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Thumbs up. There is a fair critique of MQD in the working papers.
Right. And the biggest threat to bipartisan bill passage is the inevitable POTUS veto, because a 2/3 override is just a fantasy.
There is an alternative though. When the final rule is published, the house has 60 working days to try to rescind the rule under the Congressional Review Act (“CRA”). The CRA vote would still require a simple majority in both house & Senate, but POTUS cannot veto it.
Robert thanks for the posts.
Agree. Your second post in particular controverts Ano’s non-sequitur leap from Axon to Collins.
To your post, I would add that in the APA claim— including the Anti-Injunction clause and Incidental Powers clause — Justice Alito gave no Chevron deference to any Agency or lower court authority.
This fact — and its 9-0 supporting vote —ought to bang like a drum and underscore the cold reality for APA claim plaintiffs.
I do not know this. I became interested in
Collins *after* the decision by the Fifth. You could try Glen’s #FannieGate website (free) but I don’t know it was ever posted.
FWIW, I see 5 non-shareholders who filed Amicus Briefs in support of petitioner
Patrick Collins (Note: found via ScotusBlog search of Collins v Mnuchin):
1. New Civil Liberties Alliance
2. Pacific Legal Foundation
3. Scholars (David Zaring, Steven Davidoff Solomon, Alexander Platt)
4. Thomas Vartanian (@ George Mason)
5. Americans for Prosperity Foundation
Firstly, H.R. 1382 is not submitted to the Senate. It is waiting review by the House committee on Financial Services. Thus there also has been no House floor vote:
https://www.congress.gov/bill/118th-congress/house-bill/1382/all-info?s=1&r=12
Secondly, Ano’s tweet is misleading. It implies H.R. 1382 affects FHFA, as if it revises HERA. That is false. As I posted yesterday, the text HR 1382 is available. Read it. Nowhere does it revise HERA:
https://www.congress.gov/118/bills/hr1382/BILLS-118hr1382ih.pdf
When might the Senate take up the bill, and when might Biden sign, thus subjecting CFPB (but not FHFA) to Appropriations? First things first. First, Committee. Then floor vote. Then and only then will it tiptoe into the Senate where Barr and his fellow R’s —notably —lack a majority.
“no succession clause” remains
What? How precisely does HR 1382 support that claim?
HR 1382 contains no reference anywhere to the succession clause ((which is codified at 12 USC 4617b(2)(a).))
Rather, the part of HR 1382 you underlined (on page 11 of the PDF version of the bill) merely refers to a piece of FIRREA long dealing with limits on compensation among agencies including FHFA and CFPB ((see FIRREA section 1206(a) at 12 USC 1833b(a).)) Notice HR 1382 here omits any reference to the OFR, thus deleting it. That is the purpose of your underlined section.
LINKS
FIRREA 1206(a) at 12 USC 1833b:
https://www.law.cornell.edu/uscode/text/12/1833b?quicksearch=&quicksearch=1206
HR 1382 with full PDF available:
https://www.congress.gov/bill/118th-congress/house-bill/1382/text?s=1&r=12
Succession clause at 12 USC 4617b(2)(a):
https://www.law.cornell.edu/uscode/text/12/4617
https://www.cutimes.com/2023/03/08/bill-introduced-to-turn-cfpb-into-independent-agency/?amp=1
In a nutshell it would require the CFPB to get its funding approved via the annual Congressional Appropriations process, rather than by a simple money demand request to the Federal Reserve/
Robert IMHO, to answer your question:
The FDIC must follow its implementation act, the FDIA, as amended. I think it depends on the FDIA Incidental Clause.
If the FDIA Incidental Clause still lists “shareholders” (as a few courts indicated in F/F opinions) then the FDIC as conservator or receiver *must* consider shareholder interests, not just the FDIC’s.
But if the FDIA was amended to remove “shareholders”, then under Collins v Yellen, the FDIC can use the Incidental Clause to bypass any and all shareholder interests. In that instance, excess equity might be excluded from shareholders. Likewise, under Fairholme II (Cert. Denied) there would be no taking because shareholders would lack the right to exclude as of the (hypothetical) date FDIA was amended, thus they lack a cognizable property interest.
