Updated 8:05 p.m.

The Consumer Financial Protection Bureau, whose investigations have long been criticized by the financial industry as overbroad and burdensome, has stumbled again in a court fight over a company's refusal to provide documents demanded by the agency.

On Thursday, the U.S. Court of Appeals for the Fifth Circuit struck down an administrative subpoena—known as a civil investigative demand—the CFPB issued to the Source for Public Data L.P., which runs a website offering access to public records. In a six-page ruling, a three-judge panel of the court sided with Public Data's argument that the CFPB failed to adequately advise the company of the specific conduct under investigation.

Judge Jennifer Walker Elrod, writing for the unanimous three-judge panel, said the CFPB's notice that it was investigating “unlawful acts and practices in connection with the provision or use of public records information” fell short of stating the conduct at issue in the investigation.

“Simply put, this notification of purpose does not identify what conduct, it believes, constitutes an alleged violation. Providing and using public records are not violations of federal law, and the CFPB fails to explain how these activities violate federal consumer law,” Elrod wrote.

The Source for Public Data was represented by Troutman Sanders. “The Fifth Circuit's decision upholds limits that Congress placed on the CFPB's investigatory powers and will serve as an important defense against overreaching government investigations,” Ron Raether, the Troutman Sanders partner who argued the appeal, said in a statement.

The CFPB did not immediately comment.

The ruling came a year after the U.S. Court of Appeals for the D.C. Circuit rejected another CFPB investigation. The agency had issued a subpoena to the Accrediting Council for Independent Colleges and Schools, a gatekeeper for federal student aid dollars. Brett Kavanaugh, a D.C. Circuit judge and U.S. Supreme Court nominee, was not on that panel.

The CFPB has been in sharp focus the past two days at Kavanaugh's confirmation hearing for the high court. Kavanaugh was a leading critic of the agency as a sitting D.C. Circuit judge, writing in a landmark ruling PHH v. CFPB that the agency's single-director leader held too much power with too little oversight. Republican and Democratic senators have grilled Kavanaugh over that hearing.

Kavanaugh stressed at his hearing that he did not vote to invalidate the CFPB as a whole. Rather, his ruling, later overturned by the en banc court, said the president should have power to remove the director at will, not just “for cause.” The constitutionality of the CFPB's structure is expected to return to the Supreme Court, perhaps this term. The Fifth Circuit has a pending case that tees up that issue. In that case, Gibson, Dunn & Crutcher partner Ted Olson represents the challengers.

Thursday's ruling by the Fifth Circuit overturned a decision from U.S. Magistrate Judge David Horan, who ordered Public Data to comply with the CFPB's demands in June 2017. Before being taken to court, Public Data had challenged the investigative demand through the CFPB's administrative process. Like all other companies that went through that process, Public Data lost on the appeal to the CFPB director at the time, Richard Cordray.

Mick Mulvaney, the interim CFPB director, showed an early interest in the agency's investigations. When he began soliciting comments earlier this year on virtually every aspect of the CFPB's operations, civil investigative demands emerged as the first area under consideration.

So far, Mulvaney has ruled on only one challenge to a civil investigative demand, according to the CFPB website. In late July, he rejected Firstsource Advantage's appeal and ordered the company to produce the documents requested by the CFPB within 14 days.

The Fifth Circuit's ruling is posted below:

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