Obama Recess Appointments Get First Legal Challenge - From Health Care Law Foe

  @DanRivoli on January 16 2012 12:50 PM
U.S. President Obama puts hand on shoulder of Cordray during trip to Cleveland
President Barack Obama's controversial recess appointments, including Richard Cordray, Consumer Financial Protection Bureau director, are being challenged in a lawsuit targeting his labor board picks. REUTERS

A group challenging President Barack Obama's health care law is now testing his authority over his controversial recess appointments, calling his move a brazen circumvention of the Congressional appointment process.

The National Federation of Independent Business (NFIB), whose case against the Affordable Care Act is pending before the U.S. Supreme Court, lodged the first legal challenge to the appointment of three new members to the National Labor Relations Bureau (NLRB).

The NFIB said the labor board has no authority to enforce new rules because Obama's decision to fill three open positions was illegal, thus preventing the NLRB from having a legal quorum necessary to make decisions. The NFIB on Friday added its claim to a pending lawsuit against a new, recently-delayed rule requiring businesses to put up posters informing employees of their rights.

NFIB Argues Obama Appointments Circumvented Congress

These alleged recess appointments are a brazen circumvention of the Congressional appointment process and raise serious legal concerns that cannot be ignored, said Karen Harned, executive director of the NFIB's Small Business Legal Center.

The Jan. 6 appointments were made to get around Senate Republicans who were blocking his nominees, including his pick to run the Consumer Financial Protection Bureau (CFPB), a new agency created under the 2010 Dodd-Frank financial reform law.

The Senate GOP had filibustered the confirmation of newly-minted CFPB director Richard Cordray to extract changes in the agency's structure. Meanwhile, the NLRB had become Republican public enemy No. 1 after it slapped Boeing with a lawsuit last year for allegedly retaliating against its unionized Washington state employees by moving a proposed aircraft production plant to South Carolina, an anti-union right-to-work state.

To block potential recess appointments, Senate Republicans took a page from their Democratic colleagues' playbook during the second Bush Administration and entered into pro forma sessions. No business was conducted during most of these sessions, which were called to block the president from using his appointment power when Congress is out of town.

The Department of Justice's Office of Legal Counsel last week issued a memo laying out the legal rationale for Obama's appointment decision, saying that the Senate was unavailable to exercise its constitutional authority to give advice and consent to the president's nominees.

Little Case Law on Appointments During  Pro Forma Sessions

Unfortunately for both sides, there is little case law and historical precedent that could immediately determine who is on sound legal footing; even the Obama administration conceded in the memo that the question is a novel one and the substantial arguments on each side create some litigation risk for such appointments.

It was expected that a legal fight over the appointments would take place in court challenges to any rules or policies the NLRB and consumer bureau try to enact, though Senate Republicans are mulling a suit of their own.

For the CFPB, installing Cordray as director would finally allow the bureau to start pushing new regulations on pay-day lenders, mortgage brokers and other so-called non-bank financial institutions that have been operating without any oversight from the federal government.

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