The Ongoing Dispute Between the CFPB and Its Workers’ Union
If anything, Tuesday’s three-hour oral argument in the ongoing dispute between the Consumer Financial Protection Bureau and its workers’ union showed the depth of the impasse between the sides – and, perhaps, the reluctance of the D.C. Circuit Court of Appeals to definitively rule in the case.
Judge Cornelia T.L. Pillard’s Observation
“You want everything, and they want nothing,” Judge Cornelia T.L. Pillard said, at one point Tuesday, to Jennifer Bennett, the Gupta Wessler attorney representing the National Treasury Employees Union.
The Arguments Presented
Pillard, one of 11 judges who heard the case Tuesday, was generalizing that the NTEU sought an outcome that maintained a sort of status quo at the CFPB – particularly, an injunction preventing Trump-era leadership at the bureau from drastically cutting its workforce – while Bennett argued the defendants wanted to close the bureau altogether.
“This is a fundamental separation-of-powers claim about the structure and very existence of an agency,” Bennett said.
Eric McArthur, a Justice Department attorney, argued that the measures Acting Director Russ Vought and select others took when they began leading the CFPB in February 2025 – a stop-work order and a plan to fire 95% of the bureau’s employees – did not equate to a final decision to shut down the agency, as defined by the Administrative Procedure Act.
The Jurisdiction Debate
McArthur on Tuesday argued the NTEU is going through the wrong channel – that the Merit Systems Protection Board, not the court system, should have fielded the complaint, and that personnel matters should be governed by the Civil Service Reform Act.
It should be noted that the Supreme Court last year upheld President Donald Trump’s firing of the MSPB’s two Democratic members – and that that board, now consisting of a single Republican, lacks a quorum and any political diversity.
Legal Back-and-Forth
“What you want us to hold is that the CSRA has tentacles that reach across the entire litigation system,” another D.C. Circuit judge, Patricia Millett, said Tuesday. By that logic, the MSPB could prevent a court from preserving agencies created by Congress, the judge inferred.
Courts have gone back and forth on how prescriptive they can be as it relates to the CFPB over the past year. A district court judge granted a preliminary injunction last March. The D.C. Circuit Court, weeks later, rolled back some of the injunction’s protections, and the CFPB pushed a renewed plan for mass reductions in force.
The Court’s Consideration
The NTEU asked for Tuesday’s review of the August decision – this time, by the circuit court’s full bench of 11 judges rather than a three-judge panel.
The court is considering whether the injunction was necessary to prevent officials from shuttering the CFPB before a ruling is made on whether some February 2025 firings at the bureau were legal.
At least one judge Tuesday suggested the case return to the district court for re-litigation.
The Path Forward
“Can the court issue some order that ensures there will be an agency to which employees can be returned?” Millett added Tuesday. “There’s no capacity for them to get due process or due relief unless there is an agency for them to go back to.”
Ultimately, even at the end of Tuesday’s hearing, there appears to remain a fundamental disagreement that has budged little in a year, and a murky path forward.
“The injunction entered by the district court in this case last March prevents the bureau’s new leadership from exercising their lawful discretion,” McArthur said Tuesday.
Bennett, however, asserted there’s no statutory authority to shut down the CFPB.
“I think we have quite an extreme case here where the president is claiming the power to create or destroy an agency,” Bennett argued.
