Consumer Financial Protection Bureau v. Community Financial Services Assn. of America, Ltd., 601 U.S. ___ (2024)
The case involves the Consumer Financial Protection Bureau (CFPB) and its funding mechanism. The CFPB, unlike most federal agencies, has a standing source of funding outside the ordinary annual appropriations process. Congress authorized the CFPB to draw from the Federal Reserve System an amount that its Director deems “reasonably necessary to carry out” the Bureau’s duties, subject only to an inflation-adjusted cap. Several trade associations representing payday lenders and credit-access businesses challenged this funding mechanism, arguing that it violates the Appropriations Clause of the Constitution.
The Fifth Circuit Court of Appeals agreed with the associations, ruling that the CFPB's funding mechanism violates the Appropriations Clause. The court reasoned that the Appropriations Clause requires both Chambers of Congress to periodically agree on an agency’s funding, which ensures that each Chamber reserves the power to unilaterally block those funding measures through inaction. The CFPB's funding mechanism, the court argued, allows it to draw funds indefinitely unless both Chambers of Congress step in and affirmatively prevent the agency from doing so.
The Supreme Court of the United States, however, reversed the Fifth Circuit's decision. The Supreme Court held that Congress’ statutory authorization allowing the Bureau to draw money from the earnings of the Federal Reserve System to carry out the Bureau’s duties satisfies the Appropriations Clause. The Court reasoned that under the Appropriations Clause, an appropriation is a law that authorizes expenditures from a specified source of public money for designated purposes. The statute that provides the Bureau’s funding meets these requirements. Therefore, the Court concluded that the Bureau’s funding mechanism does not violate the Appropriations Clause. The case was remanded for further proceedings consistent with the Supreme Court's opinion.
Statutory authorization allowing the Consumer Financial Protection Bureau to draw money from the earnings of the Federal Reserve System to carry out the Bureau’s duties satisfied the Appropriations Clause.
SUPREME COURT OF THE UNITED STATES
Syllabus
CONSUMER FINANCIAL PROTECTION BUREAU et al. v. COMMUNITY FINANCIAL SERVICES ASSOCIATION OF AMERICA, LTD., et al.
certiorari to the united states court of appeals for the fifth circuit
No. 22–448. Argued October 3, 2023—Decided May 16, 2024
The Constitution gives Congress control over the public fisc subject to the command that “[n]o Money shall be drawn from the Treasury, but in Consequence of Appropriations made by Law.” Art. I, §9, cl. 7. For most federal agencies, Congress provides funding through annual appropriations. For the Consumer Financial Protection Bureau, however, Congress provided a standing source of funding outside the ordinary annual appropriations process. Specifically, Congress authorized the Bureau to draw from the Federal Reserve System an amount that its Director deems “reasonably necessary to carry out” the Bureau’s duties, subject only to an inflation-adjusted cap. 12 U. S. C. §§5497(a)(1), (2). In this case, several trade associations representing payday lenders and credit-access businesses challenged regulations issued by the Bureau pertaining to high-interest consumer loans on statutory and constitutional grounds. As relevant here, the Fifth Circuit accepted the associations’ argument that the Bureau’s funding mechanism violates the Appropriations Clause.
Held: Congress’ statutory authorization allowing the Bureau to draw money from the earnings of the Federal Reserve System to carry out the Bureau’s duties satisfies the Appropriations Clause. Pp. 5–19, 22.
(a) Under the Appropriations Clause, an appropriation is a law that authorizes expenditures from a specified source of public money for designated purposes.
(1) The Bureau’s funding is “drawn from the Treasury” and is therefore subject to the requirements of the Appropriations Clause. The issue is whether the Bureau’s funding mechanism constitutes an “Appropriatio[n] made by Law.” The Court concludes that the answer is yes based on the Constitution’s text, the history against which that text was enacted, and congressional practice immediately following ratification. Pp. 5–15.
(i) The Constitution’s use of the term “appropriation” provides important insight into its meaning. The Appropriations Clause itself specifies that an appropriation must authorize withdrawals from a particular source, the “Treasury.” And, the proviso limiting Congress’ power to “raise and support Armies”—that “no Appropriation of Money to that Use shall be for a longer Term than two Years”—indicates that appropriations assign funds for specific uses. Contemporary dictionary definitions support this conclusion as well. The evidence suggests that, at a minimum, appropriations were understood as a legislative means of authorizing expenditures from public funds for designated purposes. P. 7.
