Balkinization: Who's the acting Director of the CFPB? Understanding the legal dispute at the center of the kerfuffle

Who's the acting Director of the CFPB? Understanding the legal dispute at the center of the kerfuffle

Marty Lederman

Richard Cordray resigned as Director of the Consumer Financial Protection Bureau (CFPB) on Friday evening. If Donald Trump did nothing to try to replace Cordray temporarily, pending the President's appointment (and the Senate’s confirmation) of a new Director, then the CFPB's Deputy Director, Leandra English, would serve as the interim, acting Director of the CFPB, pursuant to a provision of the 2010 Dodd-Frank Act, 12 USC § 5491(b)(5)(B), which provides that the Deputy Director “shall . . . serve as acting Director in the absence or unavailability of the Director.”

The President, however, has purported to appoint OMB Director Mick Mulvaney to be the acting CFPB Director, pursuant to the 1998 Vacancies Reform Act (VRA). In an opinion issued yesterday, the Office of Legal Counsel (OLC) concluded that the VRA affords the President such authority, and that Dodd-Frank did not do anything to affect that authority when it comes to the position of acting CFPB Director. Others insist that Dodd-Frank clearly overrides whatever authority the President might have had under the VRA. Therefore, as it now stands, two officers may arrive at the CPGB office tomorrow morning, each claiming that they, alone, have a valid legal claim to the throne.

Notably, the only legal question that divides the parties, at this point, is whether the VRA appointment procedures supersede the Dodd-Frank section 5491 designation of the Deputy Director as acting Director in cases where the President purports to act pursuant to the VRA. In this post, I’ll try to unpack the arguments on that question.

The Vacancies Reform Act provides that upon the resignation of a “PAS” officer (that is, an officer, such as the CFPB Director, who is appointed by the President by and with the advice and consent of the Senate), “the first assistant to the office of such officer shall perform the functions and duties of the office temporarily in an acting capacity subject to the time limitations of section 3346.” 5 USC § 3345(a)(1). Well, that would be Leandra English, too—so far, so good, and there’d be no conflict about who is the acting Director today. (Because Ms. English would serve as acting Director pursuant to 12 USC § 5491(b), however, the “time limitations” of the VRA would not apply to her—she would serve until the Senate confirms a new Director.)

The next paragraph of the VRA, however (5 USC § 3345(a)(2)), goes on to provide that “notwithstanding paragraph (1), the President (and only the President) may direct a person who serves in an office for which appointment is required to be made by the President, by and with the advice and consent of the Senate, to perform the functions and duties of the vacant office temporarily in an acting capacity subject to the time limitations of section 3346.” Mick Mulvaney is such a person—the Senate confirmed him to be OMB Director. And the President has now purported to appoint Mulvaney to be Acting Director of the CFPB, pursuant to section 3345(a)(2) of the VRA.

The question of whether the Mulvaney appointment is legal depends upon whether section 3345(a) of the VRA applies to an office in a case where, as here, Congress has elsewhere—and in a statute postdating the VRA—specifically designated who “shall” be the acting officer. And to answer that question, we must turn, at least in the first instance, to section 3347 of the VRA. It provides in pertinent part as follows:

§ 3347 Exclusivity

(a) Sections 3345 and 3346 are the exclusive means for temporarily authorizing an acting official to perform the functions and duties of any office of an Executive agency (including the Executive Office of the President, and other than the General Accounting Office,) for which appointment is required to be made by the President, by and with the advice and consent of the Senate, unless

(1) a statutory provision expressly

(A) authorizes the President, a court, or the head of an Executive department to designate an officer or employee to perform the functions and duties of a specified office temporarily in an acting capacity; or

(B) designates an officer or employee to perform the functions and duties of a specified office temporarily in an acting capacity; or

(2) the President makes an appointment to fill a vacancy in such office during the recess of the Senate pursuant to clause 3 of section 2 of article II of the United States Constitution.

Note that this section, 3347, is not entitled “Application,” and it does not speak in terms of when the VRA “applies.” (As I discuss below, the original Senate bill in 1998 actually was entitled “Application,” and spoke of when the VRA appointment provisions “are applicable.” That language was altered during the legislative process in 1998.) Instead, it speaks in terms of when the President’s appointment authorities under the VRA are exclusive. And that’s the key to OLC’s analysis.

