The Supreme Court on Thursday upheld the funding structure of the Consumer Financial Protection Bureau, a massive win for an agency constantly under fire from conservative corporate interest.
In a striking repudiation of the 5th Circuit Court of Appeals, which ruled against the agency, Justice Clarence Thomas — perhaps the right-most member of the Court — wrote the majority opinion. Justices Neil Gorsuch and Samuel Alito, often aligned with him, dissented.
The agency is the brainchild of Sen. Elizabeth Warren (D-MA) and was created in the aftermath of the financial crisis in the late 2000s.
Organizations of payday lenders had challenged one of the agency’s rules, arguing that its unusual funding structure ran afoul of the Constitution’s Appropriations Clause. Rather than getting an annual appropriation from Congress, the CFPB gets its funding via requests from the agency’s director to the Federal Reserve (which is, in turn, funded by member bank fees) and is subjected to a cap of 12 percent of the Federal Reserve’s 2009 operating expenses with annual adjustments.
But Thursday’s majority — following an oral argument where most of the justices expressed skepticism about the attacks on the CFPB — concluded that the funding structure passed muster.
“Based on the Constitution’s text, the history against which that text was enacted, and congressional practice immediately following ratification, we conclude that appropriations need only identify a source of public funds and authorize the expenditure of those funds for designated purposes to satisfy the Appropriations Clause,” Thomas wrote.
In a characteristically dramatic dissent, Alito — joined by Gorsuch — railed against Thomas’ opinion with a hodgepodge of historical data points, crescendoing to an invocation of the nondelegation “doctrine.” It’s an idea increasingly in vogue on the right as the Court’s conservatives crusade against the administrative state. It holds that Congress cannot delegate its legislative power to federal agencies — a maximalist reading of which would hamstring agencies from working at all without congressional authorization for the most minute actions.
“Congress abdicated its appropriations authority, an exclusively legislative prerogative,” Alito wrote. “But Congress lacks the authority to ‘transfer to another branch powers which are strictly and exclusively legislative.’”
Elsewhere he indulged his melodrama, claiming that the Framers would be “horrified” by the funding scheme, that the combination of funding mechanics in the CFPB is “deadly,” that the agency has been “insulated” from any accountability.
The liberal justices used their concurrences to poke at the right of the bench, even while cheering Thomas’ decision.
Justice Elena Kagan, in a concurrence joined by Justices Sonia Sotomayor, Brett Kavanaugh and Amy Coney Barrett, emphasized that the flexibility given to Congress to craft funding structures is not just a relic of the country’s earliest days — it has persisted to how the government functions now. It reads as a subtle poke in the ribs to the right-wing justices’ fixation on a cherry-picked history as the only justification for upholding laws and agency actions.
“Whether or not the CFPB’s mechanism has an exact replica, its essentials are nothing new,” she wrote. “And it was devised more than two centuries into an unbroken congressional practice, beginning at the beginning, of innovation and adaptation in appropriating funds. The way our Government has actually worked, over our entire experience, thus provides another reason to uphold Congress’s decision about how to fund the CFPB.”
In her solo concurrence, Justice Ketanji Brown Jackson takes an even less subtle jab at her conservative colleagues, noting that this decision (with an unspoken “unlike many of our recent rulings”) puts the power where it should be: with Congress, which crafted the CFPB’s funding structure to inoculate it from special interests infecting the appropriations process.
It’s a pointed few pages, emphasizing the limitation of judicial power, given this Court’s predilection to bat down Biden administration agency action.
“The principle of separation of powers manifested in the Constitution’s text applies with just as much force to the Judiciary as it does to Congress and the Executive,” she reminded her peers.
Read the opinion here:
+ There are no comments
Add yours