CFPB funding
New York v. Vought
Date: Sept. 25, 2026
Issue: Whether acting Consumer Financial Protection Bureau (CFPB) director Russell Vought violated the Administrative Procedure Act (APA) by refusing to request funding for the bureau from the Federal Reserve.
Case Summary: An Oregon federal court ruled that CFPB Director Russell Vought violated the Administrative Procedure Act by refusing to request funding for the bureau from the Federal Reserve.
In December 2025, 22 states and the District of Columbia (collectively, the states) sued Vought in his official capacity as Acting CFPB Director, along with CFPB and the board of Governors of the Federal Reserve. The states challenged Vought’s funding decision and alleged that it conflicted with the Dodd-Frank Act. Under the Act, CFPB receives funding from the Federal Reserve System’s “combined earnings” rather than through annual congressional appropriations.
In November 2025, the Office of Legal Counsel interpreted “combined earnings” to mean profits remaining after expenses. Because the Federal Reserve was operating at a loss, Vought and CFPB concluded no combined earnings were available to fund CFPB and, as a result, they would not request additional funding. The states alleged this interpretation conflicted with the Dodd-Frank Act and unlawfully threatened CFPB’s continued operation.
In December 2025, the U.S. District Court for the District of Columbia rejected CFPB’s interpretation in National Treasury Employees Union v. Vought. There, the court ruled that “combined earnings” means all money earned, not profits remaining after expenses. It required CFPB to continue requesting the funds it needed to perform its duties. Vought complied under protest and requested $145 million from the Federal Reserve in January 2026. In March 2026, the Northern District of California reached a similar result in Rise Economy v. Vought. There, the court ruled that Vought and CFPB acted arbitrarily, capriciously, and contrary to law in adopting the OLC’s interpretation. The court ordered CFPB to continue requesting the funds it reasonably needed from the Federal Reserve. Vought continued requesting funds while the states’ lawsuit remained pending.
Here, Judge Ann Aiken of the U.S. District Court for the District of Oregon granted the states’ motion for partial summary judgment. The court rejected Vought and CFPB’s argument that later events had made the case moot. The court determined that neither the NTEU injunction nor Vought’s court-ordered funding requests resolved the dispute over whether he could adopt the OLC’s interpretation of “combined earnings” and refuse to request CFPB funding on that basis. The court also ruled that the Federal Reserve’s apparent return to profitability did not moot the case because Vought could rely on the same interpretation if the Federal Reserve again operated at a loss. Additionally, the court ruled that the states had standing because no CFPB funding could prevent them from accessing consumer complaint and mortgage lending data that federal law requires CFPB to provide.
The court also declined to dismiss or transfer the case based on parallel litigation. Vought and CFPB argued the case duplicated NTEU and Rise, but the court found important differences. The court noted that NTEU involved different claims. Although Rise involved similar issues, it had different plaintiffs and did not include a claim under 5 U.S.C. § 706(1) or name the Federal Reserve as a defendant. The court also found little risk of conflicting rulings and concluded that concerns about convenience, efficiency, and judicial economy did not support dismissal. For similar reasons, the court rejected the defendants’ request to transfer the case to the U.S. District Court for the District of Columbia.
Next, the court ruled that Vought and CFPB took final agency action subject to review under the APA. The court rejected their argument that the November 2025 funding decision was tentative or had no real effect. Vought made the bureau’s position final when he told the President and Congress that CFPB would follow the OLC’s interpretation of the Dodd-Frank Act’s “combined earnings” provision and request no funding from the Federal Reserve. The court found that this interpretation became CFPB’s “working law” because it set the bureau’s funding policy. The court also ruled that later injunctions requiring Vought to request funding did not change the final nature of the earlier decision. Vought and CFPB had also said they would return to the OLC’s interpretation if the injunctions ended.
Turning to the merits, the court ruled in favor of the states on their APA claims. The court explained that the states challenged a specific agency action rather than CFPB’s funding policy generally. In particular, they challenged Vought’s decision not to request funding for fiscal year 2026 after adopting the OLC’s interpretation that no funds were available from the Federal Reserve while it was operating at a loss. The court also held that the CFPB Director has a statutory duty to communicate the CFPB’s funding needs to the Federal Reserve so that the Federal Reserve can make the required transfer. The court then rejected the OLC’s interpretation of “combined earnings” as profits remaining after expenses and instead held that the term means the Federal Reserve’s revenue before expenses are deducted. Based on those findings, the court granted the states summary judgment on their APA claims.
Finally, the court ruled that Vought and CFPB violated the Constitution’s separation of powers. The states argued that Vought tried to defund CFPB without statutory or constitutional authority and, in doing so, exercised Congress’s exclusive authority over federal spending. The court agreed. It found that Vought used the funding dispute to interfere with the funding system Congress created for CFPB. The court concluded that Vought and CFPB improperly assumed Congress’s “power of the purse” and granted the states summary judgment on their separation-of-powers claim.
Bottom Line: The court ruled that Vought and CFPB violated the APA by refusing to request funding from the Federal Reserve based on an unlawful interpretation of “combined earnings” and also violated the separation of powers by interfering with Congress’s funding scheme for the CFPB.
Document: Opinion