So, for example, OLC has previously opined that where another statute provides a different mechanism by which an acting officer may be appointed, the two authorities are complementary, i.e., the VRA provisions are no longer exclusive, but they remain available to the President—the two provisions (the VRA and the relevant agency statute) are alternative means of filling the office temporarily. This describes the cases that fall under paragraph 3347(a)(1)(A), where another “statutory provision [apart from of the VRA] expressly . . . authorizes the President, a court, or the head of an Executive department to designate an officer or employee to perform the functions and duties of a specified office temporarily in an acting capacity.” Thus, for example, OLC concluded in 2007 that President Bush could use the VRA to appoint Peter Keisler, then head of the Civil Division, to be acting Attorney General after Alberto Gonzales resigned, notwithstanding a statute providing that the office of Attorney General is vacant, the Deputy Attorney General “may exercise all the duties of that office.”

That longstanding OLC reading of section 3347 as applied to paragraph 3347(a)(1)(A) cases is, I think, generally sound, as the U.S. Court of Appeals for the Ninth Circuit confirmed in a 2016 case (see page 11): If Congress has provided in one statute that the President “may” fill an office in one way, and has provided in another statute that he, or someone else, “may” fill that same office in another way, Congress has provided two different options, either of which is permissible, and neither of which is exclusive. (Of course, the later-in-time Congress can provide that its procedure is exclusive, notwithstanding the language of section 3347 of the VRA. That language, however, establishes a background rule of construction against which the later Congress acts, and there’s nothing in Dodd-Frank that would call the section 3347 presumption into question if this were a case in which the latter statute provided a permissive means of filling the vacancy.)

The current CFPB dispute, however, raises the question of how section 3347(a) applies in the next set of cases described in VRA paragraph 3347(a)(1)(B), where another statutory provision “expressly . . . designates an officer or employee to perform the functions and duties of a specified office temporarily in an acting capacity.” That describes section 5491(b)(5)(B) of Dodd-Frank, in which the 2010 Congress itself designated the Deputy Director to be the Acting Director, using mandatory, not permissive terms: That provision of Dodd-Frank does not provide that the President or some other officer “may” appoint her to serve as Acting Director, nor provide that she “may” so act, or even that she “shall” do so pending a presidential appointment; instead, it provides, without more, that the Deputy “shall serve as acting Director.”

Importantly, OLC agrees that, in such a case, the VRA procedures are certainly not the “exclusive” means of choosing an Acting Director: The statutory designation in Dodd-Frank can be effective—indeed, it would be effective, and thus Leandra English would be the undisputed acting CFPB Director—if the President had not purported to appoint Mulvaney pursuant to the VRA. (Some have argued that the Dodd-Frank language in section 5491(b)(5)(B) does not cover a situation in which the Director has resigned, but OLC reasonably concluded (see page 3 of its opinion) that in such a case the Director is “unavailable,” and thus that the provision is triggered.)

OLC argues, however, that the VRA continues to be available to the President as an alternative means of filling the vacancy—a means that the President employed here. Although, in light of Dodd-Frank, the VRA might not be the “exclusive” means of naming an acting CFPB Director, OLC concludes, it remains an alternative method, and therefore Mulvaney is now the acting Director.

The fairly straightforward argument on the other side—and it’s a fairly compelling one—is that the later-in-time Congress spoke unequivocally in 2010, providing that the Deputy Director “shall serve” as acting Director. Dodd-Frank does not say that she “may” serve. It doesn’t even say, as other statutes do, that she “shall serve” unless and until the President appoints someone else to do so.[1] (And it certainly does not say—as the House-passed version of version of the Consumer Financial Protection Act did say—that the Vacancies Reform Act governs the appointment of an acting Director in the case of a vacancy.) In such cases of an unequivocal, mandatory statutory designation of the acting officer, the argument goes, the President may not exercise his appointment authority under the VRA, because Congress itself has already settled the question of who serves. [UPDATE: I agree with Dan Hemel that the use of “shall” does not necessarily indicate a congressional intent that the Deputy Director would serve as acting Director even in a case where the President preferred another, Senate-confirmed, officer to do so. I do, however, think that it establishes a presumption of such intent, and I’m not persuaded by Dan’s first reason for rebutting that presumption. His second reason, however—he’s “skeptical that Congress would have wanted the CFPB to be headed indefinitely by an official who was not presidentially appointed or Senate confirmed, without any statutory avenue for the President to pick someone else”—warrants more attention, however. And more broadly, I think that if a court or anyone else is going to answer this question, it would be very beneficial to have a much greater understanding than I do about the nature of Congress’s intent in 2010, when it enacted the “shall serve” provision.] [UPDATE: As I discuss below, the Dodd-Frank provision would also be largely superfluous if its only function were to provide an alternative, rather than an exclusive, means of filling the vacancy, because that alternative was already present--indeed, it's the default rule--in section 3345(a)(1) of the Vacancies Reform Act.]

