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Case number 25-5091, National Treasury Employees Union et al versus Russell T. Vaught in his official capacity as Acting Director of the Consumer Financial Protection Bureau and Consumer Financial Protection Bureau at Balance.

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Mr. McArthur for the balance, Ms.

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Bennett for the appellees.

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Good afternoon, Mr. McArthur.

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Welcome back.

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You may proceed when you're ready.

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Thank you, Judge Pillard.

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I may please the court.

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This case, at its core, is about who has the responsibility to ensure that the CFPB will perform its statutory duties.

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Politically accountable executive branch officials or courts acting at the behest of plaintiffs who seek not to challenge discrete agency actions or inactions that injure them, but instead to launch a preemptive strike against the possibility that the Bureau

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will fail to perform its statutory duties.

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The answer to that question is clear as a matter of both precedent and first principles.

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Under Article 2, it is the president who is charged with taking care to ensure that the laws are faithfully executed.

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And under the APA, courts have no license to engage in general legal oversight of the executive branch's implementation of the law.

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Rather, the proper

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and properly limited role of courts is to redress specific injuries caused by discrete legal violations in cases or controversies within their jurisdiction.

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I think, Mr. MacArthur, that you don't dispute that if the agency were taking action to close down the CFPB, that the courts would have a role to enjoin it from doing that.

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I do not dispute that if there were a decision made to shut down the CFPB without legislation to that effect, that would be unlawful.

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I think it is an entirely separate question what role the courts have to play, where you have to walk through all of the analysis of is there a plaintiff here who has standing, who has a cause of action, all of that has to be done before you can decide what role a court has to play.

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So just quickly, could you just tick through, for example, would the National Consumer Law Center have standing?

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So I don't think any of the plaintiffs here has standing.

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I'm happy to start with the National Consumer Law Center.

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So just tell me, so they wouldn't have standing and they wouldn't have a cause of action?

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That's correct.

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They don't have a cause of action under the APA because there is no final agency action.

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and they don't have a direct cause of action under the Constitution because they only have a statutory claim here, not a constitutional separation.

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You're saying these facts, but I'm asking you on the assumption that there's a policy decision made to close the agency.

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There would be final agency action shortly.

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I think it is possible to conceive of a decision to close the agency that would be final agency action.

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I do not think we have that.

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I understand you don't think we have that here, which is why I said on the assumption that there were such a decision made and it were being undertaken.

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For example, we have this decision at the plaintiff's site in the Venetian Casino Resort case where there's a question whether there's final agency action.

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And is it the manual?

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Is it memorialized somewhere?

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And the court says it really doesn't matter whether it's formally memorialized.

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What matters is was there such a

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such a decision and it's final and it's subject to APA review.

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So I would assume that if, you know, you dispute my premise, but I assume that if it were the case that they had made such a policy decision that you would not argue that there's no final action.

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If you walked through the two prongs of the Bennett final agency action test and found that whatever decision had been made and however had been memorialized was the consummation

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of the agency's decision-making process and it had direct and appreciable legal effects, then you would have final agency action.

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We don't have any of that here.

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Would the shutting down of the CFPB pursuant to an official decision to do so have the kinds of effects that Prong 2 of Bennett requires?

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I'm not sure that it would on its own.

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I think that the various actions that are taken to implement that decision certainly would.

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So if you are terminating employees, that would be a final agency action.

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Our issue here with the employees is not the absence of final agency action.

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It is CSRA preclusion.

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So any claims that are premised on injuries resulting from loss of employment are outside the district court's jurisdiction because Congress has channeled those claims to a separate review scheme under the CSRA.

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I understand you're channeling arguments, but so with respect to the public that is protected by the CFPB's functions like the various organizational

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organizations that are claiming associational standing.

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Would there be legal consequences to them cognizable under the Bennett test?

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I don't think there would be any direct legal consequences to them because they are not being regulated or otherwise directly acted upon by these internal operating decisions.

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They are affected, if at all, only because those internal operating decisions, by hypothesis, result in the agency not performing statutory duties, and then it's the absence of those duties, those government services, that they claim injures them.

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But I do want to go back and walk through why I think

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There is no plaintiff here who has standing to challenge the quote unquote shut down.

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So no standing, no cause of action.

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If I were to disagree with you about that, or if the court were to disagree with you, I think there is a plaintiff withstanding.

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And with respect to, again, this is all on the premise, which I know you dispute, that there was a policy decision taken to close the agency.

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Your other objections on that premise are what?

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I think the other ones are that the district court didn't apply the correct legal standard here.

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The district court should have applied the analysis under 5 USC 7061.

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That's the standard for agency action.

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To compel agency action.

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That's correct.

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And then I think also independently, there's a lack of irreparable harm to the plaintiffs here, and that by itself is a reason to vacate the injunction.

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Going back.

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Can I just ask?

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Sure.

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agency action feels a little hard to pin down because there's an internal email.

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It's not quite about shutdown.

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You have to aggregate things together.

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But suppose, again, with Judge Pillard's hypo, suppose there were a written down, formally expressed, not tentative,

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order from the acting agency head saying, this agency will shut down.

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Do you still have a Lujan discreteness problem at that point?

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I think you might.

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Here's where I struggle with this hypothetical, and I don't think I have to take it.

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I'm trying to sort of isolate on what work, if any, discreteness is doing in this analysis.

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Right.

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I think it's not just discreteness there.

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I think it's also direct and appreciable legal effects.

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I think in that hypothetical, Bennett-Prongwon is satisfied, which I do not think it is on the facts here, because you have something there that at least

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from one is conclusive.

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Consummation of the decision-making process.

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The thing that I struggle with in that hypothetical is whether or not that sort of internal operating decision has the sort of appreciable and direct legal effects that would satisfy Bennett-Prunto.

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And here's a hypothetical.

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Suppose the agency head says, I want to promulgate 10 rules through notice and comment rulemaking and signs a formal memo making that as a decision and directing

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subordinates within the agency to promulgate notice and comment rules on the following 10 subjects.

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That probably satisfies Bennett prong one, but fails Bennett prong two, because there isn't yet the direct and appreciable legal effects.

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So that's how I look at prong two here.

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Isn't part of that problem that Bennett is focused primarily on finality?

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I mean, to Judge Casas' question, discreet agency actions are related, but also distinct points.

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It is related and distinct and I think it's related in the following way, which is when you have an agency action that is not directly regulating someone out in the world and the nature of the claim is that the internal operating decisions that you have made as an agency.

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are going to cause the agency to fail to fulfill statutory duties, and then it's the absence of those statutory duties that actually injures the plaintiff.

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I actually really think you should start with the injuries of the plaintiffs to see what agency action or inaction they arise from.

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And here, for the consumer advocacy groups who are saying they are harmed by the potential absence of these government services,

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It is agency inaction.

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I don't think you can do an end run around 7061 by saying that

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Sorry.

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But we do that every day.

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I mean, for example, if the head of this agency had promulgated a notice in the Federal Register and said, we're going to shut down this agency ASAP, and then they were in the midst of doing the kinds of things that are reflected in this record, I can't imagine that we would say, well, that has to be challenged as a withholding of or delay of agency action under the APA.

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we would entertain a challenge that that is action that is arbitrary or contrary to law under the APA.

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I mean, I think it would depend, Judge Pillard, on what the nature of the injury asserted by a particular plaintiff is.

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If it's an employee who was fired pursuant to this hypothetical shutdown plan, absolutely, that's agency action.

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And those are discrete agency actions.

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The problem with them is CSRHN.

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The plaintiff challenges an action.

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We don't then reanalyze all the different, the smallest granularity of how they might, what they might have challenged.

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The plaintiffs come into us all the time.

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Petitioners say, there's a rule.

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I don't like the rule.

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Here's how it's harming me.

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And that is what we review.

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So I am interested that you are, I mean, I recognize that you have factual claims about whether this meets the standard of an action to shut down the, a decision to shut down the agency, but if it were, it's hard for me to see your, how you're shifting the baseline and saying, well, they have to meet this mandamus-like standard that this is action being unreasonably withheld.

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Right.

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And I don't mean to be taking a definitive position on that.

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I think it's a difficult question.

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I think our more fundamental point is that here there is no such action.

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There are only two actions that were identified by the district court as candidates for final agency action here.

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One is the February 10th email, which clearly is not even agency action to begin with, let alone final agency action.

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That was a temporary provisional directive given in

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involving circumstances on the morning of the acting director's first day on the job that had no direct or appreciable legal consequences and didn't even finally decide whether any given work would be done or permitted to be done.

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So that one's not final agency action under the APA.

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And then we have this other thing, this amorphous decision that

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the district court inferred.

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And I have a hard time thinking about and talking about this decision, and the same way I have a hard time thinking and talking about things that don't exist, because there is no such decision.

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And we can talk about all the reasons why we think the district court's finding in that regard was clearly erroneous, but even if you stipulate and set that to the side, there's still not a final agency action there or a decision that you can

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Put eyes on and evaluate that at best there was an imputation by the district court that in the mind, I suppose of the acting director, there was a plan or an intent or a goal to shut down the agency that is not agency action, let alone final agency action agency heads all the time.

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have goals or plans or intents in their mind that govern how they interact with their staff on a day-to-day basis and the sorts of directives they give, no one has ever thought that that is final agency action reviewable under the APA.

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That is, I mean, frankly, speaking about the facts of this case, as reflected in the record before us, the notion that this was nothing more than a plan in somebody's head is,

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Project credit when they were massive actions taken that dislocate hundreds of people's lives and halt services that affect hundreds of thousands of people's lives.

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I understand that there were actions.

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I'm not meaning to dispute that, Judge Pillard.

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The point is,

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is that they're trying to get over the various threshold problems, including the absence of a cause of action by skipping past those discrete actions that had actual effects and saying behind them, there was a reviewable decision that unifies all of these otherwise individual discrete actions.

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And that's the sort of hypothesized decision that, as best I can tell, that's what the district court meant, that there was a plan.

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That was a word the district court used repeatedly.

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There was a plan to shut down the agency.

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I do not think that is... She had used the word policy decision.

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Different result under the Venetian casino resort case.

[00:15:02] Speaker 06:
I mean, possibly, again, it's difficult to talk about something that you can't like open the JA and look at.

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If there were an actual policy decision, we could have a different conversation.

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But we don't have that.

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We have something that was inferred that we can't look at and see what the contours of it are.

[00:15:21] Speaker 01:
But suppose it was there.

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I'm coming back to my hypo.

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It's in writing.

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It's definitive.

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And I asked you, is that reviewable?

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Your first answer was no, because there's still no final agency action prone to a Bennett.

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I get that answer.

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Is there an independent answer?

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No, because still too programmatic under Lujan and SUA.

[00:16:01] Speaker 06:
I do think there is because, again, start with the injury of the plaintiff that the plaintiff is asserting.

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The plaintiff is asserting there is an absence of performance of a duty, and that's what's injuring me.

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So you could imagine just a simple case of a plaintiff who says there's a statutorily required report that the agency has failed to produce, and they want to bring a claim to say,

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I need this report.

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I use it in my organizational activities.

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Without it, I'm injured.

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You're required by statute to produce it.

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You haven't produced it.

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I don't think you get to- Injury is relevant for standing purposes.

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I think it's also- I'm not sure why it's relevant to this question about how we slice up the world into actions that are either focused enough or too programmatic, broad.

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Well, I think I'm trying to get at that with this hypothetical, which is in that situation, I think the claim that a plaintiff has is for agency action unlawfully withheld.

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I don't think that plaintiff gets to hop, skip over that and say that, well, behind that unlawfully withheld action, there must have been a decision to withhold it.

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And I'm going to challenge that decision instead and free myself from the standards that apply to 7061 and

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get the benefit of the standards that apply to 7062, or I can now say this is arbitrary and capricious or whatever else.

