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The Pay Act and the GAO as a Means of Constitutional Settlement

Next on the list of possible mechanisms to achieve constitutional settlement with respect to the Recess Appointments Clause is something that would fall into the category of congressional “self-help.” There are a variety of means by which Congress could express its displeasure with the administration’s use of the RAC; most of these would be political in nature and do not require extended legal analysis. There is, however, one enforcement mechanism specifically designed to limit executive use (or abuse) of the RAC- the Pay Act, originally enacted by the Civil War Congress and codified in its current form at 5 U.S.C. § 5503.

The Government Accountability Office will respond to congressional requests for opinions regarding the duration of recess appointments and the application of the Pay Act to particular appointments. A favorable GAO opinion on either of these points would bolster Congress’s ability to constrain recess appointments, and Congress has a strong case to make on each. It is therefore surprising that no one appears yet to have sought a GAO opinion regarding President Obama’s January 2012 recess appointments.

The Pay Act and Its Interpretation

In relevant part the statute provides:

(a) Payment for services may not be made from the Treasury of the United States to an individual appointed during a recess of the Senate to fill a vacancy in an existing office, if the vacancy existed while the Senate was in session and was by law required to be filled by and with the advice and consent of the Senate, until the appointee has been confirmed by the Senate. This subsection does not apply—

            * * *

(2) if, at the end of the session, a nomination for the office, other than the nomination of an individual appointed during the preceding recess of the Senate, was pending before the Senate for its advice and consent. . . .

(b) A nomination to fill a vacancy referred to by [paragraph (a) (2)] shall be submitted to the Senate not later than 40 days after the beginning of the next session of the Senate.

It is important to understand that the concept of an “intra-session recess” appointment is unknown to the Pay Act. The statute applies to vacancies that exist when the Senate is “in session” but which are subsequently filled when the Senate is in “recess” (i.e., no longer in session). It provides for payment of recess appointees, under some circumstances, if a nomination to fill the vacancy was pending “at the end of the session” (i.e., the point in time when the Senate ceases to be in session and its recess begins). It excepts from this authorization the nomination of an individual appointed during the “preceding recess” (i.e., the recess which occurred immediately before the session in which the nomination was made). It requires a new nomination be made to fill the vacancy within 40 days of “the beginning of the next session” (i.e., the session which begins immediately after the recess during which the recess appointment is made). These provisions can make sense only if session and recess are mutually exclusive periods.

Thus, at least for purposes of the Pay Act, all recess appointments are “inter-session” in nature. This is hardly surprising because, at the time the Pay Act was written, such was the universal understanding of how recess appointments worked. This understanding existed not only when the statute was originally enacted in 1863, but also when the last substantive amendments were passed in 1940.

We may assume, for argument’s sake, that the drafters of the 1940 amendments were aware of Attorney General Daugherty’s 1921 opinion, although this opinion had apparently served as the basis for only two recess appointments as of that time. But nothing in Daugherty’s opinion endorses the concept of an “intra-session recess;” to the contrary, the opinion is completely consistent with the Pay Act’s construct of session and recess as mutually exclusive periods.

The same is true of executive branch practice. The first recess appointment relying on the Daugherty opinion took place a few days after that opinion was issued. On August 30, 1921, President Harding recess appointed Irving D. Smith to be the register of the land office in Seattle, Washington. 61 Cong. Rec. 5737 (Sept. 22, 1921). Smith’s nomination was submitted to the Senate immediately upon its re-convening, and he was confirmed on September 26, 1921. 61 Cong. Rec. 5806 (Sept. 27, 1921). Thus, nothing in Smith’s case suggests that his recess appointment was considered to be “intra-session.”

Moreover, as described in an earlier post, the second appointment relying on the Daugherty opinion, President Coolidge’s 1928 recess appointment of John Esch, is clearly inconsistent with the concept of an “intra-session recess.” Thus, to the extent that the drafters of the 1940 amendments to the Pay Act were aware of the Daugherty opinion and executive branch practice under it, they would have seen them as corroborative of the Pay Act’s use of “session” and “recess” as mutually exclusive terms.

