UPDATE: Who’s the Boss at the CFPB?
Legal Sidebari
UPDATE: Who’s the Boss at the CFPB?
Updated January 11, 2018
Update: On January 10, 2018, the U.S. District Court for the District of Columbia denied Leandra
English’s request for a preliminary injunction, ruling that the Federal Vacancies Reform Act (Vacancies
Act) authorized the President to appoint Mick Mulvaney to serve as the Acting Director of the CFPB.
Since the Sidebar below was originally published, English filed an amended complaint and moved for a
preliminary injunction on substantially similar grounds to those described below. In rejecting her motion,
the district court held that because the provision of the Dodd-Frank Act that authorizes the Deputy
Director to serve as the Acting Director when the Director is absent or unavailable did not expressly
displace the Vacancies Act, the Vacancies Act remained available and authorized the President to fill the
position. English had also argued that even if the Vacancies Act generally would allow the President to
appoint an Acting Director, because Mulvaney is also the head of the Office of Management and Budget,
an agency housed directly under the White House, he may not head an independent agency like the
CFPB. But the judge rejected this argument, noting that no such restriction could be found in the text of
the Dodd-Frank Act. The district court ultimately denied the request for a preliminary injunction because
English had failed to show either a likelihood of success on the merits or that she would suffer
irreparable injury absent relief. It is possible that English might appeal this order, and the U.S. Court of
Appeals for the District of Columbia Circuit could weigh in on this issue.
The original post from November 28, 2017, is below.
As consumers flocked to shopping outlets nationwide on Black Friday, a leadership shakeup ensued at the
Consumer Financial Protection Bureau (CFPB). The CFPB’s Director, Richard Cordray, announced that
he had appointed Leandra English, the agency’s chief of staff, to the position of Deputy Director. Cordray
then resigned and stated that English would become the Acting Director of the agency, meaning that she
would serve until the Senate confirms a permanent replacement. However, later that day, President Trump
announced that he was designating Mick Mulvaney, the Director of the Office of Management and
Budget, to serve as Acting Director of the CFPB. On Sunday, November 26, English brought suit in
federal court seeking a declaration that she is the Acting Director of the CFPB, along with a temporary
restraining order barring Mulvaney from acting in the position and President Trump from appointing any
individual to the position. As of the date of this Sidebar, both English and Mulvaney have reportedly
claimed to be Acting Director in communications to CFPB staff. Ruling from the bench on November 28,
the federal judge presiding over English’s suit denied English’s motion for a temporary restraining order
that would have prohibited Mulvaney from holding the position. However, this order does not resolve the
underlying merits of the dispute, and future legal proceedings may be possible.
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Both then-Director Cordray and President Trump have asserted statutory authority to name an Acting
Director. English, as the Deputy Director, argues that she is now the lawful Acting Director because the
statute establishing the CFPB provides that the Deputy Director “shall . . . serve as acting Director in the
absence or unavailability of the Director.” By contrast, the White House claims that the Federal Vacancies
Reform Act (Vacancies Act) authorizes the President to fill the position. Legal observers have disagreed
over whether English or Mulvaney has the better claim. Both the Department of Justice’s Office of Legal
Counsel (OLC) and the CFPB’s own General Counsel (GC) have issued opinions that conclude President
Trump enjoys authority under the Vacancies Act to appoint Mulvaney as Acting Director of the CFPB.
The Vacancies Act Usually Governs Vacancies
The Vacancies Act generally allows the President to direct an individual who is currently serving in a
different advice and consent position to temporarily fill a vacant position that requires Senate
confirmation. As a general rule, the Act provides the exclusive authority for government employees to
temporarily “perform the functions and duties of any office of an Executive agency . . . for which
appointment is required to be made by the President, by and with the advice and consent of the Senate
. . . .” Thus, only an individual who is serving in compliance with the Vacancies Act is normally
authorized to temporarily perform duties that are expressly assigned to a vacant advice and consent
position. Therefore, assuming that the Vacancies Act applies, it would seem to allow the President to
direct Mulvaney, as a person already serving in a different advice and consent position, to serve as Acting
Director.
However, the Vacancies Act’s exclusivity provision contains a key exception that is a major part of the
dispute over who may serve as the Acting CFPB Director. The Vacancies Act provides that it is the
exclusive means of temporarily filling advice and consent positions unless another statutory provision
“expressly . . . designates an officer or employee to perform the functions and duties of a specified office
temporarily in an acting capacity.” The statute creating the CFPB, the Dodd-Frank Act, states that the
Deputy Director “shall . . . serve as acting Director in the absence or unavailability of the Director.”
Consequently, two major legal questions at issue are whether the Dodd-Frank Act’s provision providing
for the Deputy Director to serve as Acting Director applies to this vacancy, and whether it displaces the
Vacancies Act entirely.
Does the Dodd-Frank Act Apply To the Situation?
