Recently, the CFPB filed a petition for writ of certiorari seeking review of the Fifth Circuit’s decision in Consumer Financial Services of America v. Consumer Financial Protection Bureau, 51 F.4th 616 (5th Cir. 2022) which held that the CFPB’s funding mechanism—drawing the Bureau’s funding from the Federal Reserve’s operating expenses without appropriations from Congress—violates the Appropriations Clause of the U.S. Constitution. See WBK’s article on this case.
The CFPB asserts that the Fifth Circuit’s ruling in Consumer Financial Services of America v. Consumer Financial Protection Bureau is an “unprecedented and erroneous understanding of the Appropriations Clause” which conflicts with a ruling of the D.C. Circuit, and would threaten all of the Bureau’s actions taken throughout its history. The CFPB asserts that its interpretation of the Clause—which only requires Congress to pass a statute explicitly authorizing the use of a specified amount of funds from a specified source for specified purposes to comply—is in line with “[l]ong settled and established practice.” Identifying these “established practices,” the Bureau illustrates that other financial services regulators, specifically the Office of the Comptroller of the Currency and the Federal Reserve Board, obtain funding from sources outside of Congress’s appropriations process, making both vulnerable to constitutionality challenges under the Fifth Circuit’s ruling. Finally, the Bureau argues, even if its funding mechanism were unconstitutional, that the Fifth Circuit failed to utilize the required severability analysis, which would have better preserved the Bureau’s functionality despite its constitutional issues.
The CFPB asks the Supreme Court to set this case for argument this Term, claiming that the Fifth Circuit’s interpretation of the Appropriations Clause “threatens the ability of the CFPB to function and risks severe market disruption” if it were not resolved on an expedited basis.