On August 15, the U.S. Court of Appeals for the District of Columbia Circuit vacated a district court’s preliminary injunction that prevented the CFPB from taking actions regarding its employment, contracts and facilities (previously covered by InfoBytes here). In its opinion, the appellate court found the district court lacked jurisdiction over certain claims and that other claims did not meet the requirements for judicial review. The court stayed the mandate for seven days in its order for any petition for rehearing en banc.

The plaintiffs, which included organizations representing CFPB employees and groups alleging harm from the loss of agency services, brought two claims: first, that the government’s actions to eliminate the Bureau “usurp legislative authority” from Congress; and, that the CFPB’s actions to suspend or terminate the CFPB’s statutorily mandated activities constituted unlawful and arbitrary agency action under the Administrative Procedures Act.

The court held that employment-related claims brought by representatives of CFPB employees must proceed through the Civil Service Reform Act. The court further held that the claims brought by organizations representing consumers were not reviewable under the APA. The appellate court emphasized the APA allows courts to intervene in certain circumstances, only when necessary to set aside that action, and noted that none of the actions the plaintiffs cited constituted final, reviewable agency action.

The appellate panel agreed with the government that there was no reviewable decision to shut down the CFPB, as congressional statutes create the Bureau and define its powers and duties, which agency officials cannot unilaterally erase. The court opined the government “does not claim the power to ‘shut down’ the CFPB. Nor could it. … Agency officials cannot wipe those provisions off the books. … The agency does not suggest that it could lawfully abandon these various responsibilities.”

The court continued with a hypothetical scenario that would have given the shutdown order some weight: “Suppose the Acting Director had issued this edict: ‘The Bureau is shut down. Effective immediately, Bureau employees may not perform any work.’” The court suggested this memo would be a rule and that it would be final, but that no such edict had been issued.

Having determined that some plaintiffs lack standing and others do not have viable claims under the APA, the court vacated the preliminary injunction and remanded the case back to the district court for further proceedings.

Visit our resource center, CFPB Pause: Where From Here?, to stay on top of the latest and what it may mean for the federal and state regulatory and enforcement landscape.