distinction: Myers dealt with a statute requiring “the ‘advice and consent of
the Senate’ ” before the President could remove the officer, whereas HERA does
not. Post, at 99 (Higginson, J.) (quoting Myers, 272 U.S. at 60). True enough.
But it was not the character of the limitation on the President’s removal power
that led the Myers Court to reject it. Rather, it was the existence of any
limitation at all—it was the denial of “the unrestricted power of removal” that
the Court found invalid. 272 U.S. at 176. Myers held the removal power
belongs to the President alone, and Congress cannot constrain it. Ibid. Under
Myers, HERA’s removal restriction is unconstitutional.
                                      B.
      Of course, Myers was not the last word on the nature of the President’s
removal power. In Humphrey’s Executor v. United States, 295 U.S. 602 (1935),
the Supreme Court announced a different rule. The Humphrey’s Executor
Court maintained that Congress could not prevent the President from
removing any (principal) officers exercising “purely” executive power. But it
introduced the concept of administrative agencies that don’t exercise executive
power—a possibility Myers seemingly had not contemplated. See also Prakash,
Decision of 1789, supra, at 1071 (arguing the Decision of 1789 did not resolve
whether Congress could limit the President’s removal power for non-executive
officers). And for these non-executive administrative agencies, it approved
greater restrictions on the President’s removal power. Humphrey’s Executor,
295 U.S. at 631–32.
      The administrative agency at issue was the Federal Trade Commission.
President Hoover appointed Humphrey as a Commissioner. Soon after his
election in 1932, President Roosevelt removed Humphrey from office. Id. at
619. To his dying day, Humphrey maintained he was still a Commissioner.
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Ibid. Later, Humphrey’s estate sued for his unpaid salary, claiming President
Roosevelt lacked the power to remove an FTC Commissioner. Ibid. The estate
pointed to the Federal Trade Commission Act, which provided that
Commissioners would be appointed by the President, would serve for a certain
term of years, and could be removed by the President “for inefficiency, neglect
of duty, or malfeasance in office.” Id. at 620 (citing Federal Trade Commission
Act, ch. 311, § 1, 38 Stat. 717, 718 (1914) (codified as amended at 15 U.S.C.
§ 41)).
      President Roosevelt had cited no “inefficiency, neglect of duty, or
malfeasance in office” as cause for removing Humphrey. Id. at 620, 626. He
simply wanted to appoint his own Commissioner with whom he “should have
a full confidence.” Id. at 620 (citing a letter from Roosevelt to Humphrey).
Roosevelt’s administration pointed to Myers. After all, Myers had recently
confirmed that the Constitution grants the President unrestricted power to
remove executive officers for any reason or no reason at all. See 272 U.S. at
176 (holding a statute that “attempted to prevent the President from removing
executive officers who had been appointed by him . . . was invalid”).
Roosevelt’s administration argued that the Myers rule applied to the Federal
Trade Commissioners, notwithstanding Congress’s provision of a term of office
and enumeration of causes justifying their removal. Humphrey’s Executor, 295
U.S. at 626.
      The Court disagreed.     Relying on the FTCA’s legislative history, it
reasoned Congress had intended the FTC to function “wholly disconnected
from the executive department.” Id. at 630. The FTC was “to be nonpartisan;
and it must, from the very nature of its duties, act with entire impartiality.”
Id. at 624. And the Court maintained that the FTC’s “duties are neither
political nor executive, but predominantly quasi judicial and quasi legislative.”
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Ibid. Moreover, the Court had no “doubt[s]” about “[t]he authority of Congress”
to create such agencies and “to require them to act in discharge of their duties
independently of executive control.” Id. at 629. “[T]hat authority includes, as
an appropriate incident, power to fix the period during which the [officers]
shall continue, and to forbid their removal except for cause in the meantime.”
Ibid.    In short, Humphrey’s Executor held that officials exercising quasi-
legislative or quasi-judicial power could be insulated by for-cause-removal
protection because of the need to keep such officials “independent” of the
executive. Id. at 628. If an officer “exercises no part of the executive power
vested by the Constitution in the President,” it says, Congress can limit the
President’s removal power. Ibid. On the other hand, if the officer is “purely
executive,” Congress cannot limit that power. Id. at 631–32 (affirming the
Myers rule for purely executive officers). Thus, the scope of the President’s
removal power “depend[s] upon the character of the office.” Id. at 631.
        Humphrey’s Executor is difficult to apply for two reasons. First, its
division between purely executive and quasi-legislative or quasi-judicial does
not map neatly onto modern understandings of executive power. See Morrison
v. Olson, 487 U.S. 654, 689 n.28 (1988) (discussing “[t]he difficulty of defining
such categories of ‘executive’ or ‘quasi-legislative’ officials”); see also Bowsher,
478 U.S. at 762 n.3 (1986) (White, J., dissenting). And second, the Supreme
Court itself limited Humphrey’s Executor in Bowsher. There, the Comptroller
General was subject to removal only by Congress and only for cause. See
Bowsher, 478 U.S. at 727–28. The Court held this violated the Constitution’s
separation-of-powers principles by making an official exercising executive
power subservient to the legislative branch. See id. at 726, 732–33. The
Comptroller General’s primary duty was to prepare a detailed report in
accordance with a legislative mandate. Id. at 732. The Court held that this
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was an exercise of executive power: “Interpreting a law enacted by Congress
to implement the legislative mandate is the very essence of ‘execution’ of the
law.” Id. at 733. That was so even though Congress “ha[d] consistently viewed
the Comptroller General as an officer of the Legislative branch.” Id. at 731.
And in reaching its conclusion, the Court pointed to the Decision of 1789 as
“provid[ing] contemporaneous and weighty evidence of the Constitution’s
meaning since many of the Members of the First Congress had taken part in
framing that instrument.” Id. at 723–24.
      Given that Bowsher turned on Congress’s control over the executive
officer in question—a problem undisputedly not at issue here—the dissenters
are tempted to ignore Bowsher as irrelevant. Post, at 99 (Higginson, J.). But
Bowsher is highly relevant in the way it cabins Humphrey’s Executor. After
Bowsher, Congress cannot legislate around the nature of executive power by
creating an office that reports to another branch, rather than (or in addition
to) reporting solely to the Executive Branch. See 478 U.S. at 731–32; cf.
Humphrey’s Executor, 295 U.S. at 628 (reasoning the FTC is not an executive
agency because it was “created by Congress to carry into effect legislative
policies . . . in accordance with the legislative standard . . . and to perform
other specified duties as a legislative or as a judicial aid”).
      So what does Humphrey’s Executor by way of Bowsher mean here? Well,
the Federal Housing Finance Agency (“FHFA”) Director obviously exercises
executive power. As relevant to this case, FHFA implemented a statute—
HERA—by making factual findings that triggered authorization to take over
and operate the Government Sponsored Entities (“GSEs”). That’s an executive
act. Cf. Gundy v. United States, 139 S. Ct. 2116, 2140 (2019) (Gorsuch, J.,
dissenting) (explaining that “condition[ing]” the application of statutes “on
fact-finding” by the executive has been “long associated with the executive
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function”); Department of Transportation v. Association of American Railroads,
135 S. Ct. 1225, 1247 (2015) (Thomas, J., concurring in the judgment)
(explaining that “conditional legislation does not seem to call on the President
to exercise . . . legislative power” even though it makes the suspension or
operation of statutory provisions “depend upon the action of the President
based upon the occurrence of subsequent events, or the ascertainment by him
of certain facts”); Bushnell v. Leland, 164 U.S. 684, 685 (1897) (rejecting the
argument that “empowering [the comptroller] either to appoint a receiver or to
make a ratable call upon the stockholders, is tantamount to vesting that officer
with judicial power, in violation of the constitution”). Operating the GSEs in
accordance      with    statutory    directives    is   also   executive.       After    all,
“implement[ing] the legislative mandate is the very essence of ‘execution’ of
the law.” Bowsher, 478 U.S. at 733.
         True, FHFA also has powers that might seem quasi-legislative. For
example, it can promulgate regulations. See, e.g., 12 U.S.C. §§ 4536, 4617(i)(8).
But having that power cannot be enough to render an agency quasi-legislative
for purposes of Humphrey’s Executor. If it were, nearly every member of the
President’s cabinet would be a quasi-legislative official and could be given for-
cause removal protection. And that can’t be. See Morrison, 487 U.S. at 690
(“Myers was undoubtedly correct in its holding, and in its broader suggestion
that there are some ‘purely executive’ officials who must be removable by the
President at will if he is to be able to accomplish his constitutional role.”).
         But wherever you draw the line between “executive” and “quasi-
legislative” power, the exercise of power at the heart of this case is executive. 6

   6 Judge Higginson agrees that our inquiry should focus on the particular exercise of power
at issue—here, “the FHFA’s conservatorship function.” Post, at 107. Our disagreement is
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FHFA executed a contract and enforced its terms; that is the heartland of
executive power. See also Part II.E, infra. In deciding this case or controversy,
our constitutional analysis should focus on the nature of the agency action
being challenged—not the agency’s power in the abstract. Thus, in relevant
part, “the character of the office” held by the FHFA Director is executive.
Humphrey’s Executor, 295 U.S. at 631. Again, the for-cause removal restriction
is invalid. 7
                                            C.
         In Morrison v. Olson, 487 U.S. 654 (1988), the Supreme Court arranged
the removal precedents around a new organizing principle:                        Removal
restrictions cannot unduly interfere with the President’s fulfillment of his
constitutional obligations—including the power to take care that the laws be
faithfully executed.       Morrison involved the Ethics in Government Act’s
provision for the appointment of an independent counsel to “investigate, and,
if appropriate, prosecute certain high-ranking Government officials for
violations of federal criminal laws.” Id. at 660 (discussing 28 U.S.C. §§ 591–
99). The independent counsel, once appointed, could only be removed “by the
personal action of the Attorney General and only for cause.” Id. at 663 (quoting
28 U.S.C. § 596(a)(1)).

whether FHFA’s “conservatorship function” is executive or something else. Our colleagues
evidently think it is something else, but exactly what it is they do not say. See ibid.
   7 And even if we considered the FHFA Director to be both “quasi-legislative” and
executive, then the FHFA’s Director would fall into the “field of doubt” that Humphrey’s
Executor left for “future consideration.” 295 U.S. at 632. And insofar as the “nature of the
function” test discussed in Wiener v. United States, 357 U.S. 349, 353 (1958), was rooted in
the “philosophy of Humphrey’s Executor,” id. at 356, applying that test here would yield
similar results. The “intrinsic judicial character of the task” of the War Claims
Commissioners led the Court to decide that case against President Eisenhower. Id. at 355.
The executive function at issue here would command the opposite result.
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       There was “no real dispute that the functions performed by the
independent counsel are ‘executive’ in the sense that they are law enforcement
functions that typically have been undertaken by officials within the Executive
Branch.” Id. at 691. But the Morrison majority treated the categories used in
Humphrey’s Executor (executive vs. quasi-legislative or quasi-judicial) as
relevant but not dispositive. We agree with our dissenting colleagues on this
point: “Morrison downgraded Wiener’s and Humphrey’s Executor’s inquiries
from a determinative to a subsidiary level.” See post, at 106 (Higginson, J.).
       The Morrison Court instead concluded that the constitutionality of
limitations on the President’s removal power is not “define[d] [by] rigid
categories of those officials who may or may not be removed at will by the
President, but” aims to “ensure that Congress does not interfere with the
President’s exercise of the ‘executive power’ and his constitutionally appointed
duty to ‘take care that the laws be faithfully executed’ under Article II.”
Morrison, 487 U.S. at 689–90. So, under Morrison, removal restrictions that
do not limit “the President’s ability to perform his constitutional duty” are
permissible. Id. at 690.
       The Morrison Court concluded the independent counsel’s office survives
this test. First, the Court deemed the independent counsel an inferior office
“with limited jurisdiction and tenure and lacking policymaking or significant
administrative authority.” Id. at 691; see also id. at 671–72. Second, the Court
noted that the President retained the ability to remove the independent
counsel for cause (through the Attorney General). Id. at 692–93; see also id. at
696.    Congress limited the removal power “to establish the necessary
independence of the office,” the Court concluded. Id. at 693. And in light of
the independent counsel’s status as an inferior officer accountable to the

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Attorney General, such a limitation didn’t unduly “interfere” with the
President’s constitutional duties. Ibid.
         So what of the FHFA Director? Like the independent counsel, the FHFA
Director exercises the executive power of implementing the laws. See Part II.B,
supra. But unlike the independent counsel, the FHFA Director is a principal
officer with significant authority, and he is not subject to significant
presidential control through any other executive officer. FHFA’s insulation
from the ordinary appropriations process means its Director does not even
answer to Congress. Cf. Humphrey’s Executor, 295 U.S. at 628 (explaining the
FTC is quasi-legislative because it acts “in aid of the legislative power” where
it makes “investigations and reports . . . for the information of Congress”). And
that also deprives the President of the control he exercises over most
independent agencies, who “must participate in the annual budget cycle” under
the oversight of the Office of Management and Budget. 8 Perhaps it’s true that
“[n]o man is an island.”            JOHN DONNE, DEVOTIONS UPON EMERGENT
OCCASIONS, Meditation XVII 108 (Ann Arbor Paperback ed., 1959) (1624). But
FHFA’s Director comes pretty close.
         To satisfy Morrison, “the Executive Branch” must have “sufficient
control over” the independent officer “to ensure that the President is able to
perform his constitutionally assigned duties.” 487 U.S. at 696. Here, it’s not
clear the Executive Branch has any control at all.