One threshold matter is whether the Dodd-Frank Act even authorizes the Deputy Director to serve in the
case of a vacancy. The Vacancies Act applies when an officer has died, resigned, or “is otherwise unable
to perform the functions and duties of the office.” By contrast, the Dodd-Frank Act provides that the
Deputy Director shall serve when the Director is absent or unavailable. Because these statutes use distinct
language when defining the need for an Acting Director, one might argue that they refer to two distinct
circumstances: the Deputy Director serves as Acting Director under the terms of the Dodd-Frank Act
when the Director is absent or temporarily unavailable, while the Vacancies Act controls when the
Director is permanently gone and the office is truly vacant. (The White House and Mulvaney have
suggested they may raise this argument in the ongoing litigation, but at this point have not relied on this
position.)
Under this reading of the two statutes, Mulvaney would be lawfully serving as acting Director, given that
the Vacancies Act governs the vacancy that occurred when Cordray resigned. However, English argues
and the OLC concedes in its opinion that Cordray’s resignation also made him unavailable, likely
triggering the provisions of the Dodd-Frank Act. Further, as one legal scholar has noted, many statutes
have been construed as authorizing deputies to step in during permanent vacancies without specifically
using the term “vacancy.” Others, however, have noted that different provisions in the Dodd-Frank Act do
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use the term “vacancy.” These observers argue that the “absence or unavailability” language in the Dodd-
Frank Act should not be construed to apply to permanent absences of a Director, and consequently, that
the Dodd-Frank Act would not apply to the situation resulting from Cordray’s resignation.
If Dodd-Frank Applies, Does It Supersede the Vacancies Act?
Assuming that the Dodd-Frank Act does apply in the case of a vacancy caused by resignation, the next
major legal question is whether it displaces the Vacancies Act. The OLC, along with the White House and
Mulvaney, claim that both statutes remain viable options for filling the position. The Vacancies Act
provides that it is the “exclusive” method of appointment absent another provision that expressly
authorizes a different method of filling a position. Assuming that the Dodd-Frank Act authorizes the
Deputy Director to serve when the office of the Acting Director is vacant, the Vacancies Act would be
nonexclusive. However, the OLC argues that just because the Vacancies Act is not the exclusive means for
temporarily filling the office of the Director, that does not mean it is not applicable. Even if another
statutory provision authorizes acting service, the OLC contends, that option does not eliminate the
President’s discretion under the Vacancies Act.
This reading finds some support in a decision from the U.S. Court of Appeals for the Ninth Circuit. In that
case, the Ninth Circuit held that where both the Vacancies Act and a separate statutory provision expressly
provided “a means for filling . . . a vacancy,” both applied, and the President was “permitted to elect
between these two statutory alternatives to designate” an acting officer. Unlike the Dodd-Frank Act,
however, the separate statute at issue in that case provided that the President was “authorized to designate
the officer or employee who shall act [in the office] during such vacancy.” By contrast, the Dodd-Frank
Act does not vest discretion in the President. It provides instead that the Deputy Director “shall” serve as
the Acting Director. Accordingly, that decision might be distinguishable from this dispute.
Notably, at least one commentator has argued that the Dodd-Frank Act’s provision relating to the Deputy
Director serving as Acting Director does not “expressly” displace the operation of the Vacancies Act. In
other words, while the Dodd-Frank Act may render the Vacancies Act non-exclusive, the Dodd-Frank
Act’s provision is not itself exclusive. Because the Dodd-Frank Act does not expressly provide that it is
the sole avenue to authorize acting service, or otherwise explicitly state that the Vacancies Act is
inapplicable, it could be argued that both statutes may apply to permit acting service. On the basis of this
argument, both the OLC and the GC of the CFPB contend that the President therefore acted lawfully in
invoking the Vacancies Act to designate Mulvaney as Acting Director.
In contrast, English argues that the provision in the Dodd-Frank Act supersedes the generally applicable
terms of the Vacancies Act, meaning that the Vacancies Act is unavailable to fill the CFPB Director’s
office. English, along with commentators defending English’s claim, argues that Congress intended this
later enacted, more specific provision in the Dodd-Frank Act to displace the Vacancies Act. English also
asserts that allowing the President to install his pick of Acting Director under the Vacancies Act would
undermine the statutory independence of the CFPB. A number of Members of Congress have filed an
amicus brief in the ongoing litigation affirming this understanding of the statute (though this view is not
shared uniformly by their legislative colleagues). In addition, the Dodd-Frank provision employs
language typically construed as mandatory, providing that the Deputy Director “shall” serve as Acting
Director. Legal scholars have pointed out that if both statutes are available, that reading would transform
the Dodd-Frank Act’s terms from mandatory to permissive.
Some commentators have also claimed that the legislative history of the Dodd-Frank Act supports
English’s position. A prior version of the Dodd-Frank Act expressly provided that in the event of a
vacancy, the Vacancies Act would govern the appointment of an Acting Director. When Congress replaced
this text with a provision providing that the Deputy Director will serve as Acting Director, the argument
goes, it intended to displace the Vacancies Act. Others, however, have argued that the legislative history
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might not be so clear. In the bench order denying the temporary restraining order, the trial court judge
reportedly characterized this legislative history as “ambiguous at best.”
If Both the Vacancies Act and Dodd-Frank Apply, Which Controls if Both
Are Invoked?