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I think that's my fundamental concern about conceiving as a claim that at base is a claim of you're not doing something that the statute requires you to do, and that is injuring me as a final agency action as opposed to a claim of inaction.

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District court found that there was a decision taken, an authoritative decision taken to shut down the agency.

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And the district court made a finding based on a lot of evidence, including Martinez, who the agency produces their authoritative witness, who in many different days talked about

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The agency's being shut down.

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There's no need to have a retention register.

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We've shortened the time administratively because there won't be any jobs for incumbent employees to bid on according to the retention priorities.

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evidence of people that we know the executive believes are the boss, saying that they did the right thing in getting rid of the CFPB.

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We have the influential head of Department of Government Efficiency posting CFPB RIP.

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cancellation of essentially all contracts, firing all employees, and saying that the next stage would be to fire the rest, including Martinez.

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So there's a lot of factual evidence raising solid inferences as to what the district court found.

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And your response to that, I take it, is that's all a misunderstanding.

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If you look at ensuing communications, principally once the hearing was scheduled and after the case is filed, it becomes clear that what was meant all along was we're just going to pare the agency down and redirect it according to the new administration's policies and not

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to shut it down.

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Is that fair in terms of what the government's position is factually, or do you have something that more directly goes to the initial finding of a decision, an authoritative decision, to shut the agency down?

[00:20:15] Speaker 06:
We don't think there was ever any decision, authoritative or otherwise, to shut down the agency.

[00:20:22] Speaker 04:
And your most evidence that that was clearly erroneous is what?

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But the finding to the contrary is clearly wrong.

[00:20:30] Speaker 06:
So there are five points that I would make as to why that finding was clearly erroneous.

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But before I go through those five, I do just want to set the table.

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Because I think there is a lens through which you should view the record in this case.

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And I think, Judge Piller, your question was getting at this.

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But there are two competing stories here about what's going on.

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Plaintiff's story and the district court's finding is that this is a plan to shut down the CFPB entirely.

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What I take to be the operative policy here is the one that's reflected in the February 26 joint OMB OPM memo.

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This is the memo put out by acting director vote in his capacity as the director of OMB.

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where it says, pursuant to the president's direction, agencies should focus on the maximum elimination of functions that are not statutorily mandated while driving the highest quality, most efficient delivery of their statutorily required functions.

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And it's very clear that the new leadership of the Bureau has a radically different vision for this agency than the way it has been operated in the past and wants to radically downsize this agency to strip it down as it were to the statutory studs.

[00:21:45] Speaker 06:
That is a lawful policy.

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Shut down the agency, unlawful.

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Do only the bare statutory minimum, lawful.

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Whether that latter policy decision is good policy or bad policy is not for the courts to review.

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That is ultimately for the American people to decide whether that's a good policy through their elected representatives.

[00:22:06] Speaker 06:
and ultimately at the ballot box.

[00:22:08] Speaker 05:
But that's the- Can you speak to the temporal aspect of this, right?

[00:22:12] Speaker 05:
Because maybe on February 8th or February 10th, I guess February 8th was the date of the first complaint.

[00:22:19] Speaker 05:
Maybe there were reasonable inferences that the agency was going to be shut down as it were, but that over time the actions taken by the leadership suggests that there was a different understanding, that what shut down meant

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or what, you know, you know, really meant was to keep the statutory minimum.

[00:22:40] Speaker 05:
I think we think about that temporal aspect.

[00:22:43] Speaker 06:
I think the evidence judge Rao is there right from the start from February 10th.

[00:22:48] Speaker 05:
As I understand it, there's no voluntary cessation.

[00:22:51] Speaker 06:
I don't think there's a voluntary cessation issue here.

[00:22:53] Speaker 06:
And as I understand it, the district court's focus was on February 10th, February 8th.

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which was, I think, acting director vote was appointed like that evening on a Friday evening and sent out a memo saying that activities required by law should continue.

[00:23:08] Speaker 06:
The district court said, that's not my focus.

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I'm focused on February 10th.

[00:23:12] Speaker 06:
And what you'll see, if you look at the record, is starting on February 10th itself, there were actions taken by the new bureau leadership, in particular by Mark Paoletta, the chief legal officer, to ensure that statutory functions were being performed.

[00:23:28] Speaker 06:
There's, if you start at JA page 283, there are over 100 pages of emails starting on February 10th and continuing over the next couple of weeks, culminating ultimately in March 2nd when Mr. Pailetta sends out a second email saying everyone should be doing their statutory duties without reapproval.

[00:23:48] Speaker 05:
Would the preliminary injunction have been justified based on the February 10th email alone if there had been no subsequent actions?

[00:23:57] Speaker 06:
I mean, are you asking about as an evidentiary matter or all of the threshold issues?

[00:24:01] Speaker 05:
Well, I mean, you know, I mean, is there just looking at the February 10th email, could the district court have at least not clearly erroneously concluded that there was a shutdown?

[00:24:10] Speaker 06:
Oh, no, I don't think so.

[00:24:12] Speaker 06:
Even if you just look at the face of the February 10th email, there is nothing whatsoever unlawful about that email, which is it's a pause of non urgent work.

[00:24:22] Speaker 06:
That doesn't say we're not going to perform our statutory duties.

[00:24:26] Speaker 06:
And that was, again, this was at a particular moment where the building was shut down for the week because it was unsafe to come in because of the protest activity around the building.

[00:24:36] Speaker 06:
And it was a provisional and temporary measure to help the Bureau's new leadership get operational control of the agency.

[00:24:43] Speaker 06:
and work started getting approved that very day.

[00:24:47] Speaker 06:
Mark Pelletta was approached about the complaint hotline and database.

[00:24:52] Speaker 06:
He was approached about the mortgage rate, and he approved both of those to start happening that very day.

[00:24:59] Speaker 06:
If you were shutting down the agency, why do you do any of that?

[00:25:03] Speaker 06:
Next day, February 11th, you can see this in the joint appendix.

[00:25:08] Speaker 06:
Let me find the citation for you.

[00:25:13] Speaker 06:
This is at pages 416 to 417.

[00:25:15] Speaker 06:
You see that the CFO directs his... Say again, 416 to 417?

[00:25:20] Speaker 06:
Yeah, JA 416 to 17.

[00:25:23] Speaker 06:
You see that the CFO directs his deputies to identify all contracts that support a statutory requirement.

[00:25:31] Speaker 06:
And within a week, this is in the district court's opinion at 654 to 55 of the Joint Appendix, Mark Paoletta sends out an email saying, do not cancel any contracts without my express approval or the express approval of the acting director and starts rescinding contract termination notices.

[00:25:51] Speaker 06:
There is activity going on throughout this two week period where you can see the bureau's leadership taking active steps

[00:25:58] Speaker 06:
to ensure that statutory duties are being performed and the district court simply brushed all of that aside.

[00:26:05] Speaker 04:
This didn't call out of then turn around and cancel all the contracts, including those that had been identified by staff as necessary for statutorily required work.

[00:26:14] Speaker ?:
I thought I read that.

[00:26:15] Speaker 06:
The cancellation of the contracts was before that, before he started rescinding some of them.

[00:26:20] Speaker 06:
It wasn't all the contracts.

[00:26:21] Speaker 06:
It was contracts in

[00:26:22] Speaker 06:
particular units, but then he asked for identification of which of all of these contracts support a statutory function and he went through those and he rescinded the ones that he concluded were necessary for statutory functions and the district court didn't deny that.

[00:26:39] Speaker 06:
What the district court faulted them for is for taking too narrow a view of what is necessary, what sorts of contracts are necessary

[00:26:49] Speaker 06:
to support statutory functions.

[00:26:52] Speaker 06:
That's not a finding that they're not performing their statutory duties.

[00:26:57] Speaker 06:
That's not a finding that the district court has any business make.

[00:27:06] Speaker 01:
So I think I've hit those.

[00:27:08] Speaker 01:
Sorry, is this an argument that?

[00:27:13] Speaker 01:
The finding of a shutdown decision.

[00:27:19] Speaker 01:
was clearly erroneous or is this an argument that the district court didn't really make that finding but they were squabbling about what the former the former the points i just hit were some of the points that um i wanted to respond to judge pillard's question about and i think you said you had five and yeah they're they're right

[00:27:45] Speaker 01:
I'm not sure I have the five.

[00:27:47] Speaker 06:
All right.

[00:27:47] Speaker 06:
So the first one was setting aside all of the evidence.

[00:27:51] Speaker 06:
Again, beginning at 283 of the J a hundred pages of emails showing efforts to ensure that statutory duties are being approved.

[00:28:00] Speaker 06:
Second is that the district court, every time it dealt with that February 10th email,

[00:28:06] Speaker 06:
treated it as if it were a total ban on all work and either ignored or minimized the part of the email that directed employees to reach out for approval to perform statutory work.

[00:28:18] Speaker 06:
And then the court suggested that those approvals were given only grudgingly, even though Martinez testified that he had never had an approval request denied and the district court identified no instance of that ever happening.

[00:28:33] Speaker 06:
The court wrongly said that the approvals were only given for operational needs, like keeping the lights on or the computers running, even though those emails clearly show that approval was repeatedly given for substantive work.

[00:28:45] Speaker 06:
The third point was going to be.

[00:28:47] Speaker 04:
I have a question about that one.

[00:28:48] Speaker 04:
I don't want you to lose track of your points, because I think we'd all like to hear them all.

[00:28:52] Speaker 04:
But on the notion of asking employees to identify what's statutorily required, I was just trying to imagine any law office that I'd ever worked in.

[00:29:01] Speaker 04:
And whether, I'm not sure that individual employees are in a position to make that judgment.

[00:29:11] Speaker 04:
So if I'm working in supervision or in enforcement,

[00:29:15] Speaker 04:
You know, is my one case that I'm working on statutorily required?

[00:29:20] Speaker 04:
I mean, it seems like what's statutorily required is to have a responsible policy about enforcement.

[00:29:31] Speaker 04:
And we see, you know, from administration to administration across my adult lifetime where the priorities shift and some things are

[00:29:40] Speaker 04:
geared down, fewer cases started, some cases may be resolved, even withdrawn.

[00:29:48] Speaker 04:
But the notion that anybody in a line operational job could look in isolation at their work and say, this is statutorily required, seems to me that only works when you're talking about

[00:30:05] Speaker 04:
something that Congress specifically identified, but surely it is statutorily required to have an enforcement program and to have a supervision program.

[00:30:17] Speaker 04:
It might be very different from the one that was conducted by a prior administration, but I mean the

[00:30:26] Speaker 04:
It just doesn't compute to me that an administration that is serious about fulfilling its duty, granted a duty infused with discretion, but that's part of my point, infused with top-down discretion.

[00:30:41] Speaker 04:
that it would be fulfilling its duty by asking employees to raise their hand if a case that they're litigating is within a statutorily required bucket.

[00:30:57] Speaker 06:
I don't think there's anything in the record here, Judge Pillard, that suggests that the leaders had outsourced that determination to the staff.

[00:31:03] Speaker 06:
What the email says is

[00:31:05] Speaker 06:
Ask for approval if there's any urgent work that needs to be done talking about this week when the building is shut down.

[00:31:13] Speaker 06:
That could be urgent statutorily required work, or it could be urgent non statutorily required work.

[00:31:19] Speaker 06:
And I don't think it's unusual when you have

[00:31:21] Speaker 06:
leaders who are brand new at an agency to have staff help them understand what's going on and what needs to happen right now.

[00:31:30] Speaker 06:
Nor is it unusual to have a pause on activities when a new administration takes the reins just to make sure that the things that are happening at the agency, which are now under the watch of the new leadership, are consistent with the policy agenda of the new administration.

[00:31:48] Speaker 06:
So in my list of five, the third was my point about how district court gave no weight to the efforts to ensure that the contracts that were needed for statutory functions were retained.