OLC addresses this argument—what is the effect on the VRA procedures when a subsequent Congress specifically designates the officer who “shall serve” as acting Director?—in a single paragraph of its opinion yesterday, running over from page 5 to page 6. It offers two arguments for why the VRA remains an alternative method of filling a vacancy, even where a subsequently enacted statute provides that a particular officer “shall serve” in the position on an acting basis. [UPDATE: By contrast, the opinion letter of the CFPB General Counsel, issued today, does not even address the crucial "shall serve" question.]

OLC’s first argument does not make sense, if I understand it correctly. OLC notes that the VRA “default” rule, in subsection 3345(a)(1), quoted above, “similarly uses mandatory terms”; it provides that in the case of a vacancy “the first assistant to the office of such officer shall perform the functions and duties of the office temporarily in an acting capacity subject to the time limitations of section 3346.” And, OLC notes—correctly—the President can surely supersede that rule by making an appointment pursuant to the next paragraph, section 3345(a)(2). “Accordingly,” OLC concludes, “we cannot view either statute as more mandatory than the other. Rather they should be construed in parallel.” In other words, because the President can override the “shall perform” designation of section 3345(a)(1) of the VRA, so, too, can he override the “shall serve” designation of the Deputy Director in the later-enacted Dodd-Frank statute.

I must confess that I don’t get this argument. After all, the reason that subsection 3345(a)(2) of the VRA supersedes the default rule of subsection 3345(a)(1) in cases where the President acts is that the latter paragraph expressly provides that “notwithstanding paragraph (1), the President (and only the President) may direct a person who serves in an office for which appointment is required to be made by the President, by and with the advice and consent of the Senate, to perform the functions and duties of the vacant office temporarily in an acting capacity subject to the time limitations of section 3346.” That it to say, it is an express carve-out from the mandatory language of paragraph (1) of the VRA itself. Section 3345(a)(2) does not say, however, that the President can use his VRA appointment authority “notwithstanding paragraph (1) or the mandatory designation of an acting officer in any other statute.” Therefore I do not see the relevance of the fact that subsection 3345(a)(2) of the VRA tempers the application of subsection 3345(a)(1) of that same statute—a fact that simply does not speak to the impact of Congress’s designation in Dodd-Frank.

Therefore, OLC’s conclusion stands or falls on its second argument, which depends entirely (and ironically, some might say, in light of the general aversion to legislative history among many of those who support the President’s authority here) on a reading of the 1998 Senate Report that preceded enactment of the VRA. As OLC notes, pages 16-17 of that Report listed 40 then-existing statutes that prescribed some method of filling vacancies in particular offices, and the Report noted that such authorities would be “retain[ed]” by the Senate version of the VRA. Those 40 statutes included an array of formulations, but were of three basic kinds: (i) some authorized the President, a court, or the head of an Executive department, to designate an officer or employee to perform the functions and duties of a specified office temporarily in an acting capacity; (ii) some (in the words of the Report) “provide[d] for an automatic designation, unless the President designates another official” (see, e.g., those I list in footnote 1 below); and (iii) at least five of them, listed in footnote 3 of yesterday’s OLC opinion, were similar to the later CFPB statute, in that they simply designated a particular officer or employee to perform the functions and duties of a specified office temporarily in the case of a vacancy.

OLC states that in all three of these categories of cases—including all 40 statutes cited in the Report—“Congress plainly intended in those cases that the President could invoke the Vacancies Reform Act as ‘an alternative procedure’ and depart from the statutory order of succession” (quoting page 17 of the Senate Report). The only authority OLC offers for this crucial gloss on section 3347 of the VRA, however, is the source of its “an alternative procedure” quotation—namely, page 17 of the Senate Report itself. And there are at least four reasons why that quotation from page 17 does not firmly establish what OLC suggests it does.

First, it is, after all, merely a snippet from a committee report—hardly the sort of thing that might authoritatively explain, or inform—or even provide a background, defeasible interpretive rule for—what Congress meant in 2010 when it provided, in no uncertain terms, that the Deputy Director “shall serve” as acting Director.