Correct
The Collins district court’s most recent decision invoked the discretionary “mandate rule” to dismiss Plaintiffs’ Appropriations Clause claims on procedural grounds.
If I could gratuitously ask someone to link us this decision, I can copy & highlight the precise relevant parts.
I don’t know but that is possible.
I suspect all parties would be in favor of the delay if prudence and economy dictate that option. And we do know that an Appropriations claim will be heard (and on its merits) at SCOTUS in CFPB v CFSA.
One thing gives me pause, though: the Collins appellate panel dismissed the Appropriations claim on a *procedural basis*.
So perhaps the Fifth Circuit en banc would proceed to hear the Collins case in full, but then limit its opinion on the Appropriations claim to that very narrow procedural basis.
Should the en banc find for the plaintiffs, it would simply vacate the panel decision and remand the Appropriations claim back to district court for full review on merits in the first instance. Now, at that future point, certainly the district court would wait for the result of CFPB v CFSA.
Just a thought. I’m probably wrong.
Oops. Fall 2023. Let’s call it a typo.
“Do you think the CFPB case will be argued this Fall?”
Yes I would presume in Fall 2022.
“Will the SCOTUS decide that financial regulator agencies are somehow different and the Appropriations Clause protections don't apply to them?”
No, I think in CFPB v CFSA SCOTUS will decide only the question before it: whether the CFPB can live outside Appropriations.
The holding will be confined to instances of an At-will single Director, wielding immense economic power, and drawing funding outside Appropriations via a unique double-insulated structure.
“If no, then how can the Federal Reserve Board avoid review of Congressional Appropriations Oversight?”
Because the concern in CFPB v CFSA is not the absence of Appropriations per se. It rather is the threat to liberty and the risk of tyranny (I.e. a threat to the separation of powers) by taking Congress’ purse power and *handing it over to POTUS*.
This constitutional threat is clear and obvious in a single at-will Directorship.
In contrast, for an agency run by a Board, the threat is diminished (IMHO).
In Seila Law v CFPB, Chief Roberts used the FTC Board as an example of strong structural accountability in the Removal clause sense. The illustrated factors that make boards accountable also deter the threat of tyranny. IMHO this will effectively imply that financial regulators run by boards can continue to live outside Appropriations —without the court having to say so expressly.
Yes from listening to the oral argument it sounds like their standing argument was novel: as student loan debtors they didn’t benefit from the executive action —but they believe they *would likely have benefited had a rule been promulgated under notice & comments*.
I don’t know what lower courts said about their standing, but is there even a concrete particularized injury? Is the remedy too speculative? Interesting.
Louie_ Ineed to put some thought into that answer and do it in a separate post—Probably a separate post for each. But there is clearly some possible read-through. At a glance the Appropriation clause might be the stronger possibility.
Thank you for your comment.
“…does SCOTUS then toss the states?”
Only if the other states lack Article III standing and prudential (judge made) standing. Just because MO might rely on its enterprise MOHELA does not mean the other states have necessarily failed standing.
I haven’t yet examined very closely the other states’ standing, or the individual debtors’ standing—just Missouri’s.
I think MO’s loss of an exchanged-for benefit (in lieu of a fund payment) —that being the very likely loss of about 40% of prior levels of scholarship funds, is not speculative; IMO it’s a reasonable concrete expectation…but reasonable minds can differ.
No, we are talking about student loan borrowers. But none of the plaintiffs in thestudent loan case are generalized grievance tax payers. If they were they would not meet Article III. You need a discrete particularized injury and it must be redressable.
If the hypothetical student loan plaintiffs injury was the same as all tax payers, court has held its a political not a court decision. I think that’s a flaw of tax payers but not of the loan debtors.
Who is claiming that they cannot and why? My comment was limited to problems with Missouri, in case that was not clear.