[00:32:01] Speaker 06:
The fourth, and this one I think straddles the line between clear error factually and legal error, which is that the court wrongly drew an adverse factual inference from government counsel's correct objection to a follow the law injunction.

[00:32:18] Speaker 06:
The court took from that objection an inference that, OK, that means no one at the Bureau knows what the statutory duties are, and that means your professed intent to perform them is nothing but a charade or window dressing.

[00:32:33] Speaker 06:
That was, I think, clear legal error to draw that sort of factual inference from a correct objection to an open-ended follow-the-law injunction.

[00:32:43] Speaker 06:
And then my final point on clear error was that throughout its analysis,

[00:32:48] Speaker 06:
the court ignored the presumption of regularity that should attend review of executive officer's decision making.

[00:32:57] Speaker 06:
And I do want to circle back.

[00:32:59] Speaker 06:
Judge Peeler, you started out a moment ago your question about Martinez.

[00:33:03] Speaker 06:
And I think he has been unfairly impugned here because he never retreated from his core statement in his initial declaration on February 20th where he said that

[00:33:17] Speaker 06:
The agency's leadership has taken steps to comply with statutory obligations, and he believes that they were committed to fulfilling them.

[00:33:24] Speaker 06:
He never retreated from that.

[00:33:26] Speaker 06:
He did come back and say in his supplemental declaration that at a point earlier in time, he had been under the mistaken impression from things that he had heard from DOJ-affiliated folks that the agency was shutting down.

[00:33:40] Speaker 06:
And he said that for a short time thereafter, he believed that that was an instruction coming from agency leadership

[00:33:46] Speaker 06:
and he later understood that that was not in fact the case, that the Bureau's new leadership was committed to fulfilling the essential statutory responsibilities.

[00:33:57] Speaker 04:
And so your understanding of that that Martinez was just suffering under a misconception when he said in various at various different times that he believed that the agency should

[00:34:08] Speaker 06:
I think that's what his supplemental declaration says, that he had a misunderstanding that was not based on anything that actually came from the acting director.

[00:34:17] Speaker 04:
And to the extent that the 210 email actually did lead to required work not happening, that also is a miscommunication misunderstanding.

[00:34:27] Speaker 06:
I think so.

[00:34:28] Speaker 06:
Yes, that's a misunderstanding.

[00:34:30] Speaker 06:
And I think the March 2nd email from Mr. Paoletta makes that clear that the intent all along was to ensure that people were performing statutory duties while they were trying to get operational control of the agency.

[00:34:42] Speaker 06:
And I do want to be clear that there's nothing inherently wrong with a pause of even statutorily required functions for a short time if they're not urgent in the sense that

[00:34:53] Speaker 06:
They don't need to be done today.

[00:34:54] Speaker 06:
If someone's working on a statutorily required report that's due in December, there's no problem with a new agency head coming in and saying, let's pause that work for now if it's non-urgent so I can figure out if what you're doing is consistent with the priorities of the new administration.

[00:35:13] Speaker 04:
I'd be really interested if there were examples of prior administrations doing the kinds of things that the record here reflects.

[00:35:23] Speaker 04:
The accelerating of the RIF date for people that were placed on administrative leave because the notion was that there was going to be no need for a retention register because there would be no jobs.

[00:35:37] Speaker 04:
The final termination of contracts that had to do with data, that had to do with internet security.

[00:35:45] Speaker 04:
I mean, there is a picture here in the record.

[00:35:48] Speaker 04:
I appreciate you really.

[00:35:51] Speaker 04:
I think doing a really good job of putting that in context.

[00:35:55] Speaker 04:
But there's a really powerful record here of quite more ambitious action.

[00:36:03] Speaker 04:
And I am aware of being as you.

[00:36:10] Speaker 04:
It appears that you're characterizing it as ordinary to have the kind of pause that is taking place here.

[00:36:18] Speaker 04:
And I find that.

[00:36:22] Speaker 04:
contrary to anything that I've ever heard.

[00:36:24] Speaker 06:
Well, I think there's obviously more than just the pause that's going on here.

[00:36:29] Speaker 06:
There is, as I said, a desire to radically downsize this agency.

[00:36:33] Speaker 06:
That is probably different than what has happened in previous presidential administrations.

[00:36:39] Speaker 06:
We now know, after this court stayed parts of the district court's preliminary injunction and the leadership did a particularized assessment of how many employees they

[00:36:50] Speaker 06:
concluded were necessary to perform the agency statutory duties, their number was 200.

[00:36:56] Speaker 06:
That's eliminating like 90% of the workforce.

[00:36:59] Speaker 06:
That is stripping the agency down to the statutory studs.

[00:37:02] Speaker 04:
And it's higher than what Martina said was planned, which was whatever it is, the 1,200 and then the rest, including him.

[00:37:12] Speaker 06:
So I do think you need to distinguish between the 1,200 and the rest.

[00:37:19] Speaker 06:
The discussion about the rest and this idea that all of the employees of the agency would be terminated.

[00:37:26] Speaker 06:
That is never connected to any decision by the leadership.

[00:37:30] Speaker 06:
There's pre decisional deliberative documents talking about that, but there's no evidence evidence that that was ever an agency approved plan.

[00:37:40] Speaker 06:
And that is the sort of thing that is why exactly you have a final agency action requirement in the APA because you can't just assume that because some staff were planning some decision that that's ultimately going to be the agency decision as approved by the decision maker.

[00:38:02] Speaker 04:
All right.

[00:38:02] Speaker 04:
Thank you.

[00:38:03] Speaker 04:
Well, I assume you've reserved some time for rebuttal.

[00:38:06] Speaker 06:
I have three minutes.

[00:38:07] Speaker 06:
Thank you.

[00:38:15] Speaker 03:
Good afternoon.

[00:38:16] Speaker 03:
Welcome back to you as well.

[00:38:17] Speaker 03:
Good afternoon.

[00:38:18] Speaker 03:
Thank you.

[00:38:19] Speaker 03:
May it please the court, Jennifer Bennett for the appellees.

[00:38:23] Speaker 03:
The district court found that the defendants had tried to shut down the CFPB, and if given the opportunity, they would immediately do so again.

[00:38:32] Speaker 03:
As the agency's own chief operating officer testified, without the court's intervention, the agency would have been wiped out in 30 days.

[00:38:40] Speaker 03:
And if that happened, it would have been irreparable.

[00:38:43] Speaker 03:
To this day, and I think we heard from the podium, the defendants have never disputed that shutting down an agency that Congress created is unconstitutional.

[00:38:53] Speaker 03:
In other words, this is different from most preliminary injunction appeals where the government

[00:38:58] Speaker 03:
is up here arguing, well, if what they say is true, that doesn't violate the law.

[00:39:02] Speaker 03:
That is not what's going on here.

[00:39:03] Speaker 03:
The defendants concede that if they did what the district court found they did, that would violate the Constitution.

[00:39:09] Speaker 03:
Instead, they're making two arguments.

[00:39:13] Speaker 03:
The first I heard was that despite overwhelming evidence that they tried to shut down the agency, despite their chief operating officer telling employees at the time that the agency was being closed,

[00:39:26] Speaker 03:
the district court clearly erred in finding that that's exactly what was happening.

[00:39:31] Speaker 03:
And the second argument I heard is even if the district court didn't clearly err, that is even if they were shutting down the agency, even if they were taking an action that was indisputably unconstitutional, the district court still had no power to stop it.

[00:39:47] Speaker 03:
And in fact, I think I heard no court would ever have the power to stop something like that.

[00:39:52] Speaker 03:
Neither of these arguments has merit.

[00:39:55] Speaker 03:
The defendants have fallen far short of showing that the district court clearly erred, and they can't demonstrate that faced with an agency shutdown without any action from Congress, that a district court lacks the power to stop it.

[00:40:09] Speaker 03:
And I'll start with clear error.

[00:40:12] Speaker 05:
I'm interested.

[00:40:12] Speaker 05:
I mean, even if one could look at some of the early actions as supporting a shutdown, just assuming that for a moment,

[00:40:22] Speaker 05:
The entire record that sort of follows February 10th, you know, before the preliminary junction is entered, you know, the four, six weeks until that occurs, how does that, how do all of those emails, all of those actions taken by agency leadership, how do they support the idea that the agency was being shut down when there's so many instances that the agency in fact is being kept open, that statutory functions are being performed?

[00:40:51] Speaker 05:
I mean, why isn't it clear error then?

[00:40:54] Speaker 05:
Sure.

[00:40:55] Speaker 05:
Even if we bracket some of the early statements from the beginning.

[00:40:59] Speaker 03:
Sure.

[00:41:00] Speaker 03:
So I'll just go through piece by piece the evidence that the defendants, we just heard the defendants rely on.

[00:41:05] Speaker 03:
Before I do that, I just want to flag that the record we have here consists of two things.

[00:41:10] Speaker 03:
There's no administrative record that's been produced.

[00:41:12] Speaker 03:
There's no discovery.

[00:41:13] Speaker 03:
So the record we have are emails that the defendants themselves created and chose to put in the record.

[00:41:20] Speaker 03:
you know, a handful of things that whistleblowers gave us.

[00:41:22] Speaker 03:
So we don't have, you know, we're not working from a record that is, you know, reveals all of the facts that were actually happened at the time.

[00:41:30] Speaker 03:
And we have basically a hand curated record from the defendants.

[00:41:33] Speaker 03:
But putting that aside, even on that record, you know, I'll go through each of the things that they said.

[00:41:38] Speaker 03:
So the first thing I heard was there are a bunch of emails.

[00:41:42] Speaker 03:
So again, these are emails the defendants created and chose to put in the record.

[00:41:46] Speaker 03:
And those emails fall into essentially two buckets.

[00:41:50] Speaker 03:
There are a few emails that they identify that are before the district court entered in order.

[00:41:56] Speaker 03:
And then the vast majority of those emails are created in the days leading up to the preliminary injunction hearing.

[00:42:03] Speaker 03:
And the latter emails I think are really, it's really a voluntary cessation argument.

[00:42:09] Speaker 03:
The first set of emails, I think the argument they're making is there wasn't really an attempt to shut down, there was confusion.

[00:42:15] Speaker 03:
And so I think it's worth just going through one by one what they're relying on.

[00:42:19] Speaker 03:
So there are three exceptions that they point out of work that they say was allowed to continue.

[00:42:25] Speaker 03:
Each of those three exceptions

[00:42:27] Speaker 03:
was a task that, as Martinez testified, Martinez testified that he advised the agency not to, while they were shutting down, not to turn off public-facing things.

[00:42:38] Speaker 03:
They'd face a backlash.

[00:42:39] Speaker 03:
That's at JA-988, and that's also at JA-1091.

[00:42:47] Speaker 03:
And the three things, there are only three things they've identified that they didn't shut down, and each of those three things falls within that category.

[00:42:55] Speaker 03:
So there's the Home Mortgage Disclosure Act.

[00:42:57] Speaker 03:
That's a statutory requirement for mortgage companies to provide information to the Bureau.

[00:43:04] Speaker 03:
And Martinez testified.

[00:43:07] Speaker 03:
He advised the Bureau that they needed to be really careful about turning that off because it's public facing yet.

[00:43:12] Speaker 03:
So they didn't turn that off.

[00:43:14] Speaker 03:
But what they did do is they put it at risk because of contract cancellations.

[00:43:18] Speaker 03:
That's JA 1094.

[00:43:20] Speaker 05:
But those, I mean, these examples, I mean, at risk,

[00:43:23] Speaker 05:
or only keeping things that are public facing, that doesn't suggest a shutdown of the agency, which is the essential factual premise for the preliminary injunction.

[00:43:33] Speaker 03:
Well, I think your question was, let's assume that the evidence supports a conclusion that they were shutting down the agency.

[00:43:40] Speaker 03:
Do these emails sufficiently undermine it?