The argument that both statutes govern acting service raises one additional question: if both statutes are
available and both are invoked—as is the case here—which one wins? The conclusion that both statutes
are available does not, in itself, resolve the question of primacy. Indeed, the OLC acknowledged that it
could not “view either statute as more mandatory than the other.” The OLC resolved this conflict by
asserting that the President’s designation must control in order for the Vacancies Act to “remain available
as an actual alternative.” If both statutes apply, the Vacancies Act arguably becomes operational once the
President has made the choice to designate someone other than the first assistant to serve as the Acting
Director. The OLC argues that applying the Dodd-Frank Act to nullify the President’s pick would
impermissibly render the Vacancies Act superfluous; accordingly, the Vacancies Act should take priority.
English argues instead that the more specific, mandatory provision of the Dodd-Frank Act should control.
Where two statutes can both be given effect, courts will generally try to do so. One possibility for
reconciling these provisions is by reading the Dodd-Frank Act to define the Deputy Director as the “first
assistant” to the Director of the CFPB, as that term is used in the Vacancies Act. This interpretation gives
the Dodd-Frank Act some meaning—establishing that the Deputy Director is the “first assistant,” who
automatically takes over as the default acting officer under the Vacancies Act upon the occurrence of the
vacancy—but slots the operation of this provision into the framework of the Vacancies Act. This reading
of the two statutes would mean that as the Deputy Director and “first assistant,” English would have
automatically served as Acting Director upon Cordray’s resignation. But as contemplated by the
Vacancies Act, the President would have permissibly overridden this default rule by selecting Mulvaney
to serve as Acting Director instead.
What Are the Consequences of Judicial Resolution of the Matter?
As mentioned, English challenged the appointment of Mulvaney in the U.S. District Court for the District
of Columbia, seeking a declaration that she is the lawful Acting Director of the CFPB, along with an
order from the court barring Mulvaney from acting in the office and directing President Trump to refrain
from appointing any other individual to the position. The court’s decision on November 28, 2017, to deny
English’s motion for a temporary restraining order appears to leave in place the status quo without
definitively resolving the dispute over who may properly serve as the Acting Director. Decisions on
temporary restraining orders are not ordinarily appealable, and the judge reportedly denied English’s
request to convert the court’s ruling on the temporary restraining order into a decision that is immediately
appealable. It appears that English will instead be seeking a ruling that requires the district court to fully
resolve the dispute based on the parties’ filings to date. Accordingly, the dispute remains ongoing—inside
and outside of the courtroom. The district court may in the near future issue a final decision concerning
the underlying complaint and that order may be appealable.
If a court fully explores the underlying merits of the dispute, in addition to the various arguments outlined
above concerning statutory interpretation and legislative history, a court might also consider the case’s
implications for the constitutional separation of powers. First, the structure of the CFPB was recently
ruled unconstitutional by the U.S. Court of Appeals for the D.C. Circuit, a decision currently under
reconsideration by the full court, sitting en banc. A three-judge panel concluded that the unusual structure
of the CFPB, an independent agency headed by a single director who enjoys for-cause removal
protection, violates Article II’s grant of executive power in the President. Although the panel’s decision
was vacated while the en banc court reconsiders the case, the scope of power enjoyed by the CFPB
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Director and the statutory independence of the CFPB from the President will likely be background
considerations as the court considers this new dispute.
Second, the court’s ruling will itself implicate the balance of power between the executive and legislative
branches. If the court ultimately rejects the White House’s position and agrees with English that the
Dodd-Frank Act is the exclusive method of temporarily filling the office of the CFPB Director, the ruling
may effectively eliminate the President’s role in selecting an acting director of an independent agency. It
may also permit the head of an independent agency to select his or her own replacement, at least until a
permanent replacement is appointed by the President following Senate confirmation. Such an
interpretation might be disfavored by the court on the grounds that it would arguably interfere with the
President’s constitutional function under Article II to oversee the executive branch. According to the
canon of constitutional avoidance, if a statute can plausibly be read to avoid a difficult constitutional
question, courts often select that reading.
A related consideration that might lead a court to adopt the Trump Administration’s interpretation of the
Vacancies Act concerns the significance of the remedy requested by English. While courts regularly
invalidate agency actions for violations of the law, and may nullify decisions made by temporary
officeholders appointed in violation of the law, English’s suit is directed at the decision of the President
himself to select the Acting Director of the CFPB. Courts might be reluctant to directly interfere with the
President’s appointment power by, for example, issuing an injunction barring him from designating
someone to a position under the Vacancies Act.
The parties dispute only who can serve as Acting Director until a permanent Director is
confirmed by the Senate. However, the legal implications of a court’s ultimate decision in this
case could be substantial. As a practical and immediate matter, if a court rules that either English
or Mulvaney improperly attempted to exercise authority that she or he did not possess, agency
action taken pursuant to the asserted authority could possibly be invalidated. But more broadly,
Congress’s authority to shield executive branch officers from Presidential control is an evergreen
question for scholars and the courts. A court ruling could provide further clarity as to Congress’s
ability to bestow federal agencies with independence from executive oversight.
Author Information
Valerie C. Brannon
Jared P. Cole
Legislative Attorney
Legislative Attorney
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