Breaking News: Obama 2012 Recess Appointments Unconstitutional (Jan. 25, 2013)
Jan. 25, 2013
Just a day after President Obama nominated CFPB Director Richard Cordray to continue in his role as the bureau’s director, a three-judge panel of the U.S. Court of Appeals for the D.C. Circuit ruled that the President violated the Constitution when he bypassed the Senate to fill vacancies on the National Labor Relations Board, according to a just-released article from the AP. The judges decided unanimously that the recess appointments were unconstitutional.
Although the ruling pertained specifically to appointments to fill vacancies on a labor relations panel, Terry Maher, partner at Baird Holm LLP, tells Paybefore it also casts doubt on the recess appointment of Director Cordray, which is being challenged in a separate case. Cordray was appointed the same day, Jan. 4, 2012, as the NLRB appointments.
The point of contention was whether the Senate was in recess, allowing the President to make recess appointments. The D.C. Circuit court decided it wasn’t.
Acknowledging the likelihood of a Supreme Court review, Maher says the judges’ decision calls into question the authority of the CFPB to carry out many of its duties, including issuance of new regulations and undertaking additional enforcement actions. “It also strengthens the hand of members of Congress who want to change the structure and funding of the CFPB,” he says.
A post on the Ballard Spahr Website on Jan. 10, 2013, addressed the possibility of a court invalidating Director Cordray’s recess appointment and posed these questions, among others:
- What about future CFPB actions? Would the CFPB be able to issue any new regulations?
- Would the CFPB still be able to supervise large banks?
- Would President Obama be able to get the “new” Senate to confirm Mr. Cordray or some other nominee?
- Would the President agree to support the demand of many Republican senators to amend Title X of Dodd-Frank to substitute a five-member commission for a single director and to subject the CFPB to the Congressional appropriations process?
Clearly, time is needed to sort through the issues and understand their full implications. In the meantime, a lot of balls have been thrown into the air.