During the House’s debate on the fiscal year 2017 Appropriations Bill – which contained provisions aimed at curbing the Consumer Financial Protection Bureau’s (CFPB) authority – Rep. Luke Messer (R-Ind.) brought forth an amendment to prohibit the CFPB from using any funds to take administrative actions past the Dodd-Frank Act’s three-year statute of limitations.

Specifically, the amendment states the following: “None of the funds made available by this Act may be used by [the CFPB] to commence any administrative adjudication or civil action under Section 1053 of the Consumer Financial Protection Act of 2010 more than three years after the date of discovery of the violation to which the adjudication or action relates.”

“[T]he amendment I am offering today is a simple and modest proposal,” Messer said on the House floor. “It ensures that the CFPB follows the statute of limitations established by Dodd-Frank during agency administrative proceedings. This amendment is a response to the CFPB blatantly ignoring the express statute of limitations in Dodd-Frank and the Real Estate Settlement Procedures Act, otherwise known as RESPA.”

Messer then went on to mention the CFPB’s ongoing action against PHH Corp. for an alleged kickback scheme in violation of RESPA Section 8. In a previous RESPA News story, noted RESPA expert and Mayer Brown LLP partner Phil Schulman stated that PPH Corp. v. CFPB will be “critically important” to all RESPA Section 8 cases.

“In the case, CFPB Director Richard Cordray claimed the express three-year statute of limitations within Dodd-Frank did not apply to the CFPB’s administrative proceedings process, deliberately ignoring the law,” Messer stated, adding that by using this “unprecedented rationale” the CFPB had retroactively imposed fines against PHH Corp. for alleged violations dating back to 1995 – 19 years past the express statute of limitations.

Messer argued that these fines should be deemed illegal under the Dodd-Frank Act.

“[A]nd they deny business owners basic liability protections guaranteed to them under the statute of limitations. Without those protections, the CFPB could threaten litigation forever, handcuffing businesses’ ability to create jobs in perpetuity,” Messer added. “You can’t just make it up. This is lawless behavior and it is dangerous for the rule of law.”

Rep. José Serrano (D-N.Y.) opposed the amendment, arguing that it “represented a free pass for bad actors who have swindled borrowers on a host of practices and products under the bureau's jurisdiction.”

Serrano admitted that Title X of Dodd-Frank does provide a three-year statute of limitations for claims being brought by the CFPB under Title X.

“However, the bureau has argued in court that the statute of limitations does not govern claims brought under the enumerated consumer protection laws transferred to the bureau … While some of these enumerated statutes have their own statutes of limitations, others do not. The bureau has argued in court that, even under those laws that do have statutes of limitation, they do not apply to the bureau, but instead only apply to private litigation.”

Serrano added that the CFPB has argued in court that no statute of limitation applies to the enumerated laws that do not have statutes of limitation, as well as to administrative law judge proceedings

“In the final analysis, this is currently being adjudicated by the bureau and defendants in the courts. It would be premature and disruptive for Congress to step in with this amendment, which tilts the playing field in court toward the side of special interests,” Serrano argued, adding that the amendment would create uncertainty and complications as to how regulatory agencies can enforce the law.

Rising in support of the amendment, Rep. Ander Crenshaw (R-Fla.) argued that the amendment was a “common-sense” measure to “curtail some of this regulatory overreach.”

“When this agency was set up, it was outside the appropriations process. They get a check from the Federal Reserve for $600 million with no strings attached. Nobody asks anything. In our underlying bill, we put them under the appropriations process. We say: You ought not just have a single director. Have a five-member commission like a lot of these regulatory agencies,” Crenshaw added.

Serrano then reiterated his point that Congress should let the courts make their decisions “before we set a tone that kind of sways what the final outcome might be, and that is not the right thing to do.”

Messer countered that the CFPB was ignoring the rule of law by ignoring the express language of the Dodd-Frank Act.

“I respect the gentleman's position. I would just submit that the express language of Dodd-Frank says what we should do here. It creates a three-year statute of limitations for the CFPB, and the CFPB is ignoring the rule of law and ignoring that express language. All this amendment does is say that the CFPB cannot use dollars to violate the express letter of the law. I urge my colleagues for their support,” Messer said.

In response, Serrano asked for a recorded vote. The amendment later was passed by a 235-179 vote.