Appeals Panel Eyes Narrow Order to Keep CFPB Open, Curb Firings

Federal workers at the Consumer Financial Protection Bureau are poised for a continued pause on the Trump administration’s plan to dismantle the agency after a federal appeals panel signaled it may be open to letting a lower court narrow an injunction to keep the bureau open.

Judge Amy Berman Jackson of the US District Court for the District of Columbia had imposed a preliminary injunction in late March generally blocking the administration from firing CFPB staff members and canceling certain contracts. Trump officials sought to stay the injunction in motions filed with the district court as well as the US Court of Appeals for the District of Columbia Circuit.

At a hearing Wednesday, judges on the D.C. Circuit panel said they were considering a request for a narrower version of Jackson’s prohibitions, including to dial back her broad ban on firing employees or placing them on administrative leave.

“What you’re looking for, and I understand it, is a tailoring of some of the provisions at a minimum,” Judge Cornelia T.L. Pillard told Eric McArthur, a deputy assistant attorney general representing the government.

“But the difficulty I have is that when the proceedings were going on in the district court, when the district judge asked the government what your understanding of the statutorily required duties are, she wasn’t getting an explanation of that, so it really left her unable to credit that the government really had a plan not to shut down the agency,” said Pillard, an Obama appointee.

Judges Neomi Rao and Gregory G. Katsas expressed reservations about the broad injunction.

Rao said the pace of litigation could leave the order’s restrictions in place for years while the case is still pending.

Katsas questioned whether a vastly reduced workforce would still be able to carry out the CFPB’s statutorily mandated functions, weighing how Jackson’s order could be modified to prevent reductions-in-force that would endanger the agency without ruling out the practice entirely.

‘Judicial Receivership’

The administration has argued that a stay is necessary after Jackson’s order placed the CFPB in a “judicial receivership” by requiring it to restart all operations, even beyond those mandated by Congress. In a brief late last month, the government said Jackson’s “lawless” order micromanages the executive branch’s discretion, insisting the agency intends to keep performing its minimum statutory functions.

“This is the very definition of a programmatic lawsuit that’s seeking judicial supervision of how the executive branch executes the law on a day-to-day basis,” McArthur said Wednesday. “They brought this programmatic lawsuit, they persuaded the district court to enter an overbroad programmatic injunction, and it should be stayed because it seriously impinges on Article Two prerogatives.”

The suit was brought by plaintiffs including the National Treasury Employees Union, which represents most CFPB workers.

Acting CFPB Director Russell Vought issued a broad stop-work order to employees Feb. 10, shortly after he took charge, and the agency moved quickly in a bid to fire the majority of its staff, according to declarations and internal emails submitted in the case.

CFPB leaders agreed to put the mass firings on hold while Jackson considered an injunction, and the agency began to restart some operations, though it was still moving ahead with reduction-in-force plans as recently as last month, a witness testified.

Status of Firings

Jackson on April 3 granted only one aspect of the government’s bid for a stay on her preliminary injunction, removing a deadline last week for the agency to inform the court of its compliance with her order. Other provisions of her injunction, including requirements for the agency to reinstate certain terminated employees and perform its statutorily mandated functions, remained intact.

Giving the Trump administration free rein to eliminate the agency would bring plaintiffs irreparable harm and have “devastating” consequences, Jackson said.

As the D.C. Circuit panel weighs whether to give the lower court another chance to adjust certain provisions, Jennifer Bennett, a principal at Gupta Wessler LLP who represents the plaintiffs, urged the judges to keep the hold on firings and contract terminations in place while narrower terms are crafted.

“I do think if what this court believes is the best option would be for the district court to take another crack at it, I hear the termination provision being the main hangup,” Bennett said, referring to the hold Jackson placed on firings.

The appeals panel could maintain a previous administrative stay on Jackson’s order “unless and until the district court enters some order modifying the injunction,” Bennett suggested.

Katsas formerly served as deputy White House counsel under the first Trump administration and Rao worked at the Office of Management and Budget under Vought.

The union and its co-plaintiffs are also represented by Public Citizen Litigation Group.

The case is NTEU v. Vought, D.C. Cir., No. 25-05091, oral argument 4/9/25.