(ii) Pre-founding history supports the conclusion that an identified source and purpose are all that is required for a valid appropriation. The concept of legislative appropriations grew out of the broader struggle between Parliament and the Crown for popular control of the purse in England. Parliament had little claim to direct how the Crown’s hereditary revenues were spent, but “extraordinary revenues” required parliamentary authorization because they were financed through various forms of taxation. In granting these revenues, Parliament began exercising an attendant power to specify how the Crown used the funds. The ensuing power struggle culminated in Parliament stripping away the remnants of the Crown’s hereditary revenues. Subsequently, Parliament’s usual practice was to appropriate government revenue to particular purposes and to limit the duration of its revenue grants. But, not all appropriations were time limited. Some statutes granting money gave the Crown broad discretion regarding how much to spend within an appropriated sum. Pp. 8–10.
The appropriations practice in the Colonies and early state legislatures was much the same. Many early state constitutions vested the legislative body with power over appropriations, and state legislative bodies often opted for open-ended, discretionary appropriations. By the time of the Constitutional Convention, it was uncontroversial that the powers to raise and disburse public money would reside in the Legislative Branch. The origins of the Appropriations Clause confirm that appropriations needed to designate particular revenues for identified purposes, but beyond that limit, early legislative bodies exercised a wide range of discretion. Pp. 10–12.
(iii) The practice of the First Congress also illustrates the source-and-purpose understanding of appropriations. Many early appropriations laws made annual lump-sum grants for the Government’s expenses. As in England, the appropriation of “sums not exceeding” a specified amount provided the Executive discretion over how much to spend up to a cap. Congress took even more flexible approaches to appropriations for several early executive agencies, allowing them to indefinitely fund themselves from revenue collected. For example, Congress adopted open-ended fee- and commission-based funding schemes for Customs Service and the Post Office. Pp. 12–15.
(2) The Bureau’s funding statute satisfies the requirements of the Appropriations Clause. The statute authorizes the Bureau to draw public funds from a particular source—“the combined earnings of the Federal Reserve System”— in an amount not exceeding an inflation-adjusted cap. 12 U. S. C. §
(b) The associations’ three principal arguments for why the Bureau’s funding mechanism violates the Appropriations Clause are unpersuasive. Pp. 16–19.
(1) The associations argue that the Bureau’s funding is not “drawn . . . in Consequence of Appropriations made by Law” because the agency itself decides the amount of annual funding to draw from the Federal Reserve System. But, appropriations of “sums not exceeding” a certain amount were commonplace immediately after the founding. Congress did not violate the Appropriations Clause by permitting the Bureau to decide how much funding to draw up to a cap. Pp. 16–17.
(2) The associations suggest that the Appropriations Clause requires both Chambers of Congress to periodically agree on an agency’s funding, which ensures that each Chamber reserves the power to unilaterally block those funding measures through inaction. While the Constitution expressly provides that “no Appropriation of Money” to support an army “shall be for a longer Term than two Years,” Art. I, §8, cl. 12, the Constitution does not explicitly limit the duration of appropriations for other purposes. The First Congress’ practice confirms this understanding, as appropriations that supplied funding to the Customs Service and the Post Office were not time limited. The associations resist the analogy to the Post Office and other fee-based agencies, arguing that such agencies do not enjoy the same level of fiscal independence as the Bureau. But, the associations fail to explain the relevance of that difference to the question whether a law complies with the constitutional imperative of an appropriation. Pp. 17–18.
(3) Finally, the associations contend that if the Bureau’s funding mechanism is consistent with the Appropriations Clause, then Congress could do the same for any—or every—civilian agency, allowing the Executive to operate free of any meaningful fiscal check. But, the Appropriations Clause is simply a limitation on Congress’ power over the purse, and the associations err by reducing the power of the purse to only the principle expressed in the Appropriations Clause. They offer no defensible argument that the Appropriations Clause requires more than a law that authorizes the disbursement of specified funds for identified purposes. Pp. 18–19.
51 F. 4th 616, reversed and remanded.
Thomas, J., delivered the opinion of the Court, in which Roberts, C. J., and Sotomayor, Kagan, Kavanaugh, Barrett, and Jackson, JJ., joined. Kagan, J., filed a concurring opinion, in which Sotomayor, Kavanaugh, and Barrett, JJ., joined. Jackson, J., filed a concurring opinion. Alito, J., filed a dissenting opinion, in which Gorsuch, J., joined.
