Last week, the U.S. Supreme Court granted the unopposed request of the Community Financial Services Association for a 30-day extension until January 13, 2023 to file its brief in opposition to the CFPB’s certiorari petition seeking review of the Fifth Circuit panel decision in Community Financial Services Association of America Ltd. v. CFPB. In that decision, the panel held the CFPB’s funding mechanism violates the Appropriations Clause of the U.S. Constitution. It is likely that the Supreme Court will consider both the CFPB’s certiorari petition and a forthcoming cross-petition for certiorari by the CFSA at its February 17, 2023 conference.
Although it had 90 days from the panel’s decision to file a certiorari petition, the CFPB filed its petition less than a month after the decision was issued. In the petition, the CFPB indicated that it had expedited the filing “to facilitate consideration of this case this Term.” In seeking the extension for filing its brief in opposition, CFSA asserted that a 30-day extension was “particularly warranted because the government chose to file its petition more than 60 days before it was due, advancing a lengthy merits argument far more extensive than the one it presented below, including new historical research.”
In its extension request, CFSA indicated that it is also planning to file a cross-petition for certiorari to ask the Supreme Court to review the Fifth Circuit’s rejection of other challenges to the CFPB’s payday loan rule. It will file its cross-petition on January 13, the same day it files its opposition to the CFPB cert petition.
CFSA also indicated in its extension request that it understood that the CFPB planned to file its brief in opposition to CFSA’s cross-petition early enough to allow the Court to consider both petitions at its February 17, 2023 conference and then, if certiorari is granted, to expedite merits briefing to permit argument and decision this Term. According to CFSA, even if the Court were to grant certiorari, “it is neither necessary nor appropriate to resolve the significant and novel questions presented here this Term” for the following reasons: (1) the Fifth Circuit’s judgment only vacates the payday loan rule which never went into effect, (2) the CFPB can seek stays of relief in future cases if the Fifth Circuit’s decision “were extended in ways that more significantly impact” the CFPB, and (3) “the parties and the Court would benefit from briefing, arguing, and deciding this case in a more deliberate fashion than a January grant would permit.” Nevertheless, to facilitate the Court’s ability to consider both petitions at the February 17 conference, CFSA agreed to waive the 14-day waiting period under Rule 15.5 for distributing the cross-petition and the CFPB’s brief in opposition to the Court, which will allow distribution on February 1.
The CFPB responded to the CFSA extension request by stating that it did not oppose the 30-day extension sought by the CFSA and will respond to CFSA’s cross-petition on January 25. The CFPB reasserted its argument that the Supreme Court should grant its certiorari petition and order expedited briefing so the case can be argued and decided this Term. It stated:
Delaying resolution of this case beyond this Term—and thus likely until sometime in 2024—would severely prejudice the Consumer Financial Protection Bureau (CFPB), consumers, and the entire financial industry…. Although the court of appeals’ vacatur affects only the regulation challenged here, the court’s sweeping holdings threaten the validity of virtually every action the CFPB has taken in the 12 years since it was created—as well as its ongoing activities. Those holdings will remain governing Fifth Circuit precedent until this Court intervenes, and they have already created severe disruption and uncertainty for the CFPB and for the financial services industry, which has ordered its affairs in reliance on the CFPB’s regulations and administrative actions….If the Court does not hear the case until next fall, that disruption and uncertainty would likely persist until sometime in 2024.
The CFPB also argued that the questions to be raised in the CFSA cross-petition “have no legal or logical connection to the important question presented in the government’s petition, and there is no comparable urgency requiring that they be decided promptly,” and thus “the questions presented by the cross-petition could be briefed and argued next Term if this Court grants certiorari.” The Fifth Circuit rulings that CFSA is likely to ask the Supreme Court to review in its cross-petition are: (1) the payday loan rule was not invalid because it was promulgated by a CFPB Director who was unconstitutionally insulated from removal by the President, (2) the CFPB acted within its UDAAP authority in promulgating the payday loan rule, (3) the payday loan rule’s payment provisions were not arbitrary and capricious in violation of the Administrative Procedure Act either as a whole or as applied to debit and prepaid card transactions or as to separate installments of multi-payment installment loans, and (4) the CFPB’s UDAAP rulemaking authority did not represent an unconstitutional delegation of legislative power by Congress because Congress provided a specific purpose, objectives, and definitions to guide the Bureau’s exercise of its rulemaking authority.
On December 16, 2022, from 2 p.m. to 3:30 p.m. ET, Ballard Spahr’s Consumer Financial Services will hold a webinar, “How the Supreme Court Will Decide Threat to CFPB’s Funding and Structure.” For more information and to register, click here.