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United States Court of Appeals for the Fifth Circuit
October 19, 2022, Filed
[*623] Cory T. Wilson, Circuit Judge:
"An elective despotism was not the government we fought [**2] for; but one which should not only be founded on free principles, but in which the powers of government should be so divided and balanced . . . , as that no one could transcend their legal limits, without being effectually checked and restrained by the others." The Federalist No. 48 (J. Madison) (quoting Thomas Jefferson's Notes on the State of Virginia (1781)). In particular, as George Mason put it in Philadelphia in 1787, "[t]he purse & the sword ought never to get into the same hands." 1 The Records of the Federal Convention of 1787, at 139-40 (M. Farrand ed. 1937). These foundational precepts of the American system of government animate the Plaintiffs' claims in this action. They also compel our decision today.
Community Financial Services Association of America and Consumer Service Alliance of Texas (the "Plaintiffs") challenge the validity of the Consumer Financial Protection Bureau's 2017 Payday Lending Rule. The Plaintiffs contend that in promulgating that rule, the Bureau acted arbitrarily and capriciously and exceeded its statutory authority. They also contend that the Bureau is unconstitutionally structured, challenging the Bureau Director's insulation from removal, Congress's [**3] broad delegation of authority to the Bureau, and the Bureau's unique, double-insulated funding mechanism. The district court rejected these arguments.
We agree that, for the most part, the Plaintiffs' claims miss their mark. But one arrow has found its target: Congress's decision to abdicate its appropriations power under the Constitution, i.e., to cede its power of the purse to the Bureau, violates the Constitution's structural separation of powers. We thus reverse the judgment of the district court, render judgment in favor of the Plaintiffs, and vacate the Bureau's 2017 Payday Lending Rule.
In response to the 2008 financial crisis, Congress enacted the Consumer Financial Protection Act, 12 U.S.C. §§ 5481-5603. The Act created the Bureau as an independent regulatory agency housed within the Federal Reserve System. See id. § 5491(a). The Bureau is charged with "implement[ing]" and "enforce[ing]" consumer protection laws to "ensur[e] that all consumers have access to markets for consumer financial products and services" that "are fair, transparent, and competitive." Id. § 5511(a).
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51 F.4th 616 *; 2022 U.S. App. LEXIS 29060 **
COMMUNITY FINANCIAL SERVICES ASSOCIATION OF AMERICA, LIMITED; CONSUMER SERVICE ALLIANCE OF TEXAS, Plaintiffs—Appellants, versus CONSUMER FINANCIAL PROTECTION BUREAU; ROHIT CHOPRA, in his official capacity as Director, Consumer Financial Protection Bureau, Defendants—Appellees.
Subsequent History: Petition for certiorari filed at, 11/14/2022
Petition for certiorari filed at, 01/13/2023
Prior History: [**1] Appeal from the United States District Court for the Western District of Texas. USDC No. 1:18-CV-295.
Cmty. Fin. Servs. Ass'n of Am., Ltd. v. Consumer Fin. Prot. Bureau, 2018 U.S. Dist. LEXIS 226738, 2018 WL 6252539 (W.D. Tex., June 12, 2018)
Disposition: AFFIRMED in part; REVERSED in part; and RENDERED.
funding, consumers, removal, appropriations, Payday, separation of powers, withdrawal, unfair, lenders, purse, promulgation, insulation, rulemaking, invalid, loans, funding mechanism, delegation, card, arbitrary and capricious, summary judgment, district court, transfers, agencies, violates, rule making authority, self-funding, prepaid, debit, agency's action, challenging
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