   8 Eloise Pasachoff, The President’s Budget as a Source of Agency Policy Control, 125 YALE
L.J. 2182, 2203–04 (2016); see also Rachel E. Barkow, Insulating Agencies: Avoiding Capture
Through Institutional Design, 89 TEX. L. REV. 15, 42–43 (2010) (“If agencies must rely on
OMB for budget requests, the President has a huge lever of power over the agency, whether
or not the head of the agency is removable at will.”).
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                                       D.
      In Free Enterprise Fund, the Supreme Court made clear that Morrison
only extends so far. The Free Enterprise Fund Court dealt with the members
of the Public Company Accounting Oversight Board (“PCAOB”) who could be
removed only by the Securities and Exchange Commission (“SEC”). 561 U.S.
at 483. The PCAOB board members could only be removed by the SEC for
cause, and the members of the SEC are principal officers who can only be
removed by the President for cause. Id. at 486–87. The Court concluded this
double for-cause protection arrangement violates the Constitution:
      This novel structure does not merely add to the Board’s
      independence, but transforms it. Neither the President, nor
      anyone directly responsible to him, nor even an officer whose
      conduct he may review only for good cause, has full control over
      the Board.
Id. at 496.      So the Court found PCAOB Commissioners could not
constitutionally exercise executive power. See ibid.
      The Court reaffirmed its focus on the importance of the relevant office
by distinguishing principal officers from inferior officers and inferior officers
from mere employees.      Id. at 506 (“We do not decide the status of other
Government employees, nor do we decide whether ‘lesser functionaries
subordinate to officers of the United States’ must be subject to the same sort
of control as those who exercise ‘significant authority pursuant to the laws.’ ”).
Thus, the above analysis concerning the status of a principal officer under
Morrison applies here in much the same way.
      But Free Enterprise Fund also emphasized a suspicion of novel agency
structures.   Before the case came before the Supreme Court, then-Judge
Kavanaugh had dissented from the D.C. Circuit’s opinion upholding the
PCAOB:
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       Humphrey’s Executor and Morrison represent what up to now have
       been the outermost constitutional limits of permissible
       congressional restrictions on the President’s removal power.
       Therefore, given a choice between drawing the line at the holdings
       in Humphrey’s Executor and Morrison or extending those cases to
       authorize novel structures such as the PCAOB that further
       attenuate the President’s control over executive officers, we should
       opt for the former. We should resolve questions about the scope of
       those precedents in light of and in the direction of the
       constitutional text and constitutional history. In this case, that
       sensible principle dictates that we hold the line and not allow
       encroachments on the President’s removal power beyond what
       Humphrey’s Executor and Morrison already permit.
Free Enterprise Fund, 537 F.3d at 698 (Kavanaugh, J., dissenting) (citations
omitted). The Supreme Court shared his concern: “Perhaps the most telling
indication of the severe constitutional problem with the PCAOB is the lack of
historical precedent for this entity.” Free Enterprise Fund, 561 U.S. at 505
(quoting 537 F.3d at 699 (Kavanaugh, J., dissenting)).
       The novel agency structure at issue in this case raises similar suspicions.
Granting that the protections here are not a “Matryoshka doll of tenure
protections,” id. at 497, Congress nevertheless insulated the FHFA Director in
an unprecedented way.          The FHFA Director is a principal officer, not an
inferior one or an employee; he exercises significant executive authority; and
he does so by himself, not as part of a multi-member body. Cf. PHH Corp. v.
CFPB, 881 F.3d 75, 198 (D.C. Cir. 2018) (en banc) (Kavanaugh, J., dissenting)
(noting that another agency’s “single-Director structure departs from settled
historical practice, threatens individual liberty, and diminishes the President’s
Article II authority to exercise the executive power.”). 9 HERA thereby grants

       9Many have discussed the unique ways an independent agency headed by a single
Director could undermine the President’s Article II powers. See ante, at 46–47 (Willett, J.);
PHH Corp., 881 F.3d at 156–57 (Henderson, J., dissenting); id. at 183–84 (Kavanaugh, J.,
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“executive power without the Executive’s oversight” and “subverts the
President’s ability to ensure that the laws are faithfully executed.”                  Free
Enterprise Fund, 561 U.S. at 498. Thus, FHFA fails under Free Enterprise
Fund too.
                                             E.
       Judge Higginson’s principal response to all of this is that “FHFA’s
conservatorship function” is “a role one would be hard-pressed to characterize
as near the heart of executive power.” Post, at 107. We disagree. To our minds,
you’d be hard-pressed to characterize it as anything other than executive
power.
       “The executive power” vested by Article II, Section 1, is the power of
“enforcing the laws.” 1 BLACKSTONE’S COMMENTARIES, supra, at *146. At the
Founding, the “executive power” was understood in contradistinction to the
“legislative” power of “making the laws.” Ibid.; see also id. at *261; MATTHEW
HALE, THE PREROGATIVES OF THE KING 176 (D.E.C. Yale ed. 1976). Without
an executive to enforce, administer, or otherwise execute the law, legislation
was a mere parchment barrier: “[T]he Vigour of the Laws consists in their
Executive Power; Ten thousand Acts of Parliament signify no more than One
Single Proclamation, unless the Gentlemen, in whose hands the Execution of
those Laws is placed, take care to see them duly made use of . . . .” DANIEL
DEFOE, THE POOR MAN’S PLEA 23 (2d ed. 1693). Thus, the power to execute the
law is the power to follow a legislative instruction and “transform [legislative]

dissenting). When the Founders vested a single President with the executive power in Article
II of the Constitution, they recognized that one person had the potential to act with greater
speed, decisiveness, and secrecy than a multi-member body. See THE FEDERALIST NO. 70, at
424 (Alexander Hamilton) (Clinton Rossiter ed., 1961) (“Decision, activity, secrecy, and
dispatch will generally characterize the proceedings of one man in a much more eminent
degree than the proceedings of any greater number . . . .”).
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intentions into reality.” Julian Davis Mortensen, Article II Vests the Executive
Power, Not the Royal Prerogative, 119 COLUM. L. REV. 1169, 1236 (2019).
      There can be no doubt that FHFA purported to “execute” HERA here—
even if it did so unlawfully. See ante, at 50–52 (Willett, J.). It “made use of ”
the statute to adopt the Third Amendment. And it made use of the statute
(and the Third Amendment) to sweep the GSEs’ profits.              That plainly
constitutes “the executive power.”
      But suppose we’re wrong that FHFA is an executive branch agency—
where would you put it instead? FHFA is an agency of the federal government.
See 12 U.S.C. § 4511(a) (establishing FHFA as “an independent agency of the
Federal Government”); id. § 4617(b)(2)(J)(ii) (granting FHFA power to “take
any action authorized by this section, which the Agency determines is in the
best interests of . . . the Agency”). Surely Judge Higginson does not mean to
suggest FHFA is exercising “legislative or judicial power in government as
usually understood.” Myers, 272 U.S. at 117–18.
      It’s irrelevant that the Secretary of the Treasury—the other party to the
Net Worth Sweep—could veto the deal. Cf. post, at 105 (Higginson, J.); post,
at 112–13 (Costa, J.). It has never been true that setting aside an officer’s
action in a case involving the removal power requires proof that an uninsulated
officer would not have taken the challenged action.        Such counterfactual
causation is alien to the Supreme Court’s interpretation of Article II. Neither
appointment cases nor removal cases require it. See Landry v. FDIC, 204 F.3d
1125, 1131 (D.C. Cir. 2000) (“There is certainly no rule that a party claiming

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constitutional error in the vesting of authority must show a direct causal link
between the error and the authority’s adverse decision.”). 10
       Take Free Enterprise Fund, for example. That case implicated both
appointment and removal. As to the former, the Court refused to require
counterfactual causation as an element of standing to bring an appointment
claim. 561 U.S. at 512 n.12 (“[S]tanding does not require precise proof of what
the Board’s policies might have been in that counterfactual world.”). And as to
the latter, the Court likewise rejected counterfactual causation. The Court
granted prospective relief requiring officers to be properly removable before
exercising executive authority. Id. at 513. And it did so without analyzing
whether less-insulated officers would make different decisions than the
unconstitutionally insulated officers did.               If a plaintiff must show that a
removable officer would make a different decision, then Free Enterprise Fund

       10 For the same reasons, it’s irrelevant that the Third Amendment was adopted by an
Acting Director of FHFA, rather than a Senate-confirmed Director. See post, at 109 (Costa,
J.). The Acting Director serves until the appointment of a Director—the latter of whom is
insulated by the for-cause removal restriction. See 12 U.S.C. §§ 4512(b), 4512(f). The
President’s power to replace the Acting Director with a for-cause insulated Director is a
Damoclean sword that hardly solves the constitutional problem with the latter. After we
granted rehearing en banc, FHFA argued for the first time that the Acting Director can be
replaced under the Federal Vacancies Reform Act (“FVRA”). That argument is forfeited
under our longstanding rules. See Excavators & Erectors, Inc. v. Bullard Engineers, Inc., 489
F.2d 318, 320 (5th Cir. 1973) (“While these contentions may have had merit if timely raised
in the district court, it is well established that . . . issues not raised or presented in the lower
court will not be considered for the first time on appeal.”). It’s also ironic because the
Government argues the FHFA Director is not exercising executive power while justifying its
constitutionality under a statute—the FVRA—that applies only to “an officer of an Executive
Agency.” 5 U.S.C. § 3345(a). In all events, this point now appears moot because the Senate
confirmed a permanent Director who enjoys for-cause insulation. And almost immediately
after his confirmation, that insulated Director revoked FHFA’s prior concession regarding
the unconstitutionality of the for-cause removal restriction, instead defended its
constitutionality, and continued sweeping the GSEs’ profits.
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would not have granted relief without considering whether a more accountable
officer would make different decisions.
      Or take NLRB v. Noel Canning, 573 U.S. 513 (2014). By the time that
case reached the Supreme Court, the NLRB already had new, validly
appointed members. There was no evidence the new Board members were
inclined to overturn the actions of the old, unconstitutionally appointed
members. In fact, the litigants challenging the appointments told the Supreme
Court that “going forward the government can solve the problem through
agency ratification of past decisions.” Transcript of Oral Argument at 66, Noel
Canning, 573 U.S. 513 (No. 12-1281). Nevertheless, the Court invalidated the
old members’ decisions. See Noel Canning, 573 U.S. at 522 (“[T]hat the Board
now unquestionably has a quorum does not moot the controversy about the
validity of the previously entered Board order.”).
      The best support we can find for counterfactual causation is in the
Bowsher dissent.     It argued the unconstitutional removal provision was
“unlikely to be” invoked, meaning in “political realit[y]” the officer’s decision-
making was unaffected. 478 U.S. at 730 (discussing Justice White’s dissent).
But the majority rejected that analysis: “The separated powers of our
Government cannot be permitted to turn on judicial assessment of whether an
officer exercising executive power is” likely to be fired. Ibid. “The Framers did
not rest our liberties on such bureaucratic minutiae.” Free Enterprise Fund,
561 U.S. at 500. Thus, there is no reason for us to speculate about what a
more-accountable officer would have thought about the Net Worth Sweep. And
the Treasury Secretary’s agreement to the Net Worth Sweep doesn’t tell us
anything about the propriety of insulating the FHFA Director.

