On February 24, 2026, the full United States Court of Appeals for the District of Columbia (consisting of 11 judges sitting en banc) heard oral argument in National Treasury Employees Union v. Vought (No. 25-5091), a case that could prove pivotal not only for the workforce of the Consumer Financial Protection Bureau (CFPB) but also for the scope of presidential authority over independent agencies more broadly.

The central issues are clear: can the Executive Branch, through operational directives and workforce reductions, effectively disable a congressionally created agency without repealing or amending the statute that created it? If not, what is the appropriate remedy when the appeal is of an interlocutory preliminary injunction issued by the Federal District Court?

Background

The litigation arises from actions taken by Acting CFPB Director Russell Vought in early 2025 that halted much of the Bureau’s activity and set in motion substantial reductions in force. The National Treasury Employees Union (NTEU), representing CFPB employees, challenged those actions, arguing that they amounted to a de facto dismantling of the agency in contravention of Congress’s mandate in the Dodd-Frank Act.

The district court entered a preliminary injunction blocking broad layoffs. A divided three-judge panel of the D.C. Circuit later vacated that injunction, reasoning in part that the plaintiffs had not identified a reviewable “final agency action” and that employment disputes should proceed through the Civil Service Reform Act’s administrative framework. The full court subsequently granted rehearing en banc.

The Government’s Position

Arguing for the government, DOJ counsel framed the case as one about managerial discretion and jurisdictional limits. The government’s core themes were:

1. The challenged directives did not constitute “final agency action” reviewable under the Administrative Procedure Act.
2. Employment-related claims must proceed through the Civil Service Reform Act’s exclusive remedial scheme.
3. Courts should not constitutionalize disputes over internal resource allocation or agency staffing decisions.

Under this view, even sweeping reductions in force and stop-work orders fall within the lawful discretion of political leadership to determine how an agency executes its statutory responsibilities—so long as Congress has not prescribed specific staffing levels or appropriations mandates.

The Union’s Position

Counsel for NTEU urged a very different characterization. She argued that this case is not about ordinary workforce management, but about whether the Executive may neutralize a statutory agency without congressional participation.

Her principal arguments included:

1. The combined effect of stop-work orders, funding constraints, mass terminations and other actions consistent with dismantling the CFPB amounts to a constructive shutdown of the CFPB.
2. The Administrative Procedure Act (APA) permits review where executive action effectively nullifies statutory mandates.
3. The Civil Service Reform Act does not displace judicial review of structural constitutional claims.
4. The separation of powers forbids the President (or an Acting Director of the CFPB) from accomplishing through administrative means what only Congress can do legislatively—abolish or disable an agency.

In short, NTEU framed the dispute as a structural constitutional case with employment consequences, not merely an employment case with constitutional rhetoric.

Themes from the Bench

Several lines of questioning stood out:

1. Reviewability and Finality.

Multiple judges pressed the government on whether there is any limiting principle to its theory of non-reviewability. If an agency head can halt enforcement, supervision, rulemaking, and internal operations indefinitely, what would qualify as reviewable action?

2. CSRA Preclusion.

The court explored whether the Civil Service Reform Act’s remedial scheme truly channels all claims of this nature away from district court, particularly when the alleged injury is institutional and constitutional, not merely individual and employment based.

3. Separation of Powers.

The most probing exchanges focused on whether executive “inaction” or resource withdrawal can violate a statutory command. Judges appeared concerned about a rule that would allow an administration to effectively nullify a disfavored agency without formally defying Congress.

At several points, members of the court suggested the possibility of a narrower path—such as remanding for further factual development or crafting limited injunctive relief designed to preserve core statutory functions pending final resolution.

Why This Case Matters

For lawyers advising financial institutions, fintechs, and other regulated entities, this case goes far beyond internal federal employment disputes.

If the court adopts a broad view of executive authority to suspend or scale back statutory programs, the CFPB’s supervisory and enforcement posture could change dramatically depending on who occupies the White House—even without legislative change.

Conversely, if the court recognizes meaningful judicial limits on executive efforts to disable agencies, it could reinforce the durability of congressionally created independent regulators, even in periods of political hostility.

The implications extend to:

1. The stability of CFPB rulemaking, supervision and enforcement and statutorily-mandated activities;
2. The viability of structural APA challenges;
3. The continued relevance of the D.C. Circuit as a central arbiter of administrative law;
4. The evolving balance between Congress and the Executive in the administrative state.

What to Watch

The en banc court’s decision will likely turn on how it characterizes the case:

1. A narrow employment-law dispute governed by the Civil Service Reform Act; or
2. A structural constitutional challenge implicating the President’s duty to “take Care that the Laws be faithfully executed.”

The answer to that framing question may determine not only the outcome here, but the future resilience of the CFPB itself.

Given the composition of the en banc court and the intensity of the questioning, a fractured decision—with multiple concurrences and dissents—is a distinct possibility. Whatever the result, further review in the Supreme Court’s shadow docket, would not be surprising, particularly if the en banc court were to affirm the District Court’s injunction. That is because that injunction goes well beyond ensuring that the CFPB performs its statutorily required functions.

Although it is always hazardous to predict the outcome of any court decision, let alone an en banc appellate court with 11 politically diverse members sitting on the bench, we believe that the en banc court will reverse the District Court, but for different reasons than given by the 3-judge panel of the Court of Appeals — namely, that the preliminary injunction must be written so that it only requires the CFPB to perform statutorily required functions The case will likely be remanded to the District Court so that the preliminary injunction can be revised to conform with the en banc’s court mandate. The District Court’s job should be helped immeasurably by the fact that, according to the DOJ attorney arguing the case for the CFPB, the CFPB has already prepared a detailed plan of operation on what it intends to do if the preliminary injunction gets lifted, Since Vought has acknowledged that he cannot shut down the CFPB entirely after the District Court ruled that the CFPB was not precluded from being funded by the Federal Reserve Board even though the Federal Reserve Banks were losing money on a combined basis, the CFPB’s plan of operation should be a good starting point for the District Court in fashioning a preliminary injunction which requires the CFPB to perform statutorily required functions. The DOJ lawyer has offered to share the CFPB’s operating plan with the court. Hopefully, this may result in the preliminary injunction being converted to a final injunction with which all parties can live. Of particular importance to the industry is that the CFPB finalize many of the proposed rules that were identified in the CFPB’s most recent regulatory agenda, including statutorily-required rules under Section 1033 of Dodd-Frank (open banking) and Section 1071 of Dodd-Frank (data collection related to small business loans) and non-statutorily required rules pertaining to the elimination of the use of the disparate impact theory under the Equal Credit Opportunity Act.