Judges on the U.S. Court of Appeals for the District of Columbia Circuit pressed the Trump administration on Tuesday over its claim that federal courts cannot block the government from dismissing most employees at the Consumer Financial Protection Bureau (CFPB).
The consumer watchdog has been largely on ice since February of last year while the administration seeks judicial clearance to decimate, if not eliminate, its staff - moves officials tried to carry out on two occasions. While top administration figures have publicly argued for eliminating the CFPB as a politicized obstacle to free enterprise, in court the government has asserted it does not plan to do so.
The matter was argued before the court’s full 11-judge bench, where Deputy Assistant Attorney General Eric McArthur faced sustained questioning over the government’s position that a lower court overstepped when it enjoined the proposed mass firings and concluded the administration intended to shut the agency down.
At the hearing, McArthur told the panel that employees should pursue claims before the Merit Systems Protection Board (MSPB), the specialized labor forum traditionally used to contest federal firings. He also acknowledged that the administration does not possess the authority to abolish the CFPB outright, because Congress has mandated the agency’s existence.
Judge Cornelia Pillard highlighted the stakes of the lower court’s factual finding about the government’s intent, asking: "If we were to affirm the district court's finding that the government intended to shut down the agency, that changes the landscape doesn't it?"
McArthur emphasized the executive branch's obligation to follow the law but cautioned that "courts do not have unbridled authority to enforce that obligation." Separately, the administration is pursuing measures to weaken the MSPB's power to review government decisions.
Jennifer Bennett, counsel for a union representing CFPB employees who sued to block the administration’s actions, told the judges that Congress did not design the MSPB to resolve constitutional separation-of-powers questions. She framed the union's claim as broader than an individual wrongful termination grievance: "The claim here is not 'I shouldn't have been laid off'... but 'this agency should not have been shut down,'" she said. "I heard the defendants admit that that claim can proceed in court."
The case has a complex procedural history. In August, a three-judge panel at the appeals court overturned the lower court by finding it lacked jurisdiction to intervene. Later, the court's full bench in December reinstated the lower court's injunction and agreed to rehear the jurisdictional and substantive questions now before it.
This set of proceedings will determine where disputes over sweeping personnel actions at an independent consumer regulator can be litigated - in federal court or before the MSPB - and whether the lower court's finding about the government's intent to shutter the agency is binding as the litigation moves forward.