The Fifth Circuit Court of Appeals has denied a request by the Community Financial Services Association of America (CFSA) to hold a rehearing en banc on the group’s challenge of the CFPB’s payday loan rule.
The court simply said that no member of the panel had requested that the appeals court be polled, so the petition was denied.
The CFSA, the association representing payday lenders, and others originally filed the high-profile suit, arguing that the agency’s payday loan rule was unconstitutional because the CFPB was not funded through the annual appropriations process (the “funding argument”).
The CFSA and other plaintiffs also argued that (1) the payday lending rule’s promulgation violated the Administrative Procedure Act; (2) the rule was promulgated by a CFPB Director unconstitutionally insulated from presidential removal; and (3) the CFPB’s UDAAP rulemaking authority violated the Constitution’s separation of powers (collectively, the “three non-funding arguments”).
A panel of the Fifth Circuit rejected the three non-funding arguments but agreed with the funding argument and issued a supplemental order extending the rule’s compliance date until 286 days after the resolution of the appeal. The case then went to the Supreme Court.
The U.S. Supreme Court ruled in May that the funding mechanism was constitutional. The court remanded the case to the Fifth Circuit, saying that the high court was not ruling on the constitutionality of the law itself. The Fifth Circuit panel then reinstated its decision rejecting the three non-funding arguments. The plaintiff groups filed a petition for a rehearing en banc, which, as noted, has now been denied. No effective date for the rule has been announced.
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