[00:43:42] Speaker 03:
And I think what these emails show is in the process of shutting down the agency, there are a few things the agency kept on during the time they were shutting down, essentially not to tip off the public, or at least it is not clearly erroneous to find that.

[00:43:56] Speaker 03:
And if you start, you know, if you go back to the first thing I was mentioning, the Homeworkage Disclosure Act,

[00:44:00] Speaker 03:
So they kept it on technically, but the office that handles it would have been eliminated entirely on February 14th.

[00:44:09] Speaker 03:
That's at JA 518.

[00:44:11] Speaker 03:
So they're keeping it on.

[00:44:12] Speaker 03:
They're keeping something the public will notice on while they're planning to eliminate the whole office that does that task.

[00:44:19] Speaker 03:
It's not clearly erroneous to think that that is not demonstrating that they're not going to shut down the agency.

[00:44:26] Speaker 03:
Second thing I heard was an email about consumer response.

[00:44:29] Speaker 03:
Again, this is Mr. Martinez testified, JA988, if you turn that off publicly, you're going to face a backlash.

[00:44:37] Speaker 03:
There was widespread media attention when they did, in fact, turn it on, turn it off.

[00:44:41] Speaker 03:
That's JA130.

[00:44:43] Speaker 03:
And then the only thing they turned back on was the hotline.

[00:44:47] Speaker 03:
So they turned on the part that the public would notice.

[00:44:50] Speaker 03:
Can you call in?

[00:44:51] Speaker 03:
But they didn't have any employees actually monitoring or responding.

[00:44:56] Speaker 03:
They didn't have the contracts.

[00:44:57] Speaker 03:
They pointed to this email that has a list of things that were needed to operate consumer response.

[00:45:02] Speaker 03:
All of those contracts were canceled.

[00:45:05] Speaker 03:
And then the last thing they talk about is the average prime offer rate.

[00:45:08] Speaker 03:
And again, this is a public facing

[00:45:12] Speaker 03:
that the CFPB handles.

[00:45:15] Speaker 03:
And again, they were planning on February 14th to eliminate the whole office that did that.

[00:45:20] Speaker 03:
So you have their big examples of people doing statutorily required work.

[00:45:26] Speaker 03:
All three of them are examples of public facing tasks that would have gone away.

[00:45:31] Speaker 03:
And so it's certainly not implausible that what they were doing is covering their tracks.

[00:45:40] Speaker 04:
When you say plan, Ms.

[00:45:41] Speaker 04:
Bennett, Mr. MacArthur has really emphasized the operative difference between a plan that is in somebody's head, there is a possibility, it's a thought, and a policy.

[00:45:56] Speaker 04:
We review only final agency action.

[00:45:59] Speaker 04:
So I'm just interested in when you say plan, well, it didn't happen, right?

[00:46:05] Speaker 04:
Well, it didn't happen because the average prime offer rate, you know, the the entire office that did that has been eliminated.

[00:46:12] Speaker 03:
No, and that's because the district court entered in order literally hours before that would have happened.

[00:46:18] Speaker 03:
And it can't be that I'm sorry, please go ahead.

[00:46:20] Speaker 04:
The same thing about the hotline.

[00:46:22] Speaker 03:
Yes, yes.

[00:46:23] Speaker 03:
So the only reason that those were not eliminated is because of the district court's intervention.

[00:46:29] Speaker 03:
And it cannot be that if an agency is in the midst of executing a final agency action when the district court intervenes, that it is somehow no longer final.

[00:46:40] Speaker 03:
That can't be right.

[00:46:41] Speaker 04:
So you're saying this is more than a plan.

[00:46:43] Speaker 04:
This is a decision already made.

[00:46:47] Speaker 04:
And these are components of the decision that were being carried out.

[00:46:51] Speaker 04:
I mean, it's a complicated thing, I guess, to shut down an entire agency.

[00:46:54] Speaker 04:
So decision made, that's the action.

[00:46:59] Speaker 04:
And when it's being executed, it generates a lot of evidence about the nature and existence of that decision.

[00:47:08] Speaker 03:
That's exactly right.

[00:47:09] Speaker 03:
And I think you can look at, for example, Biden v. Texas is an example of this.

[00:47:13] Speaker 03:
The decision was made to

[00:47:15] Speaker 03:
close the colloquially known as Remain in Mexico program to stop doing that.

[00:47:20] Speaker 03:
And what that decision said is, I direct staff to implement the decision.

[00:47:25] Speaker 03:
And the court said, that's a final agency action.

[00:47:28] Speaker 03:
And that's because you are directing staff.

[00:47:30] Speaker 03:
You are imposing an obligation on agency staff to not do this thing anymore.

[00:47:35] Speaker 03:
That's exactly what happened here.

[00:47:37] Speaker 03:
It's an obligation on agency staff to implement the closure of the agency.

[00:47:41] Speaker 03:
And I think what I'm sorry, please go ahead.

[00:47:44] Speaker 04:
You had, I think, I do this way too much.

[00:47:48] Speaker 04:
Ask questions that are when you have a, we've asked you something that requires a set of responses.

[00:47:54] Speaker 04:
you, we asked you about the record and you were saying, you know, in response, I think to a question from Judge Rao, that the defendants, their narrative about what the record shows in

[00:48:09] Speaker 04:
as distinct from what the plaintiffs say the record shows.

[00:48:14] Speaker 04:
And you started with the first bucket, which was emails.

[00:48:20] Speaker 04:
And I think that I haven't allowed you to go further than that.

[00:48:23] Speaker 03:
Oh, sure.

[00:48:24] Speaker 03:
So the next thing I heard the defendants rely on is that the district court misinterpreted the stop work order, that it was just this temporary pause.

[00:48:34] Speaker 03:
And I'll just go through the evidence on that.

[00:48:37] Speaker 03:
One, the language of the stop work order instructs employees to stand down from performing any work tasks.

[00:48:43] Speaker 03:
They set up a tip line that remains in place to this day.

[00:48:47] Speaker 03:
If you click on the link, you will go to the tip line that allows the public to report members of the CFPB working in violation of the stop work order.

[00:48:56] Speaker 03:
That's at JA-701.

[00:48:58] Speaker 03:
They cited the stop work order as justification for firing people.

[00:49:03] Speaker 03:
That's not a temporary pause.

[00:49:04] Speaker 03:
If you're firing people, if you're eliminating positions in the Bureau because the Bureau has stopped its work, that's not a pause.

[00:49:11] Speaker 03:
That's permanent.

[00:49:12] Speaker 03:
That's JA 675 and 76.

[00:49:16] Speaker 03:
Mr. Martinez testified that at the time he told employees there's a stop order across the board for all work associated with the Bureau.

[00:49:25] Speaker 03:
That's J.A.

[00:49:26] Speaker 03:
1051.

[00:49:28] Speaker 03:
We know that employees were not in fact working.

[00:49:30] Speaker 03:
That's J.A.

[00:49:31] Speaker 03:
145 and J.A.

[00:49:33] Speaker 03:
161.

[00:49:34] Speaker 03:
And then there's lots of evidence in the record that employees did ask for permission to work and they were either refused or just ignored entirely.

[00:49:42] Speaker 03:
That's J.A.

[00:49:43] Speaker 03:
224 and J.A.

[00:49:45] Speaker 03:
244 and J.A.

[00:49:47] Speaker 03:
308.

[00:49:47] Speaker 05:
Is any of that evidence inconsistent with a temporary

[00:49:51] Speaker 05:
work stoppage, right, with a pause of agency actions while the new leadership determines what direction to take the agency?

[00:50:02] Speaker 03:
Yes.

[00:50:02] Speaker 03:
And I just answer that because I think the answer is yes.

[00:50:05] Speaker 03:
But I just want to make clear the standard here is clear error.

[00:50:09] Speaker 03:
So what the defendants have to show is that it is not at least is not plausible from this record as a whole that they were trying to shut down the agency.

[00:50:20] Speaker 03:
But to answer your question, is any of that inconsistent?

[00:50:23] Speaker 03:
The answer is yes.

[00:50:23] Speaker 03:
So they have a tip line.

[00:50:25] Speaker 03:
Again, active to this day to report people who are not working, they use as a justification for firing people the stop work order.

[00:50:33] Speaker 03:
That is a permanent decision.

[00:50:35] Speaker 03:
And I'll note it's a justification not just for firing people, but for RIFs, which isn't just actually firing people.

[00:50:40] Speaker 03:
A RIF is actually technically you're eliminating that position from the agency entirely.

[00:50:45] Speaker 03:
So they use the stop work order as a justification to entirely eliminate people from the agency.

[00:50:52] Speaker 03:
And I'll note that all of this is in the background of all of this, of course, is that they canceled contracts.

[00:51:00] Speaker 03:
They were about to fire the entire agency.

[00:51:02] Speaker 03:
Mr. Martinez is telling people, here's what's happening.

[00:51:06] Speaker 03:
We're closing down.

[00:51:06] Speaker 03:
We're legitimately shutting down.

[00:51:08] Speaker 03:
And they omit all of that.

[00:51:12] Speaker 03:
So I think that's the stop work order.

[00:51:15] Speaker 03:
The next bullet point I heard is that the court gave no weight to the effort to ensure contracts that were statutorily required were turned back on.

[00:51:28] Speaker 03:
That's just an example of the defendants cited the emails that they cite here.

[00:51:34] Speaker 03:
They cited them below, and they don't actually mean what the defendants are saying they mean.

[00:51:39] Speaker 03:
So they cite an email that

[00:51:44] Speaker 03:
talks about a vote saying, maybe it was pay a letter.

[00:51:48] Speaker 03:
at JA 1068 and 1069 saying, don't terminate any contracts without asking me.

[00:51:55] Speaker 03:
That is after.

[00:51:56] Speaker 03:
That is more than a week after.

[00:51:57] Speaker 03:
All of the contracts were already terminated.

[00:51:59] Speaker 03:
I think it's a good example of the defendants creating something and putting it in the record to try to show that they were doing something when, in fact, that's not possibly what could have happened.

[00:52:10] Speaker 03:
The other emails they identify is an email that

[00:52:16] Speaker 03:
that the CFO sent around saying, hey, heads of divisions, please identify your statutorily required contracts.

[00:52:23] Speaker 03:
That email went around 90 minutes before they then canceled them all anyway.

[00:52:28] Speaker 03:
And they also cite an email that they say, well, Mr. Paoletta turned them back on.

[00:52:33] Speaker 03:
Mr. Martin has testified that actually wasn't true, that that's combining two different spreadsheets in a misleading way.

[00:52:40] Speaker 03:
In fact, what they turned on is a small number of technology contracts.

[00:52:43] Speaker 03:
This is JA1070, and it's, you know, what I'm told from the contracting officers is that those are the technology contracts that you need to shut down an agency.

[00:52:51] Speaker 03:
So they're the contracts that give you the tickets, for example, so that you can keep track of the tasks that you're doing.

[00:52:56] Speaker 03:
They're the contracts that ensure that you can have the RIF software that you need.

[00:52:59] Speaker 03:
Those are the contracts that they turned back on.

[00:53:02] Speaker 03:
Then we have a chunk of emails that are right before the district court's evidentiary hearing.

[00:53:12] Speaker 03:
And I think that really has to be a voluntary cessation argument.

[00:53:17] Speaker 03:
you know, any way around that.

[00:53:19] Speaker 03:
But the defendants haven't made a voluntary cessation argument.

[00:53:22] Speaker 03:
Oh, please.

[00:53:23] Speaker 03:
I'm sorry.

[00:53:23] Speaker 04:
You said that this is emails.

[00:53:25] Speaker 03:
So they have a handful of emails that are around February 10th that the defendants, I think, are saying, look, these show that we weren't really trying to shut down.

[00:53:35] Speaker 03:
Then if you notice, there's a gap.

