CFPB Funding and Operation
National Treasury Employees Union v. Russell Vought
Date: Dec. 30, 2025
Issue: Whether the Consumer Financial Protection Bureau violated the Administrative Procedure Act (APA) by using the bureau’s funding mechanism to defund itself.
Case Summary: The D.C. Circuit Court granted the National Treasury Employees Union’s petition for rehearing in its lawsuit challenging whether CFPB violated the APA by using the bureau’s funding mechanism to defund itself.
On Feb. 13, 2025, NTEU and its co-plaintiffs (collectively NTEU) sued CFPB, alleging President Trump and Acting Director Vought violated the Constitution and the APA by suspending CFPB’s legally mandated activities and effectively shutting it down. NTEU also sought a preliminary injunction. On March 28, 2025, Judge Jackson granted NTEU’s motion for a preliminary injunction, emphasizing the court could not stand by while CFPB risked dissolution before the case concluded. The court held that the preliminary injunction preserves CFPB’s contracts, workforce, data, and operations, and protects employees’ ability to perform their duties until the litigation ends.
On April 11, 2025, a D.C. Circuit Court panel partially stayed the injunction and allowed the CFPB to fire employees it deemed unnecessary after individualized assessments. Afterward, the CFPB implemented an RIF and terminated most of its workforce. NTEU moved to require CFPB to explain why it had not violated the injunction, and Judge Amy Berman Jackson blocked the termination of 1,483 employees, suspended the reduction in force (RIF), barred further firings pending resolution of the motion, and ordered an evidentiary hearing on CFPB’s compliance.
On April 28, 2025, a divided D.C. Circuit Court panel (2–1) modified its partial stay and eliminated CFPB’s authority to conduct any RIF. Afterward, on Aug. 15, 2025, a divided D.C. Circuit panel vacated the preliminary injunction, concluding that NTEU improperly grouped multiple CFPB leadership actions into a single alleged shutdown plan and that its claim the Trump administration sought to dismantle the CFPB unlawfully was overbroad.
En Banc Rehearing Granted
On September 29, 2025, NTEU petitioned for rehearing en banc. NTEU argued the panel majority’s public-statement rule conflicts with binding precedent and lets agencies evade judicial review. Under this novel rule, a decision qualifies as reviewable agency action only if the agency issues a public statement memorializing it. NTEU explained that the majority treated CFPB’s shutdown as unreviewable under the APA because the bureau did not issue a formal written statement, even though Supreme Court precedent holds that ending a program can itself be a final agency action. NTEU also argued that the public-statement rule clashes with D.C. Circuit Court cases recognizing that agency action need not be written to be final or reviewable, including cases involving unwritten or de facto policies proven by actual practice. Finally, NTEU warned that the public-statement rule would allow agencies to escape review by remaining silent or carefully wording statements, even when officials publicly announce a shutdown, leaders move to carry it out, and the action causes immediate, concrete harm.
Further, NTEU argued the panel majority wrongly held that shutting down an agency does not create a separation-of-powers claim. Citing Supreme Court and D.C. Circuit precedent, NTEU explained that parties with standing may bring constitutional claims when the executive acts without statutory authority, and that precedent does not bar such challenges. Because no statute authorizes CFPB to shut itself down, NTEU maintained that the case presents a clear constitutional violation. On Dec. 17, 2025, the D.C. Circuit granted NTEU’s petition without comment.
Motion For Clarification Granted
On Dec. 30, 2025, Judge Amy Berman Jackson granted Plaintiffs’ motion to clarify the preliminary injunction. Plaintiffs sought clarification that CFPB may not justify a violation of the preliminary injunction by refusing to request funding from the Federal Reserve, as they maintain the Dodd-Frank Act requires. The court determined that Plaintiffs’ motion does not seek to modify the preliminary injunction; it asks the court to clarify how the existing order applies to defendants’ announced plan not to seek Federal Reserve funding. The court explained a true funding lapse would make compliance with the injunction impossible, but stressed that funding has not “lapsed” on its own, as CFPB is creating the shortfall by choosing not to request funds. The court concluded CFPB’s decision would deliberately frustrate their obligations under the injunction.
The court also emphasized the injunction exists to preserve CFPB’s operations and prevent defendants from achieving a work stoppage “by any other means.” Because the order requires CFPB to maintain staff, contracts, capacity, and core statutory functions, and those duties require money, the court found that requesting the congressionally authorized funding is necessary to comply with the injunction. The court accordingly clarified that CFPB’s refusal to seek funding conflicts with the injunction and requires no modification to say so.
Bottom Line: A full panel of D.C. Circuit Court judges will examine whether CFPB violated the APA by using the bureau’s funding mechanism to defund itself.
