When Congress created the Consumer Financial Protection Bureau in 2010, it chose to fund the Bureau as it has long funded nearly all financial regulators. Instead of relying on annual appropriations bills to finance the agency from year to year, Congress gave the CFPB a dedicated funding source in the legislation creating the agency, ensuring a steady and predictable revenue stream. Each year, the Bureau is permitted to use a small fraction of the annual earnings of the Federal Reserve System to fund its operations.

After several financial services associations challenged a CFPB regulation cracking down on abusive payday lending, the U.S. Court of Appeals for the Fifth Circuit ruled that the Bureau’s funding mechanism violates the Constitution’s Appropriations Clause, which provides that “no Money shall be drawn from the Treasury, but in Consequence of Appropriations made by Law.” This decision marks the first time in American history that a court has held that Congress violated the Appropriations Clause by passing a law authorizing spending. The Supreme Court agreed to hear the case, and in May 2023, CAC filed an amicus brief on behalf of professors of history and constitutional law in support of the CFPB.

Our brief examines in detail the text and history of the Appropriations Clause, demonstrating that the Clause gives Congress alone the power to decide how federal agencies are funded. As we show, the Clause empowers Congress to control the executive branch by preventing unauthorized spending from the Treasury. It does not empower the judiciary to control Congress by second-guessing its funding decisions. The Clause requires only that Treasury withdrawals must be authorized by a statute.

Starting with the text, our brief shows that at the Founding, as today, to “appropriate” money “by law” simply meant to designate a purpose for that money in a law that is passed under the normal process for enacting legislation. Because the statute authorizing the CFPB’s funding does exactly that, it is an “appropriation made by law.” The Clause contains no other restrictions or procedural requirements. The Fifth Circuit’s contrary decision is based on several new rules of the court’s own invention, including the notion that appropriations legislation must be temporary and that it cannot be combined with the “enabling” legislation authorizing the activities in question. Nothing in the Clause’s text imposes those limits, however, and where the Founders wanted to limit Congress’s discretion over appropriations, they did so explicitly in other parts of the Constitution. Unlike those express limits, the Fifth Circuit’s newly fashioned rules appear nowhere in the text.

Nor does the history of the Appropriations Clause support the new restrictions on congressional power that the Fifth Circuit devised, as our brief explains next. The appropriations power developed in England, and later in America, as a legislative check on executive power, not a judicial check on legislative power. None of the historical precursors to the Appropriations Clause in England, the American colonies, or the early American states included any of the limits on legislative discretion that the Fifth Circuit has attempted to impose on Congress. Indeed, allowing presidentially appointed judges to overrule the will of the people’s elected legislators on funding matters runs directly contrary to the Clause’s purpose and history. The Founders agreed, as James Madison put it, that “the purse-strings should be in the hands of the Representatives of the people.”

Finally, the brief shows that Congress has given federal agencies perpetual, dedicated funding sources like the CFPB’s since the Founding. Congress has never relied exclusively on annual appropriations or time-limited funding. Indeed, the very first agency it created in July 1789, the Customs Service, wielded authority over a vital component of the economy and was financed not with annual appropriations but with an indefinite revenue stream provided in the legislation creating it. Congress employed that model for other agencies throughout the nation’s first decade—providing strong evidence of the Constitution’s original meaning—and has done so ever since.

In sum, the Appropriations Clause does not restrain Congress but rather empowers Congress to restrain the other branches. When Congress decides that an agency should have dedicated funding or indefinite appropriations, it is not ceding its “power of the purse,” as the Fifth Circuit claimed—it is exercising that power.