On September 25, the U.S. District Court for the District of Oregon granted partial summary judgment in an action brought by 22 states and the District of Columbia, ruling that the CFPB’s acting director violated the APA and the constitutional separation of powers by refusing to request funding for the agency from the Fed. The court rejected the conclusion in DOJ’s Office of Legal Counsel (OLC) memorandum that “combined earnings” under the Dodd-Frank Act refers to the Fed’s profits after deducting interest expenses, meaning no funds could be transferred to the CFPB when the Fed operated at a loss.

Joining two prior federal district courts whose rulings are both on appeal, the court held that “combined earnings” means the Fed’s gross revenues before any deduction for expenses, and that the acting director had a statutory duty under 12 U.S.C. § 5497(a)(1) to communicate the CFPB’s funding needs to the Fed so that the mandatory transfer of funds could take place. As previously covered by InfoBytes, the case arose after 22 state attorneys general sued and moved for partial summary judgment, alleging the acting director’s funding decisions violated the APA and the Constitution. According to the court, the acting director requested $0 in funding from the Fed in February 2025, initially citing sufficient cash reserves, and later adopted the OLC’s position that no funds were legally available. After the D.C. district court compelled him to act, the acting director requested $145 million from the Fed “under protest” in January (previously covered by InfoBytes here).

The court found the acting director’s November 2025 determination that the CFPB could legally request $0 from the Fed constituted final agency action that was contrary to law and unlawfully withheld agency action. Finding that the administration had taken the “dismantling” of the CFPB as a policy objective, the court further held that by frustrating the funding system Congress created for the CFPB, the acting director infringed on Congress’s exclusive power of the purse in violation of the separation of powers. The court granted declaratory relief but declined to issue injunctive relief related to fiscal year 2026 funding given the pending end of the fiscal year.