The US Supreme Court held Thursday that the Consumer Financial Protection Bureau’s (CFPB) funding does not violate the Appropriations Clause and is constitutionally valid, in a decision authored by Justice Clarence Thomas.

The CFPB was established following the market crisis of 2008, and “ensures that markets for consumer financial products are fair, transparent, and competitive.” The agency is the primary means of enforcing federal consumer protection laws, enforcement of which was split between various agencies before the creation of the CFPB.

The case in question challenged the CFPB’s funding under Appropriations Clause of the Constitution. This clause states, “[n]o Money shall be drawn from the Treasury, but in Consequence of Appropriations made by Law.” For most agencies, this funding comes through the yearly Congressional budget. This requires the agencies to petition Congress for funds each year. The funding for the CFPB is different. The relevant statute states:

Each year (or quarter of such year), beginning on the designated transfer date, and each quarter thereafter, the Board of Governors shall transfer to the [CFPB] from the combined earnings of the Federal Reserve System, the amount determined by the Director to be reasonably necessary to carry out the authorities of the Bureau under Federal consumer financial law, taking into account such other sums made available to the Bureau from the preceding year (or quarter of such year).

The statute further sets the funding cap for the CFPB at twelve percent of the “total operating expenses of the Federal Reserve System.”

This funding mechanism was the subject of the challenge to the CFPB, which was initiated after the agency enacted a regulation that limited lender’s access to consumer’s accounts after two failed withdrawal attempts. Due to the annual recurring funding, the Community Financial Services Association of America, Limited argued the CFPB lacked the necessary Congressional oversight to comply with the Appropriations Clause. Because the director of the CFPB can request the amount to be transferred to the agency, subject to the funding cap, they argued that this undermines the goal of the Appropriations Clause, which is to ensure Congress has control over all federal expenditures.

The challenge was centered around the language of the Appropriations Clause: in the words of Justice Thomas, “[t]he associations’s challenge turns solely on whether the Bureau’s funding mechanism constitutes an ‘Appropriatio[n] made by Law.'” Citing history and court precedent surrounding interpretation of the Constitution’s language, Justice Thomas concluded “the origins of the Appropriations Clause confirm that appropriations needed to designate particular revenues for identified purposes,” a standard which the CFPB meets.

The CFPB responded to the decision in a press release, stating:

Today’s decision is a resounding victory for American families and honest businesses alike, ensuring that consumers are protected from predatory corporations and that markets are fair, transparent, and competitive…As we have done since our inception, the CFPB will continue carrying out the vital consumer protection work Congress charged us to perform for the American people.

Senator Elizabeth Warren, who spearheaded the inception of the CFPB, posted on X (formerly Twitter), saying, “This is a big win for working people.”