[00:53:37] Speaker 03:
So there's a few emails that are really, I think, mostly about what the public is going to see.

[00:53:43] Speaker 03:
And then there's a gap.

[00:53:44] Speaker 03:
And then there's a flurry of emails that are days before the evidentiary hearing.

[00:53:52] Speaker 03:
And the story with those emails is, look, well, whatever happened in the beginning, we changed our ways.

[00:53:58] Speaker 03:
We're not going to do this anymore.

[00:53:59] Speaker 03:
You should trust us.

[00:54:02] Speaker 03:
That kind of argument, what the defendants would have to show, they'd meet a formidable burden, as the Supreme Court said in FICRA, to show that there's no reasonable expectation that the conduct will recur.

[00:54:14] Speaker 03:
And as the Supreme Court said in Vicar, the standard applies to the government, just as it applies to everybody else.

[00:54:19] Speaker 03:
They haven't even attempted to meet that burden, and they can't.

[00:54:23] Speaker 03:
There's a bunch of emails saying that they're reactivating certain divisions, but there's evidence showing that that didn't actually mean people could work.

[00:54:31] Speaker 03:
So at JA 716, for example, people were told to go back to work publicly and then privately sent text messages saying, don't go back to work.

[00:54:41] Speaker 03:
That cannot be evidence that they had changed their ways.

[00:54:44] Speaker 03:
721 and to 722, those are examples of offices that actually couldn't perform the work because they said go back to work.

[00:54:52] Speaker 03:
They didn't have the contracts or the data that they needed to do it.

[00:54:56] Speaker 03:
JA562, they say supervision could go back to work.

[00:55:00] Speaker 03:
The work that they were given was to write a report for pale letter and then go back on administrative leave.

[00:55:05] Speaker 03:
and recent reporting shows, the work that they've recently been given is to organize their files.

[00:55:11] Speaker 03:
So that just can't be a genuine effort that satisfies the voluntary cessation standard.

[00:55:16] Speaker 05:
Maybe shift course a little bit.

[00:55:19] Speaker 05:
So to bring an APA challenge, there needs to be some discrete agency action that's being challenged.

[00:55:28] Speaker 05:
What is the discrete agency action

[00:55:32] Speaker 03:
So the core discrete agency action is the shutdown of the agency.

[00:55:35] Speaker 05:
Is that the only, so if we were to conclude, despite all the J.A.

[00:55:42] Speaker 05:
sites that you provided, that there was, it was clearly erroneous to find that the agency was shutting down, then would there be a discrete agency action?

[00:55:49] Speaker 03:
The district court found a second discrete agency action, a final agency action, which is the stop work order, which I think is also correct.

[00:55:57] Speaker 03:
The district court didn't reach whether there were any other actions that might be final.

[00:56:01] Speaker 03:
But to start with the shut down.

[00:56:05] Speaker 03:
And I'll also note that the strictures.

[00:56:07] Speaker 05:
It's not just finality, but also discrete.

[00:56:10] Speaker 03:
Sure.

[00:56:10] Speaker 03:
Sure.

[00:56:11] Speaker 05:
Which are, as we were discussing earlier, different but related.

[00:56:14] Speaker 03:
Yes.

[00:56:15] Speaker 03:
Yes.

[00:56:15] Speaker 03:
And so I'll take them each in turn.

[00:56:16] Speaker 03:
But before I do that, I just want to flag that this discrete action, final action, none of these strictures apply to a constitutional claim under the separation of powers.

[00:56:24] Speaker 03:
I have questions about that, too.

[00:56:27] Speaker 03:
But to answer, to stay with your question, on the shutdown as a discrete agency action, I think that question is basically controlled by Biden v. Texas.

[00:56:36] Speaker 03:
It's very difficult to see how Biden v. Texas could not be a discrete agency, how this could not be a discrete agency action.

[00:56:44] Speaker 03:
and the decision to shut down the Remain in Mexico program could be.

[00:56:48] Speaker 03:
It's the same thing.

[00:56:51] Speaker 03:
It's a direction, a plan to shut something down that requires several steps.

[00:56:57] Speaker 03:
If the defendants were right and you couldn't challenge the plan to shut down the Remain in Mexico policy, what you'd have to challenge is the cancellation of the contract.

[00:57:06] Speaker 03:
With the bus drivers or the plane company that was taking people across the border.

[00:57:10] Speaker 03:
You'd have to challenge the firing of the chunk of employees separately who may have managed that program.

[00:57:15] Speaker 03:
You'd have to separately challenge any

[00:57:17] Speaker 03:
emails that went out telling people, stop working on this program.

[00:57:21] Speaker 03:
You'd have to separately challenge any policies.

[00:57:24] Speaker 03:
That cannot be the way it works.

[00:57:25] Speaker 03:
And in fact, the Supreme Court made clear that's not the way it works.

[00:57:29] Speaker 03:
The same thing is true in the Regents case.

[00:57:31] Speaker 03:
The same thing is true in the Western Watersheds Project v. Halland case, where you have a decision that says,

[00:57:39] Speaker 03:
We want there to be zero horses.

[00:57:41] Speaker 03:
And there were a series of efforts to implement that decision.

[00:57:45] Speaker 03:
And in fact, what this court held, relying on Supreme Court precedent in that case, is not only was that first decision that there should be zero horses, not only was that a final agency action, once you've started implementing it, you can't challenge the implementation steps.

[00:58:02] Speaker 03:
And so I think there would be a danger.

[00:58:04] Speaker 03:
If you say you cannot challenge the shutdown of an agency, at some point you'd run into the ripeness case law, which says once an agency starts implementing a final action, you can't wait several years until the final step that they take and then challenge the whole thing.

[00:58:19] Speaker 03:
So there would be actually quite a danger of holding that a shutdown is not a final agency action.

[00:58:24] Speaker 05:
So your main final agency action is the shutdown.

[00:58:27] Speaker 03:
I think that's right.

[00:58:28] Speaker 05:
It has to be the shutdown.

[00:58:29] Speaker 04:
And what kind of relief do you ultimately expect to get in this case?

[00:58:40] Speaker 04:
The relief that was entered that may be

[00:58:45] Speaker 04:
plausible maybe appropriate the preliminary injunction state and as you mentioned, the record here is undeveloped.

[00:58:53] Speaker 04:
And if the preliminary injunction were left in place, and there were fact finding the

[00:59:01] Speaker 04:
case as you describe really is crystallized around a plan to shut down.

[00:59:06] Speaker 04:
So I'm sure there, it depends on what the, what the evidence might show, but what, what are some examples of relief that you think your clients might be entitled to at the end of the day?

[00:59:21] Speaker 03:
So one, I think they would certainly be entitled to relief that vacates the plan to shut down.

[00:59:27] Speaker 03:
And the second is, I do think they would be entitled to an injunction.

[00:59:30] Speaker 03:
I concede that it depends a bit on what the factual development is in the case and honestly what the factual circumstances are at the time.

[00:59:39] Speaker 03:
We are not standing here before you today saying that I think there needs to be a permanent injunction that looks just like this preliminary injunction forever.

[00:59:46] Speaker 03:
I don't think that would be a reasonable position and it's not one that we would take.

[00:59:51] Speaker 03:
the president has withdrawn the nomination of the person who he nominated to be the head of the agency, I could imagine that the president would nominate someone else, that that person would be confirmed, and that that person would potentially be able to make the showing of voluntary cessation that would be necessary.

[01:00:11] Speaker 03:
For example, I imagine that's possible.

[01:00:13] Speaker 03:
I can also imagine that with more time, it would be possible to work out with the government a much narrower

[01:00:19] Speaker 03:
permanent injunction that is much more procedural.

[01:00:22] Speaker 03:
And frankly, something along the lines to what didn't work in the preliminary posture, but could work in a final posture with more details about, OK, of course, you have the discretion to conduct lawful rifts.

[01:00:37] Speaker 03:
And what kind of plan would that look like?

[01:00:41] Speaker 03:
Or what would the procedure look like?

[01:00:42] Speaker 05:
So the district court judge is going to decide the extent of rifts

[01:00:47] Speaker 05:
that the executive branch thinks is appropriate.

[01:00:49] Speaker 05:
So there would just be a constant judicial supervision.

[01:00:51] Speaker 05:
You can do a 40% riff, but you can't do a 50% riff.

[01:00:55] Speaker 05:
I mean, what could that possibly look like?

[01:00:58] Speaker 03:
No, I want to be really clear that we don't think that the permitted.

[01:01:01] Speaker 05:
You cite a lot of cases in your brief that are from structural injunction cases like busing.

[01:01:06] Speaker 05:
So should it be that sort of situation where the district court, you know, Charlotte Mecklenburg takes over the running of the CFPB?

[01:01:14] Speaker 03:
No, I want to be really clear that that is not what we're asking for.

[01:01:17] Speaker 03:
We haven't ever asked for that.

[01:01:18] Speaker 03:
I wouldn't expect that to be necessary.

[01:01:20] Speaker 05:
What are the cases that you cite?

[01:01:21] Speaker 03:
Right so the case is that so I think the district court in if if what happened is say the district court enters a permanent vacates the the shutdown plan enters a permanent injunction that says uh don't try to shut down the agency and maybe it says something like you can do anything that in your discretion you have a good faith belief you know won't shut down the agency whatever or or doesn't or just decides what the good faith is or just says don't not the president not the senate confirmed head of the agency

[01:01:50] Speaker 03:
Or it just says, don't shut down the agency.

[01:01:52] Speaker 03:
You could imagine that.

[01:01:53] Speaker 05:
And then the district court says, 50% RIF is shutting down the agency.

[01:01:58] Speaker 03:
Yeah, to be clear, I think it may be that at some point, if there's evidence that the defendants aren't acting in good faith, of course, there's nothing that would bar a plaintiff from coming back into court.

[01:02:11] Speaker 03:
But I would not expect a permanent injunction to start there.

[01:02:13] Speaker 03:
And I would expect, frankly,

[01:02:17] Speaker 03:
We've talked, you know, once there's a Senate confirmed director in place, I would expect that there would be some evidence that perhaps something different was going on and maybe there isn't something, you know, necessary or at least not as a first step.

[01:02:32] Speaker 03:
So I want to be really clear that we are not saying that this preliminary injunction would be the permanent injunction.

[01:02:39] Speaker 03:
I think it would depend on a lot of factors that were true at the time.

[01:02:42] Speaker 03:
But what this preliminary injunction does is ensures that we are not

[01:02:46] Speaker 03:
having to worry about the agency being shut down in the interim as the case goes on.

[01:02:50] Speaker 01:
I mean, we have some experience trying to manage this on an interim basis.

[01:03:01] Speaker 01:
And just speaking for myself, it was not a happy experience.

[01:03:08] Speaker 01:
And I mean, it does tend to highlight

[01:03:14] Speaker 01:
some of the difficulties with the case as you conceive it.

[01:03:22] Speaker 01:
And I think this is related to the discrete action point, but you're taking a little hard to get my head around that in the abstract, but you're starting with a bunch of things that look like typical

[01:03:40] Speaker 01:
agency actions that would be the object of judicial review, like firing employees, canceling contracts, things like that.

[01:03:50] Speaker 01:
And you're putting all of them together to get this more general overarching shutdown action kind of upstream from all these the individual

[01:04:09] Speaker 01:
employment and contract decisions.

[01:04:12] Speaker 01:
And then to get standing your projecting downstream to people who are hurt one way or another employees or people who need the hotline and so on.

[01:04:28] Speaker 01:
Right.

[01:04:28] Speaker 01:
But when you do all that, there's a huge gap between the shutdown action that you are framing

[01:04:37] Speaker 01:
is the focus of judicial review and the harm to these individuals who won't have someone answering the phone.

[01:04:51] Speaker 01:
And it seems to me that's what is putting the courts in this position.

[01:04:58] Speaker 01:
There's no obvious connection between the two.