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                                      III.
      A majority of our Court believes that the appropriate remedy for the
constitutional violation is to delete the offending statutory text.           We
respectfully disagree, because we do not think our limited Article III power to
decide cases and controversies permits such a remedy.
      The judicial power vested by Article III of the Constitution extends to
“Cases” and “Controversies.” U.S. CONST. art. III, § 2, cl. 1. It generally does
not include the legislative power to erase, rewrite, or otherwise “strike down”
statutes: “[U]nder our constitutional system courts are not roving commissions
assigned to pass judgment on the validity of the Nation’s laws.” Broadrick v.
Oklahoma, 413 U.S. 601, 610–11 (1973). Rather, “[c]onstitutional judgments,
as Mr. Chief Justice Marshall recognized, are justified only out of the necessity
of adjudicating rights in particular cases between the litigants brought before
the Court.” Ibid. (citing Marbury v. Madison, 5 U.S. (1 Cranch) 137, 178
(1803)); see also United States v. Godoy, 890 F.3d 531, 539–40 (5th Cir. 2018)
(explaining that the Supreme Court’s declining to apply an unlawful statutory
provision does not purge that provision from existence).
      When then-Judge Scalia was sitting as a member of the three-judge
district court in Synar v. United States, he recognized the importance of
choosing a remedy that redresses the plaintiffs’ injury-in-fact. See Synar v.
United States, 626 F. Supp. 1374, 1393 (D.D.C.) (per curiam), aff ’d sub nom.
Bowsher v. Synar, 478 U.S. 714 (1986).        In that case, the constitutional
violation was caused by a “combination” of statutes: one authorizing an officer
to exercise executive power and another governing the appointment or removal
of the officer in question. Ibid. Justice Scalia was faced with the question:
Which statute should the court refuse to apply when either one would be
constitutional in isolation?    His answer was the statute that “allegedly
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authorizes the injury-in-fact that confers standing upon the plaintiff.” Ibid.
(synthesizing numerous Supreme Court precedents). Because the injury-in-
fact in that case was caused by the statutory grant of executive power, that
grant had to “yield.” Id. at 1393–94.
      In this case, Plaintiffs are injured by the Net Worth Sweep—an exercise
of executive power unconstitutionally granted by HERA. Plaintiffs lost the
value of their investments because FHFA used the Net Worth Sweep to
transfer their money to the Treasury. They ask us to “[v]acat[e] and set[ ] aside
the [contract’s] Net Worth Sweep” provision. Our Article III powers permit us
to grant this remedy, as it would redress Plaintiffs’ injury-in-fact. Such a
remedy finds support in precedent. See, e.g., Noel Canning v. NLRB, 705 F.3d
490, 493, 514–15 (D.C. Cir. 2013), aff’d, 134 S. Ct. 2550 (2014) (vacating the
NLRB’s order because the Board was unconstitutionally constituted); see also
Dresser-Rand Co. v. NLRB, 576 F. App’x 332, 33–34 (5th Cir. 2014) (vacating
Board’s order that was issued by only two lawfully appointed members).
      Instead of granting this remedy, a majority of our Court charts a
different path.      They seek to blue-pencil the statute by deleting the
unconstitutional statutory provision.      Such a remedy is improper for two
reasons.
      First, it affords Plaintiffs no relief whatsoever. On these facts, editing
the statute would not resolve any case or controversy.           Plaintiffs do not
complain about the possibility of future regulatory activity. Instead, they
complain only about a past decision made by the FHFA Director: contractually
agreeing to the Net Worth Sweep. A complaint based solely on past violations
cannot justify prospective relief ordering an agency to disregard a statutory
provision going forward. In a case seeking redress for past harms such as this
one, prospective relief is no relief at all. Cf. Lucia v. SEC, 138 S. Ct. 2044, 2055
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n.5 (2018) (explaining that Appointments Clause remedies should be designed
to preserve the separation of powers and “to create ‘[ ]incentive[s] to raise
Appointments Clause challenges’ ” (quoting Ryder v. United States, 515 U.S.
177, 183 (1995)).
      Free Enterprise Fund is the principal precedent for the majority’s blue-
pencil remedy. But there, the plaintiffs sought an injunction against future
audits and investigations by the unconstitutionally insulated agency.          To
remedy the plaintiffs’ prospective injury-in-fact, the Court refused to apply the
statute insulating the officers from removal. See 561 U.S. at 508–10. The
Court recognized that the statutory provision was “only one of a number of
statutory provisions that, working together, produce a constitutional
violation.” Id. at 509. In refusing to apply the for-cause protection provision
that insulated the PCAOB commissioners from removal, it applied the most
modest remedy it could to redress the plaintiffs’ injuries.      Thus, the Free
Enterprise Fund remedy was effectively an injunction ordering the agency to
disregard the second layer of for-cause removal protection going forward,
unless and until Congress chose to fix the constitutional violation in a different
way. In this case, Plaintiffs did not complain about the threat of future harm,
so blue-penciling the statute would not redress any injury they have alleged.
      Strangely, our colleagues who argue that Plaintiffs lack standing to
bring their constitutional claim also join a majority of the Court in endorsing
a blue-penciling remedy. Nowhere in their opinion do they explain how our
Court could purport to delete a statutory provision when there is no active case
or controversy within the meaning of Article III. We think Plaintiffs do have
standing, yet we cannot identify how deleting the FHFA Director’s removal
protection would redress any harm Plaintiffs have alleged. On what basis

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could our colleagues possibly believe that a blue-penciling remedy is
constitutionally permissible? We can see none.
      The second problem we have with the remedy endorsed by a majority of
our Court is that we do not believe Article III of the Constitution permits us to
“strike” the FHFA Director’s for-cause protection from the statute. See Murphy
v. NCAA, 138 S. Ct. 1461, 1485 (2018) (Thomas, J., concurring) (explaining
that “[e]arly American courts did not have a severability doctrine” because
“[t]hey recognized that the judicial power is, fundamentally, the power to
render judgments in individual cases”); Jonathan F. Mitchell, The Writ-of-
Erasure Fallacy, 104 VA. L. REV. 933, 936 (2018) (explaining “federal courts
have no authority to erase a duly enacted law from the statute books” but have
only the power “to decline to enforce a statute in a particular case or
controversy” and “to enjoin executive officials from taking steps to enforce a
statute”); Kevin C. Walsh, Partial Unconstitutionality, 85 N.Y.U. L. REV. 738,
756 (2010) (explaining that the Founders did not conceive of judicial review as
the power to “strike down” legislation).
      At the Constitutional Convention, several delegates, including James
Wilson and James Madison, argued for a “Council of Revision” comprised of
federal judges and the executive. Mitchell, supra, at 954. The Council would
have had the power to veto legislation passed by Congress, subject to
congressional override. Ibid. A veto of legislation would render it “void,”
without any legal effect. Ibid. That proposal was defeated at the Convention
on June 4, 1787. Id. at 957. Wilson and Madison tried again on July 21, but
again they were defeated. Id. at 958. Finally, on August 15, they made one
last attempt to give the judiciary a veto over federal legislation, proposing that
the Supreme Court be given the power to veto legislation independent of the

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President, subject to congressional override. Id. at 958–59. Again, they were
defeated. Id. at 959.
      In the final Constitution, the judiciary was given only the power to decide
cases and controversies—to resolve legal disputes between parties and order
remedies to redress injuries. Thus, when a court concludes that a statute is
unconstitutional, it is not “striking down” or “voiding” or “invalidating” the law.
It is merely holding that the law may not be applied to the parties in the
dispute. The Constitution does not empower courts to delete sections of state
and federal codes. The Founders expressly considered the possibility of a
judicial veto, and they rejected it multiple times during the Constitutional
Convention.
      This history has been obscured by rhetoric that Chief Justice Marshall
used in Marbury v. Madison, 5 U.S. (1 Cranch) 137 (1803), to explain judicial
review.    In that case he famously declared that a statute found
unconstitutional by a court becomes “entirely void,” “invalid,” and “not law.”
Id. at 177–78. Subsequent cases have compounded the confusion. See, e.g.,
The Civil Rights Cases, 109 U.S. 3, 26 (1883) (holding “void” sections 1 and 2
of the Civil Rights Act of 1875). Nevertheless, it is indisputable that courts do
not have the power to erase duly enacted statutes. Instead, they may decline
to enforce them or enjoin their future enforcement to resolve cases and
controversies.
      Our Court should not add to the confusion about the judiciary’s limited
powers by claiming to “sever” a statute based on open-ended speculation about
how Congress would have solved the separation-of-powers problem. And we
certainly should not rewrite the statute while pretending such legislative
activity is the most modest judicial remedy. We would instead remand to the

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district court with instructions to fashion a remedy that actually redresses
Plaintiffs’ harms.
                                  *     *     *
      Whether we apply the Constitution’s original public meaning, Myers,
Humphrey’s Executor, Morrison, or Free Enterprise Fund, the conclusion in this
case is the same. The FHFA Director cannot exercise the executive power of
the United States because he is unconstitutionally insulated from presidential
control and accountability. And our Court does not have the power under
Article III to order a remedy that does not redress Plaintiffs’ injuries.

