Jul 22, 2016 @ 09:26 AM

Federal Courts Must Enforce Limits On President's Appointment Powers



Treasury Secretary Jacob J. Lew looks on as Director of the Consumer Financial Protection Bureau, Richard Cordray delivers remarks during a public meeting. (Photo by Pete Marovich/Getty Images)

No one any longer contests that President Barack Obama acted in excess of his constitutional powers when, on January 4, 2012—a day on which the Senate was not in recess—he purported to grant a recess appointment to Richard Cordray to head the Consumer Financial Protection Bureau (CFPB). Yet, in a troubling decision issued last week, the U.S. District Court for the District of Columbia indicated that it was of no moment that for a period of 18 months Cordray, although no more than a private citizen, issued dozens of significant decisions in the name of CFPB. Judge Ellen Huvelle ruled in State National Bank of Big Springs v. Lew that Cordray, after finally receiving Senate confirmation, could simply wave a magic wand and retroactively approve all of his unauthorized acts. That decision eviscerates the Constitution’s explicit limitations on the President’s appointment powers and encourages future Presidents to disregard those limitations.

The Appointments Clause Violation

President Obama attempted to make several recess appointments on January 4, 2012, including Cordray’s as well as several appointments to fill vacant slots on the National Labor Relations Board (NLRB). The Supreme Court disapproved President Obama’s efforts in NLRB v. Noel Canning, ruling unanimously that the recess appointments were unauthorized because the Senate remained in session on that date.

So what to do about official actions taken by the improperly appointed officials? NLRB and CFPB adopted diametrically opposed approaches. NLRB carefully reconsidered each of its actions taken while the recess-appointed members were purporting to serve on its five-member board, and ultimately issued new decisions.

In sharp contrast, CFPB’s Cordray simply rubber-stamped every action he took during the 18 months (from January 2012 to July 2013) that he improperly exercised authority. His four-sentence Federal Register notice (published on August 30, 2013) purported to ratify all actions he took during the 18-month period, without citing specific actions or suggesting that he had taken a new look at any of them. Indeed, he continued to insist that “the actions I took during the [18-month] period … were legally authorized and entirely proper,” despite the D.C. Circuit’s January 2013 Noel Canning decision that had held otherwise. Among the many actions that Cordray claimed to ratify were numerous formal regulations issued by CFPB to carry out its delegated responsibilities, as well as enforcement actions that had resulted in federal court judgments being entered against private citizens.

The State Bank Lawsuit

State National Bank of Big Spring is a Texas bank that objects to five formal CFPB regulations that the Bureau—during the unauthorized recess-appointment period—proposed and/or adopted for the purpose of carrying out the regulatory functions assigned to it by Congress. Its lawsuit challenges Cordray’s purported retroactive ratification of the regulations, asserting that no ratification of the admittedly unauthorized-when-undertaken acts can be effected until after a properly constituted Bureau complies with the Administrative Procedure Act’s notice-and-comment requirements. In a 2015 decision, the D.C. Circuit ruled that State National had standing to challenge the constitutionality of Cordray’s recess-appointment actions and directed the district court to address whether Cordray had properly ratified the regulations in question.

In her decision last week, Judge Huvelle rejected State National’s challenge. She held that a rubber-stamp ratification sufficed to breathe life into federal regulations that—because they were approved by improperly appointed officials—were invalid when initially issued. She concluded that there was no point in requiring Cordray to undertake a more detailed review of the regulations because, given that he was the individual who initially approved the regulations, there was virtually no possibility that a more detailed review would result in a different set of regulations.

http://www.forbes.com/sites/theapoth.../#43146d32424d