Notice & Comment

What the Court Did Not Decide in Community Financial, and How That Might Prove Dispositive for Future Challenges to the CFPB’s Funding Statute, by Chad Squitieri

On two occasions, the majority opinion in CFPB v. Community Financial made clear that it was tasked with answering only a “narrow” question concerning the requirements imposed by the Appropriations Clause.  Slip Op. at 1, 5.  The Court’s answer to that narrow question was relatively straightforward: the Appropriations Clause requires no more than “a law that authorizes the disbursement of specified funds for identified purposes.”  Id. at 19.  This meant that, because 12 U.S.C. § 5497 (the statute permitting the CFPB to demand funds from the Federal Reserve rather than request funds from Congress) identified a “source” and “purpose” for the CPFB’s funding, the limited requirements of the Appropriations Clause were satisfied. Id. at 22. 

The Court’s dutiful commitment to answering only the narrow Appropriations Clause question presented was dispositive for the appeal in Community Financial.  But the Court’s narrow holding is unlikely to be dispositive for future appropriations challenges—including future challenges to the CFPB’s funding statute.  This is because of a crucial question that the Court was careful not to address: whether the CFPB’s funding statute violates the limitations imposed by the precise constitutional text that actually vests Congress with the authority to enact appropriations laws.   

This essay builds on my past and forthcoming work identifying the different constitutional text that vests Congress with the authority to enact various appropriations laws, and explains why a focus on the requirements imposed by such text may prove dispositive for future appropriations challenges. 

The Source of Congress’ Power to Enact Appropriations Laws 

As the Court explained in Community Financial, although “the Appropriations Clause presupposes Congress’ powers over the purse,” the Appropriation Clause’s  “phrasing and location in the Constitution make clear that [the Appropriations Clause] is not itself the source of those powers.”  Id. at 18 (emphasis added). Instead, “[t]he Appropriations Clause is phrased as a limitation: ‘No Money shall be drawn from the Treasury, but in Consequence of Appropriations made by Law.’”  Id. In other words, although the Appropriations Clause requires that an appropriation be made “by Law,” the Clause does not itself give Congress any authority to enact such laws. 

Because Congress has only those limited powers granted to it by the Constitution, the fact that the Appropriations Clause does not itself vest Congress with the authority to enact appropriations laws suggests that Congress must be vested with appropriations authority pursuant to other constitutional text.  And it is the limitations imposed by that other constitutional text that impose the relevant limitations on Congress’ ability to enact appropriations laws.  This is no doubt what the Court was referring to in part when it explained that, outside of the Appropriations Clause, “there may be other constitutional checks on Congress’ authority to create and fund an administrative agency.”  Id. at 21–22 (emphasis added). 

The Court did not address those “other constitutional checks” in Community Financial—likely because the parties did not ask the Court to do so.  Indeed, the limitations created by the parties’ framing of the case is why I previously argued (in a law review essay and blog post published last summer) that the Court should either dismiss the writ of certiorari as improvidently granted, or at least request supplemental briefing so that further argument could develop concerning the constitutional source (and thus constitutional limitations) of Congress’ authority to enact apportions statutes.  But because the Court chose to take the case as it found it, identifying the source and limitations of Congress’ ability to enact appropriations statutes will be left to future litigation. 

Looking Forward 

What might future litigation framed around the precise text empowering Congress to enact appropriations statues look like?  For a detailed answer, I encourage readers to soon turn to my work in a forthcoming edition of the Cato Supreme Court Review.  But for the moment, a sketch of my forthcoming argument will have to suffice. 

If it is correct, for the reasons I have unpacked in detail elsewhere, that Congress’ authority to enact an appropriations statute for the CFPB is vested via the interplay between the Necessary and Proper Clause and the Commerce Clause, then the dispositive question concerning the constitutionality of the CFPB’s funding statute is predetermined.  Namely, the dispositive question asks whether the CFPB’s funding statute constitutes a “necessary and proper” means of carrying Congress’ Commerce Clause authority “into execution.” 

