The Attorneys General (“AG”) of 16 states and the District of Columbia moved today to intervene in the CFPB’s appeal of the D.C. Circuit’s PHH ruling finding the Bureau unconstitutional. The matter is currently under consideration for en banc review and the AGs indicated that they do not intend to file briefs until and unless the D.C. Circuit seeks further briefing in the course of en banc proceedings.

In moving to intervene, the AGs argue that the new administration may choose not to defend the Bureau and may even withdraw the en banc petition or otherwise render it moot. According to the AGs, they have an interest in protecting their citizens and such interest would be impacted by any such administration decision. More specifically, the AGs argue that if Director Cordray is deemed an at-will employee and removed from office, a new, politically-influenced Director (rather than an independent Director) may be appointed who is able to intervene in state AG consumer protection lawsuits and effectively undermine them, harming state interests. They further argue that failing to have an independent Director will negatively impact coordination between the Bureau and state AG offices on consumer protection matters. As the AGs set out in their brief: “Because this Court’s ruling threatens to undermine the ability of the State Attorneys General to bring effective civil enforcement and coordinated regulatory actions free from political influence and interference, the State Attorneys General have a vital interest in intervening in this case.”

We note that the CFPB has independent litigating authority and is not dependent on the Department of Justice to continue litigating this case in the D.C. Circuit. Accordingly, a decision by the new administration that it did not want to pursue the matter would not result in its dismissal by the D.C. Circuit, but could result in dismissal if the case reaches the U.S. Supreme Court. Also, if Director Cordray is removed and a new Director is appointed, that new Director may choose to end the Bureau’s appeal or take other steps to make the underlying matters moot. In those cases, a decision on the AGs’ motion to intervene may prove decisive in whether the issues raised in PHH are reviewed on the merits. As such, this is a matter worth monitoring.

The participating states are Connecticut, Delaware, Hawaii, Illinois, Iowa, Maine, Maryland, Massachusetts, Mississippi, New Mexico, New York, North Carolina, Oregon, Rhode Island, Vermont and Washington, and the District of Columbia.