Argued. For petitioners: Elizabeth B. Prelogar, Solicitor General, Department of Justice, Washington, D. C. For respondents: Noel J. Francisco, Washington, D. C. |
Motion of West Virginia and 26 Other States for leave to participate in oral argument as amici curiae and for divided argument DENIED. |
Reply of petitioners Consumer Financial Protection Bureau, et al. filed. (Distributed) |
CIRCULATED |
Record from W.D. Tex. electronically received and available with the Clerk. |
Record received from the United States Court of Appeals for the Fifth Circuit. The record is electronic and available on PACER. |
Record requested from the United States Court of Appeals for the Fifth Circuit. |
SET FOR ARGUMENT on Tuesday, October 3, 2023. |
Response in opposition to motion from respondents Community Financial Services Association of America, Limited, et al. filed. |
Response of Community Financial Services Association of America, Limited, et al. to motion submitted. |
Amicus brief of New Civil Liberties Alliance, et al. submitted. |
Amicus brief of Former Members of Congress submitted. |
Amicus brief of Landmark Legal Foundation submitted. |
Amicus brief of America's Future, U.S. Constitutional Rights Legal Defense Fund, and Conservative Legal Defense and Education Fund submitted. |
Amicus brief of ACA International submitted. |
Amicus brief of Credit Union National Association, Inc., National Association of Federally-Insured Credit Unions, and American Association of Credit Union Leagues submitted. |
Amicus brief of Chamber of Commerce of the United States of America, et al. submitted. |
Amicus brief of John Michael “Mick” Mulvaney submitted. |
Amicus brief of Third Party Payment Processors Association submitted. |
Amicus brief of Washington Legal Foundation submitted. |
Motion of State of West Virginia and 26 Other States for leave to participate in oral argument and for divided argument submitted. |
Amicus brief of The Foundation for Government Accountability submitted. |
Amicus brief of New England Legal Foundation submitted. |
Amicus brief of 132 Members of Congress submitted. |
Brief amici curiae of New Civil Liberties Alliance, et al. filed. |
Brief amici curiae of Chamber of Commerce of the United States of America, et al. filed. |
Brief amici curiae of 132 Members of Congress filed. |
Brief amicus curiae of John Michael “Mick” Mulvaney filed. |
Brief amicus curiae of The Foundation for Government Accountability filed. |
Motion of State of West Virginia and 26 Other States for leave to participate in oral argument as amici curiae and for divided argument filed. |
Brief amici curiae of America's Future, U.S. Constitutional Rights Legal Defense Fund, and Conservative Legal Defense and Education Fund filed. |
Brief amicus curiae of Third Party Payment Processors Association filed. |
Brief amicus curiae of New England Legal Foundation filed. |
Brief amici curiae of Credit Union National Association, Inc., National Association of Federally-Insured Credit Unions, and American Association of Credit Union Leagues filed. |
Brief amicus curiae of Landmark Legal Foundation filed. |
Brief amici curiae of Former Members of Congress filed. |
Brief amici curiae of ACA International filed. |
Brief amicus curiae of Washington Legal Foundation filed. |
Amicus brief of Americans for Prosperity Foundation submitted. |
Brief amici curiae of State of West Virginia and 26 Other States filed. |
Brief amicus curiae of Americans for Prosperity Foundation filed. |
Amicus brief of State of West Virginia and 26 Other States submitted. |
Amicus brief of Atlantic Legal Foundation submitted. |
Brief amicus curiae of Atlantic Legal Foundation filed. |
Brief of Community Financial Services Association of America, Limited, et al. submitted. |
Brief of respondents Community Financial Services Association of America, Limited, et al. filed. |
Amicus brief of Center for Constitutional Jurisprudence submitted. |
Brief amicus curiae of Center for Constitutional Jurisprudence filed. |
Amicus brief of 90 State and Local Nonprofit Organizations submitted. |
Amicus brief of Public Citizen. Americans for Financial Reform Education Fund, Consumer Action, Consumer Federation of America, Consumer Reports, Electronic Privacy Information Center, National Association of Consumer Advocates, National Consumer Law Center, Student Borrower Protection Center, U.S. Public Interest Research Group submitted. |
Amicus brief of Community Development Credit Unions and Financial Institutions Including Self-Help Credit Union, The Center For Responsible Lending, And National Association of Latino Community Asset Builders submitted. |
