DC Circuit Vacates District Court’s Preliminary Injunction and Allows Downsizing of the CFPB: Will the CFPB RIF its Employees?
Today, August 15, 2025, the DC Circuit issued a very consequential opinion allowing the CFPB acting leadership to continue efforts to substantially reduce the CFPB’s size, which may include a “reduction in force” (“RIF”) of most of the CFPB’s employees. While it remains to be seen whether the CFPB’s acting leadership has changed its plans (it has recently undertaken several rulemaking initiatives, some of which I’ve written about here, here, and here), this decision could potentially lead to the downsizing of the CFPB to a skeleton crew. I briefly summarize the DC Circuit’s opinion below and provide a few thoughts.
As background, since taking over the CFPB earlier this year, the CFPB’s current acting leadership has undertaken efforts to downsize the CFPB, including a RIF of most employees (they actually issued RIF notices to employees), termination of the CFPB’s office leases and other contracts, and an order to the CFPB staff to stop most work. Some interpret this as an effort to “delete” the CFPB (as tweeted by former DOGE leader Elon Musk). I originally wrote about these efforts back in February when they began (see here). The NTEU, which represents CFPB employees, has had an ongoing lawsuit against the CFPB to prevent such a RIF, as well as the other efforts to “delete” the CFPB, which resulted in a preliminary injunction issued by the DC District Court against such actions in March 2025 (which I wrote about here). In April 2025, after an appeal of that preliminary injunction by the CFPB, the DC Circuit partially stayed the preliminary injunction, allowing a RIF of employees under certain conditions (see here). Then only a few days later, the CFPB issued RIF notices to about 1,400 employees, which prompted an order from the DC District Court pausing the RIF (see here). The CFPB appealed that order, but, at the end of April 2025, the DC Circuit temporarily prevented the RIF by lifting its own partial stay of the District Court’s preliminary injunction (see here). The DC Circuit then heard oral argument on the merits of the District Court’s preliminary injunction on May 16, 2025, and the public has been waiting for the District Court’s opinion on the preliminary injunction since then.
The DC Circuit found for the CFPB, holding that the District Court lacked jurisdiction over the NTEU’s (including the other plaintiffs in the case) claims based on loss of employment, because they have to be heard under a particular scheme set forth in the Civil Service Reform Act (which, for example, provides for review of federal employment actions by the Merit Systems Protection Board). Regarding the other claims, the DC Circuit held that they were not subject to judicial review under the Administrative Procedure Act because they did not constitute a final agency action or an unconstitutional action reviewable in equity. The case was two-to-one, with a dissenting opinion by the sole Democrat-appointed judge, Judge Pillard. The DC Circuit remanded the case back to the District Court, which based on the opinion, would appear bound to dismiss many, if not all, of the claims.
While this could potentially be viewed as the CFPB merely winning on standing, which could be viewed as technical, the DC Circuit’s opinion does appear to espouse a view that there was nothing wrong with what the CFPB’s acting leadership was doing. For example, the opinion states that the “the CFPB is mostly free to organize its internal affairs as it wishes.” In addition, regarding the CFPB acting leadership’s February 10th stop work email, which was a pivotal email in the NTEU lawsuit, the DC Circuit states that it was not a final agency action, but merely “reflected a new presidential Administration and a new Acting Director trying to assess all agency activities,” and that it “merely directed employees to obtain advance approval before performing work, while remaining silent on legally mandated work and leaving the Chief Legal Officer with discretion to approve it.” Further, the DC Circuit states that, “because the Chief Legal Officer did approve many tasks upon request, it is difficult to see how the email affected the plaintiffs even practically, much less how it directly changed their legal rights.” Further, regarding other efforts by the acting leadership, the DC Circuit stated that, “the plaintiffs point to no regulation, order, document, email, or other statement, written or oral, purporting to shut down the CFPB,” and that “there was neither a definitive agency decision to stop mandatory work nor a direct and appreciable impact on the rights of the plaintiffs.” Further, the DC Circuit said that the CFPB acting leadership could still change its mind, stating that “the Bureau did change course—it has reactivated certain contracts; refined its RIF plans; and issued a directive to ensure that everyone is carrying out any statutorily required work.”
Further, the DC Circuit discussed the problems with issuing an order requiring the CFPB to operate, stating that, “while the statute specifies various services that the Bureau must provide, it gives the agency a great deal of discretion in deciding how to provide them.” The DC Circuit stated that issuing “an order requiring the Bureau to retain specified levels of employment,” or a “general order merely compelling compliance with broad statutory mandates” would run afoul of prohibitions against judicial direction of agency action that is not demanded by law.
The DC Circuit did allow the plaintiffs seven days to file for a rehearing by the panel or en banc by the DC Circuit before the remand to the District Court. While I cannot predict whether the plaintiffs will ask for an en banc review, it would appear to make sense to do so, considering the major impact of this opinion (which could result in a RIF of most of the CFPB staff) and the dissenting opinion by Judge Pillard. For now, it will be waiting game to see if and when the CFPB’s acting leadership moves forward with a RIF. We will stay on top of this case and keep you updated.
If you would like to discuss any of the issues in this post, please email me at rich@garrishorn.com.