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HAYNES, Circuit Judge, joined by STEWART, Chief Judge, and DENNIS,
SOUTHWICK, GRAVES, HIGGINSON, and COSTA, Circuit Judges,
dissenting with respect to statutory claims:

      I conclude—as the panel in this case and five other circuits have held—
that 12 U.S.C. § 4617(f) bars us from granting the relief that the Shareholders
seek on their statutory claims. See Jacobs v. FHFA, 908 F.3d 884 (3d Cir.
2018); Saxton v. FHFA, 901 F.3d 954 (8th Cir. 2018); Roberts v. FHFA, 889
F.3d 397 (7th Cir. 2018); Robinson v. FHFA, 876 F.3d 220 (6th Cir. 2017); Perry
Capital LLC v. Mnuchin, 864 F.3d 591 (D.C. Cir. 2017). This court’s role is not
to question why as to the benefits and detriments of the Net Worth Sweep.
Instead, under a statutory challenge to the FHFA’s conduct, our court must
examine the statute in question and apply it.
      Every court to address the issue agrees that the core question is whether
the FHFA acted within its statutory authority. It is the core question because
§ 4617(f) states that “no court may take any action to restrain or affect the
exercise of powers or functions of the Agency as a conservator or a receiver”
unless otherwise specified by statute or requested by the Director.           The
Shareholders argue that the FHFA has exceeded its statutory “powers or
functions . . . as a conservator or a receiver” such that the bar does not apply.
So I examine whether adopting the Net Worth Sweep was within those
statutory powers.
      Given HERA’s grant of extensive powers to the FHFA, I conclude that
the FHFA acted within its statutory powers when it adopted the Net Worth
Sweep. The FHFA’s “powers are many and mostly discretionary.” Jacobs, 908
F.3d at 889. To begin with, once a conservator, the FHFA takes over the rights
and powers of the shareholders, officers, and directors.              12 U.S.C.
§ 4617(b)(2)(A)(i). It is then free to then “conduct all business of the regulated

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entity” without any restriction on that grant of power.                        See id.
§ 4617(b)(2)(B)(i).
      Most importantly, when the FHFA conducts a company’s business, it
does not have to consider the interests of shareholders. HERA dictates that
the Director “ensure that . . . the activities of each regulated entity and the
manner in which such regulated entity is operated are consistent with the
public interest.” Id. § 4513(a)(1)(B)(v). Most sweepingly, the FHFA may “take
any action authorized by [§ 4617], which the [FHFA] determines is in the best
interests of the regulated entity [e.g., the GSEs] or the Agency [i.e., the FHFA].”
Id. § 4617(b)(2)(J)(ii) (emphasis added). As Judge Stras said, “That is no typo.
The FHFA can operate critically important businesses, with trillions of dollars
in assets and the financial support of the federal government, in its own best
interests—apparently to the exclusion of the interests of the American people,
Fannie and Freddie, and their shareholders.” Saxton, 901 F.3d at 960 (Stras,
J., concurring). On top of that, the decision about what is in the FHFA’s best
interest is committed to the FHFA.
      This broad statutory grant of authority undermines the Shareholders’
core arguments.       To begin with, the Shareholders argue that the statute
requires the FHFA to pursue the goal of “preserving and conserving” assets
and operating the GSEs in a “sound and solvent” manner. But those quoted
terms are snippets from only some of the provisions in § 4617 granting the
FHFA authority. See 12 U.S.C. § 4617(b)(2)(B)(iv), (b)(2)(D). When reviewed
in context, each of those provisions is written as a permissive grant of
authority.    For example, § 4617(b)(2)(D) begins, “The Agency may, as
conservator, take such action as may be . . . .”                Other provisions, like
§ 4617(b)(2)(B)(i)    and   §   4617(b)(2)(J)(ii),   grant      the   FHFA    authority
unrestricted by the goals of asset preservation and solvency.
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      Undeterred, the Shareholders argue that though the snipped provisions
use “may,” they are actually mandatory and constrain all other grants of
authority. Their theory is that “may” is “a simple concession to the practical
reality that a conservator may not always succeed in rehabilitating its ward.”
See Perry Capital, 864 F.3d at 638 n.1 (Brown, J., dissenting). But when “may”
and “shall” appear in the section, “the normal inference is that each is used in
its usual sense—the one act being permissive, the other mandatory.” Anderson
v. Yungkau, 329 U.S. 482, 485 (1947). Congress uses “shall” to note mandatory
responsibilities, even when the officer carrying them out cannot possibly
succeed. See, e.g., 28 U.S.C. § 547 (“[E]ach United States attorney, within his
district, shall . . . prosecute for all offenses against the United States . . . .”).
For instance, in the very same section, the FHFA is told it “shall seek to develop
incentives for claimants to participate in the alternative dispute resolution
process.” 12 U.S.C. § 4617(b)(7)(B). “Shall” makes the command mandatory,
while “seek” signals that the FHFA might still fail. Congress could have used
similar language to constrain the FHFA’s actions, but it chose not to.
      The Shareholders also argue that the word “conservator” connotes a
requirement that the FHFA “conserve” assets. They rely on the common law
meaning of the term, which they believe Congress reflected in the statute.
Congress is free to use common law terms in statutes, which courts then look
to when interpreting the statute in the absence of statutory definitions. But
that general rule gives way when the statute dictates otherwise. See, e.g.,
Taylor v. United States, 495 U.S. 575, 594 (1990). Here, HERA’s statutory
scheme is inconsistent with the traditional notions of a conservator. Common
law conservators are supposed to look out for the rights of shareholders or
other beneficiaries. But the FHFA looks out for the public’s and its own
interests, a key difference from common law conservatorships. So this court
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cannot read any common law principles into Congress’s use of the word
“conservator.”
      During oral argument before the en banc court, a member of our court
suggested that this claim should not be resolved on a motion to dismiss because
it includes factual allegations beyond what appeared before other courts of
appeals.   However, neither party had previously argued this point, each
proceeding from the assumption that this was purely a legal issue that could
be resolved on a motion to dismiss. Indeed, the term “plausible” as it relates
to the Shareholders’ complaint appears nowhere in their briefing. Instead, the
Shareholders focused their assertions on the contention that the FHFA
exceeded its statutory powers as a matter of law. They certainly never argued
that there are “fact issues” that need to be litigated or more fully developed as
it pertains to their statutory arguments regarding § 4617(f). It is hardly novel
law that an appellant’s failure to brief an issue waives it. See, e.g., Singh v.
RadioShack Corp., 882 F.3d 137, 149 (5th Cir. 2018).
      Despite the clear waiver, that en banc oral argument question has now
morphed into the holding of the majority opinion on this issue. The majority
opinion concludes that the Shareholders stated a “plausible” claim that the
FHFA exceeded its statutory authority in enacting the Third Amendment and
remands for “further proceedings.”       Now, due to the majority opinion’s
departure from the Shareholders’ arguments, will the district court be required
to hold a trial on FHFA’s intent? That makes little sense.
      Even if this argument were not waived, it still does not pass muster as a
distinction from the other circuits’ decisions. First, the complaints in the
previous suits all alleged that the FHFA did not have the intent of conserving
the GSEs’ capital, even if they did not cite every piece of evidence supporting
that view. Second, and more importantly, the statute permits the FHFA to act
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in the public’s or its own interest, and the statute commits the decision of what
is in the FHFA’s best interest to itself. So even if those agencies’ subjective
intent—whatever that means—was to operate Fannie Mae and Freddie Mac
for its or the public’s benefit, the statute allows the FHFA to do so.
      Nothing about this case alters the robust case law from other circuits. I
would join all our sister circuits that have considered this question and rejected
the Shareholders’ statutory claim. The Shareholders have not shown that the
FHFA exceeded its enormous grant of authority. I conclude that § 4617(f) bars
us from “tak[ing] any action to restrain or affect the exercise of powers or
functions of the [FHFA] as a conservator or a receiver.”            Because the
Shareholders’ statutory claims would “restrain or affect” the FHFA’s acting in
its role as conservator, the Shareholders’ claims should fail. I would affirm the
district court’s order granting the Agencies’ motions to dismiss the
Shareholders’ APA claims because such claims are barred by 12 U.S.C.
§ 4617(f). I respectfully dissent from the contrary decision to remand.

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STEPHEN A. HIGGINSON, Circuit Judge, joined by STEWART, Chief Judge,
and DENNIS and COSTA, Circuit Judges, dissenting in part:

       It is wrong to declare the FHFA unconstitutionally structured. Neither
the parties nor the majority has addressed the statutory text central to the
constitutional issue: the provision establishing the FHFA Director’s five-year
term “unless removed before the end of such term for cause by the President.”
12 U.S.C. § 4512(b)(2). For-cause removal provisions typically enumerate the
specific grounds that would justify removal, such as “inefficiency, neglect of
duty, or malfeasance in office.” See Humphrey’s Executor v. United States, 295
U.S. 602, 619 (1935) (quoting 15 U.S.C. § 41). This one does not. Thus, it is
concerning that no one in this litigation has addressed why or how § 4512(b)(2)
is an undue impediment to removal in practice; indeed, no one has even
suggested what § 4512(b)(2)’s text means. 1 Furthermore, no one has identified
an entity empowered to block a presidential removal under § 4512(b)(2).
       It is unwise to base a momentous constitutional ruling on the expected
effects of a statutory provision no one has made the effort to construe.
                                             ***
       The Constitution affords sparse materials to resolve this question––only
broad pronouncements that “[t]he executive Power shall be vested” in the
President and that “he shall take Care that the Laws be faithfully executed.”
Art. II §§ 1, 3. These clauses say nothing about removal of executive-branch
officers, and there is little that is tractable or manageable in them compared,
for instance, to the Appointments Clause. See Art. II § 2. That clause

       1  The en banc D.C. Circuit’s decision on the constitutionality of the Consumer
Financial Protection Bureau’s design elicited varying views on this question as to the for-
cause removal protection of that agency’s director. Compare PHH Corp. v. Consumer Fin.
Prot. Bureau, 881 F.3d 75, 122–24 (D.C. Cir. 2018) (Wilkins, J., concurring), with id. at 124–
37 (Griffith, J., concurring).
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distinguishes between categories of officers and specifies who may appoint so-
called “inferior” officers. Id. These specifications helpfully structure a well-
developed case law on presidential appointments. See, e.g., Lucia v. S.E.C., 138
S. Ct. 2044, 2051–56 (2018); Edmond v. United States, 520 U.S. 651, 658–66
(1997). No such specificity guides us here.
       What we have instead is a relatively limited body of modern Supreme
Court decisions. Only six cases, decided over eighty-five years, comprise the
corpus of relevant precedential material. On the one side, three cases identify
unconstitutional limits on the presidential removal power. See Free Enter.
Fund v. Pub. Co. Accounting Oversight Bd., 561 U.S. 477 (2010); Bowsher v.
Synar, 478 U.S. 714 (1986); Myers v. United States, 272 U.S. 52 (1926). On the
other, three cases uphold limits on the presidential removal power. See
Morrison v. Olson, 487 U.S. 654 (1988); Wiener v. United States, 357 U.S. 349
(1958); Humphrey’s Executor v. United States, 295 U.S. 602 (1935). 2 As with
the sparseness of constitutional text, the limited extent of this caselaw
counsels, at minimum, caution before we announce from the bench that
Congress has violated the Constitution. 3

       2  One might also place United States v. Perkins, 116 U.S. 483 (1886), concerning a
cadet engineer in the Navy, and United States v. Shurtleff, 189 U.S. 311 (1903), concerning a
“general appraiser of merchandise,” in the corpus of removal cases, but their remoteness in
time and the simplicity of the positions at issue––relative to the complexity of modern
administrative agency design––make them minor parts of that corpus for present purposes.
Presidential removal was at issue also in Mistretta v. United States, 488 U.S. 361 (1989),
regarding the U.S. Sentencing Commission, but the Court’s animating concern in that
instance was interference with judicial power, not executive.
        3 The concurring opinion that responds to my views misses that my dissent is

fundamentally rooted in the principle of judicial restraint. This principle must be our guide
“in cases of peculiar delicacy,” such as those that challenge the constitutionality of Congress’s
enactments. See McCulloch v. Maryland, 17 U.S. 316, 401 (1819) (Marshall, C.J.). Moreover,
I do not recognize my views in the paraphrases that the concurring opinion gives of them. At
the very beginning, for instance, the concurring opinion imputes views to me about “original
public meaning” and “‘judicial’ power to rewrite Congress’s law,” yet neither is an argument
I elaborate here.
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      Two of the three cases striking down limits on the presidential removal
power are plainly beyond the circumstances here, because they addressed
provisions that located control over removal wholly or partly in the legislative
branch. Bowsher concerned a law assigning executive functions to the
Comptroller General, an official removable only by Congress. 478 U.S. at 728–
34. Myers concerned a postmaster whose removal by the President was subject
to the “advice and consent of the Senate.” 272 U.S. at 60. Congress gave itself
no such control over removal of the FHFA Director, so neither case furnishes a
basis on which to find the FHFA unconstitutionally structured.
      Appellants’ constitutional challenge therefore stands or falls on Free
Enterprise Fund, the only other Supreme Court decision fashioning the
Constitution’s scant textual materials into a rule by which we might invalidate
an agency’s structure. In Free Enterprise Fund, the Court affirmed the
principle that “Congress can, under certain circumstances, create independent
agencies run by principal officers appointed by the President, whom the
President may not remove at will but only for good cause.” 561 U.S. at 483.
Free Enterprise Fund addressed “something quite different”: vesting the for-
cause removal decision in officials who were themselves protected against
removal without cause, thereby creating “two layers of good-cause tenure.” Id.
at 495, 497. Appellants thus have the difficult task of showing that Free
Enterprise Fund, which affirmed one layer of good-cause tenure while
condemning two, somehow requires us to invalidate the one layer protecting
the FHFA Director.
      In addition to showing that Free Enterprise Fund implicitly negated a
principle it explicitly affirmed, Appellants must also confront three cases
approving good-cause tenure: Humphrey’s Executor, Wiener, and Morrison.
These cases each affirmed Congress’s power to insulate officials against

