I am wondering if the Plaintiffs can make the case that future preference of cash flows under the operation of the SPS to be void since it is prospective. This line of reasoning should also stop the reimposition of the NWS. The FHFA may maintain custody but not reallocate or reprioritize the assets and earnings of the Conservatorship Estate.
I also find it interesting that the DOJ settled the All American Case after it was remanded to the District Court:
QUESTION PRESENTED (I added bold) Whether the court of appeals erred in holding that the statute that describes how the Consumer Financial Protection Bureau is funded, 12 U.S.C. § 5497, violates the Appropriations Clause, U.S. Const. Art. I, § 9, Cl. 7, and in vacating a regulation promulgated at a time when the CFPB was receiving such funding.
INTRODUCTION AND INTERESTS OF AMICI CURIAE* The Consumer Financial Protection Bureau is a failed experiment in administrative governance. Conceived as an answer to the problems that led to the Great Recession, Congress endowed the Bureau with an “unprecedented combination of structural characteristics” meant to cloister it from outside accountability. William Simpson, Above Reproach: How the Consumer Financial Protection Bureau Escapes Constitutional Checks & Balances, 36 REV. BANKING & FIN. L. 343, 345 (2016). At the same time, Congress gave the agency “enormous power over American business, American consumers, and the overall U.S. economy.” PHH Corp. v. CFPB, 881 F.3d 75, 165 (D.C. Cir. 2018) (Kavanaugh, J., dissenting). This toxic blend of broad power and unchecked autonomy has been a problem from the start.
...This “financial freedom,” the Court observed, “makes it even more likely that the agency will slip … from [the control] of the people.” Id. at 2204 (cleaned up).
The appropriations issue that Seila Law noted has now come to a head. In the decision below, the Fifth Circuit correctly held that the CFPB’s unprecedented funding scheme impermissibly shifts Congress’s power of the purse to the Bureau.
The CFPB experiment has failed. The Court should return it to the lab.
The Appropriations Clause serves an important purpose: it allows Congress to supervise and control federal administrative agencies.
III. The decision below is correct. The Fifth Circuit took Congress at its word—Congress said it was not making an appropriation, and nothing else in the law overcomes that express statement. The Court should not accept the Bureau’s invitation to rewrite or ignore Congress’s direction. And neither history nor practice can save the Bureau, either, especially when the historical record contains many instances of the Bureau describing itself as an agency without an appropriation. Having correctly found that the CFPB violated the Appropriations Clause, the Fifth Circuit was right to vacate the rule at issue.
A. Article 1, Section 9, Clause 7 of the Constitution says that “[n]o Money shall be drawn from the Treasury, but in Consequence of Appropriations made by Law.” This “straightforward and explicit command” means what it says: “[N]o money can be paid out of the Treasury unless it has been appropriated by an act of Congress.” OPM v. Richmond, 496 U.S. 414, 424 (1990). The Founders regarded congressional power over the purse “as the most complete and effectual weapon with which any constitution can arm the immediate representatives of the people.” THE FEDERALIST NO. 58 (James Madison). So the Appropriations Clause’s restraint is “absolute.” U.S. Dep’t of Navy v. FLRA, 665 F.3d 1339, 1348 (D.C. Cir. 2012) (Kavanaugh, J.). It covers “any sum of money collected for the government.” Ring v. Maxwell, 58 U.S. 147, 148 (1854); accord Republic Nat’l Bank of Mia. v. United States, 506 U.S. 80, 93 (1992).
The Appropriations Clause is an important way that the Constitution entrusts the “difficult judgments” to Congress. Richmond, 496 U.S. at 428. Congress is thought to be motivated by the “common good,” rather than the “individual favor” that “Government agents” might use to decide an issue. Id. Appropriations power also provides Congress “a controlling influence over the executive power.” 2 JOSEPH STORY, COMMENTARIES ON THE CONSTITUTION OF THE UNITED STATES § 530, at 14 (1833). Even with “independent” agencies like the SEC, “[s]ubjecting any regulatory agency to the congressional appropriations process places constraint on that agency.” Conrad Z. Zhong, A New Way to Fund the Consumer Financial Protection Bureau, 18 U.C. DAVIS BUS. L.J. 1, 18 (2017).
