Despite massive attempted layoffs and cancellation of third-party vendor contracts, the Trump Administration did not and does not intend to shut down the CFPB, a Justice Department attorney told a federal appeals court on May16 in connection with oral arguments on the government's appeal of the preliminary injunction issued by the District Court, which essentially required the government to maintain the status quo pending the outcome of the litigation.
“Agency heads all the time have goals or plans or intents in their mind that govern how they interact with their staff on a day-to-day basis and the sorts of directives they give,” Eric McArthur told the Federal Appeals Court for the District of Columbia. He added that such actions never have been interpreted as “final action” subject to challenge under the Administrative Procedure Act.
Jessica Bennett of Gupta Wessler, representing the National Treasury Employees Union (NTEU), said that the firing of more than 1,400 employees—which only would leave some 200 employees at the CFPB—was a clear indication that the administration intended to shutter the bureau.
Employees were publicly told to return to work, while they were privately told not to, she asserted.
“If you're eliminating positions, that's not a pause,” she said. “That's permanent.”
The appeals court had previously refused to stay the preliminary injunction issued by Judge Amy Berman Jackson of the U.S. District Court for the District of Columbiain order to ensure that the plaintiffs could receive “meaningful final relief” if they prevail in the suit..
McArthur told the appeals court that Jackson did not adequately consider Paoletta's communications with bureau employees making it clear that they were supposed to continue activities authorized by Congress.
But Bennett said that there was overwhelming evidence that the administration was shutting down the agency. She said that the bureau had indicated that it intended to continue HMDA and consumer response activities, but CFPB officials cancelled the contracts needed to do that work.
Appeals court Judge Nina Pillard seemed skeptical of the government's arguments. She cited Elon Musk's social media post that said “CFPB RIP” as evidence that the agency was being shut down.
“There's a really powerful record here of quite more ambitious action,” Pillard said.
However, Judges Gregory G. Katsas and Neomi Roa appeared to be more skeptical of the NTEU's argument.
Rao questioned whether a District Court Judge should decide what agency Reductions in Force are appropriate.
“This has a little bit of a nailing Jello to the wall quality to it,” Katsas said. “There's no rule or order we can focus on as the basis for our review.”
We think that the majority of the Court of Appeals will narrow the breadth of the preliminary injunction to give the Trump Administration more flexibility to manage the CFPB pursuant to its new supervisory and enforcement policy as long as the CFPB continues to perform the functions mandated by statute.
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