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presidential removal. The cases affirmed that power in widely varying
institutional contexts and despite circumstances that, under then-existing
precedent, would make curtailment of Congress’s power the expected outcome.
      Humphrey’s Executor came first, nine years after Myers’s ringing
vindication of the President’s “unrestricted power of removal.” See Myers, 272
U.S. at 176. The case concerned the protection of Federal Trade Commission
members from removal unless for “inefficiency, neglect of duty, or malfeasance
in office.” 295 U.S. at 619. Given Myers’s emphatic declaration of principle, this
insulation of FTC commissioners would surely fall. But it did not. A unanimous
Supreme Court ruled that Myers “cannot be accepted as controlling [the]
decision here.” 295 U.S. at 627. The Court recognized Congress’s power to
create “quasi legislative or quasi judicial agencies” that could act
“independently of executive control.” Id. at 629. It read Myers as “confined to
purely executive officers” and stated a new principle: that Congress’s power to
“preclud[e] a removal except for cause will depend upon the character of the
office.” Id. at 631–32.
      Two decades later, the Supreme Court considered the removal of a
member of the War Claims Commission, an adjudicatory body for claims of
injury or property damage in the Second World War. Wiener, 357 U.S. at 350–
51. Unlike the FTC statute at issue in Humphrey’s Executor, the statute
creating the War Claims Commission said nothing about removal. Id. at 352.
One would think, therefore, that the President’s removal power would operate
unrestricted, per Myers. On the contrary, Wiener adhered to Humphrey’s
Executor’s distinction between purely executive officers and those meant to
exercise independent judgment. Focusing on the “nature of the function that
Congress vested in the War Claims Commission,” the Court read for-cause
removal protection into the statute. Id. at 353–56.

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      Three decades after Wiener, the Supreme Court considered the
constitutionality of the independent counsel authorized by the Ethics in
Government Act of 1978. Morrison, 487 U.S. at 660. The independent counsel
was appointed by a special three-judge panel upon a referral from the Attorney
General, and the office held a panoply of prosecutorial powers. Id. at 660–63.
The Attorney General could remove the independent counsel “only for good
cause, physical disability, mental incapacity,” or other substantially impairing
condition, with judicial review thereafter. Id. at 663. Because the independent
counsel wielded the quintessentially executive power of criminal prosecution,
one would expect the office’s insulation from presidential removal would be
unconstitutional, under either Wiener’s “nature of the function” or Humphrey’s
Executor’s “character of the office” inquiries. But that was not the Court’s
conclusion. Morrison reasoned that Congress’s power “to impose a ‘good cause’-
type restriction on the President’s power to remove an official cannot be made
to turn on whether or not that official is classified as ‘purely executive.’” Id. at
689. Instead it applied a new test: whether “the Act, taken as a whole, violates
the principle of separation of powers by unduly interfering with the role of the
Executive Branch.” Id. at 693. The Court ruled that the independent counsel
statute did not cause such interference. Indeed, it listed the Attorney General’s
ability to remove the independent counsel for cause among the mechanisms
adequately preserving presidential control. Id. at 693, 696.
      Appellants thus confront a precedential barrier they cannot surmount:
three cases affirming good-cause tenure in a variety of circumstances; and a
fourth case affirming it again while invalidating a form of double good-cause
tenure not present here. 4

      4  The concurring opinion tries to sidestep the precedential barrier by turning to
scholarship on the Decision of 1789 and other primary sources that reveal founding-era
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       Appellants’ approach is to draw attention to a purportedly “unique
constellation of independence-enhancing features” in the FHFA’s design. This
claim derives from phrases that the Court used in Free Enterprise Fund. E.g.,
561 U.S. at 483 (asking whether two “separate layers of protection may be
combined”); id. at 510 (describing the PCAOB members’ “good-cause removal”
as “only one of a number of statutory provisions that, working together, produce
a constitutional violation”) (emphasis added). The majority opinion picks up on
this language, deeming the FHFA’s structure unconstitutional due to the
“combined effect” of its “unique constellation of insulating features.” 5 But these
phrases in Free Enterprise Fund were used to describe the novel problem of
two-layered good-cause tenure. The Court was clear that the problematic
novelty at issue in Free Enterprise Fund was in contrast to the long-standing
legitimacy of single-layered good-cause tenure:
       As explained, we have previously upheld limited restrictions on
       the President’s removal power. In those cases, however, only one
       level of protected tenure separated the President from an officer
       exercising executive power. It was the President—or a subordinate
       he could remove at will—who decided whether the officer’s conduct
       merited removal under the good-cause standard.
       The Act before us does something quite different. It not only
       protects Board members from removal except for good cause, but
       withdraws from the President any decision on whether that good
       cause exists. That decision is vested instead in other tenured
       officers—the Commissioners [of the SEC]—none of whom is
       subject to the President’s direct control. The result is a Board that

viewpoints on presidential removal power. The concurring opinion relies on one side of a
vigorous scholarly debate about these materials. Amici scholars have helpfully shown
another, quite different side. See Brief of Harold H. Bruff, Gillian E. Metzger, Peter M. Shane,
Peter L. Strauss, and Paul R. Verkuil, as Amici Curiae in Support of Defendants-Appellees,
Collins v. Mnuchin, No. 17-20364 (5th Cir. Jan. 17, 2019).
       5 See Collins v. Mnuchin, 896 F.3d 640, 661, 670 (5th Cir. 2018) (per curiam). The en

banc majority opinion incorporates the panel opinion’s analysis. See Section VIII(A).
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       is not accountable to the President, and a President who is not
       responsible for the Board.
       The added layer of tenure protection makes a difference.
591 U.S. at 495 (emphasis added). Thus, to import Free Enterprise Fund’s
phrases describing novel structures into this case is to erase the distinction
those descriptions were meant to draw. 6
       Appellants’ challenge rests on a tenuous interpretation not only of Free
Enterprise Fund but also of the scholarly literature on administrative agency
design. 7 Appellants argue, and the majority opinion agrees, that various
otherwise unremarkable agency design features, through undescribed
alchemy, combine to make the FHFA Director unduly insulated from
presidential control. But upon a closer look, these assertions are little more
than debatable empirical claims––hardly the firm footing judges need to take
the bold step of declaring Congress’s agency design choices unconstitutional.
       The majority opinion for the en banc D.C. Circuit addressing the
constitutionality of the Consumer Financial Protection Bureau has already
surveyed the dubious empirical propositions on which Appellants and the
majority opinion depend. See PHH Corp. v. Consumer Fin. Prot. Bureau, 881

       6  For a thoughtful discussion of the significance that novelty should have in
constitutional analysis of agency design, see Leah M. Litman, Debunking Antinovelty, 66
DUKE L.J. 1407 (2017).
       7 See, e.g., Kirti Datla & Richard L. Revesz, Deconstructing Independent Agencies (And

Executive Agencies), 98 CORNELL L. REV. 769 (2013); Rachel Barkow, Insulating Agencies:
Avoiding Capture Through Institutional Design, 89 TEXAS L. REV. 15 (2010). One can only
imagine the feelings of scholars who were motivated by the “urgent need” for better
institutional design against the threat of agency capture, Barkow, 89 TEXAS L. REV. at 18,
upon seeing their work turned into a constitutional cudgel against that design.
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F.3d 75, 92–110 (D.C. Cir. 2018). 8 That wheel need not be reinvented here, 9
but a few points may usefully be added.
       The majority opinion gives weight to the purportedly insulating effect of
the FHFA’s single-headed structure, but that structure may just as readily
promote accountability as inhibit it, by spotlighting the obstacle in the way of
the President’s will. The majority opinion values the internal checks of a multi-
member structure, particularly when bipartisan balance is required, but such
structures tie a President’s hands as much as free them. If the constitutional
concern here is undue interference with presidential control, an agency
structure requiring the President to appoint a political opponent can hardly be
said to enhance presidential sway. Such a structure could not be said to have
constitutional significance either. The Supreme Court never suggested in Free
Enterprise Fund that the internal dynamics fostered by the PCAOB’s multi-
member structure might avoid a constitutional violation. 10 The dubiousness of
these various claims in turn makes their “combined effect” yet more
questionable. 11

       8  The majority opinion expresses no disagreement with the en banc D.C. Circuit’s
analysis affirming the constitutionality of the CFPB, instead identifying “salient distinctions”
between the CFPB and FHFA. Collins, 896 F.3d at 673. With that lack of disagreement I
quite agree.
        9 Cf. Consumer Fin. Prot. Bureau v. Seila Law LLC, 923 F.3d 680, 682 (9th Cir. 2019),

petition for cert. docketed (June 28, 2019) (No. 19-7) (likewise declining to “re-plow the same
ground”).
        10 A common argument from parties and judges skeptical of agency insulation is that

the multi-member structure of the FTC––a “body of experts”––was an essential part of the
Court’s decision in Humphrey’s Executor affirming the FTC’s structure. See, e.g., PHH Corp.,
881 F.3d at 98–99 (majority opinion’s explanation of challengers’ argument); id. at 143, 150–
51 (Henderson, J., dissenting). But that quote appeared in Humphrey’s Executor’s treatment
of a preliminary statutory issue, not in its constitutional analysis. Compare 295 U.S. at 621–
26 (statutory); id. at 626–32 (constitutional); see PHH Corp., 881 F.3d at 98–99 (making this
observation).
        11 Relatedly, it is debatable that the FHFA’s features are in fact unique. One scholarly

treatment of “indicia of independence” identified seven salient features, of which the FHFA
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       As I suggested at the outset, Appellants have not elaborated how for-
cause removal protection itself is an undue barrier to presidential control,
rather than a useful tool thereof, as Morrison held. 487 U.S. at 696. In this
connection, it warrants mention that Humphrey’s Executor and Wiener, in
which the removed officials prevailed, were suits for backpay in the Court of
Claims, not emergency suits for injunctions to block removal. See Wiener, 357
U.S. at 350–51; Humphrey’s Executor, 12 295 U.S. at 618–19. No one has put
forward an example of the President being blocked from removing an official
at the FHFA Director’s level. Thus, the actuality of the protection in practice
is anyone’s guess. 13
       Moving from generalities to specifics, the FHFA does not exhibit undue
insulation. As Judge Costa’s opinion explains, the FHFA undertook every
action at issue here by agreement with the Secretary of the Treasury, a purely
executive officer serving at the pleasure of the President. The President thus
had direct control via the bargaining power of the Secretary.
       Moreover, two unusual features present in Free Enterprise Fund are not
present here. First, the statutory grounds for removal of PCAOB members set

and eight other agencies had five, ten agencies had six, and four agencies had seven. See
Datla & Revesz, 98 CORNELL L. REV. at 825.
        12 Humphrey had died; hence that case’s unusual name.
        13 Justice Scalia’s noted dissent in Morrison delved into the difficult political dynamics

likely to engulf presidential removal of an official statutorily protected against removal
without cause. See 487 U.S. at 702–03 (intuiting that “[t]he context of this statute is acrid
with the smell of threatened impeachment,” and noting the “bitter power dispute” giving rise
to the case). Concededly, we have a duty to determine the constitutionality of statutes. See
Zivotovsky ex rel. Zivotovsky v. Clinton, 566 U.S. 189, 197 (2012) (relating removal
jurisprudence to the political-question doctrine). But, to the extent we find ourselves basing
constitutional reasoning on hypothesized trajectories of interbranch politics, it is cause for
reflection on the wisdom of what we are doing. For a nuanced and somewhat contrary view
of how such hypothesizing might be factored into adjudication, see Adrian Vermeule,
Conventions of Agency Independence, 113 COLUM. L. REV. 1163 (2013).
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an “unusually high standard.” 561 U.S. at 502–03. 14 By contrast, the FHFA’s
authorizing statute, as noted above, says merely that the Director shall serve
a five-year term “unless removed before the end of such term for cause by the
President.” 12 U.S.C. 4512(b)(2). Though this provision is the centerpiece of
Appellants’ constitutional claim and of the majority opinion’s constitutional
remedy, no party and no part of the majority opinion suggests what this text
should mean. It is at least quite plain that the text sets a lower bar than the
PCAOB statute. 15 Second, members of the PCAOB were removable only by
formal order of the SEC, and such orders are subject to judicial review. Free
Enter. Fund, 561 U.S. at 502 (citing 15 U.S.C. § 78y(a)(1)). The President would
thus have to persuade not only the SEC commissioners but also an Article III
court that removal was appropriate. No such obstacle exists here.
       Finally, the nature of the FHFA’s function and the character of the
Director’s office matter, even though Morrison downgraded Wiener’s and
Humphrey’s Executor’s inquiries from a determinative to a subsidiary level.
See Morrison, 487 U.S. at 691. The majority and dissenting opinions on
Appellants’ statutory claims cover the relevant ground. As their discussions
make clear, the FHFA Director wields no prosecutorial power as the
independent counsel in Morrison had. The Director has powers of regulation

