Earlier today, the Court of Appeals for the DC Circuit ruled in Noel Canning v NLRB that three January 2012 “recess” appointments made by President Obama to the National Labor Relations Board (NLRB) were unconstitutional. importantly, the Director of the Consumer Finance Protection Board (CFPB), Director Richard Cordray was appointed in the same way on the same day as the NLRB members. As a result, this has put the past and future actions of Director Cordroy and the CFPB in serious question. Yesterday, President Obama renominated Richard Cordroy to be Director of the CFPB.
The largest potential beneficiaries of this would seem to be non-bank financial institutions – including many student lenders and schools that lend to students. This is because the Dodd-Frank Act granted to the CFPB regulatory authority over non-bank financial institution only under the leadership of a Senate-confirmed or legally-recess-appointed director. Today’s ruling calls into question a number of oversight and rule making activities taken by the agency under Director Cordroy.
As a matter of constitutional jurisprudence, the decision, dramatically limits executive power. First, it limits recess appointments to when the Senate is in “intersession recess”:
[T]he Constitution’s appointments structure — the general method of advice and consent modified only by a limited recess appointments power when the Senate simply cannot provide advice and consent — makes clear that the Framers used “the Recess” to refer only to the recess between sessions. . . . In short, we hold that “the Recess” is limited to intersession recesses. The Board conceded at oral argument that the appointments at issue were not made during the intersession recess: the President made his three appointments to the Board on January 4, 2012, after Congress began a new session on January 3 and while that new session continued. 158 Cong. Rec. S1 (daily ed. Jan. 3, 2012).
In addition, the recess appointments clause is only triggered when an actual vacancy arises during the intersession recess of the Senate. That is, the vacancy cannot merely exist during the recess. This would appear to reduce the usefulness of recess appointments dramatically.