Some early broad commentary from a regulatory law firm on the CFPB case on where some battle lines may be drawn.
https://www.mcglinchey.com/insights/taking-the-case-scotus-to-decide-constitutionality-of-cfpb/
Missouri is claiming a different harm than the other five states.
Read Professor Josh Blackmon’s comments on states’ standing in this case.
Missouri is suing because it has a state owned enterprise (MOHELA) that in theory contributes to state revenue —but which in reality has paid in very little recently. But one dollar of harm could in theory suffice for a concrete injury. Thus a decision could go either way.
https://abcnews.go.com/amp/Politics/supreme-court-case-biden-student-debt-relief-hinge/story?id=97445430
I think we just have to wait & see on MQD.
I think the court will find standing for enough of the petitioners. It’s a low bar.
I’d expect Chief Roberts to lead off the questioning, as usual. One of the questions will attempt to illustrate that there seems to be no limiting principle to the government’s interpretation of the HEROES Act.
Gorsuch loves his pet indeterminate multi-factor test for MQD, so it’ll be interesting to hear if he tries to rally others to his flag as by citing authority along those lines.
Looking forward to reading the transcript because I will not be able to listen live.
I agree. Only CFPB’s petition was granted.
https://www.supremecourt.gov/orders/courtorders/022723zor_6537.pdf
I agree.
Robert
As always I appreciate your discussion efforts. I have not studied the student loan case in any detail (yet) for its fit in MQD.
But I will note that some of these early, lower-court struggles about MQD were predicted by Professor Thomas Merrill. Linked for you is his 5-part MQD blog (slightly beyond a “basic” primer) covering West Virginia v EPA (2022).
I started you at part 3 of 5, but you can access the other 4 parts from within the article. By my personal count there’s precious few Agency Law scholars more notable than Tom Merrill.
https://reason.com/volokh/2022/07/28/west-virginia-v-epa-questions-about-major-questions/?itm_source=parsely-api
“In all cases - be it Chevron or MQD - first the courts need to decide if the issue - action - is NOT clearly excluded or included by the words in the legislation done by Congress --- if not clear - then the fun begins.”
Actually the inquiries under Chevron and MQD differ.
In a Chevron review, yes, a court’s 1st inquiry is whether Congress has spoken unambiguously in a statute. If the answer is no (i.e., SOME ambiguity exists), then courts must defer to plausible Agency interpretations. Further, under City of Arlington v FCC (2013), an Agency is effectively free to *delineate the scope of its own regulatory mandate* unless it is clear Congress did not confer that precise authority. (Wow!!!)
Under West Virginia v EPA, the court’s 1st inquiry is whether the agency is seeking to regulate in a manner that presents a "major question" of "economic and political significance." If the answer is yes, the court asks, second, whether there is a "clear statement" by Congress conferring such authority. In the absence of a clear statement, the agency will be held to have exceeded the scope of its authority. MQD textual analysis is limited to looking for a “clear statement” of authorization. It changes the order and scope of any orthodox statutory analysis.
In summary (and at the risk of somewhat overgeneralizing) IMO this appears to be the change:
CHEVRON (‘BEFORE’)
If any ambiguity, courts must defer unless authority clearly withheld by Congress
WEST VA v EPA (‘AFTER’)
If any MQD, court cannot defer absent a “clear statement” of authority by Congress
The CNN author Joan Biskupic is a Marquette lawyer, biographer and journalist, and is highly respected. She leans toward personal conservatism but her writing is fair and balanced, and the CNN article reflects that.
I have read her book on Scalia “American Original” and it’s very good.
https://joanbiskupic.com/
“I guess the point I'm extrapolating is that if the U.S. Court of Appeals decided an administrative agency (like the CFPB) was unconstitutional then that would be the law of the land unless SCOTUS overturned it.”
Yes if you are referring to the US Court of Federal Claims(“COFC”) and its appeals court (“CACOFC”) then that is a true statement or hypothetical. So your more general point (as I think I understand it) is well taken.
But neither the COFC nor the CA COFC has general authority to issue injunctive relief, only monetary relief**.
