A&B Abstract:

In November, the Consumer Financial Protection Bureau (“CFPB”) filed a petition for a writ of certiorari in connection with the Fifth Circuit’s recent decision in Community Financial, which held that the CFPB’s funding structure violated the Constitution’s Appropriations Clause. (For a full discussion of the Community Financial decision, click here; for a full discussion of the CFPB’s petition, click here.).

One month later, thirty-eight state attorneys general have joined one of two separate amicus briefs asking the nation’s highest court to weigh in. While both amicus briefs support granting the CFPB’s petition, the similarities end there.

The Amicus Briefs

The first brief, filed by a coalition of twenty-two Democratic attorneys general, argues that the Fifth Circuit’s Community Financial decision created “confusion and regulatory chaos” by “stepp[ing] in to create a conflict between [Congress and the Executive branch] that did not otherwise exist.” Focusing principally on the Fifth Circuit’s decision to vacate the challenged CFPB rule it its entirety, these amici argue that Supreme Court precedent specifically rejects that challenged agency action must be completely undone just because the agency operated with a constitutional defect at the time of the action. Emphasizing the threat that Community Financial poses to many of the CFPB’s actions taken over the last decade, these amici suggest that a “‘judge made remedy’ that aligns with traditional remedial principles would address the specific constitutional defects in the CFPB’s funding” in a more tailored way. They ask that the Supreme Court “grant certiorari and confirm that the absence of valid appropriations does not make void a prior unfunded action.” These attorneys general represent the states of New York, California, Colorado, Connecticut, Delaware, Hawai’i, Illinois, Maine, Maryland, Massachusetts, Michigan, Minnesota, Nevada, New Jersey, New Mexico, North Carolina, Oregon, Pennsylvania, Rhode Island, Washington, Wisconsin, and the District of Columbia.

The second amicus brief, filed by sixteen Republican attorneys general, takes a very different approach. To start, these amici contend that the Court should grant the petition for review not because Community Financial was wrongly decided but because the Fifth Circuit’s ruling should apply nationwide. Referring to the CFPB as a “failed experiment,” these amici stress that the Appropriations Clause “serves a critically necessary purpose by giving States insight into agency action” that must be recognized. And because, in their view, the CFPB has “not convincingly explain[ed]” how the CFPB could act without appropriations, these amici conclude that the Fifth Circuit correctly elected to vacate the CFPB’s action altogether. Applauding the Fifth Circuit’s opinion as “right in every regard,” these amici request that the Court grant certiorari and confirm the Fifth Circuit’s reasoning. These attorneys general represent the states of West Virginia, Alabama, Arkansas, Indiana, Kansas, Kentucky, Louisiana, Mississippi, Montana, Nebraska, Oklahoma, South Carolina, South Dakota, Texas, Utah, and Virginia.

Takeaways

The Fifth Circuit’s decision in Community Financial posed an existential threat to the CFPB. Now, leaders across the nation have asked the Supreme Court to take a side. If the Court accepts this invitation, its ultimate ruling will have important implications on the future of the CFPB.

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