When the Consumer Financial Protection Bureau (CFPB or Bureau) unveiled its UDAAP exam manual at the end of March 2022, announcing that it had decided to interpret the word “unfair” in Dodd-Frank to prohibit discrimination, even where specific statutes like the Equal Credit Opportunity Act do not apply, we expressed skepticism about the viability of the CFPB’s position if the issue were ever litigated. We thought that the CFPB’s interpretation of UDAAP was beyond its authority “because it seems to ignore the legislative choice made by Congress to explicitly limit the reach of anti-discrimination concepts to specific areas when it passed legislation like ECOA, the Fair Housing Act, Title VII, the Americans with Disabilities Act, and the like. We suspect a court would be suspicious of the CFPB taking this policy judgment into its own hands.”

The Supreme Court released a decision on June 30 that we believe reinforces our view, and puts the CFPB’s announcement in significant jeopardy. In West Virginia v. EPA, the Court held that the EPA lacked congressional authority to make sweeping changes to the country’s energy generation system because Congress did not provide explicit authority for EPA to exert such broad, impactful changes. The Court’s discussion of this issue bears remarkable parallels to the CFPB’s UDAAP announcement:

Nonetheless, our precedent teaches that there are “extraordinary cases” that call for a different approach — cases in which the “history and the breadth of the authority that [the agency] has asserted,” and the “economic and political significance” of that assertion, provide a “reason to hesitate before concluding that Congress” meant to confer such authority.

Such cases have arisen from all corners of the administrative state. In Brown & Williamson, for instance, the Food and Drug Administration claimed that its authority over “drugs” and “devices” included the power to regulate, and even ban, tobacco products. We rejected that “expansive construction of the statute,” concluding that “Congress could not have intended to delegate” such a sweeping and consequential authority “in so cryptic a fashion.” In Alabama Assn. of Realtors v. Department of Health and Human Servs., we concluded that the Centers for Disease Control and Prevention could not, under its authority to adopt measures “necessary to prevent the … spread of” disease, institute a nationwide eviction moratorium in response to the COVID–19 pandemic. We found the statute’s language a “wafer-thin reed” on which to rest such a measure, given “the sheer scope of the CDC’s claimed authority,” its “unprecedented” nature, and the fact that Congress had failed to extend the moratorium after previously having done so.

Our decision in Utility Air addressed another question regarding EPA’s authority — namely, whether EPA could construe the term “air pollutant,” in a specific provision of the Clean Air Act, to cover greenhouse gases. Despite its textual plausibility, we noted that the Agency’s interpretation would have given it permitting authority over millions of small sources, such as hotels and office buildings, that had never before been subject to such requirements. We declined to uphold EPA’s claim of “unheralded” regulatory power over “a significant portion of the American economy.” In Gonzales v. Oregon, we confronted the Attorney General’s assertion that he could rescind the license of any physician who prescribed a controlled substance for assisted suicide, even in a State where such action was legal. The Attorney General argued that this came within his statutory power to revoke licenses where he found them “inconsistent with the public interest.” We considered the “idea that Congress gave [him] such broad and unusual authority through an implicit delegation … not sustainable.” Similar considerations informed our recent decision invalidating the Occupational Safety and Health Administration’s mandate that “84 million Americans … either obtain a COVID–19 vaccine or undergo weekly medical testing at their own expense.” National Federation of Independent Business v. Occupational Safety and Health Administration. We found it “telling that OSHA, in its half century of existence,” had never relied on its authority to regulate occupational hazards to impose such a remarkable measure.

All of these regulatory assertions had a colorable textual basis. And yet, in each case, given the various circumstances, “common sense as to the manner in which Congress [would have been] likely to delegate” such power to the agency at issue made it very unlikely that Congress had actually done so. Extraordinary grants of regulatory authority are rarely accomplished through “modest words,” “vague terms,” or “subtle device[s].” Nor does Congress typically use oblique or elliptical language to empower an agency to make a “radical or fundamental change” to a statutory scheme. Agencies have only those powers given to them by Congress, and “enabling legislation” is generally not an “open book to which the agency [may] add pages and change the plot line.” We presume that “Congress intends to make major policy decisions itself, not leave those decisions to agencies.”

Thus, in certain extraordinary cases, both separation of powers principles and a practical understanding of legislative intent make us “reluctant to read into ambiguous statutory text” the delegation claimed to be lurking there. To convince us otherwise, something more than a merely plausible textual basis for the agency action is necessary. The agency instead must point to “clear congressional authorization” for the power it claims.

(Citations omitted)

With apologies for the long block quote above, it seems self-evident that the Court’s analysis could be readily applied to the CFPB’s assertion that Congress’ enactment of the word “unfair” gave the Bureau the authority to prohibit discrimination in areas never mentioned by Congress, and that the policy judgment of where to prohibit discrimination — surely one of the most consequential economic and political questions facing the country — should be reserved to Congress, not given to an agency based on the use of the word “unfair” in Dodd-Frank.

When the CFPB’s announcement came out in March 2022, we believed that common sense counseled the conclusion that Congress did not give the Bureau the authority to interpret “unfair” to include discrimination. The Supreme Court’s decision in West Virginia v. EPA reinforces that view, and we believe provides a ready avenue for challenge of the Bureau’s position.