[01:05:00] Speaker 01:
And so the court has to ask itself such imponderables as how many employees

[01:05:07] Speaker 01:
Can the agency writh and yet ensure that the hotline phone gets answered?

[01:05:16] Speaker 01:
What's the end game other than some form of very ongoing and intrusive judicial supervision?

[01:05:26] Speaker 03:
I strongly suspect that the end game is there's actually a pretty narrow final injunction.

[01:05:34] Speaker 03:
And the only way we get to something broader than that is if there's clear evidence that the government is violating it.

[01:05:41] Speaker 03:
And I'll note that in your hypothetical, the only challenging provision that anybody is really having trouble with is the RIF provision.

[01:05:51] Speaker 03:
And that would be challenging, even if that was the only aspect, because that is just a difficult line drawing problem.

[01:05:57] Speaker 03:
And I think the government has a lot of discretion there.

[01:06:00] Speaker 03:
But I want to go back and talk.

[01:06:01] Speaker 03:
I heard you say two things.

[01:06:04] Speaker 03:
One was that there are a bunch of individual decisions being challenged.

[01:06:07] Speaker 03:
And the second is that the harm is not very direct.

[01:06:10] Speaker 03:
And I want to, if I may, address both of those.

[01:06:12] Speaker 01:
A bunch of reviewable actions that are used to abstract

[01:06:18] Speaker 01:
from which is abstracted the shutdown idea.

[01:06:22] Speaker 03:
So and maybe those three, I'll start backwards in terms of abstracting the shutdown.

[01:06:26] Speaker 03:
So if there were a piece of paper, if there was something published in the Federal Register that said we are shutting down, I think I heard the defendant say, I think it has to be right, that's not abstract.

[01:06:37] Speaker 03:
So then the question is,

[01:06:38] Speaker 03:
Can an agency avoid review by hiding its decision, either by not writing it down, that's the Venetian case, or by, you know, I actually am not certain that it's not written down somewhere.

[01:06:53] Speaker 03:
We have no administrative record and we have no discovery.

[01:06:56] Speaker 03:
So right now, what we have is all of the evidence of what they did.

[01:07:00] Speaker 03:
And in the Venetian case, that's exactly what they had there too.

[01:07:04] Speaker 03:
What they said is based on the record we have before us, we can infer that there's been this unwritten policy.

[01:07:11] Speaker 03:
And then, so that's one thing on unwrittenness, on individual decisions.

[01:07:19] Speaker 03:
I don't think that there have been a bunch of individual decisions here.

[01:07:22] Speaker 03:
There's nothing in the record that says we have decided to fire John and Jane and Adam.

[01:07:29] Speaker 03:
We're terminating contract X, Y, and Z. Everything in the record, and this is what the chief operating officer said at the time,

[01:07:37] Speaker 03:
And not just, by the way, the week of February 10th, but continuing long after that, everything in the record is, we are shutting down, and here are the things, here are the main things the agency uses to operate, and so to implement that shutdown, we are going to cut them off.

[01:07:55] Speaker 03:
Contracts, wholesale.

[01:07:56] Speaker 03:
The staffing, wholesale.

[01:07:59] Speaker 03:
The work, wholesale.

[01:08:01] Speaker 03:
And so it's not a case like Lujan, for example, where there are, you know, in Lujan there are a bunch of individual decisions.

[01:08:08] Speaker 03:
They were not related.

[01:08:09] Speaker 03:
They were unlawful for a bunch of different reasons.

[01:08:12] Speaker 03:
And what Lujan says is that there's this one policy animating all those decisions.

[01:08:16] Speaker 03:
Of course you can challenge that.

[01:08:18] Speaker 03:
That's what's going on here.

[01:08:19] Speaker 03:
It's not a bunch of individual decisions that are somehow aggregated.

[01:08:23] Speaker 01:
Luhan says you can't take a bunch of decisions that, you know, have a statutory focus.

[01:08:33] Speaker 01:
The agency is supposed to do some specific thing under some specific statute and you get five or six of those and you can't aggregate them into a land use plan.

[01:08:48] Speaker 01:
And this has some of that

[01:08:50] Speaker 01:
feels to it, right?

[01:08:52] Speaker 01:
Because there are lots of individual pieces from which you're building up this shut down the agency action, which is not, there's no statute or reg that talks about shutting down the agency.

[01:09:08] Speaker 01:
This is why we're, you know, this has a little bit of nailing jello to the wall quality to it, trying to figure out is it there, is it not?

[01:09:19] Speaker 01:
So there's no agency record.

[01:09:21] Speaker 01:
I take your point on that, but in a way that sort of cuts against you because it just makes the point.

[01:09:29] Speaker 01:
There's no rule or order we can focus on as the basis for our review.

[01:09:37] Speaker 03:
So the very last point, it's not that there isn't an agency record.

[01:09:40] Speaker 03:
It's that we're not at the stage of the case where they've been asked to produce.

[01:09:43] Speaker 03:
They have to produce it yet.

[01:09:44] Speaker 03:
So I want to be just clear about that.

[01:09:47] Speaker 03:
But moving back, I realize that wasn't, you know, this is not a lawsuit.

[01:09:55] Speaker 03:
There's no, there's not, we're not, there's nothing in the complaint.

[01:09:58] Speaker 03:
It's not a lawsuit that says the plaintiff's challenge or decision to

[01:10:03] Speaker 03:
Halt supervision.

[01:10:04] Speaker 03:
The plaintiffs challenge your decision to halt consumer response.

[01:10:07] Speaker 03:
The plaintiffs think that you are doing the wrong enforcement actions.

[01:10:10] Speaker 03:
That I think would be more similar to Lujan, although similar to Lujan would be

[01:10:16] Speaker 03:
The plaintiffs challenge these 500 ways that the supervision decisions were wrong.

[01:10:20] Speaker 03:
That would be similar.

[01:10:22] Speaker 03:
Here, the plaintiffs challenge one thing.

[01:10:24] Speaker 03:
You are not operating the CFPB at all.

[01:10:27] Speaker 03:
Now, that's unlawful for a lot of reasons.

[01:10:30] Speaker 03:
It violates the separation of powers.

[01:10:32] Speaker 03:
It violates the Dodd-Frank Act.

[01:10:34] Speaker 03:
But they're not challenging.

[01:10:37] Speaker 03:
This isn't a challenge to the many different ways they're violating a statute.

[01:10:41] Speaker 03:
It's a challenge to a single decision to shut down the agency.

[01:10:44] Speaker 03:
And I think that distinguishes it from Lujan in two ways.

[01:10:47] Speaker 03:
One is that there is a unifying thing that is being challenged.

[01:10:51] Speaker 03:
And again, I think Biden v. Texas, I think Regents.

[01:10:55] Speaker 03:
I think the Siba Gaigi decision is also really helpful here.

[01:10:58] Speaker 03:
In that decision, what the court held is there's this collection of

[01:11:02] Speaker 03:
informal letters that together make clear that there is a final agency action, that there is a policy.

[01:11:09] Speaker 03:
The Western Watersheds Project, same thing.

[01:11:12] Speaker 03:
So there are a bunch of cases, including cases from the Supreme Court that are exactly like this, where you're challenging

[01:11:19] Speaker 03:
a decision to close.

[01:11:21] Speaker 03:
The second way it's different is because it's a decision to close, the relief is prohibitory.

[01:11:29] Speaker 03:
It's, you know, essentially don't close the agency.

[01:11:32] Speaker 03:
And I realize, you know, there may be, I realize there may be.

[01:11:35] Speaker 01:
And it took like five days from our stay order to compliance, you know, maybe proto contempt proceedings when, you know,

[01:11:49] Speaker 01:
Executive branch, which wants to go down, you know, 90% down, says, we think we can run the agency with 200 people.

[01:11:59] Speaker 01:
And the district court says, I don't believe that.

[01:12:03] Speaker 01:
And you have this, you know, big enforcement proceeding right away.

[01:12:07] Speaker 03:
I mean, I think that shows the wisdom of the district court's injunction on a preliminary posture, which is to say, there's a lot more we need to know to enter a refined, you know,

[01:12:19] Speaker 03:
permanent injunction and the preliminary injunction sees all we're trying to do is have a workable way of keeping the status quo in place and I'll note that the defendants what they said is we made this assessment.

[01:12:34] Speaker 03:
What the evidence shows the chief operating officer who again has been their declarant in this case.

[01:12:39] Speaker 03:
set agreed that if what they did were allowed to stand, the Bureau would not continue functioning even for 60 days.

[01:12:46] Speaker 03:
That's docket 131-1 at exhibit 23.

[01:12:49] Speaker 03:
And leaders from across the agency agreed it cannot be that the defendants can come into court and say, you can't do anything to prevent us from shutting down the agency because we're going to make it hard for you by refusing to comply in good faith.

[01:13:04] Speaker 01:
What might a final injunction look like that would not involve this problem of at what point are you firing too many people?

[01:13:22] Speaker 01:
Or at what point are you canceling too many contracts?

[01:13:27] Speaker 01:
Or at what point are you closing too many offices?

[01:13:31] Speaker 03:
Yeah, so I think the contracts is a great example.

[01:13:35] Speaker 03:
The defendants have a list of contracts that they think are needed to operate the agency.

[01:13:40] Speaker 03:
It would be a very easy thing for them to

[01:13:44] Speaker 03:
produce, and they chose not to because they wanted a broader injunction that they could challenge.

[01:13:49] Speaker 03:
The same thing, the offices are listed in the statute.

[01:13:52] Speaker 03:
Which offices need to be there?

[01:13:54] Speaker 03:
And then the RIF provision, again, I would assume that once there is a Senate-confirmed director that will, in fact, for example, the executive order, the memo that they talk about requires the submission of a plan to OMB.

[01:14:10] Speaker 03:
I believe, actually, that's not right.

[01:14:12] Speaker 03:
I think it's OPM.

[01:14:13] Speaker 03:
The defendants have never submitted any plan to do that.

[01:14:17] Speaker 03:
So they stand here and say, the reason we need this preliminary injunction to be lifted is so we can comply with this memo.

[01:14:23] Speaker 03:
And they have never even tried to comply with that memo.

[01:14:27] Speaker 03:
And so all we're talking about, it's a very different question, what gets permanently entered.

[01:14:34] Speaker 03:
All we're talking about is to give the district court the opportunity to rule on the merits of the case.

[01:14:41] Speaker 04:
Precedent, I looked briefly for this, but there are a lot of cases in which, and I think they're mainly cases in which the facts really aren't disputed and the issue is a legal one where court enters a preliminary injunction, the preliminary injunction is upheld and just becomes the permanent injunction.

[01:14:57] Speaker 04:
But I assume that there are many cases in which, like this one, the premise of the finding of the entry of the preliminary injunction is factual,

[01:15:08] Speaker 04:
Here it was fast moving, as you point out, the factual change of information had yet to occur.

[01:15:19] Speaker 04:
You know, preliminary injunction is preliminary and a lot can take place in between.

[01:15:24] Speaker 04:
Are there case examples that aren't like school desegregation or busing that you would have us look at that kind of show that relationship?

[01:15:35] Speaker 04:
Preliminary, bit of a rough cut.

[01:15:37] Speaker 04:
I know we do have some cases saying a preliminary injunction can be something of a rough cut.

[01:15:43] Speaker 04:
I think in the

[01:15:47] Speaker 04:
Oh, shucks.

[01:15:48] Speaker 04:
There was an Eighth Circuit case you cited.

[01:15:50] Speaker 04:
Maybe it was the Biden- Nebraska v. Biden.

[01:15:53] Speaker 04:
Where the defendants saw it tailoring.

[01:15:59] Speaker 04:
And they said, no, yes, it's overbroad, but it's preliminary.

[01:16:03] Speaker 04:
And that we didn't end up seeing the further interaction between what does it look like at permanent versus preliminary.

