Leadership of the Consumer Financial Protection Bureau could hinge on the definition and interpretation of the word "shall."
A three-judge panel on April 12 heard arguments from lawyers representing Leandra English, a CFPB employee who was appointed as deputy director immediately prior to former Director Richard Cordray's resignation. Following Cordray's departure, President Donald Trump appointed Mick Mulvaney, director of the Office of Management and Budget, as acting director of the CFPB. Under Mulvaney's leadership, the CFPB has halted enforcement activity and called for numerous reviews of the CFPB's practices, a stark reversal from Cordray's tenure, known for an active docket of enforcement actions.
English is arguing the Dodd-Frank Act, which established the CFPB, stipulates the deputy director "shall" serve as acting director "in the absence or unavailability of the Director." As such, English argues she should be the acting director and is seeking an injunction against Trump, which would nullify his appointment of Mulvaney. On Jan. 11, a judge denied English's request for an injunction, which she appealed to the U.S. Court of Appeals for the District of Columbia Circuit, which heard the arguments on April 12.
"In the Dodd-Frank Act, Congress has used that 'shall' language to indicate a mandatory command," said Deepak Gupta, the lawyer for English.
In response, Hashim Mooppan, the lawyer representing Trump, argued the Federal Vacancies Reform Act, or FVRA, supersedes the language in Dodd-Frank. The FVRA allows the president to temporarily appoint officials to vacant positions that generally require Senate confirmation.
"Congress has already told us that if there is an agency-specific statute, even one that uses the word 'shall,' even one that is mandatory, it co-exists with the FVRA." He later added: "The FVRA itself says that saying 'shall' isn't enough."
Mooppan then seized on an assertion in English's brief that former President Barack Obama's succession plan for the Director of National Intelligence allowed for a more flexible interpretation of "shall" if the principal deputy director's office is vacant.
English's lawyer also noted that the selection of Mulvaney supports an injunction against Trump. Gupta argued that the Dodd-Frank Act made clear that Congress wanted the CFPB to be independent of budget scrutiny. Dodd-Frank stipulates the CFPB draws its funding directly from the Federal Reserve, which itself is funded independently of Congress.
Along those lines, Gupta said the Dodd-Frank Act and FVRA both are intended to limit presidential authority. The Dodd-Frank Act states the president can only fire the CFPB's director for cause as opposed to at-will. The FVRA requires the executive branch reports to Congress whenever there is a temporary appointee in a position that requires Senate confirmation.
The Trump administration, Gupta said in closing, has interpreted the Dodd-Frank Act and the FVRA in a way to allow it to take over the CFPB.
The case will be decided by a three-panel judge: Judith Rogers, appointed in 1994 by President Bill Clinton; Thomas Griffith, appointed in 2005 by President George W. Bush; and Patricia Millett, appointed in 2013 by President Barack Obama.