WASHINGTON (CN) — A D.C. Circuit panel on Friday night temporarily lifted provisions of a court order that prevented the Trump administration from terminating en masse employees at the Consumer Financial Protection Bureau and required previously terminated employees to be reinstated.
The three-judge panel left in place several remaining provisions of U.S. District Judge Amy Berman Jackson’s order, including a freeze on certain stop-work orders that would affect congressionally mandated agency functions, a prohibition of mass contract terminations and the continuation of the Office of Consumer Response hotline.
The Justice Department challenged the Barack Obama appointee’s broad injunction, arguing that it exceeded her authority and impeded the White House’s ability to manage the executive branch as it saw fit by effectively placing the agency under “judicial receivership.”
Oral arguments in the case have been scheduled for May 16, setting up a month of determinations and likely cuts by Department of Governmental Efficiency and White House Office of Management and Budget personnel already embedded at the CFPB.
Unlike several recent orders by the D.C. Circuit, Friday’s order did not feature any statements in concurrence or dissent.
At oral arguments on Wednesday, U.S. Circuit Judge Neomi, a Trump appointee, suggested that the Trump administration had every reason to slim down the agency, as it saw fit, even to the point of running the CFPB at “some minimal level,” so long as the agency still conducted its statutorily required functions.
During an exchange with Jennifer Bennett, of Gupta Wessler and representing the CFPB employee union and several advocacy groups, Rao seemed skeptical that the plaintiffs could say what exact functions were required by Congress.
In her view, that should be a decision for the administration to determine, especially considering the CFPB was under the executive branch.
Justice Department attorney Eric McArthur argued that President Donald Trump’s Feb. 11 executive order, which established the Department of Government Efficiency and instructed federal agencies to conduct mass reductions in force, was wrongfully being impeded.
“That is a key presidential policy initiative that has been stopped dead in its tracks at the bureau as a result of this injunction, and every day that injunction remains enforced inflicts irreparable harm on our democratic system of government,” McArthur said.
U.S. Circuit Judge Cornelia Pillard, an Obama appointee, seemed unconvinced that the apparent harm to the president’s policy agenda outweighed the clear harm the public would suffer with a severely limited consumer protection agency.
“The fundamental harm is that the agency does the work to protect the public,” Pillard said. “Elders who are being offered things and told there’s no cost to them, and in fact, they’re agreeing to many hidden fees, or somebody who takes out a loan and doesn’t realize their entire home has somehow become collateral and then foreclosed on.”
Pillard added that the record clearly showed such irreparable harms had already occurred between the arrival of DOGE personnel and an initial court order on Feb. 14.
McArthur pushed back, arguing that the plaintiffs — a coalition of federal employee unions, advocacy groups and the husband of recently deceased retired pastor Eva Steege who was receiving CFPB guidance on $17,000 in theology school student loans — received agency services that would remain in effect, adding that their harms did not outweigh the government’s.
McArthur repeatedly argued that the Trump administration made clear the agency would continue to function — despite the president’s statements on the campaign trail and in the early weeks of his term — just with a more “streamlined” workforce.
Pillard expressed concern at the idea of simply “disavowing” the president’s own statements, especially considering Jackson’s finding that the government’s representations were “so disingenuous” that she could not trust the defense “to tell the truth about anything.”
Those concerns arose during a two-day evidentiary hearing in March, the government’s primary witness, CFPB Chief Operating Officer Adam Martinez, effectively undermined a declaration he had previously filed where he said the agency was still conducting its congressionally mandated services.
Speaking on the stand, Martinez testified that the agency would be “unrepairable” following mass terminations and stop-work orders for congressionally mandated services, which would effectively terminate up to 95% of all CFPB staff.
He described the arrival of DOGE and White House personnel at the agency as a “hostile takeover.”
The D.C. Circuit panel was rounded out by U.S. Circuit Judge Gregory Katsas, another Trump appointee.