[01:16:13] Speaker 04:
But I just wonder if you have any further, anything else for us to-

[01:16:17] Speaker 04:
read or rely on in understanding that relationship.

[01:16:21] Speaker 03:
There are a few cases we cite in our brief that stand for this proposition, and I can get you the page number of the brief that cite them.

[01:16:28] Speaker 03:
To be honest, there's a paragraph in our brief that talks about injunctions being a stopgap measure and examples of that.

[01:16:38] Speaker 03:
But to be honest, page 49, I am told, of our brief.

[01:16:44] Speaker 03:
There you go.

[01:16:46] Speaker 03:
To be honest, I am not positive that I know what the final injunction in those cases look like, but I'd be happy.

[01:16:52] Speaker 03:
I am certain there are such cases, and I'd be happy to do that research and submit them to you.

[01:16:56] Speaker 04:
If you have them, that'd be great.

[01:16:59] Speaker 04:
I think the question is sort of a little bit, or you tried to interrupt before.

[01:17:03] Speaker 04:
I tried to get a word in.

[01:17:05] Speaker 05:
It's OK.

[01:17:05] Speaker 05:
I had a question about the constitutional claim.

[01:17:08] Speaker 05:
So if yours is still there.

[01:17:09] Speaker 04:
So maybe this is a good segue to that.

[01:17:11] Speaker 04:
How do we distinguish between

[01:17:14] Speaker 04:
A claim that the agency lacks statutory authority to do what it's doing and a claim that it is violating the separation of powers because it is doing something without statutory authority or

[01:17:31] Speaker 04:
I guess a clearer way to think about it is, I remember Mr. MacArthur said, one way to explain the president's announced intention to get rid of the CFPB is not as support for a unilateral executive branch effort to do that, a policy decision to do that, but that he intended to go to Congress and ask for that, how do we know

[01:18:00] Speaker 04:
just as a legal matter, whether, well, no, he didn't do that.

[01:18:06] Speaker 04:
He's doing it himself without, you know, presentment and bicameralism and all of that versus just he's acting contrary to statute.

[01:18:18] Speaker 03:
So I think Dalton actually really helps on this because Dalton contrasts what happened in Dalton

[01:18:24] Speaker 03:
which is the president approving the recommendation of a base closer.

[01:18:32] Speaker 03:
And the Dalton Court says that's different from what happened in Youngstown.

[01:18:37] Speaker 03:
And I think contrasting those two things and reading the Dalton Court's comparison of those two things answers that question.

[01:18:42] Speaker 03:
So in Dalton, the president, no question, the statute says the president approves military base closures.

[01:18:48] Speaker 03:
And the claim was you did it wrong, basically.

[01:18:52] Speaker 04:
I found like Youngstown to be more clearly on the other side of the line from Salton because there's no statute kind of invoked there, period.

[01:18:59] Speaker 03:
Well, so actually, if you read, so if you read Youngstown, there were there were statutes on the books that said under what circumstances the president could seize property, but none of those statutes gave him authority to seize the steel mills under these circumstances.

[01:19:15] Speaker 03:
And so that's the difference.

[01:19:16] Speaker 03:
There's the Youngstown cases.

[01:19:18] Speaker 03:
There is no power to do this at all.

[01:19:21] Speaker 03:
Not you have the discretion to do it, but you did it wrong.

[01:19:24] Speaker 05:
I think if you.

[01:19:25] Speaker 05:
Isn't another important difference in Youngstown.

[01:19:27] Speaker 05:
The government was defending the president's action based on the president's inherent constitutional authority.

[01:19:33] Speaker 05:
And so it was a constitutional case.

[01:19:35] Speaker 05:
It wasn't a statutory case.

[01:19:37] Speaker 05:
Well, I think what Youngstown.

[01:19:38] Speaker 05:
It's a very different kind of defense.

[01:19:40] Speaker 03:
So I didn't hear the defendants make any defense statutory or constitutional shutting down the agency.

[01:19:48] Speaker 03:
And what Youngstown stands for is if the president to have power to act constitutionally, the presence of Article 2 means there's an Article 1.

[01:19:58] Speaker 03:
To not violate the separation of powers, the executive has to have either statutory power or constitutional power.

[01:20:04] Speaker 03:
But the lack of that power when the executive acts without either

[01:20:08] Speaker 03:
Then that's a separation of powers violation.

[01:20:11] Speaker 05:
I don't see any dispute about that with the defense claiming an inherent article to power to shut down the agency.

[01:20:18] Speaker 05:
I mean Mr. MacArthur said that they can't shut down the agency without congressional

[01:20:24] Speaker 05:
without congressional action.

[01:20:25] Speaker 03:
So I think that's right.

[01:20:26] Speaker 03:
I think that just means the government concedes that if they did that, they violated the Constitution.

[01:20:31] Speaker 03:
And so I don't think that that makes that not a constitutional case.

[01:20:34] Speaker 03:
It means that the government concedes the point that was at issue in Youngstown, not the framework.

[01:20:39] Speaker 05:
I don't see how you get around Dalton.

[01:20:41] Speaker 05:
I mean, Dalton makes very clear that you can't just repackage a claim that an executive branch official is not following a statute to be some kind of generic separation of powers claim.

[01:20:51] Speaker 03:
So how do you get around all I agree with that and I think if you I think genuine looking at the comparison of Dalton and Youngstown really gives you that answer so again Dalton was you violated the statute in doing a thing the statute gives you power to do Youngstown is neither a statute nor the Constitution gives you power to do that there's no claim.

[01:21:10] Speaker 03:
The district court pointed out, I think, as the defendants have conceded here, there's no claim that any statute or the Constitution gives power to shut down the agency.

[01:21:17] Speaker 03:
And again, the claim here isn't, you have power to run supervision, but we think you're doing it wrong.

[01:21:23] Speaker 03:
That would be a Dalton claim.

[01:21:24] Speaker 03:
The claim that you are not operating a whole agency at all, that you shut down an agency that Congress created, that's a Youngstown claim.

[01:21:32] Speaker 05:
Your constitutional claim, then, like your APA claim, depends on there being a shutting down of the agency.

[01:21:38] Speaker 05:
It all rests on that.

[01:21:40] Speaker 05:
So if they weren't in fact shutting down the agency, all of your legal claims fail.

[01:21:48] Speaker 03:
I don't agree with that, but I do think that the clearest constitutional violation here is the one that the district court found, which is they were shutting down the agency without any authorization.

[01:21:59] Speaker 05:
So there's no constitutional problem with taking the agency to 10%.

[01:22:04] Speaker 05:
There might be a statutory claim, an APA claim, but there's certainly no constitutional.

[01:22:09] Speaker 03:
I think that is a fight about what it means to shut down an agency, what it means, you know, if, if there were a district court never defines.

[01:22:16] Speaker 03:
Well, the district court didn't need to find it because the record, the evidence in the record showed that this is the easy case.

[01:22:23] Speaker 03:
Because we have testimony from the head of the rift team saying we were firing everyone in two steps.

[01:22:32] Speaker 03:
Mr. Martinez, their chief operating officer, agrees with that.

[01:22:35] Speaker 03:
Mr. Martinez also says the agency is going to be eliminated.

[01:22:38] Speaker 03:
The agency is going to be completely wiped out.

[01:22:40] Speaker 03:
It's going to be legitimately shut down.

[01:22:42] Speaker 03:
It's going to be closed.

[01:22:43] Speaker 03:
So this is the easy case where we're just getting rid of an agency.

[01:22:47] Speaker 03:
I realize there might be harder separation of powers cases where they get rid of 90% and they take the 10% of people and they have them do coloring or something.

[01:22:56] Speaker 03:
Maybe that's a harder case.

[01:22:58] Speaker 03:
But this case, the facts and what the district court found is they were getting rid of the agency completely.

[01:23:04] Speaker 03:
And so that, I think, is a clear constitutional violation.

[01:23:07] Speaker 01:
Your constitutional claim

[01:23:12] Speaker 01:
necessarily depends on establishing the statutory violations.

[01:23:21] Speaker 01:
You don't, you don't have a freestanding, you know, First Amendment claim.

[01:23:26] Speaker 01:
They could be complying with every statute, but they're nonetheless violating the First Amendment.

[01:23:31] Speaker 01:
Your claim is they are

[01:23:35] Speaker 01:
not going to do a bunch of things that the statute requires them to do, just run the agency, and therefore they're violating the take care clause or the separation of powers.

[01:23:51] Speaker 03:
Oh, no, I don't think so.

[01:23:53] Speaker 03:
The claim is not, they're dependent on, they're not going to do a bunch of things the statute requires them not to do.

[01:23:59] Speaker 03:
It doesn't matter what the Dodd-Frank, I do think there are a bunch of legal violations caused by the shutdown for that reason, but it doesn't matter what the Dodd-Frank Act says.

[01:24:08] Speaker 01:
The power... What's the source of their obligation to run the agency?

[01:24:12] Speaker 01:
The power... Satutory.

[01:24:14] Speaker 03:
The power to create agencies and the power to end them is Congress's power.

[01:24:19] Speaker 03:
That's long been true.

[01:24:20] Speaker 03:
That's very clear.

[01:24:21] Speaker 03:
And so ending an agency that Congress created, whatever the statute says the agency has to do, getting rid of an agency is a separation of powers violation.

[01:24:30] Speaker 03:
I also think there's a problem if Congress says the agency has to have a supervision division and you get rid of it.

[01:24:36] Speaker 03:
But the clearest constitutional violation is it is Congress's power to create and to eliminate

[01:24:44] Speaker 03:
executive agencies and the executive cannot unilaterally get rid of an agency that Congress created.

[01:24:51] Speaker 01:
Post-Congress created a component agency within the bureau and said it's at the discretion of the director to run it or not.

[01:25:06] Speaker 01:
And it's being run and a new director comes in and it's like, I'm going to shut this down completely.

[01:25:12] Speaker 03:
I think it's fine.

[01:25:14] Speaker 03:
I think it maybe depends, but if Congress says there shall exist ex-agency, the executive cannot unilaterally get rid of that agency.

[01:25:22] Speaker 03:
That has long been understood to be a separation of powers violation.

[01:25:27] Speaker 05:
I don't understand why it's a separation of powers violation.

[01:25:30] Speaker 05:
Are you saying that the president is assuming Article I authority?

[01:25:33] Speaker 05:
I mean, there isn't any sort of free-floating separation of power.

[01:25:38] Speaker 05:
What is the precise violation?

[01:25:39] Speaker 05:
Is it a violation of Article II, the Take Care Clause?

[01:25:43] Speaker 05:
What is the violation under the Constitution?

[01:25:46] Speaker 03:
I think there are two.

[01:25:48] Speaker 03:
One is it's a violation of the separation of powers principles inherent in the Constitution.

[01:25:53] Speaker 03:
We cite some cases in our brief.

[01:25:54] Speaker 04:
There's also- So you're talking about particularly

[01:25:57] Speaker 04:
lawmaking authority that Congress has to appeal what Congress has enacted in order for it to legitimately be disregarded?

[01:26:07] Speaker 05:
There's no case in the Supreme Court has said there's a separation of powers violation without identifying a specific provision of the Constitution that has been violated.

[01:26:20] Speaker 05:
Can you think of one?

[01:26:22] Speaker 03:
Well, I think all of the removal.

[01:26:24] Speaker 05:
I mean, they, they, they, those are based in Article two.

[01:26:27] Speaker 03:
Right.

[01:26:28] Speaker 05:
So Article two violation in terms of removal being inherent in the, you know, the vesting of the executive power.

[01:26:33] Speaker 05:
I mean, it's, it's tied to the text and structure of Article two.

[01:26:37] Speaker 05:
So you need some text of the Constitution to explain what the constitutional as opposed to statutory problem is.

[01:26:44] Speaker 03:
Sure.

