"Finally, the principal practical effect of
Plaintiffs’ requested remedy would be to put Fannie and Freddie in a stronger
financial position, which if anything would expand the policy options of the current
Administration.
At the motion to dismiss stage, the district court was required to take
Plaintiffs’ plausible allegations as true. Instead, the district court disbelieved Plaintiffs’ plausible allegations, weighed the evidence in Defendants’ favor, and
chose to disbelieve a former President of the United States. The district court
ultimately discounted Plaintiffs’ factual allegations as “mere speculation.”
ROA.1521; see also ROA.1523 (“Plaintiffs’ Amended Complaint fails to plead that
any harm was more than speculative.”). But Plaintiffs have done precisely what the
Supreme Court called for. The Supreme Court instructed Plaintiffs, and in turn the
lower courts, to determine what would have happened absent the unconstitutional
removal restriction. That is—by definition—a counterfactual exercise. Plaintiffs’
duty under the Court’s framework was to allege facts to establish, by a
preponderance of evidence, what would have happened under different
circumstances. Plaintiffs did just that—and more. Indeed, President Trump’s letter
takes all speculation out of the matter. ROA.1225. In the end, the district court may
be entitled to disagree with the Supreme Court’s prescription of a counterfactual
inquiry. But it is not entitled to dismiss Plaintiffs’ plausible allegations on that basis."
"All the while, FHFA exercises sweeping powers
over the Companies and the American housing market. ROA.1177. This structure
renders FHFA “no longer dependent and, as a result, no longer accountable to
Congress and, ultimately, to the people.” CFSA, 51 F.4th at 639 (internal quotation
marks omitted).
As to remedy, “[s]o long as this constitutional infirmity in FHFA’s funding
structure persists, FHFA lacks constitutional authority to act.” ROA.1177. After all,
“[a]n executive agency that lacks constitutionally authorized funding to operate
lacks the authority necessary ‘to carry out the functions of the office.’” ROA.1213
(quoting Collins, 141 S. Ct. at 1788). “The FHFA adopted the Third Amendment at
a time when it lacked constitutionally authorized funding to operate,” ROA.1214,
and so “the Third Amendment must be vacated and set aside,” Id.; see also
ROA.1216–17 (Plaintiffs’ Appropriations Clause claims brought under the APA).
Because FHFA lacked constitutional authority to act due to the
Appropriations Clause violation, it follows that Section 4617(f) does not bar relief.
See Collins, 141 S. Ct. at 1776.
Plaintiffs have stated a claim that the FHFA’s self-funding structure violates the Appropriations Clause and that the appropriate remedy for this constitutional
violation is to vacate and set aside the Third Amendment. Here again, this
Court should Plaintiffs in the position they would have been in but for the violation
of the Constitution."