       14 “A [PCAOB] member cannot be removed except for willful violations of the
[Sarbanes–Oxley] Act [of 2002], Board rules, or the securities laws; willful abuse of authority;
or unreasonable failure to enforce compliance—as determined in a formal Commission order,
rendered on the record and after notice and an opportunity for a hearing. [15 U.S.C.] §
7217(d)(3); see § 78y(a). The Act does not even give the Commission power to fire Board
members for violations of other laws that do not relate to the Act, the securities laws, or the
Board’s authority. The President might have less than full confidence in, say, a Board
member who cheats on his taxes; but that discovery is not listed among the grounds for
removal under § 7217(d)(3).” 561 U.S. at 503.
       15 See Datla & Revesz, 98 CORNELL L. REV. at 788 (“Statutes that specify that an

appointee cannot be removed except for ‘good cause’ confer the weakest protection,” in
contrast to statutes enumerating specific grounds).
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and enforcement, like the PCAOB, though only over the government-sponsored
enterprises, Fannie Mae and Freddie Mac, and affiliated entities. See Free
Enter. Fund, 561 U.S. at 485–86 (PCAOB’s powers); 12 U.S.C. § 4631
(Director’s cease-and-desist proceedings). This appeal does not arise from the
use of those powers, nor has any party shown us examples of their misuse.
Instead, this appeal arises from the FHFA’s conservatorship function, 16 a role
one would be hard-pressed to characterize as near the heart of executive
power. 17 To the extent that the Supreme Court’s removal doctrine has been
animated by a concern for preserving presidential control over the core of that
power, this is not a case that should stir us to act.
                                             ***
       Regarding Appellants’ constitutional claim against the FHFA, I see only
reasons for caution and skepticism, and none for action. Neither the
Constitution’s text, nor the Supreme Court’s constructions thereof, nor the
adversary process in this litigation has given us much ground on which to
declare the FHFA’s design unconstitutional. If so thin a record may be made
the basis for invalidating Congress’s considered response to a major crisis in
American life, I am apprehensive about the responsible use of our nullification
power henceforth.

       16 The Secretary of the Treasury, an appellee in this matter, relies on our caselaw
distinguishing the “non-governmental” power wielded by agencies acting as conservators or
receivers of struggling financial institutions from the power wielded by agencies acting as
regulators. See, e.g., United States v. Bezborn, 21 F.3d 62, 68 (5th Cir. 1994) (concerning the
Resolution Trust Corporation, a model for the FHFA’s design).
       17 Cf. A. Michael Froomkin, Note, In Defense of Administrative Agency Autonomy, 96

YALE L.J. 787, 809–12 (1987) (identifying a given power’s enumeration in Article I versus
Article II as the key criterion in determining whether Congress may insulate from
presidential control an agency acting pursuant to that power).
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GREGG COSTA, Circuit Judge, joined by STEPHEN A. HIGGINSON, Circuit
Judge, dissenting in part:
      In a separation-of-powers case, our vigilance should first be directed at
the constitutional limits on our own power. Raines v. Byrd, 521 U.S. 811, 819
(1997) (“[O]ur standing inquiry has been especially rigorous when reaching the
merits of the dispute would force us to decide whether an action taken by one
of the other two branches of the Federal Government was unconstitutional.”).
We have failed in that duty. In concluding that unravelling the Net Worth
Sweep is not the remedy for the allegedly unconstitutional insulation of the
FHFA, the court recognizes that the President has always maintained
“oversight” of the Net Worth Sweep. Majority Op. (Remedy) 58. But that
conclusion does not just resolve the final question for the constitutional claim.
It also answers the first question any case poses: Is there jurisdiction?
      The answer is “no” because presidential control of the Net Worth Sweep
means there is no connection between the good-cause removal provision for
FHFA Directors that plaintiffs challenge and the injury from the New Worth
Sweep they allege. In other words, the limitation on the removal power did not
cause their injury.
      The requirement that an alleged constitutional defect caused the
plaintiff’s injury is part of the threshold standing inquiry—the standing lingo
is “traceability”—that ensures we are only deciding constitutional issues when
they arise in “cases” or “controversies.” Raines, 521 U.S. at 818–19. For
numerous reasons described below (some of which are recognized in the court’s
remedial ruling), the Net Worth Sweep is not traceable to the for-cause
limitation on the President’s power to remove the FHFA Director. In deciding
whether Congress has violated the separation of powers at the behest of
plaintiffs who lack standing, we violate the separation of powers ourselves. See

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Clapper v. Amnesty Int’l, 568 U.S. 398, 408 (2013) (“The law of Article III
standing . . . is built on separation-of-powers principles.”).
       This is not just a case in which plaintiffs fail to prove standing; the
history and nature of the Net Worth Sweep, as well as the Shareholders’ own
allegations, disprove standing. Let us count the ways the record refutes the
required causal link.
       For starters, the Acting Director of the FHFA who agreed to the Third
Amendment was subject to full removal power.                    See 12 U.S.C. § 4512(f)
(allowing Acting Directors with no limits on the President’s ability to remove
them). Recognizing the problem for this lawsuit if the FHFA was not insulated
from presidential control at the Net Worth Sweep’s inception, the majority
opinion contends that the for-cause limit on removal also applies to Acting
Directors. Maj. Op. 48. This novel reading is a stark departure from textualist
principles.    Unlike the tenure protection the statute provides the FHFA’s
Senate-confirmed Directors, 12 U.S.C. § 4512(b)(2), it does not impose a for-
cause limitation on the removal of Acting Directors. 12 U.S.C. § 4512(f). “[I]t
is a general principle of statutory construction that when Congress includes
particular language in one section of a statute but omits it in another section
of the same Act, it is generally presumed that Congress acts intentionally and
purposely in the disparate inclusion or exclusion.” Barnhart v. Sigmon Coal
Co., Inc., 534 U.S. 438, 452 (2002) (quotations omitted).
       That Congress created the FHFA as “an independent agency,” Majority
Op. at 48 (citing 12 U.S.C. § 4511(a)), is no license for us to graft onto the
statute a for-cause limitation on removal of Acting Directors that Congress did
not include. 1 As the Office of Legal Counsel recently pointed out, “Congress

       1The court is looking in the wrong place for the removal power over Acting Directors
when it states that Section 4512(f) “does not explicitly address removal.” Majority Op. at 48.
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does not, by purporting to give tenure protection to a Senate-confirmed officer,
afford similar protection to an individual who temporarily performs the
functions and duties of that office when it is vacant.” Designating an Acting
Director of the Bureau of Consumer Financial Protection, 41 Op. O.L.C. ___,
2017 WL 6419154, Slip Op. at 11 (Nov. 25, 2017). The D.C. Circuit agrees that
courts should not create for-cause removal restrictions for officers Congress
does not explicitly protect. Swan v. Clinton, 100 F.3d 973, 988 (D.C. Cir. 1996)
(refusing to assume certain officials retained removal protection after their
terms expired because the statute allowing those officials to continue in a
“holdover capacity” made no mention of such protection). No authority has
ever read in tenure protection for acting officials not subject to Senate
confirmation. 2
       Doing so for the first time here is particularly problematic because
penciling in a for-cause limitation on the removal of Acting Directors creates a
constitutional issue.       In interpreting statutes, we are supposed to avoid
constitutional difficulties, not create them. Edward J. Bartolo Corp. v. Fla.

That power comes from the Constitution, not Congress. Myers v. United States, 272 U.S. 52,
163–64 (1926). One would thus search in vain for a statute giving the President authority to
remove the Attorney General, the Secretary of Defense, or any other cabinet secretary.
        2 Wiener v. United States read in tenure protection only for Senate-confirmed officials,

not for acting officials, who in another respect are already exclusively the product of
presidential power because they do not go through the advice-and-consent process. 357 U.S.
349, 350 (1958). And unlike the FHFA statute and the CFPB statute OLC addressed, Wiener
was not a case in which Congress extended for-cause protection to one kind of officer and not
to another. The “expressio unius est exclusio alterius” canon thus had no role in Wiener.
Instead, it was addressing a complete silence as to removal. Here there is no “congressional
failure of explicitness”—Congress explicitly gave tenure protection only to Senate-confirmed
Directors. Id. at 352. Finally, Wiener predates Morrison v. Olson’s shift in removal power
cases from a focus on the nature and function of the office in question (that is, whether the
officer performing purely executive functions and therefore in need of greater presidential
control) to one about the degree to which the president’s prerogative is impaired. See 487
U.S. 654, 691 (1988). The “intrinsic judicial character” of the War Claims Commission made
its members one of the stronger candidates for tenure protection under the then-governing
conception of removal power. Wiener, 357 U.S. at 355.
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Gulf Coast Bldg. & Const. Trades Council, 485 U.S. 568, 575 (1988) (“[W]here
an otherwise acceptable construction of a statute would raise serious
constitutional problems, the Court will construe the statute to avoid such
problems unless such construction is plainly contrary to the intent of
Congress.”).
      Why turn these cardinal rules of statutory construction upside down?
Because the implication is quite clear when the statute governing Acting
Directors is read according to its plain language: If the FHFA agreed to the
Net Worth Sweep when its leader was fully accountable to the President, then
any injury that policy caused is not traceable to the for-cause removal
limitation the Shareholders seek to challenge. Indeed, this may be why none
of the numerous other statutory challenges to the Net Worth Sweep that courts
of appeals have decided included the constitutional claim about the removal
power. See Jacobs v. FHFA, 908 F.3d 884 (3d Cir. 2018); Saxton v. FHFA, 901
F.3d 954 (8th Cir. 2018); Roberts v. FHFA, 889 F.3d 397 (7th Cir. 2018);
Robinson v. FHFA, 876 F.3d 220 (6th Cir. 2017); Perry Capital LLC v.
Mnuchin, 864 F.3d 591 (D.C. Cir. 2017).        As for the only other case that
challenged the removal power in connection with the Net Worth Sweep, a court
dismissed it for lack of standing, recognizing that the policy came from an
Acting Director subject to full presidential control. Bhatti v. FHFA, 332 F.
Supp. 3d 1206, 1213–14 (D. Minn. 2018), appeal docketed, No. 18-2506 (8th
Cir. July 16, 2018).
      The role of a presidentially accountable FHFA official in agreeing to the
Net Worth Sweep is enough to reject traceability. But there is more.
      The Shareholders’ allegations confirm that the Third Amendment was
not the product of any improper insulation of the FHFA from presidential
control. In fact, their theory is the opposite—that the Third Amendment was