[01:26:44] Speaker 03:
So the constitutional violation would be tied to Article 1.

[01:26:47] Speaker 03:
Congress has the power to pass legislation.

[01:26:50] Speaker 03:
And what the Supreme Court said in free enterprise, and there are cases going back before that, that it is Congress's power to create and eliminate agencies.

[01:26:59] Speaker 05:
Sure, but the president here hasn't purported to pass a law that Congress would pass.

[01:27:07] Speaker 05:
Right, but what the maybe it's a violation of the take care clause, but how is it a violation of Article one isn't purported to make a statute without the House and the Senate.

[01:27:18] Speaker 03:
Well, the way you create and if you look at free enterprise, the way you create and eliminate agencies is by passing a statute and so by doing that unilaterally.

[01:27:26] Speaker 03:
what the executive has done has usurped the Article 1 power to do that.

[01:27:31] Speaker 03:
I think free enterprise is a good case.

[01:27:33] Speaker 03:
I think the Center for Constitutional Accountability brief goes in long detail about all of the cases about this and the history of this.

[01:27:42] Speaker 03:
I think that's also helpful if you're wondering where the source of this power is.

[01:27:46] Speaker 03:
But I haven't heard the defendants dispute, and I don't think there is any dispute that the executive cannot unilaterally

[01:27:56] Speaker 03:
either create or get rid of an agency.

[01:27:59] Speaker 04:
So it would be bicameralism and presentment.

[01:28:01] Speaker 04:
It would be violation, take care, because the statute's still in the books.

[01:28:06] Speaker 04:
It would be what else?

[01:28:08] Speaker 03:
I mean, I think just also inherent in the Constitution that it is Congress's power to do this.

[01:28:14] Speaker 03:
The courts certainly enforce the separation of powers in this way.

[01:28:18] Speaker 05:
Enforce it by reference to specific provisions of the Constitution.

[01:28:24] Speaker 03:
That's right.

[01:28:25] Speaker 03:
And I think that the provisions that Judge Pillard mentioned are the provisions on which the Supreme Court has rested in making clear that the power to create and to dismantle agencies is the legislature's power.

[01:28:40] Speaker 04:
If the riff that was proposed after the preliminary injunction was in place and after we

[01:28:54] Speaker 04:
sought to clarify and narrow it were the first, were the action.

[01:29:05] Speaker 04:
I mean, I think this is unfair and maybe unproductive, but if the agency fired 90 people, would you have the same lawsuit or would that, I think I know the answer, that that's the harder case.

[01:29:19] Speaker 04:
I mean, is it de facto shut down and it would be contextual?

[01:29:23] Speaker 03:
I agree with your answer to that question.

[01:29:25] Speaker 04:
All right.

[01:29:30] Speaker 04:
Thank you.

[01:29:30] Speaker 04:
Thank you.

[01:29:31] Speaker 04:
Mr. MacArthur has reserved some time for buttle.

[01:29:39] Speaker 06:
Quickly on the Dalton point, they have no direct cause of action under the Constitution for a separation of powers violation.

[01:29:47] Speaker 06:
The sort of simple way that I think about this is, do you need to read the statute?

[01:29:52] Speaker 06:
to figure out whether the alleged conduct is unlawful.

[01:29:56] Speaker 06:
And here you do.

[01:29:56] Speaker 06:
I think Ms.

[01:29:57] Speaker 06:
Bennett said multiple times that the executive cannot abolish an agency established by Congress.

[01:30:04] Speaker 06:
That's not a necessary metaphysical truth.

[01:30:06] Speaker 06:
You can imagine a statute that authorizes the executive to close an agency on making certain findings.

[01:30:13] Speaker 06:
The only way you know that's not the case here is to get out the statute and read it and see that it does not in fact authorize that and instead imposes certain mandatory duties that the agency must perform.

[01:30:23] Speaker 06:
This is a statutory claim that is the crux that the statute says there are certain mandatory duties and the defendants are taking action.

[01:30:31] Speaker 06:
If they shut down the agency, the Bureau will not perform the duties that are required by statute.

[01:30:37] Speaker 06:
That is clearly a statutory claim under Dalton.

[01:30:41] Speaker 06:
I thought Judge Rao, your question to Ms.

[01:30:44] Speaker 06:
Bennett and her answer got to the heart of this case about what is the discrete agency action.

[01:30:50] Speaker 06:
And Ms.

[01:30:51] Speaker 06:
Bennett's answer was a shutdown.

[01:30:54] Speaker 06:
That is precisely what Lou Han was talking about when it said that the APA does not authorize programmatic challenges.

[01:31:02] Speaker 06:
You can't take a collection of individual actions, ratchet up the general level of generality, and all of a sudden now you've got a program

[01:31:11] Speaker 06:
that you can challenge instead of the various discrete agency section.

[01:31:15] Speaker 04:
So on that theory, if I am the newly appointed acting director of CFPB and I understand that my boss wants the agency eliminated and what I do is I

[01:31:35] Speaker 04:
riff 100% of the agency's employees.

[01:31:39] Speaker 04:
And I figure I don't need to get into contracts.

[01:31:41] Speaker 04:
I don't need to get into building leases.

[01:31:43] Speaker 04:
If I fire everybody, nothing's going to happen.

[01:31:49] Speaker 04:
You adhere to your same notion that the plaintiffs have to, that that's an illegitimate, that framing that as closing the agency as opposed to a litany of personnel actions is illegitimate or Lujan.

[01:32:07] Speaker 06:
Correct.

[01:32:07] Speaker 06:
The action there that a plaintiff could challenge if they had a cause of action would be a termination or the riff.

[01:32:13] Speaker 06:
The problem for them here is that Congress has channeled those claims to a different body.

[01:32:18] Speaker 04:
To the MSPB.

[01:32:19] Speaker 06:
To the MSPB, which can entertain challenges to rifts.

[01:32:23] Speaker 04:
It can.

[01:32:23] Speaker 04:
It can't, actually, right?

[01:32:26] Speaker 04:
Now.

[01:32:27] Speaker 04:
I think there was a case about that this morning.

[01:32:30] Speaker 06:
Yes, there may have been a case about that this morning.

[01:32:32] Speaker 04:
I mean, it's never come up because we understand that's a separate legal category.

[01:32:39] Speaker 04:
Is it really irrelevant here that the agency to which you insist the plaintiff's claims are challenged is an agency that is not operative?

[01:32:50] Speaker 06:
Well, I think it's an overstatement to say that the agency is not operative.

[01:32:53] Speaker 06:
The agency lacks a quorum at the board level, but cases can still be heard by the administrative law judges.

[01:33:00] Speaker 06:
But also, I don't think that CSRA preclusion turns on that.

[01:33:03] Speaker 04:
That's why we haven't been talking about it, but I was just interested whether you had any

[01:33:10] Speaker 04:
Whether that matter to you.

[01:33:11] Speaker 06:
I don't think it does.

[01:33:12] Speaker 06:
I think what matters is that Congress set up an exclusive review mechanism where these sorts of claims can be brought, including, for example, on a class action basis.

[01:33:20] Speaker 06:
The MSP has regulations that provide for class claims.

[01:33:24] Speaker 06:
And if there's a meritorious claim there, they can order reinstatement.

[01:33:28] Speaker 06:
They can order back pay.

[01:33:29] Speaker 06:
They can unwind a riff.

[01:33:31] Speaker 06:
So it's not as if we're saying there's no remedy for the discrete actions that actually happened here.

[01:33:38] Speaker 06:
It's just that the remedy lies elsewhere.

[01:33:40] Speaker 01:
Sorry, back just back to Judge Pillard's hypo.

[01:33:44] Speaker 01:
The agency action is a definitively and formally expressed 100% riff and your

[01:33:57] Speaker 01:
defense of that is number one, the challenge has to go to the MSPB.

[01:34:02] Speaker 01:
But is there a number two that that is also too insufficiently discreet for Lujan or would that be discreet?

[01:34:13] Speaker 01:
The riff?

[01:34:14] Speaker 01:
Yeah.

[01:34:14] Speaker 06:
No, I think the riff would be discreet enough for Lujan.

[01:34:18] Speaker 06:
But the problem there is the district court lacks jurisdiction to consider that.

[01:34:23] Speaker 06:
Miss Bennett cited Biden versus Texas.

[01:34:27] Speaker 06:
Biden versus Texas is fundamentally different.

[01:34:28] Speaker 06:
There, there was actually a memo, a rescission memo, that we were getting rid of the MPP program.

[01:34:35] Speaker 06:
The court said that was a rule within the meaning of the APA.

[01:34:39] Speaker 06:
If you look up the definition of rule within the meaning of the APA, the first words are an agency statement.

[01:34:46] Speaker 06:
That's one thing we're lacking here.

[01:34:49] Speaker 06:
We don't have an agency statement of this program, whatever it is.

[01:34:53] Speaker 06:
I'm not saying there's never a circumstance where you could infer from circumstantial evidence that there's a decision.

[01:35:03] Speaker 06:
But I do want to say that I think you need to proceed with extreme caution here in inferring that sort of program where the two options on the table are the ones that I outlined before of

[01:35:15] Speaker 06:
shut down entirely or take this agency down to the bare statutory minimum.

[01:35:20] Speaker 06:
It's not surprising that there's a fog of confusion about what's going on in the early days of implementing a policy where you are radically scaling back to agency.

[01:35:30] Speaker 04:
So I do think- I have to say just, I mean, radically scaling down without a plan.

[01:35:42] Speaker 04:
also seems to me extraordinary.

[01:35:44] Speaker 04:
I don't think that's the way it's been done in the past.

[01:35:47] Speaker 04:
And I recognize just because it hasn't been done in the past doesn't make it unlawful.

[01:35:53] Speaker 04:
But it is unusual.

[01:35:57] Speaker 06:
It is certainly unusual.

[01:35:58] Speaker 06:
And I don't think anyone would say that this was a smooth transition.

[01:36:02] Speaker 06:
But I'm not sure why you say there was a lack of a plan.

[01:36:04] Speaker 06:
I discern a very clear

[01:36:06] Speaker 06:
governing policy here, which is we're going to maximize to the extent possible the elimination of non-statutorily required functions.

[01:36:15] Speaker 06:
That's set out in the memo itself.

[01:36:17] Speaker 04:
Right, by people who have no internal familiarity with the nature of the agency, the work it does, the statutes it implements, that is a generic government-wide proposal.

[01:36:30] Speaker 04:
And to go in, I mean,

[01:36:34] Speaker 04:
I don't need to take you, you're the lawyer for the government.

[01:36:36] Speaker 04:
I don't need to take you to task for this, but it's part of what's at stake in the case is what feels like a rather reckless treatment of an institution and of a lot of work underway and of a lot of people's lives.

[01:36:54] Speaker 04:
So it's just, but I don't need to tell you something that you don't already know

[01:37:03] Speaker 06:
The legal question here is, was the policy that they were implementing one that was lawful?

[01:37:07] Speaker 06:
Shut down the agent.

[01:37:08] Speaker 06:
Absolutely.

[01:37:09] Speaker 06:
Right?

[01:37:09] Speaker 06:
Absolutely.

[01:37:11] Speaker 06:
And I encourage you.

[01:37:15] Speaker 04:
Go ahead.

[01:37:15] Speaker 04:
I'm sorry.

[01:37:16] Speaker 04:
I didn't mean to cut you off.

[01:37:16] Speaker 06:
I was just going to say, I encourage you to look at this record for yourself and try to adjudicate between those two possibilities.

[01:37:22] Speaker 06:
I think you will see multiple points where agency leaders are doing things that are irreconcilable with the notion that they are closing the agency.

[01:37:33] Speaker 04:
Thank you.

[01:37:33] Speaker 04:
Really appreciate the work of both of you, extremely well prepared and really very helpful.

[01:37:39] Speaker 04:
Thank you.