The D.C. Circuit Court released its highly anticipated opinion in PHH v. Consumer Financial Protection Bureau on October 11. This post addresses one important holding from that opinion. In other posts, we will be analyzing the court’s holding regarding the constitutionality of the CFPB’s single-director structure, and the court’s determination that the CFPB violated due process by retroactively applying a new interpretation of Section 8 of RESPA.


The D.C. Circuit Court made headlines recently with its ruling that the CFPB’s structure was unconstitutional. Just as critically for companies or individuals facing enforcement actions by the CFPB, the court also held that statutes of limitation apply to CFPB administrative proceedings. In this case, the court held that the CFPB was bound by the three-year statute of limitations in RESPA, whether the CFPB was enforcing consumer financial laws through a civil action or administrative proceeding. Moving forward, if this holding survives a likely appeal by the CFPB, this decision will have major implications for government enforcement agencies and anyone that is targeted in an enforcement action.

CFPB’s Position

The CFPB took the bold position that no statute of limitations applied when the CFPB enforced consumer financial laws through administrative proceedings rather than courts. The CFPB argued that administrative proceedings were not actions that were covered by a statute of limitations. While the CFPB admitted to being bound by a statute of limitations when it brings a civil action in court, the CFPB posited that it could hold administrative proceedings any number of years after the alleged wrongdoing occurred with the only limitations on its authority being prosecutorial discretion and the equitable defense of laches.

Court Decision

The D.C. Circuit Court was unanimous in holding that action includes administrative enforcement proceedings brought by the Bureau and that statutes of limitation apply to those proceedings. In his opinion for the court, Judge Kavanaugh wrote that the CFPB’s position that no statute of limitations applied to administrative proceedings was alarming and absurd. Pointing to the Supreme Court’s unanimous opinion in Gabelli, Judge Kavanaugh emphasized the importance of time limits on penalty actions, quoting that it ‘would be utterly repugnant to the genius of our laws’ if actions for penalties could be brought at any distance of time.

Impact on Future CFPB Enforcement Actions

The CFPB can no longer rely on its belief that no statutes of limitation apply in administrative proceedings. This will have a significant impact on the CFPB’s ability to negotiate settlements regarding any wrongdoing that is alleged to have occurred prior to the relevant statute of limitations. In a number of prior orders, the CFPB has identified acts and practices that happened many years outside of an applicable statute of limitations as the basis for its conclusion that a company violated consumer financial laws.

Moving forward, the CFPB should only be able to bring an administrative proceeding or civil action within the time allotted by the relevant statute of limitations identified in the law under which the CFPB is bringing a civil or administrative action. The Supreme Court’s decision in Gabelli takes on added importance for CFPB enforcement actions as the Court held in that case that the statute of limitations for government agencies to bring enforcement actions begins to run from the date of the alleged misconduct, rather than the date the enforcement agency claims to have discovered the misconduct. In light of these rulings, future CFPB actions and orders should only identify misconduct that is alleged to have begun within the number of years provided by the relevant statute of limitations.

Impact on state enforcement actions

The CFPB is by no means the only government enforcement agency that has relied on the belief that statutes of limitation do not apply to administrative proceedings. In states where civil enforcement agencies are authorized to bring administrative actions against entities, state enforcers have made the argument that state statutes of limitation do not apply to administrative proceedings. While it will take some time for this decision to trickle down to state courts and administrative law bodies, expect to see a number of challenges to state level administrative actions that allege wrongdoing that occurred outside of a state’s statute of limitations.

What to do if you’re facing an enforcement investigation

If you find yourself in the position of being the subject of a government enforcement action, go back and take a close look at the years in which the government is alleging that any misconduct occurred. While companies may have doubted the persuasiveness of statute of limitations arguments in the past given the government’s position that no statute of limitations applied to administrative proceedings, there is now strong precedent that all government enforcement agencies must apply a statute of limitations in administrative proceedings. While you can expect the CFPB to appeal this decision, for now gone are the days where a regulator can say with a straight face that no statute of limitations whatsoever applies to administrative proceedings.