CFPB Seeks Cert in Funding Dispute

As we previously predicted, the Consumer Financial Protection Bureau (CFPB) has asked the Supreme Court to reverse the recent Fifth Circuit decision finding that the agency’s funding is unconstitutional. In a petition for certiorari filed less than a month after the Fifth Circuit decision, the CFPB asks the Supreme Court to hear the case and decide it this term. The CFPB’s petition argues that the Fifth Circuit’s conclusion that the agency’s funding violates the Appropriations Clause was wrong for numerous reasons. In the CFPB’s words:

The court of appeals relied on an unprecedented and erroneous understanding of the Appropriations Clause to hold the CFPB’s statutory funding mechanism unconstitutional. Congress enacted a statute explicitly authorizing the CFPB to use a specified amount of funds from a specified source for specified purposes. The Appropriations Clause requires nothing more. The court of appeals’ novel and ill-defined limits on Congress’s spending authority contradict the Constitution’s text, historical practice, and this Court’s precedent. And the court of appeals compounded its error by adopting a sweeping remedial approach that calls into question virtually every action the CFPB has taken in the 12 years since it was created.

As the last sentence suggests, in addition to arguing that the Fifth Circuit’s Appropriations Clause analysis was erroneous, the CFPB argues that the Fifth Circuit’s remedy analysis—which struck down the CFPB’s Payday Lending Rule and suggested that all of the agency’s actions were similarly subject to challenge—was also wrong.

Given the implications of the Fifth Circuit’s ruling, we expect the Supreme Court to grant cert and decide the case this term—that is, by June 2023.