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a “deliberate strategy” of the Obama Administration. The complaint often
refers FHFA and Treasury collectively as “the Agencies,” not as independent
actors. The Shareholders allege that “those Agencies initiated a long-term
policy of seeking to seize control of Fannie and Freddie.” They further contend
that the Net Worth Sweep was part of “the Administration’s plans to keep
Fannie and Freddie in perpetual conservatorship.”
       Treasury’s role provides even more proof that the Net Worth Sweep is
not traceable to the for-cause removal limitation. The necessary and ongoing
involvement of an agency not suffering from any alleged constitutional defect
is an unusual feature in a separation-of-powers case. 3 Ever since Treasury
was established in 1789 as the third department in the executive branch, 4 its
secretary has been subject to at-will removal. So even if the President could
not express any disapproval of the Net Worth Sweep policy through the FHFA
once a Senate-confirmed Director replaced the Acting Director, the Treasury
Secretary was always an outlet for any such views.                     Yet Treasury has
continued to accept the dividends for each of the past 27 quarters (since the
Third Agreement was signed in August 2012), showing that Treasury’s
leadership has not viewed the Net Worth Sweep as out of step with the
preferred policy of either the Obama or Trump Administration. If that stance

       3 Indeed, the Treasury Secretary is the lead defendant in this case, demonstrating
that the executive branch is enforcing the policy that the Shareholders contend is the product
of an improperly insulated bureaucrat.
       4 The First Congress created Treasury on September 2, 1789. An Act to Establish the

Treasury Department, 1 Stat. 65, Ch. 12, 65–67 (1789). Earlier in that first year of the
republic, the State Department (then called the Department of Foreign Affairs) was created
on July 27 and the War Department on August 7. An Act for Establishing an Executive
Department, to Be Denominated the Department of Foreign Affairs, 1 Stat. 28, Ch. 4, 28–29
(1789); An Act to Establish an Executive Department, to Be Denominated the Department of
War, 1 Stat. 49, Ch. 7, 49–50 (1789).
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ever changes, all it would take is for the President to direct the Treasury
Secretary to stop accepting the dividends.
       Looking at the government officials involved in both the creation and
continuation of the Net Worth Sweep leads to one conclusion: The injury
Shareholders complain about in no way flows from any limits on the
President’s ability to influence FHFA policy.
       Nor can the Shareholders rely on “regulated entity” standing. That
doctrine describes removal power cases in which courts have found standing
because the party bringing the challenge is under investigation. Free Enter.
Fund v. Pub. Co. Accounting Oversight Bd., 561 U.S. 477, 487–88 (2010);
Morrison v. Olson, 487 U.S. 654, 667–68 (1988); PHH Corp. v. Consumer Fin.
Prot. Bureau, 881 F.3d 75, 82 (D.C. Cir. 2018). But those cases were brought
by the individuals or corporations subject to agency authority. In contrast, the
FHFA is not “overseeing” or regulating the Shareholders. To the extent it is
engaged in ongoing oversight of anything, it is of the government sponsored
entities.     Corporate law distinguishes between a corporation and its
shareholders for standing purposes; a shareholder, or even a majority of them,
cannot litigate in the shoes of the corporation. 5 See Dole Food Co. v. Patrickson,

       5 A derivative suit is the notable exception. As noted in the majority opinion, our sister
circuits have determined that the FHFA, not the Shareholders, has sole authority to bring a
derivative suit. Maj. Op. 21–22. See also Roberts, 889 F.3d at 408; Perry Capital, 864 F.3d
at 624. And while two circuits have found an exception in an analogous situation—when the
FDIC as conservator of a bank has a conflict of interest with respect to a particular claim—
no such exception to HERA’s grant of “all rights, titles, powers, and privileges of the regulated
entity, and of any stockholder” to the FHFA as conservator appears in the statutory text. 12
U.S.C. § 4617(b)(2)(A)(i); Roberts, 889 F.3d at 409–10.
        But those issues arise in the context of whether Shareholders can bring their statutory
claim. The majority opinion concludes that this is a direct shareholder action. That analysis
does not carry over to standing for the constitutional claims based on regulated entity status.
For that, it has always been the entity being regulated—not its shareholders—that has
standing to challenge the structure of the regulating agency.
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538 U.S. 468, 474-75 (2003) (“A basic tenet of American corporate law is that
the corporation and its shareholders are distinct entities.             An individual
shareholder, by virtue of his ownership of shares, does not own the
corporation's assets . . . .” (citations omitted)); Fox v. Harbottle, 2 Hare 461
(Eng. 1843) (seminal corporate law case holding that the proper plaintiff in an
action alleging an injury to the corporation is the corporation). Think of the
potential for chaos if the law were otherwise.                Any shareholder of a
corporation—for major ones like Wal-Mart or GE we are talking about tens of
thousands of potential plaintiffs—could claim to represent the company
despite shareholders holding widely varying views on issues affecting the
corporation. Consistent with the long-established rule that a business entity
has to litigate on its own behalf, no case has recognized that the shareholders
of a regulated entity have standing to bring constitutional challenges to the
structure of the regulator. That astonishingly expansive view of regulated
entity standing cannot be the law.
      So if Shareholders have standing at all, it must be founded on harms the
Net Worth Sweep directly inflicts on them. On that score, while the standing
requirements are sometimes relaxed in separation-of-powers cases, 6 they are
not removed. See Bond v. United States, 564 U.S. 211, 225 (2011) (continuing
to require that a plaintiff must show an “actual or imminent harm that is
concrete and particular, fairly traceable to the conduct complained of, and
likely to be redressed by a favorable decision”).          The Supreme Court has

      6  One important way standing is relaxed is that we do not require the branch of
government whose powers are being encroached to bring the separation-of-powers claim.
Because structural limitations in the Constitution protect individual liberty, affected
individuals can bring such claims. See Bond v. United States, 564 U.S. 211, 222–23 (2011)
(discussing the rationale). But that does not mean they don’t have to be affected by the
allegedly unconstitutional law.
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loosened the standing inquiry when it was not possible to know if the allegedly
unconstitutional structure of an agency caused the challenger’s injury. See
Free Enter. Fund, 561 U.S. at 512 n.12. Given the usual difficulty of proving
that “counterfactual world,” plaintiffs do not have to prove that causation is
more than a possibility when the alternative reality is unknowable. Id; see also
Landry v. F.D.I.C., 204 F.3d 1125, 1131 (D.C. Cir. 2000) (explaining the
traceability requirement is relaxed when it is “difficult or impossible for
someone subject to a wrongly designed scheme to show that the design . . .
played a causal role in his loss”). 7 But it is one thing to give plaintiffs the
benefit of the doubt when we cannot know if a properly structured agency
would have taken the same action. It is quite another to ignore the traceability
requirement when there is no doubt that the alleged constitutional error did
not cause the plaintiffs’ injury. That is the case here. We know the Net Worth
Sweep is a presidentially-sanctioned policy because a Treasury Secretary and
Acting Director of FHFA subject to full removal authority adopted the policy,
and the presidentially-controlled Treasury has continued to enforce it. If there
is standing even in this situation when real world events disprove traceability,
then there is nothing left of the Article III limitation. 8

       7  In its standing discussion, court cites another line from Free Enterprise—that “the
separation of powers does not depend on the views of individual Presidents, nor on whether
‘the encroached-upon branch approves the encroachment.’” Majority Op. 44 (quoting Free
Enter. Fund, 561 U.S. at 497 (quoting New York v. United States, 505 U.S. 144, 182 (1992))).
But the Supreme Court did not make that comment in discussing standing. It instead was
directed at the merits, pointing out that presidential acquiescence in a limit on removal power
does not eliminate the constitutional defect. Free Enter. Fund, 561 U.S. at 496. The standing
inquiry requires us to answer not whether “the encroached-upon branch approves the
encroachment,” but instead whether the encroachment caused the injury.
        8 Two other cases the Shareholders rely on are inapposite. Noel Canning arose
directly from an enforcement action brought by the challenged agency, so standing was not
even discussed. N.L.R.B. v. Noel Canning, 573 U.S. 513 (2014). Beyond that, the case
involved an unconstitutional appointment, not an improperly insulated agency. That is an
important distinction—any action an improperly appointed agency official takes is “void ab
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       Because presidential control over the creation and enforcement of the
Net Worth Sweep refutes any link between it and the challenged limits on
presidential oversight of the FHFA, Shareholders have little more claim to
litigate the structure of that agency than any taxpayer would. Hein v. Freedom
from Religion Found., 551 U.S. 587, 609–10 (2007) (recognizing that taxpayer
standing generally does not exist). If they could be parties to this case, most
taxpayers would present a different perspective on the Net Worth Sweep. It
has helped repay the roughly $190 billion taxpayers lent to bail out Fannie and
Freddie before the 2008 financial collapse—a key component of the recovery
from the Great Recession given the outsized role of Fannie and Freddie in the
housing market. 9 Plaintiffs who invested before the collapse would have lost
their entire investment were it not for the bailout. Those who have invested
since have paid “pennies on the dollar” in a speculative play based on hopes

initio.” Noel Canning v. N.L.R.B., 705 F.3d 490, 493 (D.C. Cir. 2013), aff’d, 573 U.S. 513
(2014). Whereas a lack of authority permeates every agency action, a lack of oversight only
injures a regulated party if the required oversight would have made a difference. Compare
Lucia v. S.E.C., 138 S. Ct. 2044, 2055 (2018) (vacating and remanding decision of an
improperly appointed ALJ) with Free Enter. Fund, 561 U.S. at 508 (rejecting the “broad
holding” that improper insulation rendered the challenged agency “and all power and
authority exercised by it in violation of the Constitution” (quotation omitted)).
        Bowsher v. Synar may provide even less assistance. 478 U.S. 714 (1986). For one, as
Judge Higginson points out, that case is less about limiting the President’s ability to control
an agency and more about placing executive authority in the hands of a legislative officer.
Higginson Op. at 3. And in any case, unlike here, in Bowsher there was evidence that the
constitutional defect prevented the President from carrying out his preferred policy. See Brief
for the United States, Bowsher v. Synar, 478 U.S. 714 (1986), 1986 WL 728082, at *44–51.
Indeed, the central purpose of the statute challenged in Bowsher was to tie the President’s
hands and force him to sequester funds hand-selected by a Comptroller General who
answered directly to Congress. Bowsher, 478 U.S. at 718. So standing for union members
whose cost of living adjustments were withheld as a result of sequestration was easily
satisfied—their money was sequestered at the behest of a Comptroller General who never
should have had that authority in the first place. Id. at 721.
        9 Shareholders point out that now, more than a decade later, the dividends have repaid

the billions lent. But looking only at the principal ignores the return one would expect based
on the risk the enormous sum would not be repaid and the time value of money.
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that either the Treasury Department would change the Net Worth Sweep
policy or that the courts would undo it for them. See Robert Stowe England,
Against All Odds: The Long Bet on Fannie Mae and Freddie Mac, Institutional
Investor, Sept. 6, 2013. 10 The former may happen. Treasury is reviewing
whether to end the conservatorship, yet another reminder that the President
has always held full policymaking authority over this issue.                     Andrew
Ackerman, Administration Nears Plan to Return Fannie, Freddie to Private
Ownership, WALL ST. J., May 30, 2019. 11 But if we were to grant Shareholders
that relief based on their separation-of-powers claim, they would be receiving
not just a financial windfall. Unravelling the Net Worth Sweep because of
limits on the removal power that had nothing to do with the creation or
continuation of that financial policy would also be giving Shareholders a
constitutional windfall.

