CFPB Head Appointment In Jeopardy

Source: Weiner, Brodsky, Kider, PC

On Friday, January 25, 2013, the United States Court of Appeals for the D.C. Circuit emphatically struck down President Obama’s January 2012 “recess appointments” of three members to the National Labor Relations Board. In doing so, the Court emphasized the narrow construction of the Constitution’s Recess Appointments Clause in a sweeping manner that is sure to bolster current challenges to Richard Cordray’s “recess appointment” as Director of the Consumer Financial Protection Bureau on the same day.

Generally, the Constitution requires Presidential Appointments to be confirmed with the “advice and consent” of the Senate. The Recess Appointments Clause provides the President with the power to appoint executive officers during times of Congressional recess, without Senate confirmation, when the Senate cannot provide its advice and consent. The DC Circuit struck down the President’s NLRB “recess appointments” on two separate grounds: (1) “Recess” as used in the Constitution means only the specific time period between official sessions of Congress; and (2) the vacancy being filled by a
“recess appointment” must arise during a recess of Congress. The DC Circuit found that neither of these conditions was present in the President’s “recess appointments” to the NLRB in January 2012.

In its ruling regarding the definition of “the Recess,” the DC Circuit construed the term narrowly because the Constitution uses different terms in different portions of its enumerated powers, specifically using the terms “adjournment” and “Recess” in different aspects for its enumeration of Congressional powers, and found no basis to adopt the NLRB’s argument that recess can mean indeterminate periods of inactivity by Congress and should be within Presidential discretion to determine. The DC Circuit forcefully and colorfully rejected these arguments: “An interpretation of ‘the Recess’ that permits the President to decide when the Senate is in recess would demolish the checks and balances inherent in the advice-and-consent requirement, giving the President free rein to appoint his desired nominees at any time he pleases, whether that time be a weekend, lunch, or even when the Senate is in session and he is merely displeased with its inaction.”

The DC Circuit also rejected the government’s position that any vacancy can be filled during recess, instead holding that the explicit language of the Constitution holds that recess appointments may only be used for vacancies that arise during the recess. The DC Circuit further held that any such vacancy must be filled during the same recess, otherwise the President cannot use the recess appointment power.

This decision will likely heavily influence the current litigation pending against the recess appointment of Richard Cordray as Director of the CFPB, as Director Cordray was appointed by President Obama on the same day by a purported “recess appointment.” This decision places not only Director Cordray’s appointment in doubt, but places into question the validity of a number of actions taken by him or the CFPB since the Dodd- Frank Act required a Director to be in place prior to the CFPB obtaining certain of its supervisory authorities.

We will continue to monitor this situation as new developments arise.

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