## Facts

- Congress created the Consumer Financial Protection Bureau (CFPB) and authorized it to fund its operations by requesting amounts “reasonably necessary” to perform its duties from the Federal Reserve System’s earnings, subject to an inflation-adjusted statutory cap.
- The statute specifies that CFPB funding is not subject to review by the congressional appropriations committees, while providing for reporting, audits, and other oversight.
- The CFPB issued a 2017 rule regulating certain payday lending practices.
- Trade associations representing payday lenders challenged the rule, arguing (among other claims) that the CFPB’s funding mechanism violates the Appropriations Clause.
- The district court rejected the Appropriations Clause challenge and largely upheld the rule.
- The court of appeals held the CFPB’s funding structure unconstitutional because it was “double-insulated” from annual appropriations (funds drawn from the Federal Reserve, which itself is outside annual appropriations) and vacated the rule on that basis.

## Issues

1. Whether Congress’s statutory authorization allowing the CFPB to draw capped funds from Federal Reserve earnings for specified purposes violates the Appropriations Clause.
2. If the funding mechanism is unconstitutional, whether the payday lending rule must be vacated as a product of unlawfully funded agency action.

## Decision

- The Supreme Court reversed the court of appeals and remanded.
- The Court held that the CFPB’s funding statute satisfies the Appropriations Clause because it authorizes expenditures from a specified source of public money for designated purposes.
- The Court rejected the argument that the funding mechanism is unconstitutional because it is non-annual, continuing, or insulated from the appropriations committees.
- Justice Kagan concurred, stressing historical variety in appropriations practices and Congress’s discretion to choose among them.
- Justice Jackson concurred, emphasizing that the Clause requires legislative authorization for spending, not judicial limits on Congress’s chosen funding design.
- Justice Alito, joined by Justice Gorsuch, dissented, concluding the scheme violates the separation of powers by weakening ongoing congressional control over agency funding.

## Legal Principles

- An “appropriation” for Appropriations Clause purposes is a law that authorizes expenditures from an identified source of public funds for specified purposes.
- The Appropriations Clause requires congressional authorization “by law” before public money may be drawn; it does not require annual appropriations, line-item specificity, or a particular degree of political accountability through recurring funding votes.
- Historical practice supports the constitutionality of broad, lump-sum, standing, or otherwise non-annual appropriations when Congress identifies the funding source and permissible uses.
- Novelty or relative insulation from annual appropriations is not, by itself, a constitutional defect; Congress retains authority to amend or revoke statutory funding arrangements.

## Conclusion

The Court upheld the CFPB’s funding mechanism as a valid appropriation made by law because it draws capped amounts from a specified public source for defined statutory purposes, rejecting a constitutional rule that would require annual appropriations or prohibit insulated funding structures.


Consumer Fin. Prot. Bureau v. Cmty. Fin. Servs. Ass’n of Am., Ltd., 601 U.S. 416 (2024)