      10 Available at https://www.institutionalinvestor.com/article/b14zbcy3kts0t7/against-
allodds-the-long-bet-on-fannie-mae-and-freddie-mac.
       11 Available at https://www.wsj.com/articles/administration-nears-plan-to-return-

fannie-mae-freddie-mac-to-private-ownership-1155925207.
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WILLETT, Circuit Judge, joined by JONES, SMITH, ELROD, HO,
ENGELHARDT, and OLDHAM, Circuit Judges, dissenting in part:

      In my view, the proper remedy for Count IV is to vacate the Third
Amendment. I respectfully dissent from the court’s decision to instead grant a
prospective remedy.
                                            I
      When a plaintiff with Article III standing challenges the action of an
unconstitutionally-insulated officer, that action must be set aside. In Bowsher
v. Synar, the Supreme Court held the Comptroller General could not prescribe
budget reductions because he was not removable by the President. 1 “Once an
officer is appointed, it is only the authority that can remove him, and not the
authority that appointed him, that he must fear and, in the performance of his
functions, obey.” 2 The Comptroller General exercised executive power: His role
required him to “interpret” the law and “exercise judgment” in applying it. 3
Because he did so outside the President’s supervision, the Court set aside his
sequestration order. The Court affirmed the district court’s judgment “that the
presidential sequestration order issued . . . pursuant to the unconstitutional
automatic deficit reduction process be, and hereby is, declared without legal
force and effect.” 4
      Synar’s remedial approach applies here. It is the only Supreme Court
case that presented the issue. In Myers v. United States, the Court upheld a
postmaster’s removal, so it had no need to grant relief against past government

      1 478 U.S. 714, 736 (1986).
      2 Id. at 726 (quoting Synar v. United States, 626 F. Supp. 1374, 1401 (D.D.C. 1986)).
      3 Id. at 733.
      4 Synar, 626 F. Supp. at 1404, aff’d, 478 U.S. at 736.

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action. 5 In Morrison v. Olson, the Court found no constitutional defect in the
independent counsel’s removal protection, so it granted no relief. 6
      In Free Enterprise Fund, the Court held the Public Company Accounting
Oversight Board’s double for-cause removal protection unconstitutional. 7 But
no Board action had become final against the plaintiff, an accounting firm. 8 So
the Court “excised” the offending removal protection from the statute going
forward. 9 The plaintiff had standing for prospective relief because the
challenged agency “regulate[d] every detail of an accounting firm’s practice.” 10
The unconstitutionally-insulated regulator inflicted an ongoing injury.
      Here, in contrast, FHFA generally regulates the GSEs, not their
shareholders. And the Third Amendment, which became final in 2012, caused
the Shareholders’ injury. So I disagree with Judge Duncan’s view that Free
Enterprise Fund, or any Supreme Court decision, counsels against a vacatur
remedy in this case. And the Shareholders’ lack of “regulated party” standing
separates me from Judge Haynes’s remedial theory.
      Despite having no occasion to vacate agency action, Free Enterprise Fund
reinforces Synar’s principle that an unconstitutionally-insulated officer may
not exercise executive power. “[T]he Framers sought to ensure that ‘those who
are employed in the execution of the law will be in their proper situation, and
the chain of dependence be preserved; the lowest officers, the middle grade,
and the highest, will depend, as they ought, on the President, and the
President on the community.’” 11 “By granting the Board executive power

      5 272 U.S. 52, 176 (1926); see id. at 106.
      6 487 U.S. 654, 691–92 (1988).
      7 Free Enter. Fund v. Pub. Co. Accounting Oversight Bd., 561 U.S. 477, 496 (2010).
      8 Id. at 490.
      9 Id. at 509.
      10 Id. at 485.
      11 Id. at 498 (quoting 1 Annals of Cong. 499 (J. Madison)).

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without the Executive’s oversight, this Act subverts the President’s ability to
ensure that the laws are faithfully executed—as well as the public’s ability to
pass judgment on his efforts. The Act’s restrictions are incompatible with the
Constitution’s separation of powers.” 12
                                          II
      Unconstitutional      protection   from    removal,      like   unconstitutional
appointment, is a defect in authority. Appointments Clause decisions routinely
set aside agency action. In Lucia v. SEC, the Court held that administrative
law judges must be appointed by a “head of department,” not by staff. 13 As
remedy, the Court granted a new hearing before a different ALJ. 14 It
disapproved curing the defective appointment by a quick (already-issued)
ratification of the ALJ’s appointment. 15 Similarly, in NLRB v. Noel Canning,
the Court held that three NLRB Members were unconstitutionally appointed
without Senate advice and consent. 16 It affirmed the Court of Appeals’s
decision that the NLRB order, issued without a properly-appointed quorum,
was “invalid.” 17
      These cases are apt because there, as here, a defect in authority made
agency action unlawful. In debating the first executive agencies, James
Madison insisted the President naturally had “the power of appointing,
overseeing, and controlling those who execute the laws.” 18 Unlike judicial

      12 Id.
      13 138 S. Ct. 2044, 2051 (2018).
      14 Id. at 2055.
      15 Id. at 2055 nn. 5&6.
      16 573 U.S. 513, 519 (2014) (interpreting U.S. CONST. art. II, § 2, cl. 3, Recess

Appointments Clause).
      17 Id. at 521; see id. at 557.
      18 1 Annals of Cong. 463 (1789).

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power or (arguably) legislative power, executive power can be delegated. 19 But
if an unconstitutional removal protection breaks the “chain of dependence”
between the officer and the President, the delegation breaks down too. 20 An
unconstitutionally-insulated officer lacks authority to act. 21
       Treasury contends that when agency action is held unlawful, vacatur is
not mandatory but subject to equitable remedial authority. 22 And it maintains
that the case for such relief here is weak. The Shareholders waited four years
to sue; vacatur might disrupt the GSEs’ operations or the housing market
generally; and the Shareholders wielded 20/20 hindsight to target an initially
risky, but now astute, Treasury bargain. It also says the case for equitable
relief here is worse than Synar, where the statutory fallback provision was
ready at hand. 23
       These arguments do not defeat vacatur here. Appointments Clause cases
refute the point that vacatur is too disruptive. As a remedial matter, Lucia
granted the petitioner a new hearing based on an appointment defect that was

       19  See Mistretta v. United States, 488 U.S. 361, 424 (1989) (Scalia, J., dissenting) (citing
Wolsey v. Chapman, 101 U.S. 755 (1880); Williams v. United States, 42 U.S. 290 (1843))
(“Although the Constitution says that ‘[t]he executive Power shall be vested in a President of
the United States of America,’ Art. II, § 1, it was never thought that the President would
have to exercise that power personally. He may generally authorize others to exercise
executive powers, with full effect of law, in his place.”).
        20 Free Enter. Fund, 561 U.S. at 498 (quoting 1 Annals of Cong. 499 (J. Madison)); see

Kisor v. Wilkie, 139 S. Ct. 2400, 2413 (2019) (opinion of Kagan, J.) (“[A]gencies . . . have
political accountability, because they are subject to the supervision of the President, who in
turn answers to the public.”).
        21 See Free Enter. Fund, 561 U.S. at 498; Neomi Rao, Removal: Necessary and

Sufficient for Presidential Control, 65 ALA. L. REV. 1205, 1242 (2014) (“Removal . . . provides
the constitutionally requisite presidential control.”).
        22 Cf. Abbott Labs. v. Gardner, 387 U.S. 136, 155 (1967) (stating in APA context that

“the declaratory judgment and injunctive remedies are equitable in nature, and other
equitable defenses may be interposed”); see also Weinberger v. Romero-Barcelo, 456 U.S. 305,
311–19 (1982) (holding that traditional equitable principles apply to injunctive relief unless
Congress intervenes to guide the courts’ discretion).
        23 Cf. 478 U.S. at 734–36.

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common to every single SEC ALJ. 24 Noel Canning held an NLRB order invalid
because of three defective appointments, which infected all the Board’s actions
during those Members’ tenure. 25 If setting aside agency action was proper in
those cases, it is proper here. FHFA and Treasury have other tools to arrange
their affairs going forward. The FHFA Director, constitutionally supervised by
the President, generally can enter new agreements or ratify past ones that are
not challenged here. As for the Third Amendment, it must be aside. The
Shareholders have invoked judicial review of agency action that injured them
in fact and violated the separation of powers. 26
       Treasury’s cases urging equitable discretion are distinguishable. They
discuss prospective remedies like prohibitory or mandatory injunctions, not
vacatur of agency action that violated the separation of powers. 27 In contrast,
neither Synar, Lucia, nor Noel Canning discusses equitable-discretion
principles or applies the four-factor test for granting an injunction.
                                              III
       Although setting aside agency action is not subject to the four-factor
injunction standard, it remains an equitable remedy. Doing so here is like
rescinding a contract. “A transfer by an agent, trustee, or other fiduciary

       24 138 S. Ct. at 2049, 2055.
       25 573 U.S. at 520–21, 557.
        26 See Bond v. United States, 564 U.S. 211, 223 (2011) (“If the constitutional structure

of our Government that protects individual liberty is compromised, individuals who suffer
otherwise justiciable injury may object.”); Synar, 478 U.S. at 736 (setting aside sequestration
order because “the powers vested in the Comptroller General . . . violate the command of the
Constitution”).
        27 See North Carolina v. Covington, 137 S. Ct. 1624, 1625 (2017) (per curiam)

(reversing special-election injunction in redistricting case); Winter v. Nat. Res. Def. Council,
Inc., 555 U.S. 7, 12 (2008) (reversing preliminary injunction against Navy sonar training);
eBay Inc. v. MercExchange, LLC, 547 U.S. 388, 394 (2006) (holding that traditional four-
factor test applies to injunctions against patent infringement); Weinberger, 456 U.S. at 320
(holding that Federal Water Pollution Control Act did not mandate injunctions against its
violation).
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outside the scope of the transferor’s authority, or otherwise in breach of the
transferor’s duty to the principal or beneficiary, is subject to rescission and
restitution.” 28 The Third Amendment is the smallest independent agreement
that caused the Shareholders’ injury, so that is what to rescind. When a
contract is rescinded, restitution is generally in order, and the plaintiff may
also need to return benefits it received. 29 I would recognize the district court’s
authority, on remand, to decide the parties’ rights and duties to restore their
rightful position. So I don’t share Judge Haynes’s concern that this remedy
resembles a “pick-and-choose approach” and grants Shareholders a windfall.
                                       *       *      *
       The Shareholders are entitled to declaratory judgment that the Third
Amendment exceeded FHFA’s lawful authority because the agency adopted it
outside the President’s supervision. 30 This analysis also supports an injunction
vacating the Third Amendment. 31 In light of recent developments, I would
remand Count IV to the district court for entry of a judgment consistent with
this opinion. 32

       28  RESTATEMENT (THIRD) OF RESTITUTION AND UNJUST ENRICHMENT § 17 (AM. LAW
INST. 2011).
        29 See id. (“The transferee is liable in restitution to the principal or beneficiary as

necessary to avoid unjust enrichment.”).
        30 See Free Enter. Fund, 561 U.S. at 513 (holding petitioners were entitled to

declaratory relief that PCAOB standards “will be enforced only by a constitutional agency
accountable to the Executive”); see also Kisor, 139 S. Ct. at 2413 (opinion of Kagan, J.)
(“[A]gencies . . . have political accountability, because they are subject to the supervision of
the President, who in turn answers to the public.”).
        31 See Synar, 478 U.S. at 736, aff’g Synar, 626 F. Supp. at 1404 (ordering “that the

presidential sequestration order issued . . . pursuant to the unconstitutional automatic deficit
reduction process be, and hereby is, declared without legal force and effect”).
        32 FHFA’s newly appointed Director has publicly indicated he is considering

renegotiating FHFA’s agreements with Treasury. Andrew Ackerman & Ben Eisen, Push to
Overhaul Fannie, Freddie Nudges Up Mortgage Costs, WALL STREET J. (June 25, 2019,
https://www.wsj.com/articles/trump-push-on-housing-finance-nudges-up-mortgage-costs-
11561474203?mod=searchresults&page=1&pos=2).
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