D.C. Circuit to Reconsider Injunction Barring CFPB Reductions in Force
The U.S. Court of Appeals for the District of Columbia Circuit granted a petition for rehearing en banc filed by the National Treasury Employees Union (NTEU) and agreed to reconsider a three-judge panel's decision lifting an injunction that sought to block the Trump Administration from pursuing extensive reductions in force (RIFs) at the CFPB. The per curiam order, entered on Dec. 17, 2025, is the latest development in what has been a tumultuous review of the CFPB's ability to effectively dismantle the agency via RIFs and decisions to decline additional funding. This announcement presumably also sets the stage for a review of the Trump Administration's current stance that the CFPB is unable to request additional funds from the Federal Reserve while there are no "combined earnings of the Federal Reserve System."
As Holland & Knight previously reported, the panel in August 2025 ordered that jurisdictional and factual deficiencies surrounding the plaintiff's claims for relief barred the district court's injunction. The panel's 2-1 decision, therefore, would have given the CFPB freedom to return to utilization of RIFs and discretionary decisions to refuse funding as a means to substantially minimize if not effectively eliminate the agency's operations. However, in light of the D.C. Circuit's order to rehear the panel's decision, the CFPB is once again prohibited from engaging in such drastic methods of agency downsizing. Instead, the panel's April 28, 2025, order that lifted a partial stay of the district court's injunction and required the CFPB to refrain from any further RIFs pending resolution of the matter at the appellate level, remains in effect.
Oral argument is set for Feb. 24, 2026, when the full D.C. Circuit will rehear the matter. Notably, the Trump Administration requested a report from the Federal Reserve on Dec. 17, 2025, concerning whether it is currently operating in a surplus. As indicated above, the CFPB and Trump Administration have recently adopted the position that the CFPB could not receive funding if the Federal Reserve's revenues did not exceed its losses. If the Federal Reserve does in fact generate a surplus, and whether it will continue to have such surplus, the CFPB may have an opening to request funding from the Federal Reserve as it awaits oral argument and a final decision from the D.C. Circuit. Although neither the matter of CFPB funding nor the order granting the NTEU's petition for rehearing shed conclusive light on the future of the CFPB at this stage, it does at the very least indicate that the CFPB's efforts to further curtail the scope and footprint of the agency will be hamstrung for the foreseeable future, which is a notable win for the NTEU at this stage.
Visit Holland & Knight's resource center, CFPB Dispatch: Legal Updates and Insights, to stay on top of the latest CFPB developments.