First time in decades a federal appeals court struck down an agency administrative subpoena as lacking statutory authority
Washington, DC (April 21, 2017) – The U.S. Court of Appeals for the D.C. Circuit has upheld a district court ruling that a civil investigative demand (CID) issued by the Consumer Financial Protection Bureau (CFPB) against the Accrediting Council for Independent Colleges and Schools (ACICS) is unenforceable. The decision represents the first time in decades that a federal appeals court has struck down an administrative subpoena issued by the federal government.
Judge David B. Sentelle, writing for the three-judge panel, held that the CFPB did not have the statutory authority to issue the civil CID in question. Specifically, the Court held that the CFPB failed to provide ACICS with sufficient notice as to the nature of the conduct and the alleged violation under investigation, as required by statute. The Court emphasized the CFPB’s inability to provide specifics regarding the nature of the investigation: "Tellingly, in attempting to explain the scope of its investigation, the Bureau merely repeats the broad language used in the Notification of Purpose." According to the Court, the CFPB was "required by statute to adequately inform ACICS of the link between the relevant conduct and the alleged violation." The Court agreed with the district court that the CID "says nothing" about this potential link.
The Court rejected the CFPB's references to broad statutory provisions and "uninformative catch-all" phrases, and explained that "[i]ndeed, were we to hold that the unspecific language of this CID is sufficient to comply with the statute, we would effectively write out of the statute all of the notice requirements that Congress put in."
Allyson B. Baker, Kimberly Culp, Andrew T. Hernacki, and Benjamin E. Horowitz of Venable LLP served as lead counsel on behalf of ACICS. The case is Consumer Financial Protection Bureau v. Accrediting Council for Independent Colleges and Schools, Case No. 16-5174, in the U.S. Court of Appeals for the D.C. Circuit.
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