WASHINGTON — A panel of judges remained skeptical of claims by Leandra English, deputy director of the Consumer Financial Protection Bureau, that she is the rightful head of the agency. But they didn’t sound convinced that current acting Director Mick Mulvaney is, either.
English had already faced long odds to unseat Mulvaney as head of the agency, and oral arguments Thursday before the U.S. Court of Appeals for the D.C. Circuit did not appear to reverse that.
The judges suggested that even if they granted English's request to remove Mulvaney as acting director, that does not necessarily mean she could take his place.
"All injunctive relief against Mr. Mulvaney does is tell him he can’t show up at work,” said Judge Thomas Griffith, who sits on the three-judge panel hearing the case.
English, appointed as deputy director just as then-Director Richard Cordray stepped down last year, claims the 2010 Dodd-Frank Act gives the agency's reins to its No. 2 in the absence of a Senate-confirmed successor. But the Trump administration, arguing the 1998 Federal Vacancies Reform Act, or FVRA, allows the president to choose an acting director, appointed Mulvaney, who heads the Office of Management and Budget. In January, a lower-court judge sided with the administration.
But the judges also questioned whether Mulvaney’s appointment conflicts with his other job as head of the OMB, since Congress went to substantial pains to ensure that the bureau was independent from the executive.
Judge Judith Rogers asked Deepak Gupta, principal at Gupta Wessler and English's attorney, to what extent his argument relied on the idea that Dodd-Frank envisioned the CFPB as an independent organization, specifically as independent from the OMB.
“I think the appointment of Mr. Mulvaney highlights the principal argument we’re making the problem with how it destroys the statutory design that Congress had for this agency,” Gupta said. “But it’s particularly notable in this regard that Congress had provision to insulate the bureau from the director of the Office of Management and Budget.”
Rogers suggested that means a more viable approach would be for the president to appoint someone other than the OMB director.
“The president, if you were to read the two statutes as coexisting, the president could appoint someone else, exercising one of the options he would have under the vacancy reform act,” Rogers said.
Gupta responded: “If you disagree with us and conclude that the FVRA applies and the president has the authority, he could appoint somebody else. But this was the narrowest way you could rule in our favor.”
Judge Patricia Millett said that appointing Mulvaney as acting CFPB director certainly has the effect of making the CFPB’s actions accountable to OMB, even if that is not the statutory requirement, and indeed counter to Congress’ express wish to make the CFPB independent of OMB.
“He is wearing two hats at the same time,” Millett said. “If we’re talking about straining things, it seems a strain to suggest that Mr. Mulvaney would wake up and say, ‘I wish to do this as CFPB director, but of course as OMB director I think that’s a terrible, horrible thing to do.’”
Still, the judges did not view English as having a stronger claim to the job.
Within seconds of Gupta beginning his argument, Griffith interrupted him and asked whether English had standing to bring the case, suggesting that the president might still have grounds to appoint someone other than both English and Mulvaney.
“You have to show that, if she prevails, that she is likely to get the relief, right? And if you can’t enjoin the president, then that’s an open question,” Griffith said. “It’s an open question, but not very open, right? If you can’t enjoin the president here, what would prevent the president from naming other people? And it’s not likely that Ms. English would get the relief she claims, even if your theory is correct.”
Millett pointed to another potential issue in English's case, which is whether the deputy director has the same constitutional protection from being fired by the president that is afforded a Senate-confirmed director.
A separate case brought during Cordray's tenure said the bureau's single-leader structure, in which a director can only be fired "for cause," was legally viable. But if a deputy director installed as acting director is not protected by the “for cause” provision, then that person serves at the will of the president, meaning that the appointment of Mulvaney can essentially be construed as an affirmative dismissal of English as acting director.
Millett said the “for cause” protection appears in the statute ahead of a section describing the duties of the deputy director and other officials, suggesting that Congress knew exactly how broadly it wanted to apply the “for cause” protection and declined to extend it to the CFPB deputy director.
“It wasn’t lost on Congress that a deputy director is different from the director, and so just as a matter of straightforward reading of the statute, you’ve left the deputy director out of the ‘for cause’ protection," she said. "That seems like a tough statutory construction row to hoe.”
Gupta said that when the statute chose to name the deputy director expressly as the successor to the director, should a director be unavailable, it effectively made the deputy director the acting director and thus conferred the “for cause” protections to that person.
“You’re trying to figure out what the term ‘acting director’ means, and what I think that means is that the acting director steps into the shoes of the director and the powers, privileges of the director, which are referred to throughout the statute, apply to the acting director,” Gupta said. “There isn’t any indication … that Congress intended this ‘for cause’ protection … not to apply to the deputy director.”
English's case arose late last year after Cordray abruptly resigned over the Thanksgiving holiday, effectively naming English as his successor. English sued after President Trump tapped Mulvaney to serve as acting director, citing his authority under the Federal Vacancies Reform Act.
English has argued that Dodd-Frank explicitly said the deputy director “shall” serve as acting director if the director is “unavailable,” and that designation overrides the FVRA.
Hashim Mooppan, deputy assistant attorney general for civil appeals at the Department of Justice, argued that that language is not sufficient to dispense with the FVRA's authority. Congress would have to explicitly say that the FVRA does not apply.
“Congress would not have intended to displace the FVRA using the precise language it specified coexists with the FVRA,” Mooppan said. “The FVRA coexists with the dozen or so agency-specific vacancy statutes using mandatory words like ‘shall’ that were enacted before FVRA.”
But Griffith said Congress could have meant to sidestep the FVRA by saying that the deputy director “shall” replace the director in the event of an absence.
“People always make the argument that Congress had the ability, they knew how to do this expressly, and the fact that they didn’t is significant,” Griffith said. “But doesn’t that suggest that the way they did it was through the use of the word ‘shall’?”
But Mooppan said that Congress already carved out some exceptions to the FVRA. Many inspectors general, for example, are exempted from FVRA authority, as are the general counsel positions at the Federal Labor Relations Authority and National Labor Relations Board.
“That would be a passing, strange way to do it, because the FVRA itself says that such statutes coexist with the FVRA, they don’t displace it,” Mooppan said.
Mooppan downplayed the importance of Mulvaney’s role as Office of Management and Budget director by noting that there is no statutory exclusion against Mulvaney or anyone else who serves at OMB serving as acting director of the CFPB.
“Congress thought about who shouldn’t serve as director, and Congress didn’t say, ‘Anyone who’s serving at OMB,’ Congress didn’t say, ‘Anyone who is accountable to the president,' ” Mooppan said.
