Consumer Financial Protection Bureau v. Community Financial Services Ass’n of America has emerged as one of the most consequential cases before the U.S. Supreme Court this term.  The U.S. Court of Appeals for the Fifth Circuit’s judgment below—in Community Financial Services Ass’n of America v. Consumer Financial Protection Bureau—held the Consumer Financial Protection Bureau’s funding structure to be unconstitutional under the Appropriations Clause of the U.S. Constitution.  With this holding, the Fifth Circuit created a circuit split with the U.S. Court of Appeals for the District of Columbia Circuit and became the first federal court of appeals to invalidate a federal funding statute under the Appropriations Clause.  After the Fifth Circuit declared 12 U.S.C. § 5497 constitutionally invalid, it applied—for unclear reasons—the remedial framework that the Supreme Court first introduced in Seila Law LLC v. Consumer Financial Protection Bureau and then clarified in Collins v. Yellen.  By applying that framework rather than conducting a severability analysis as 12 U.S.C. § 5302 requires, the Fifth Circuit vacated both § 5497 in its entirety and the Payday Lending Rule promulgated thereunder and challenged by the trade association plaintiffs.

This Essay assesses the Fifth Circuit’s rulings as to (1) Section 5497’s constitutional invalidity and (2) the proper remedy in view of such a holding.  It assesses the parties’ arguments on appeal to the Supreme Court and proposes how the Court should and likely will decide.  While this Essay accepts the Second Circuit’s reasoning as superior to the Fifth Circuit’s, it acknowledges that the Fifth Circuit sets forth a technically plausible, if novel, reading of the Appropriations Clause.  As such, it predicts that the Supreme Court will likely uphold the Fifth Circuit’s holding as to § 5497’s unconstitutionality.  The Supreme Court, however, should reverse the Fifth Circuit’s remedial ruling.  The Court should either remand for a severability analysis of § 5497 or stay the Fifth Circuit’s vacatur of the Payday Lending Rule and permit the political branches to hash out a constitutionally firm funding scheme for the CFPB.