Three Non-profit Organizations Represented By Public Citizen Litigation Group Open Up New Front In War Against The CFPB

On December 5, 2025, Rise Economy, the National Reinvestment Coalition and the Woodstock Institute filed a lawsuit against the CFPB and its Acting Director Russell Vought in the Federal District Court for the Northern District of California (San Francisco) seeking declaratory and injunctive relief related to Vought's determination not to seek funding from the Federal Reserve Board because of an opinion provided to the CFPB by the Office of Legal Counsel of the Department of Justice ("OLC") that it would be unlawful for the CFPB to make such a request based on there being no "combined earnings of the Federal Reserve System." The lawsuit was brought under Section 706 of the Administrative Procedure Act which directs courts to hold unlawful and set aside agency actions that are "arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law."

The Plaintiffs' Claim for Relief alleges the following:

1. The "Defendants" decision not to request funding from the Federal Reserve Board of Governors based on their determination that the Federal Reserve System does not currently have 'combined earnings' is "final agency action."
2. Vought "is required by law to determine the amount of funding reasonably necessary to carry out the CFPB's authorities so that the Board of Governors of the Federal Reserve System can transfer that amount to the CFPB subject to a cap....Contrary to that statutory command, Defendant Vought has not determined the amount of funding reasonably necessary to carry out the CFPB's authorities and communicated that determination to the Board of Governors of the Federal Reserve System ... so that the necessary funds can be transferred to the CFPB."
3. "No statute authorizes Defendants to make determinations about the status of Federal Reserve System finances, or the funding available from the Federal Reserve System, or to decline to request funding based on such determinations."
4. "Defendants' refusal to request funding from the Federal Reserve System is based on an incorrect interpretation of the term 'combined earnings' of the Federal Reserve System."
5. "In any event, the Federal Reserve System currently has 'combined earnings,' even under Defendants' incorrect interpretation of the term."
6. "Defendants' refusal to request from the Board of Governors of the Federal Reserve System funds reasonably necessary to support the CFPB's authorities was thus arbitrary, capricious, and not in accordance with law."

The Plaintiffs have asked the court to:

1. "Declare that Defendants' determination not to request funding from the Federal Reserve Board of Governors is unlawful."
2. Set aside Defendants' determination not to request funding from the Federal Reserve Board of Governors.
3. "Issue preliminary and permanent relief requiring Defendants to request funding from the Federal Reserve Board of Governors in the amount, determined reasonably necessary to carry out the authorities of the Bureau under Federal consumer financial law, taking into account such other sums made available to the Bureau from the preceding year (or quarter of such year)."

Here are a few observations and questions about this new lawsuit:

There is a question that comes to mind in light of the following: (a) the lawsuit brought by the NTEU and certain other organizations against Vought and the CFPB early this year in the Federal District Court for the District of Columbia challenging Vought's actions to shut down the CFPB, an already pending preliminary injunction issued by Judge Amy Berman Jackson precluding the terminations of 1,400 or so CFPB employees and certain other actions; (b) a reversal of Judge Jackson's opinion by the DC Circuit Court of Appeals based on there not being any "final agency action," with the DC Circuit withholding the issuance of its mandate; (c) a pending petition for rehearing en banc; and (d) most importantly, a notice to Judge Jackson asking her to clarify her preliminary injunction in light of Vought's decision not to seek any further funding for the CFPB as a result of the OLC opinion. With that background, the question is, why did the Plaintiffs file this new lawsuit and why did they file it in the Northern District of California?

We think it was filed in order to have a "clean" complaint based entirely on current events involving the alleged shutdown of the CFPB including Vought's formal decision not to seek any additional funding for the CFPB because of a lack of combined earnings of the Federal Reserve System rather than to rely upon the DC lawsuit which is in a convoluted procedural posture and where the preliminary injunction issued by the District Court was based on a factual record that is obsolete and where that injunction was reversed by a panel of the DC Circuit based on the record not reflecting "final agency action."

We think that Public Citizen chose the Northern District of California for filing its lawsuit because the 9th Circuit Court of Appeals is known for having liberal judges.

The case has been assigned to Senior Judge Edward J. Davilla who was appointed to the bench by President Obama.

In light of the fact that the CFPB has now raised before Judge Jackson the core funding issue that is the gravamen of the new lawsuit, a second question is whether the CFPB will respond by seeking to have venue transferred to Judge Jackson since it seems to be inefficient for two courts to be dealing with the same complex issue.

A third question is whether the CFPB may move to dismiss the lawsuit based on the argument that the Federal Reserve Board is an indispensable party. The same motion may also be appropriate in the DC case with regard to the funding issue. A court order directing the CFPB to request funds from the Fed would be an exercise in futility if the Fed believes that remitting funds to the CFPB would be unlawful in light of its financial situation or its interpretation of the CFPB funding language in Dodd-Frank

A fourth question is whether the three Plaintiffs have standing to file the lawsuit. In that connection, the three organizations assert that, in order to perform their businesses, they need data supplied by the CFPB under the Home Mortgage Disclosure Act, the CFPB's consumer complaint portal and a final regulation pertaining to small business loan data collection.

A fifth question is whether, if the court determines that "combined earnings of the Federal Reserve System" means profits and not revenues, there will be a need to conduct probing discovery from the Federal Reserve Board.

A sixth question is whether, if the court concludes that "combined earnings of the Federal Reserve System" means profits, there will be a need to conduct further discovery to determine whether the Federal Reserve System has "combined earnings" as of today or whether, in light of the fact that the Federal Reserve System has had approximately $240 billion of accumulated losses/deferred assets since September 2022, it has to zero out those accumulated losses/deferred assets before remitting funds to the CFPB?

A seventh, and, for now, our final question, is whether, if the court concludes that "combined earnings" of the Federal Reserve System means profits, will that implicitly invalidate all actions taken by the CFPB after September 2022 until now including, among other things, regulations, examinations and enforcement?

Although the Defendants have not yet responded to the complaint, the Plaintiffs filed a motion for summary judgment on December 9. Even though such an early motion is permitted, courts almost always postpone consideration of the motion because:

• The defendant has not yet answered or had any chance to develop facts.
• Rule 56(d) allows the nonmovant (the defendant) to show by affidavit or declaration that they need discovery to oppose the motion. Courts routinely grant this relief.
• Many judges view a very early summary judgment motion as premature or inefficient and will defer it until after at least some discovery.

We will cover the motion for summary judgment in a later blog post and we will continue to follow these cases and to report on further developments as they arise.