Second, and as OLC expressly acknowledges (see p.5 of the opinion), the Senate version of section 347 of the VRA, which was the subject of the discussion in the Senate Report, was not ultimately enacted—the language on which Congress ultimately settled is quite different.[2]

Third, OLC’s traditional reliance on the Senate Report to support the general proposition that the VRA remains “available” as an “alternative” means of filling vacancies, even where office-specific statute prescribe other methods, depends upon the sentence in question on page 17 of the Report (“[E]ven with respect to the specific positions in which temporary officers may serve under the specific statutes this bill retains, the Vacancies Act would continue to provide an alternative procedure for temporarily occupying the office.”)—and yet that statement was obviously incorrect as a reading of the language of 3347 that was in the Senate bill itself. That version of 3347 provided (see note 2 below) that the VRA provisions would be “applicable . . . unless” an existing statute provided a different mode of filling the vacancy of a particular office: In other words, if the Senate version had been enacted, the presidential appointment authority under the VRA would not have been “applicable” in such cases. Therefore, the Report sentence in question is of dubious authority, even on its own terms, and as applied to the (unenacted) bill it was describing. (The only reason the VRA continues to “apply” in any such cases, then, is not because of the (flawed) Report language, but because Congress ultimately enacted a different version of section 3347, one that replaced the Senate’s “applicable unless” language with a statement about when the VRA procedures are not to be “exclusive.”)

Fourth, and perhaps most importantly, OLC has selectively quoted the relevant sentence on page 17 of the Senate Report. Recall OLC’s conclusion: that “Congress plainly intended in those cases”—all of the different cases enumerated in the 40 statutes listed—“that the President could invoke the Vacancies Reform Act as ‘an alternative procedure’ and depart from the statutory order of succession.” The sentence on page 17, however, refers specifically to the VRA remaining an “alternative procedure” only “with respect to the specific positions in which temporary officers may serve under the specific statutes this bill retains.” That sentence does not make reference to the handful of statutes (OLC cites five of them) in which Congress specifically designated an officer who “shall” (not “may”) serve in an acting capacity; and it certainly did not establish a background presumption, against which future Congresses might understand they would be acting, that the Vacancies Act would continue to provide an alternative procedure even where the later-in-time legislature prescribed such a specific designated acting officer, without any mention of the prospect of an alternative presidential appointment.

[UPDATE: I had meant to add another argument, flagged to me by my colleague Adam Levitin: If the only function of the Dodd-Frank provision for filling the vacancy in the office of Director were, as OLC concludes, to provide an alternative, rather than an exclusive, means of filling that vacancy, there'd have been no compelling reason for Congress to have enacted it, because that alternative--for the Deputy to take over the office temporarily-- was already present--indeed, it's the default rule--in section 3345(a)(1) of the Vacancies Reform Act itself. I think this is an interesting point, but doesn't resolve the question, because even though the VRA already provides for the prospect of the Deputy acting as Director, the Dodd-Frank provision would still have at least two further functions: (i) It would make her term indefinite, i.e., until a successor is confirmed, whereas the VRA designation is time-limited; and (ii) it also applies to cases where the Director remains in office but is otherwise "absent or unavailable," e.g., in the case of recusal or debilitating illness.]

For these reasons, I think OLC’s conclusion about the continued applicability of the VRA to later-enacted statutes, such as Dodd-Frank, specifying a particular officer who “shall serve” in an acting capacity, is at the very least contestable. A reviewing court might agree with it—but it might not. [UPDATE: I highly recommend Nina Mendelson's post, which offers further reasons--including, toward the end, some important functional considerations--that also point against the President's authority to appoint Mulvaney.]

As for how this whole contretemps might end up in court any day now, see Sam Bray’s post on the possibly forthcoming quo warranto proceeding.

[1] See, e.g., 40 U.S.C. § 751(c)) (providing that the Deputy Administrator of the General Services Administration “shall be Acting Administrator of General Services . . ., unless the President shall designate another officer of the Government, in the event of a vacancy in the office of Administrator”); 38 U.S.C. § 7254(d)) (providing that the “[i]n the event of a vacancy in the position of chief judge of the Court [of Veterans Appeals], the associate judge senior in service on the Court shall serve as acting chief judge unless the President designates one of the other associate judges to serve as acting chief judge, in which case the judge so designated shall serve as acting chief judge”).

[2] The Senate version read:

§ 3347. Application. (a) Sections 3345 and 3346 [the provisions giving the President the authority to appoint persons to vacant offices temporarily] are applicable to any office of an Executive agency (including the Executive Office of the President, and other than the General Accounting Office) for which appointment is required to be made by the President, by and with the advice and consent of the Senate, unless—

(1) another statutory provision expressly provides that the such provision supersedes sections 3345 and 3346;

(2) a statutory provision in effect on the date of enactment of the Federal Vacancies Reform Act of 1998 expressly— (A) authorizes the President, a court, or the head of an Executive department, to designate an officer or employee to perform the functions and duties of a specified office temporarily in an acting capacity; or (B) designates an officer or employee to perform the functions and duties of a specified office temporarily in an acting capacity; or (3) the President makes an appointment to fill a vacancy in such office during the recess of the Senate pursuant to clause 3 of section 2 of article II of the United States Constitution.

Posted 8:35 AM by Marty Lederman [link]