On March 13, the U.S. District Court for the Northern District of California granted summary judgment to nonprofit organizations challenging the CFPB’s refusal to request operating funds from the Fed, resolving a lawsuit (previously covered by InfoBytes here) that alleged the Bureau violated the APA by declining to seek funding under 12 U.S.C. § 5497. Considering various merits, the court concluded that the CFPB director is required to request funding from the Fed and that the director lacks authority to redefine or independently determine whether the Fed has sufficient “combined earnings” for such funding, thereby rejecting the CFPB’s argument. It further held that even if a credible argument to persuade the court that the director had the authority to define and calculate the Fed’s “combined earnings” existed, the court disagreed with the Bureau’s characterization of “combined earnings” as irreconcilable with the history and purpose of the Dodd-Frank Act.

The court held that the CFPB’s reliance on the DOJ Office of Legal Counsel’s (OLC) interpretation of its funding statute was arbitrary, capricious, and contrary to law, and ordered the Bureau to continue requesting funding from the Fed as required by statute. In a separate case (covered by InfoBytes here) involving the same funding dispute, the U.S. District Court for the District of Columbia rejected the same OLC interpretation and clarified that the CFPB must request funding from the Fed. Following that decision, the Bureau submitted a funding request for the second quarter of fiscal year 2026 (covered here).