...congressional control over an agency’s finances is “[t]he most constant and effective control”). The “appropriations monopoly” lets Congress control “agencies by altering total funding, targeting specific programs through earmarks and riders, and using signals and threats.”
But an agency free from the appropriations process can keep critical information out of public view for as long as possible. As a result, broader enforcement initiatives may become hard to spot until the pattern emerges. Even rulemakings may lack the transparency that the appropriations process offers, as “many substantive policy decisions happen before the agency publishes the notice of proposed rulemaking.”
Thus, the CFPB is its own appropriator. The approach is an anomaly
“[S]elf-funding … effectively makes the agency accountable to nobody.”
But relying on a self-interested CFPB to do the right thing is a “curious assumption,” especially when the Bureau has “lack[ed] transparency in much of its decision-making.”
Indeed, freed from fear of budgetary consequences, the CFPB has repeatedly shown itself indifferent to oversight from just about anyone. In testimony before Congress, for instance, the CFPB’s first director responded, “Why does that matter to you?” when a congressperson asked who had authorized hundreds of millions in renovation costs for the Bureau’s headquarters.
Later, another director told the House Financial Services Committee that he could “twiddle [his] thumbs while you all ask questions” because the CFPB is “not accountable to anybody but itself.” Jim Puzzanghera, CFPB Chief Mick Mulvaney Says He Could Just ‘Twiddle My Thumbs’ Before Congress To Highlight Agency’s Flaws, L.A. TIMES (Apr. 11, 2018, 11:55 a.m.), http://bit.ly/3PaQJ6o.
Even Senator Elizabeth Warren has lamented that her brainchild “ignored congressional mandates” and operated as a “politicized rogue agency” when it fell under the control of a political opponent. Elizabeth Warren, Republicans Remain Silent As Mulvaney’s CFPB Ducks Oversight, WALL ST. J. (Mar. 28, 2018, 5:48 p.m.), https://bit.ly/3Bh6lQg.
No part of that recitation captures this situation: an agency endowed with substantial power, led by a single Director, indefinitely self-funded through another agency that is itself self- funded, in permanent control of any funds it obtains, and expressly exempted from the usual forms of oversight that come with federal appropriations. That combination of features is fatal. See Pet.App.37a. It makes the agency undeniably unique. Markham S. Chenoweth & Michael P. DeGrandis, Out of the Separation-of-Powers Frying Pan and into the Nondelegation Fire: How the Court’s Decision in Seila Law Makes CFPB’s Unlawful Structure Even Worse, 8/27/2020 U. CHI. L. REV. ONLINE 55, 60 (2020).
And the current director told Congress that the CFPB’s “base level of funding” is “guaranteed,” and the agency would only be “subject to the normal appropriations process” if it needed to ask Congress for more. Consumer Financial Protection Bureau Semiannual Report, C-SPAN (Oct. 28, 2021), https://bit.ly/3iGFC93. In its own words, then, the Bureau has repeatedly conceded that it neither has nor needs any congressionally enacted appropriation. Lacking that element, the Bureau can’t rightfully call itself constitutional now.
The only remaining question would then be the remedy. The Fifth Circuit was right to vacate a rule enacted without constitutional funding. “An agency’s funding is the very lifeblood that empowers it to act.” CFPB v. All Am. Check Cashing, Inc., 33 F.4th 218, 241 (5th Cir. 2022) (Jones, J., concurring). And the Bureau does not convincingly explain how severing some provision of Section 5497 could provide it with the “proper appropriation” that is “a precondition to every exercise of executive authority by an administrative agency.” Id. at 242. So the court appropriately vacated the rule before it. No money, no power.