Executive branch practice did not change until 1948, when Comptroller General Warren, perhaps unwittingly, invented the concept of the “intra-session recess” for purposes of the RAC. Even Warren, though, recognized that the Pay Act’s usage of the term “session” could not be read consistently with his constitutional interpretation. Thus, although Warren believed that the Senate adjournment of June 20, 1948 was not a “termination of the session” for purposes of the RAC, he nevertheless concluded that it was the “termination of the session” for purposes of the Pay Act. As Warren explained, he found it “only reasonable to regard the term ‘termination of the session’ as having been used by the Congress in the sense of any adjournment, whether final or not, in contemplation of a recess covering a substantial period of time.” In other words, for statutory (but not constitutional) purposes, Warren found that the “session” terminates when a “recess” begins, and vice versa.

Similarly, the executive branch has long acknowledged, albeit grudgingly, that the “next session” referred to in the Pay Act is most plausibly read as meaning something different that the “next session” of Warren’s constitutional imagination. As Acting Attorney General Walsh explained in 1960: “While the reconvening of the Senate after a temporary adjournment is not the next session of the Senate in the ordinary sense of that term, . . . it is likely that the words ‘commencement of the next succeeding session of the Senate’ [in the Pay Act] refer to the reconvening of the Senate regardless of whether, technically, it begins a new session.”

In one respect, however, Warren and the executive branch have insisted on construing the Pay Act “technically” (i.e., contrary to its plain meaning). The clear import of the Pay Act is to prohibit paying the salary of a recess appointee if (1) the President chooses to nominate the same individual when the Senate reconvenes and (2) that nomination is still pending at the time of the next recess. In that case the Pay Act exception (in paragraph (2) (a)) for “an individual appointed during the preceding recess of the Senate” would seem to apply.

However, Warren and the executive branch have declared that exception inapplicable to recess appointments that do not end in the next recess. Take, for example, Obama’s January 4 NLRB recess appointments. The Pay Act requires that the President submit nominations to fill the vacancies within 40 days of the Senate’s reconvening (on January 23). In February, Obama again nominated the three NLRB recess appointees to fill the vacancies on a permanent basis.

The Warren/executive branch position is that these recess appointees can continue to be paid, even if the Senate fails to act on their nominations by the time of the next recess. They would continue to get paid until their commissions expire (which could be as late as January 3, 2014). At that point, they apparently would be barred from receiving pay, even if the President reappoints them. This position is rather difficult to square with the text of the Pay Act, which refers to individuals appointed during the preceding recess.

Analysis of the Cordray Recess Appointment

For reasons that I will get to, GAO’s analysis of the Richard Cordray recess appointment would be of particular interest. Cordray was recess appointed to become the first Director of the Consumer Financial Protection Bureau. This office was created by Dodd-Frank, which was signed into law by President Obama on July 21, 2010. Obama nominated Cordray as Director on July 18, 2011. On December 8, 2011, a cloture vote to advance Cordray’s nomination failed in the Senate. On December 17, 2011, the Senate’s last day of “regular” session, it adopted a unanimous consent agreement by which the nomination was “to be returned to the President under Rule XXXI, paragraph 6 of the Standing Rules of the Senate at sine die adjournment of the 112th Congress, 1st session.”

Pursuant to this agreement and the Senate rule, the nomination was returned to the President at noon on January 3, 2012. At 12:01:32 p.m. the same day, the Senate met in pro forma session to convene the second session of the 112th Congress. This pro forma session lasted for 41 seconds, and the Senate adjourned at 12:02:13. The next day, January 4, 2012, Cordray received the recess appointment.

The first question is whether this should be viewed as an “intra-session” or “inter-session” recess appointment. While GAO will be reluctant to reverse its longstanding position that the President may make intra-session recess appointments, there is no precedent that obligates it to find that this particular appointment was intra-session in nature. Moreover, because there was no history of “intra-session recess” appointments (as opposed to recess appointments during non-final adjournments that were treated as inter-session recesses) prior to 1948, and because the constitutionality of this practice remains unsettled, there are good reasons not to reach this conclusion.

One would think that GAO, as a guardian of legislative branch prerogatives, would have some concern about the steadily increasing encroachment by the executive branch on the Senate’s advice and consent power. The January 2012 recess appointments represent a high-water mark of such encroachment by allowing the President to disregard the pro forma sessions of the Senate held between December 17, 2011 and January 23, 2012. For reasons discussed more fully in earlier posts, this theory leads most logically to treating the period as an inter-session recess. There is no reason why the GAO should acquiesce in the further expansion of executive power by allowing the period to be treated as two intra-session recesses.

