United States: D.C. Circuit Questions English's Standing To Challenge CFPB Control

The battle for control of the Consumer Financial Protection Bureau ("CFPB") raged on this Thursday during oral argument before the United States Court of Appeals for the District of Columbia Circuit in English v. Trump. All three panel judges seemed skeptical of English's claim that she should be acting director of the CFPB, but two judges questioned whether President Trump could appoint Mulvaney as acting director when a provision in the Dodd-Frank Act states that a subsection on budgeting and financial management "may not be construed as implying ... any jurisdiction or oversight over the affairs or operations of the [CFPB]" by the Office of Management and Budget ("OMB").

As we previously reported in January and February, there are several pending actions that question the President's authority to appoint OMB Director Mick Mulvaney as the CFPB's acting director. In this case, CFPB Deputy Director English claims that she is the rightful acting director and challenges President Trump's authority to appoint Director Mulvaney under the Federal Vacancies Reform Act of 1998 ("FVRA") as acting director. She contends that her midnight ascension to deputy director, when former Director Richard Cordray appointed her hours before he resigned, defeated the President's authority to appoint an acting director.

English filed suit in November against the President and Mulvaney seeking to enjoin the President from appointing an acting director other than her, to direct the President to withdraw Mulvaney's appointment, and to prohibit Mulvaney from serving as acting director. The district court rejected English's argument that the CFPB director position was excluded from the FVRA under Dodd-Frank. Instead, the court found that, when the two statutes are read together, Dodd-Frank requires that the deputy director "shall" serve as acting director by default, but the FVRA provides that the President "may" override that default rule.

At oral argument before the D.C. Circuit, English's counsel faced a hot bench from Judges Judith Rogers, Thomas Griffith, and Patricia Millett as soon as the timer began. With little chance to affirmatively argue her position, English's counsel fielded questions for more than 30 minutes. Notably, Judge Griffith immediately questioned whether English has standing to raise her challenges—an issue not briefed before the court. Specifically, the panel questioned how English would be redressed should the court rule in her favor because if a federal court cannot enjoin the Office of the President. English's counsel seemed somewhat unprepared for this questioning and offered to provide supplemental briefing.

The court appears poised to reject or to avoid deciding English's argument that the CFPB must be led by an individual who cannot be removed except for cause. When English's counsel argued that Dodd-Frank was "designed to preserve [the CFPB's] independence from the President's will above all," Judge Griffith responded, "Before we get to purpose, we have to deal with text." The other judges also continually directed counsel back to the statutory text throughout the oral argument. The panel seemed unpersuaded by the purpose argument because, as English's counsel conceded, Cordray could have been removed at will if he had continued as director after his term expired. Judge Rogers questioned whether the court needed to reach the for-cause issue if it ruled that Mulvaney's dual-hat status as OMB director precludes his appointment as the CFPB's acting director.

This questioning transitioned English into her argument that the court could rule narrowly in her favor by holding that Mulvaney's appointment was improper because he is the OMB's director. English asserted that Dodd-Frank dictates that OMB not have "any jurisdiction or oversight over the affairs or operations of the [CFPB]," and that appointing the OMB director to lead the CFPB would violate that dictate. Thus, even if the President has authority to appoint an acting director, English asserted that the President had exceeded his authority by picking the wrong person for the job. Judge Millett questioned, though, how this position helps English when the President could simply appoint a new acting director if the court enjoined Mulvaney from serving.

The questioning slowed but did not cease when the U.S. Department of Justice ("DOJ") assumed the lectern. Judge Millette questioned DOJ's argument that Mulvaney could wear dual hats as director of OMB and CFPB. She posited that such dual hatting could mean that the OMB controls the CFPB in violation of congressional purpose. DOJ responded by noting that the statute merely states that the provisions in the funding subsection do not "obligat[e]" the CFPB director to obtain OMB's consent on "financial operating plans and forecasts." DOJ argued that this language is not enough to expressly override the FVRA, particularly when Dodd-Frank provides that all federal laws dealing with federal officers (which includes the FVRA) apply to the CFPB except where "otherwise provided expressly" by law.

How the court is likely to rule is difficult to discern from the argument, but it appears that the court may resolve the appeal on standing instead of the merits. Although Judge Rogers and Judge Millet were concerned that Mulvaney's appointment was improper because he leads the OMB, Judge Millet and Judge Griffith doubted whether the English had standing to pursue her claims. That said, judges often resolve concerns post-argument, and no clear winner will emerge until the panel issues its decision. As the fight for control of the CFPB continues, we will keep you apprised of the battles won and lost.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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Authors
Tonya M. Esposito
Esther Slater McDonald
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