A ruling by the Washington, DC federal appeals court in Noel Canning v. NLRB pretty much ends the ability of presidents to make recess appointments, a measure that has been used since 1867. The suit successfully challenged a NLRB rulemaking on the grounds that three of the five directors were recess appointments which meant the NLRB lacked a quorum to give it authority to act. Georgetown law professor Adam Levitin believes this decision will stick:
The DC Circuit’s held on two separate grounds that the NLRB members were not validly appointed. All of the NLRB members in question were appointed as so-called “recess” appointments by the President, meaning that they were appointed without the advice and consent of the Senate. First, the DC Circuit held that these appointments were invalid because they were appointed under the Recess Appointments power at a time when the Senate was not in recess. And second, the DC Circuit held that the appointments were invalid because the Recess Appointments power only applies to vacancies that arise during a recess, not vacancies that are continuing during a recess, and the vacancies in question arose before the (non-)recess. The ruling is based on the DC Circuit’s close textual reading of the Recess Appointments clause of the Constitution (in particular, the use of the term “the Recess” instead of “a Recess”), but is also butressed by policy arguments.
While I don’t like the result of the decision, it doesn’t read as a strained or flagrantly political decision (unlike Business Roundtable v. SEC, say), even if the panel was all GOP appointees. I assume the decision will get appealed and would think there’s a reasonable chance that certiorari will be granted by the Supreme Court, but there’s a real chance that the decision will stand either because certiorari won’t be granted or because the Supreme Court will affirm.
This decision throws a huge monkey wrench in the Consumer Finance Protection Bureau. The agency was created by combining various existing consumer finance regulatory authority in one place. Actions related to those powers should be unaffected by this decision. However, the CFPB acquired additional powers under Dodd Frank that became effective only when the agency’s director was in place. Richard Cordray, the agency’s first and current director, was a recess appointment. Per the logic of the ruling, any acts that depended on the additional powers that the agency obtained when a director was installed are nullified. Levitin again:
Even if Cordray’s renomination gets confirmed by the Senate, all of the CFPB’s rulemakings and Directorial actions since the recess appointment would seem to be invalid. I don’t know what affect that has on litigation settlements or appointments and administrative matters, but looking through Title X of the Dodd-Frank Act, there are an awful lot of things that the Director, rather than the Bureau are supposed to do. I suppose that a confirmed (or properly recess-appointed) Director would be able to readopt rulemakings and administrative decisions fairly easily, but I suspect it couldn’t be on a nunc pro tunc basis. There’s more litigation to happen, but this could be a real mess.
The Deepak Gupta at the Consumer Law and Policy Blog is more optimistic:
Just because the recess appointment is unconstitutional doesn’t necessarily mean that everything the Bureau has done under Rich Cordray will be wiped out. A longstanding legal doctrine known as the “de facto officer doctrine” is designed to avoid the sort of needless chaos that would otherwise result from a ruling like today’s decision.
The de facto officer doctrine confers validity upon acts performed by a person acting under the color of official title even though is later discovered that the legality of that person’s appointment or election to office is deficient. Although its roots are old and somewhat murky, the Supreme Court recognized the doctrine as recently as 1995. See Ryder v. United States, 515 U.S. 177 (1995).
As the Court explained in Ryder, the doctrine “springs from the fear of the chaos that would result from multiple and repetitious suits challenging every action taken by every official whose claim to office could be open to question, and seeks to protect the public by insuring the orderly functioning of the government despite technical defects in title to office.”
I’m sure we’re going to see more detailed parsing of what this probably means in coming days, but the actions that could be nullified include:
Qualified mortgage rules
Rules to prevent misrepresentation of credit card interest rates
Compelling debt-relief companies to refund illegal fees