Updated Friday, January 25, 2013 at 11:01 PM
WASHINGTON — A federal appeals court, in a far-reaching decision that could cripple operations at two agencies, sharply limited the president’s power to bypass Senate confirmation and make so-called recess appointments.
A three-judge panel decided President Obama violated the Constitution last year by appointing three members to the National Labor Relations Board (NLRB) while the Senate was not meeting.
The broader implications of Friday’s ruling mean the Senate’s Republican minority can all but halt the work of the new Consumer Financial Protection Bureau and the NLRB by preventing the president from appointing its leaders or board members. The decision also leaves in doubt the legal status of regulations and enforcement actions made by those agencies in the past year.
The panel for the U.S. Court of Appeals for the District of Columbia ruled that “recess appointments” can be made by the president only when Congress has formally adjourned, not when lawmakers leave Washington for a break that lasts a few days or few weeks. The Senate has recently held brief “pro forma” sessions when members are away, and the appeals court agreed with Senate Republicans that these breaks do not count as a recess.
The Constitution’s check on presidential appointments would be “turned upside down if the president could make appointments any time the Senate so much as broke for lunch,” said Chief Judge David Sentelle.
. White House press secretary Jay Carney called Friday’s decision “novel and unprecedented. It contradicts 150 years of practice by Democratic and Republican administrations.”
The ruling came in a lawsuit brought by a Pepsi-Cola bottler from Washington state that challenged an NLRB decision against the company. The bottler argued, and the court agreed, that the three Obama appointments were invalid and that the five-seat board lacked a quorum to take action.
At the same time he made the NLRB appointments, Obama nominated Richard Cordray to head the Consumer Financial Protection Bureau, which oversees the financial industry to police abuses by Wall Street and big banks. A challenge to that appointment remains pending in a separate case.
The bureau, created by the 2010 Dodd-Frank financial-overhaul law in response to the financial crisis that fed into the Great Recession of 2007-09, was not able to use authority granted to it by Congress until it had a full-time director.
Since Obama’s recess appointment of Cordray, the agency has issued sweeping new rules for mortgages, begun overseeing large credit-reporting and debt-collection companies and required mortgage servicers to take steps to help keep delinquent borrowers in their homes.
The agency also has been involved in several high-profile enforcement actions. Those include settlements in which Discover agreed to refund $200 million to credit-card customers and Capital One agreed to refund $150 million to its credit-card customers and pay $60 million in civil penalties to the government. Many of those actions, if not all of them, could be in jeopardy because of the NLRB ruling.
Material from The New York Times is included in this report.