Supreme Court Justice Samuel Alito penned a strongly worded dissent deriding his colleagues’ May 16 decision to uphold a financial regulator’s controversial funding mechanism.
The case—Consumer Financial Protection Bureau (CFPB) v. Community Financial Services Association of America (CFSA)—questioned the constitutionality of CFPB’s ability to determine its level of funding from The Federal Reserve, albeit with limited restrictions. The case is one of several posing major questions this term about the scope of administrative power.
Congress set up that funding scheme when it created the agency but CFSA argued legislators exceeded their authority under the Appropriations Clause of the Constitution. That clause reads in part: “No Money shall be drawn from the Treasury, but in Consequence of Appropriations made by Law.”
Unlimited Funding
The other six justices had signed onto Justice Clarence Thomas’ opinion stating: “Under the Appropriations Clause, an appropriation is simply a law that authorizes expenditures from a specified source of public money for designated purposes.”Justice Alito criticized the majority for turning “the Appropriations Clause into a minor vestige. The Court upholds a novel statutory scheme under which the powerful Consumer Financial Protection Bureau (CFPB) may bankroll its own agenda without any congressional control or oversight.”
He added, in reference to the majority’s opinion, that “there is apparently nothing wrong with a law that empowers the Executive to draw as much money as it wants from any identified source for any permissible purpose until the end of time.”
The funding scheme, he said, was “unprecedented. And it is likewise clear that this assemblage was no accident. Rather, it was carefully designed to give the Bureau maximum unaccountability.”
Justice Thomas’ majority opinion criticized Justice Alito’s dissent for “never offer[ing] a competing understanding of what the word ‘Appropriations’ means.”
In a concurring opinion, Justice Ketanji Brown-Jackson suggested the majority should have been more restrained in its ruling. She argued that the CFPB funding mechanism “easily meets the Appropriations Clause’s minimal requirements.”
She went on to express her view that “nothing more is needed to decide this case. Indeed, there are good reasons to go no further. When the Constitution’s text does not provide a limit to a coordinate branch’s power, we should not lightly assume that Article III implicitly directs the Judiciary to find one.”
Justice Jackson also clarified that upholding the funding mechanism’s constitutionality wasn’t an attempt to “endorse those policy choices.” Instead, she saw the decision as returning the policy questions to the people, whom she said have the primary responsibility for checking the power of the political branches.
Justice Alito argued in part that CFPB’s funding wasn’t a constitutional appropriation because it told the Federal Reserve how much money it needed and was designed to be independent of the appropriations process.
The Founding
Many of the opinions from Justice Alito, Justice Thomas, and a concurrence by Justice Elena Kagan focused on the founding era and what clues it offered into the Constitution’s intent for Congressional appropriations.“The CFPB’s funding scheme, if transplanted back to the late-18th century, would have fit right in,” Justice Kagan wrote in a concurrence joined by Justices Brett Kavanaugh, Amy Coney Barrett, and Sonia Sotomayor.
She added that “Congress has exercised broad discretion in crafting appropriations. ... All the flexibility and diversity evident in the founding period has thus continued unabated, making it ever more obvious that the CFPB’s funding accords with the Constitution.”
Justice Alito disagreed, writing: “In sum, centuries of historical practice show that the Appropriations Clause demands legislative control over the source and disposition of the money used to finance Government operations and projects.”
Justice Thomas’ opinion echoed arguments the Biden administration made during oral argument last year. He pointed to how the Customs service and Post Office both had open-ended funding schemes at the beginning of the nation.
“These fee- and commission-based funding schemes were not an American innovation; they emulated the colonial precursors to the Customs Service and Post Office,” Justice Thomas wrote.
In response, Justice Alito contended that the Post Office and Customs Service “were nothing like the CFPB,” noting that Congress specified the fees that could be collected by the Post Office. He added that while the Customs Service “had a carefully delineated mission,” the CFPB’s powers were “broad and vast.”
“It enjoys substantial discretionary authority,” his and Justice Gorsuch’s dissent added. “It does not collect fees from persons and entities to which it provides services or persons and entities that are subject to its authority. And it is permitted to keep and invest surplus funds.”
