United States: Ninth Circuit Finds CFPB Interpretation Of RESPA Provision Not Entitled To Deference

On August 24, 2015, the Ninth Circuit found that the CFPB's interpretation offered in an amicus brief of 12 U.S.C. § 2607(c)(2) of the Real Estate Settlement Procedures Act (RESPA) was not entitled to Chevron deference (Edwards v. The First Am. Corp., No. 13-55542).

The provision at issue was the statutory safe harbor for the RESPA anti-kickback prohibition: "Notwithstanding the general prohibition of exchanging any thing of value for a referral, a statutory safe harbor exempts a payment from RESPA violation if the payment—despite being made simultaneously with a referral—was 'for goods or facilities actually furnished or for services actually performed.'" Slip Op. at 10 (quoting 12 U.S.C. § 2607(c)(2)). The question was whether an ownership interest exchanged could be categorized as a good, facility, or service.

In an amicus brief, the CFPB—the agency with regulatory authority for RESPA—contended "that § 2607(c)(2) does not apply to the transactions [in question] because First American's payment for ownership interests is not a payment for goods, facilities, or services" and the Bureau urged the Court "to give deference to its interpretation." Slip Op. at 11. The Ninth Circuit concluded that the "agency's interpretation of the statute—when presented in an amicus brief—is not promulgated in the exercise of its formal rule-making authority, so no Chevron deference is warranted." The Ninth Circuit also concluded that "because the statutory terms at issue are not ambiguous, no deference is merited." Id. at 12.

The Court nevertheless agreed with the CFPB's interpretation based on the language of the statute, finding that the "the meanings of 'goods,' 'facilities,' and 'services' are plain," and that "ownership interests purchased by First American are equity shares, not goods, services, or facilities." Id. at 13. The Court concluded that, because the safe harbor could not apply to those circumstances as a matter of law, "the district court erred in relying on § 2607(c)(2) to determine the propriety of class certification." Id. The case has been remanded.

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