Amicus brief of States of New York, California, Colorado, Connecticut, Delaware, Hawaiʻi, Illinois, Maine, Maryland, Massachusetts, Michigan, Minnesota, Nevada, New Jersey, New Mexico, North Carolina, Oregon, Pennsylvania, Rhode Island, Washington, and Wisconsin, and the District of Columbia submitted. |
Amicus brief of Financial Regulation Scholars submitted. |
Amicus brief of AARP and AARP Foundation submitted. |
Amicus brief of Lawyers’ Committee for Civil Rights Under Law, Housing Clinic of Jerome N. Frank Legal Services Organization at Yale Law School, Leadership Conference on Civil and Human Rights, National Fair Housing Alliance, Unidosus, et al. submitted. |
Amicus brief of Members of Congress submitted. |
Amicus brief of National Treasury Employees Union submitted. |
Brief amici curiae of States of New York, et al. |
Amicus brief of Military and Veterans Organizations submitted. |
Motion to dispense with printing the joint appendix filed by petitioners GRANTED. |
Amicus brief of The Mortgage Bankers Association, The National Association of Home Builders and The National Association of Realtors submitted. |
Amicus brief of Professors of History and Constitutional Law submitted. |
Brief amici curiae of Financial Regulation Scholars filed. |
Brief amici curiae of Community Development Credit Unions and Financial Institutions Including Self-Help Credit Union, et al. filed. |
Brief amici curiae of Lawyers’ Committee for Civil Rights Under Law, et al. filed. |
Brief amici curiae of Community Development Credit Unions and Financial Institutions Including Self-Help Credit Union, The Center For Responsible Lending, And National Association of Latino Community Asset Builders filed. |
Brief amici curiae of 90 State and Local Nonprofit Organizations filed. |
Brief amici curiae of Ten Consumer Advocacy Organizations filed. |
Brief amici curiae of AARP and AARP Foundation filed. |
Brief amici curiae of The Mortgage Bankers Association, et al. in support of neither party. |
Brief amici curiae of Professors of History and Constitutional Law filed. |
Brief amici curiae of The Mortgage Bankers Association, The National Association of Home Builders and The National Association of Realtors in Support of Neither Party filed. |
Brief amici curiae of Lawyers’ Committee for Civil Rights Under Law, Housing Clinic of Jerome N. Frank Legal Services Organization at Yale Law School, Leadership Conference on Civil and Human Rights, National Fair Housing Alliance, Unidosus, et al. filed. |
Brief amici curiae of Military and Veterans Organizations filed. |
Brief amici curiae of Current and Former Members of Congress filed. |
Brief amicus curiae of National Treasury Employees Union filed. |
Amicus brief of Farm Action, HEAL Food Alliance, Institute for Agriculture and Trade Policy, Rural Coalition, Partners for Rural Transformation submitted. |
Brief amici curiae of Farm Action, et al. filed. |
Brief of Consumer Financial Protection Bureau, et al. submitted. |
Brief of petitioners Consumer Financial Protection Bureau, et al. filed. |
Motion of Consumer Financial Protection Bureau, et al. to dispense with joint appendix submitted. |
Motion to dispense with printing the joint appendix filed by petitioners Consumer Financial Protection Bureau, et al. |
Motion of Consumer Financial Protection Bureau, et al. to dispense with joint appendix submitted. |
Motion to extend the time to file the briefs on the merits granted. The time to file the joint appendix and petitioners' brief on the merits is extended to and including May 8, 2023. The time to file respondents' brief on the merits is extended to and including July 3, 2023. |
Letter of Consumer Financial Protection Bureau, et al. submitted. |
Motion for an extension of time filed. |
Petition GRANTED. |
DISTRIBUTED for Conference of 2/24/2023. |
DISTRIBUTED for Conference of 2/17/2023. |
Reply of petitioner Consumer Financial Protection Bureau, et al. filed. (Distributed) |
Brief of respondents Community Financial Services Association of America, Limited, et al. in opposition filed. |
Brief amici curiae of New York, et al. filed. |
Brief amici curiae of West Virginia, et al. filed. |
Motion to extend the time to file a response is granted and the time is extended to and including January 13, 2023. |
Motion to extend the time to file a response from December 14, 2022 to January 13, 2023, submitted to The Clerk. |
Response to motion to extend the time to file a response filed. |
Petition for a writ of certiorari filed. (Response due December 14, 2022) |