Framing an appropriations questions in those terms would lead to some notable consequences.  For one, the framing would explain why Congress can fund some entities (such as the post office and national mint) outside of the annual appropriations process, but nonetheless be unable to fund the CFPB via the unique method codified in 12 U.S.C. § 5497.  The difference lies in the fact that Congress must rely on different powers (i.e., Congress’ postal, coining, and commerce powers) to fund different entities.   

For example, determining the constitutionality of a statute funding post offices through postal fees requires asking whether the statute is a “necessary and proper” means of carrying into execution Congress’ power to “establish post offices and post roads.”  And because, as I have argued before, the ordinary reader at the time of the Constitution’s ratification would have likely been familiar with historical efforts to fund postal systems through postal fees, early congressional legislation utilizing that familiar form of postal funding would have no doubt been considered a necessary and proper means of carrying Congress’ postal powers into execution.  But the necessary and properness of that exercise of Congress’ postal powers is of little to no relevance to Congress’ exercise of its Commerce Clause authority. For similar reasons, other funding examples relied upon by the Government (which constitute exercises of other congressional powers) can be distinguished from the CFPB funding statute.   

Isolating the different powers that Congress must rely on to enact different appropriations statutes also offers a response to an argument made by Justice Kagan in her Community Financial concurrence.  Her concurrence sought to connect the CFPB’s unique funding statute to “more than two centuries” of “unbroken congressional practice.”  Id. at 5 (Kagan, J., concurring).  But can it really be said that there is more than two centuries of Congress using its Commerce Clause authority to enact anything like 12 U.S.C. § 5497?  Perhaps the historical evidence could bear that out.  But for the moment, the concurrence’s need to rely on historical examples (and even resort to more modern examples) regarding the funding of “government operations” in general—rather than rely on historical exercises of the Commerce Clause in particular—offers some reason to be skeptical. 

What’s more, even though the concurrence telegraphs a lack of interest in entertaining appropriations challenges in the future, lower courts do not enjoy the same flexibility in shaping their dockets.  A lower court faced with an appropriations challenge based on the actual constitutional text vesting Congress with the authority to enact appropriations statutes would therefore have to conduct the sort of power-specific analysis I have proposed.  And a Supreme Court seeking to review such a case on its own terms would have reason to do the same.  In such a case, a citation to the Court’s interpretation of the Appropriations Clause in Community Financial would be of only limited relevance.  So too would be a generalized reference to “government operations,” at least without a careful consideration of what congressional powers those operations purported to invoke. 

Finally, a more precise framing of future appropriations challenges would also provide an answer to a critique that the Community Financial majority makes of the dissent.  Justice Thomas’ majority criticizes Justice Alito’s dissent for “winding its way through English, Colonial, and early American history about the struggle for popular control of the purse” but “never connect[ing that] summary of history back to the word ‘Appropriations.’”  Id. at 19 (Maj. Op.).  But future appropriations challenges would have no need to connect such history to an original understanding of the word “Appropriations.”  Instead, such history would be evaluated for its ability to answer the more fundamental question concerning whether a particular appropriations law is a “necessary and proper” means of carrying a particular power into execution.   


The Court was careful in Community Financial to only answer the narrow Appropriations Clause question presented by the parties.  But as the Court flagged, Congress’ authority to enact appropriations statutes is vested by constitutional text located outside of the Appropriations Clause.  It is thus the limitations imposed by that other constitutional text, and not the narrow Appropriations Clause holding in Community Financial, that should prove dispositive for future challenges concerning Congress’ ability to enact particular appropriations statutes. 

Chad Squitieri is an Assistant Professor of Law at the Catholic University of America, where he also serves as a Fellow for the Project on Constitutional Originalism and the Catholic Intellectual Tradition 

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