D.C. Circuit Weighs Executive Authority In CFPB Union Case

The D.C. Circuit is considering whether federal courts have the jurisdiction to stop a mass “reduction-in-force” aimed at the CFPB.

The D.C. Circuit Court of Appeals heard oral arguments in National Treasury Employees Union (NTEU) v. Russell Vought (Case No. 25-1591) Feb. 24 concerning a challenge to the administration’s efforts to downsize or shut down the Consumer Financial Protection Bureau through a reduction-in-force (RIF) and other administrative directives.

The central focus of the nearly 3-hour argument was whether the federal courts have jurisdiction to stop the firing of employees and whether to uphold an injunction preventing the executive branch from shutting down the bureau.

For background, the D.C. Circuit granted a petition from the NTEU for rehearing of a case challenging Vought’s plan for mass layoffs at the agency, ACA International previously reported.

The court also approved a stay of the layoffs pending its review of the case.

The hearing follows a January district court injunction (PDF) clarifying that Vought is legally obligated to request operational funding while the case remains active. This mandate recently resulted in a $145 million request to the Federal Reserve (PDF) for the bureau’s second-quarter budget.

Summary of Oral Argument

The Department of Justice, on behalf of the CFPB, argued that under the Civil Service Reform Act (CSRA), any claims related to a RIF must be channeled through the Merit Systems Protection Board (MSPB) rather than a district court.

DOJ attorneys argued that if the administration’s actions were illegal under the Administrative Procedure Act (APA), the district court lacks the power to enjoin a RIF because the CSRA provides the exclusive remedy for federal employment disputes.

In response, the judges questioned whether this applies when the RIF is not just an employment action but a tool to bypass a statutory mandate to keep an agency functioning.

Turning to the NTEU’s case, the plaintiffs argued that internal emails and directives issued shortly after the presidential transition constituted a “final agency action” to dismantle the CFPB, in violation of the APA.

The court explored whether a series of actions — such as stopping work on specific regulations or planning to cut 80–90% of the staff — amounted to a singular, reviewable decision to shutter the agency.

Government attorneys contended there was no final decision by the administration close the bureau. They argued the agency was merely undergoing a deregulatory agenda and lawful reforms for which the public had voted.

Statutory Obligations

Both sides discussed a foundational principle of government: that the executive branch lacks the authority to close an agency created by Congress through the Dodd-Frank Act.

The government argued that if the CFPB actually stopped performing a specific required task (like operating a consumer complaint hotline), the proper remedy is a suit under APA Section 706(1) to “compel agency action unlawfully withheld,” rather than a broad injunction against staffing changes.

What’s Next?

The pending en banc appellate decision from the D.C. Circuit will establish the legal boundaries of the administration’s efforts to restructure the CFPB. The appeals court may refer the issue back to the district court for reconsideration.

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