Sixteen amicus briefs have been filed with the U.S. Supreme Court in support of the position of the Community Financial Services Association of America (CFSA) that the Court should affirm the Fifth Circuit panel decision in CFSA v. CFPB which held the CFPB’s funding mechanism violates the Appropriations Clause of the U.S. Constitution.  As a remedy for the constitutional violation, the panel vacated the CFPB’s payday lending rule (Payday Rule).  The CFPB filed its brief with the Supreme Court defending the constitutionality of its funding on May 8, 2023 and CFSA filed its brief asking the Court to affirm the Fifth Circuit panel decision on July 3.  The CFPB must file its reply brief by August 2. 

Perhaps the most surprising of the amici is former CFPB Acting Director Mulvaney who filed an amicus brief as “John Michael “Mick” Mulvaney.”  In explaining his interest in the case, he cites his service as a House member, CFPB Acting Director, and Director of the Office of Management and Budget.  He states that he “is the only individual to have served in all three of these capacities” and “[a]s a result, he is uniquely situated to understand how Congress’s appropriations authority disciplines Congress, curbs executive overreach, and promotes liberty in general, and in particular how lack of appropriations affects the conduct of the CFPB.”  In his brief, Mr. Mulvaney cites numerous actions by the CFPB that he characterizes as “improper conduct” and that, in his view, are attributable to the CFPB’s lack of accountability to Congress.  The “improper conduct” he cites includes “egregious discovery misconduct” by the CFPB, the “numerous enforcement actions [brought by the CFPB] based on novel, extreme interpretations of relevant law” such as its RESPA interpretation in the PHH case, and the CFPB’s actions “to evade explicit statutory limitations on whom it can regulate” such as its attempts to regulate the conduct of auto dealers.

While all of the trade group amici agree that the Fifth Circuit panel acted properly in vacating the Payday Rule as a remedy for the Appropriations Clause violation, the trade groups take the following differing approaches as to what the other appropriate consequences for the violation should be:

• Third Party Payment Processors Association.  TPPPA argues that the most appropriate remedy is for the Court’s ruling to only apply retroactively to currently challenged CFPB actions and rules funded by the CFPB’s unconstitutional funding mechanism, including the Payday Lending Rule, and leave in place all unchallenged actions, including (but not limited to) those outside of the Administrative Procedure Act’s (APA) six-year statute of limitations.  According to TPPPA this approach is necessary “in recognition of the enormous reliance costs that [applying the ruling to all CFPB actions and rules] would inflict on the American economy.”

• ACA International.  ACA argues that the Court “cannot fix the problem and save the Bureau” by severing the funding provision and that, to keep the CFPB, “the Court would have to write a new appropriations statute [which it cannot do].”  To minimize the disruption from its ruling, the Court should “stay its judgment for six months and leave the reshaping of the Bureau’s funding structure to the political process.”  ACA also asserts that “[e]ven if overhauling the Bureau’s financing structure proves too difficult for the political branches, a reasonable stay would give the Bureau time to transition its affairs with minimal disruption to the markets, consumers, and regulated entities.  It would also place the decision to allow the disruption that would necessarily follow the Bureau’s shuttering where it belongs: with the political branches of government.”

• Credit Union National Association, Inc., National Association of Federally-Insured Credit Unions, and American Association of Credit Union Leagues.  Amici argue that the Court cannot use a severance analysis to remove the constitutional defects in the CFPB’s funding.  They assert that “[t]he least disruptive remedy is for the Court to stay its judgment in the case for three to six months and leave the appropriations process to Congress.”  According to amici, “[a] constitutionally reconstituted agency would have the authority to ratify prior final agency actions (or not) before the mandate issues; reconsider pending enforcement actions; and start readjudicating qualifying prior adjudications, if any.”  They also argue that the CFPB should pause any new or ongoing rulemaking activity during the stay period.

• Chamber of Commerce of the United States of America, National Federation of Independent Business Small Business Legal Center, Inc., American Bankers Association, American Financial Services Association, Consumer Bankers Association, Independent Community Bankers of America, Independent Bankers Association of Texas, Texas Association of Business, Texas Bankers Association, and Longview Chamber of Commerce.  Amici argue that an appropriate remedy would be for the Court to sever the unconstitutional funding mechanism, leaving the rest of the CFPB’s enabling act in place.  They contend that to give Congress the time to change the CFPB’s funding, the Court should stay its decision for a reasonable but defined period to authorize temporary funding or permanently fix the constitutional defect.  In addition to agreeing that the Payday Rule should be vacated, amici state that they “believe they are entitled to vacatur of” any CFPB actions that they have challenged in pending lawsuits based on the CFPB’s unconstitutional funding.  They also assert that CFPB enforcement actions should be paused until Congress addresses the funding issues.  Amici contend that relief “would be limited to a few pending actions where the parties have raised the argument at issue here.”  They reference the APA’s six-year statute of limitations and note that in most cases the 30-day period to appeal from a past agency adjudication or court decision “has long lapsed.”

All of the amicus briefs filed in support of CFSA can be found here.  In addition to those filed by Mr. Mulvaney and the trade groups, amicus briefs were filed by:

• Atlantic Legal Foundation
• Americans for Prosperity Foundation
• State of West Virginia and 26 Other States
• Washington Legal Foundation
• New England Legal Foundation
• The Foundation for Government Accountability
• Former Members of Congress
• 132 Members of Congress
• The New Civil Liberties Alliance, the Buckeye Institute, the Manhattan Institute for Policy Research, and Law Offices of Crystal Moroney, P.C.
• Landmark Legal Foundation
• America’s Future, U.S. Constitutional Rights Legal Defense Fund, and Conservative Legal Defense and Education Fund

The West Virginia Attorney General and 26 other Republican State Attorney General amici also filed a motion with the Supreme Court asking for leave to participate in oral argument as amicus curiae supporting CFSA.  They ask the Court to allow them ten minutes of argument time, with the remaining twenty minutes allocated to CFSA.  They indicate that CFSA has opposed their request.  According to the Attorneys General, they can provide the Court with additional helpful information on the issues at stake.  In addition to their expertise in consumer protection, banking, and financial services, the Attorneys General assert that they can “explain why their consumers actually suffer when the [CFPB] is not kept sufficiently accountable.”

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