- within Insolvency/Bankruptcy/Re-Structuring topic(s)
On August 15, the U.S. Court of Appeals for the D.C. Circuit reversed a lower court decision that had temporarily blocked mass layoffs at the CFPB. The case arose after the National Treasury Employees Union (NTEU) challenged Acting Director Russell Vought's directives suspending the Bureau's funding draw, halting all supervisory and enforcement activity, and placing employees in limbo (previously discussed here). The NTEU argued that these moves, which paved the way for large-scale layoffs, violated separation of powers principles by undermining Congress's statutory design for the CFPB.
In reaching its decision, the court emphasized the limits of judicial review over internal executive branch management, reasoning that directives affecting agency staffing and operations fell outside the scope of review, even if they indirectly dismantled a congressionally created agency. Overturing the district court's injunction has effectively cleared the way for the Bureau to start enacting workforce reductions. The union has vowed to appeal.
Putting It Into Practice: The union has continued to fight back against the administration's efforts to dramatically reduce its size. However, questions still remain over the extent to which the executive branch can disable federal agencies created by Congress. In addition, the Bureau in recent weeks has signaled that it wants to engage in renewed rulemaking (see our discussion here and here). Whether it has the resources to re-write the various rules it has targeted for review remains to be seen.
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