Supreme Court to Hear Recess Appointment Case; Could Complicate CFPB Leadership

The U.S. Supreme Court Monday announced that it will hear a case that challenges the legality of recess appointments made by President Obama in early 2012. While the specific case concerns three appointees to the National Labor Relations Board, the outcome of the case could have a direct impact on the appointment of Richard Cordray as Director of the Consumer Financial Protection Bureau.

The case, National Labor Relations Board (NRLB) v. Noel Canning, challenges the validity of the January 4, 2012 appointments of three people to the NRLB. A circuit court in Washington, D.C. earlier this year ruled the appointments unconstitutional because they did not meet the criteria for allowed recess appointments. On the same day President Obama appointed the board members, he installed Cordray as the head of the CFPB using the same doctrine.

Cordray was nominated in July 2011 to head the CFPB. But Senate Republicans blocked a vote on his confirmation for months as they tried to change the structure of the new agency to include a commission and more Congressional oversight. Obama used his recess appointment authority to install Cordray – and the NRLB board members — in early January 2012 while the Senate was in recess.

But the move has led to legal challenges, as Republicans insist they were not in recess. They had devised a plan to call pro forma sessions of Congress every third day specifically to block Cordray’s appointment. There is at least one ongoing lawsuit challenging Cordray’s appointment and authority to lead the CFPB.

The Canning case does not address Cordray’s appointment. But if the Supreme Court rules against the Administration, a precedent will be set for the specific use of Presidential recess appointment power seen in Cordray’s case.

If Cordray’s appointment were to be invalidated, it could cause huge issues at the CFPB, where a Director is required to be seated for certain regulatory powers to take effect.

The Court will most likely hear the case in October, with a decision coming in late 2013 or early 2014.

Congressional Republicans are already waging a war of sorts on the CFPB’s power to regulate outside of the validity of Cordray’s appointment.