The CFSA seeks equitable or injunctive relief against the CFPB (not a money judgment), hence, it had to be filed outside the COFC and thus any appeal could not be heard in the CACOFC.
*Case law support:
Richardson v. Morris, 409 U.S. 464, 465 (1973) (“[T]he [Tucker] Act has long been construed as authorizing only actions for money judgments and not suits for equitable relief against the United States.”);
Bowen v. Massachusetts, 487 U.S. 879, 905 (1988) (“The Claims Court does not have the general equitable powers of a district court … ‘the Court of Claims has no power to grant equitable relief.’” (quoting Richardson, 409 U.S. at 465)).
“If that case would have been decided in the U.S. Court of Appeals, regardless of district, it would have nationwide precedence.”
False. You are confusing jurisdiction with binding precedent. They are separate.
Wrong. Circuits disagree all the time on constitutional issues. That’s not a flaw, it’s by design. Civics 101. See for example
https://www.law.com/nationallawjournal/2022/12/21/circuit-splits-to-watch-in-2023/?slreturn=20230116115241
Agree 100%
“Wouldn't the SCOTUS be reluctant of invalidating Dodd Frank (or Hera?) as over a decade of CFPB (or FHFA?) agency actions could in theory be invalidated?”
I would assume so. But they still have a job to do, and they can manage that reluctance in different ways.
One way is to simply not hear the CFPB request for Writ of Certiorari, I.e., wait for a different federal circuit to decide on a contrary but workable remedy precedent.
Another way is to decide the CFPB request on the shadow docket, though I think that option makes less sense because of the novel nature of the claim.
“Is 5th Circuit Appealate Panel Decision in CFPB really of national importance, wouldn't it largely be confined to the 5th Circuit (Mississippi, Louisiana, and Texas) and not be precedential in the other Circuits?”
It is ONLY binding on federal courts in the Fifth Circuit, so yes, only those 3 states.
“Could the SCOTUS take the Petition, hear it in the Fall, and decide next Spring or Summer to limit the remedy in a way that would avoid invalidating all the CFPB'S federal agency actions for the last 12 years?”
If SCOTUS hears questions and decides on the merits, and affirms the Fifth Circuit, I honestly cannot think of a way to avoid the eventual invalidation fall out. To avoid the fall out, the remedy would need to be watered down: I just can’t see how. But here again, SCOTUS might instead decide to simply not hear the CFSA case.
“I thought Collins is where we got the split jury decision and will move to round two of trial?”
No the split-jury occurred in a case with consolidated plaintiffs where the only remaining claim is breach of the implied covenant of good faith —a contract claim. A second trial will occur in that case soon.
Collins v Yellen is the case the plaintiffs got 2 claims to SCOTUS, but was remanded back to district court to determine on the Removal Clause claim if Ps suffered “compensable harm”. The district court summarily dismissed this claim on a procedural basis, opining that proving such harm was a futile effort.
Collins Ps have now appealed again to the Fifth Circuit. And in the wake of the Fifth Circuit’s panel opinion in CFSA V CFPB, Ps have mirrored the CFSA constitutional claim by arguing a new claim: FHFA’s self-funding structure as an independent agency violates the Appropriations Clause.
I empathize with feelings, but your conclusion (“It’s over”) is a fallacy of over-generalization.
That favorable judgment has arisen in no final case does not logically preclude it from happening in all non-final cases. This would only be true if all cases and claims were identical. Hence the fallacy.
The Wazee plaintiffs’ attorneys are listed as Hamish Hume, Sam Kaplan, Eric Zager
https://www.glenbradford.com/wp-content/uploads/2023/02/18-1124-0021.pdf
https://www.sec.gov/Archives/edgar/data/310522/000031052220000121/descriptionofsecuritie.htm
This is FNMA’s SEC ‘section 12’ registered securities summary from 12/31/2019.
Page 5 states “Preferred Stock is not subject to mandatory redemption…” thus it appears no non-perpetuals (e.g., a 25 year mandatory redemption) still haunt the landscape.
Robert what case did you get this from?