If Cordray’s recess appointment is treated as inter-session, then his commission would expire no later than January 3, 2013. Indeed, it should expire at the next Senate recess following January 23, 2012, which arguably has already occurred.

On the other hand, if Cordray’s recess appointment is deemed to be intra-session, his commission will not expire until the end of the first session of the 113th Congress, which could last until January 3, 2014. However, that does not mean that he is entitled to be paid for that period. The Pay Act is designed to block payments to recess appointees in circumstances where the RAC permits (or arguably permits) the appointment.

To determine Cordray’s eligibility under the Pay Act, one might first ask when the alleged “intra-session recess” began. It might be argued that it began on January 3 at noon, when the first session of the 112th Congress ended and the second session began. But when President Teddy Roosevelt declared a “constructive recess” at such a moment of constitutional transition, at noon on December 7, 1903, it was treated as an inter-session recess.

This suggests that any intra-session recess here must have commenced when the Senate adjourned its pro forma session on January 3 at 12:02:13. The reasoning of OLC’s January 6, 2012 opinion supports this conclusion. It treats the January 3 pro forma session as effective, noting that “the Senate convened [a] pro forma session to begin the second session of the 112th Congress.” It also relies on a January 14, 1992 OLC opinion dealing with a recess appointment made after a brief pro forma session on January 3, 1992. The 1992 opinion clearly treats the pro forma session as effective for purposes of commencing the congressional session and breaking the overall length of the adjournment (the Senate was adjourned from November 27, 1991 until the pro forma session on January 3, when it adjourned until January 21, 1992). Although both opinions suggest that in a realistic sense the pro forma session might be viewed as not interrupting a longer inter-session recess, they operate on the assumption that the January 3 pro forma session should be viewed in a formalistic sense as beginning a new intra-session recess.

If this assumption is correct, the “end of the session” for purposes of paragraph (a)(2) of the Pay Act occurred at 12:02:13 on January 3. Because at that moment, no nomination for the position of CFPB Director was pending before the Senate (said nomination having been returned to the President just over two minutes earlier), it would seem that paragraph (a)(2) of the Pay Act would not authorize payment for Director Cordray’s services. (The same analysis would hold for the NLRB recess appointees).

Protests that this is a highly technical and/or unfair reading of the statute should be unavailing. The result flows directly from the executive branch’s efforts first to create the constitutionally dubious category of “intra-session recess” appointments, then to contort the provisions of the Pay Act to justify payments for such intra-session recess appointees, and now to make a thoroughly unnecessary intra-session recess appointment. Any unfairness to Cordray is attributable to the executive alone.

As it happens, however, this may make little difference in Cordray’s case. It appears that no nomination to fill the CFPB vacancy was submitted to the Senate after it re-convened on January 23, 2012. Thus, even if the Pay Act authorized payment of Cordray’s salary in the first place, such authorization ran out 40 days after the Senate re-convened.

Why did the administration fail to submit a new nomination for CFPB Director? Part of the explanation may be found in this CRS memo, which notes, in footnote 28, that “an argument could be made questioning whether the statutory restriction on payment would be applicable to a recess appointed Director of the CFPB because it seems uncertain whether ‘payment . . . [would be] made from the Treasury’ to such a recess appointee given the funding structure of the CFPB.” CFPB, you see, gets its funding from the Federal Reserve, and the Federal Reserve apparently gets its funding by calling up the Treasury and asking for a shipment of money. (Really).

You might think this means the CFPB’s funding, though outside the normal appropriations process, comes ultimately from the Treasury. That kind of thinking won’t get you a job at OLC, however, where they read statutes narrowly and literally, except when its in their interest to do otherwise.

Thus, while OLC is happy to read the Pay Act loosely in order to continue to pay recess appointees appointed during the “preceding recess,” it feels quite differently about the statute’s restriction on payments “from the Treasury of the United States.” In 1991, for example, it found that the Pay Act was inapplicable to recess appointments of directors of the Federal Housing Finance Board. Noting that the FHFB did not received appropriated funds (instead it relied primarily on assessments imposed on Federal Home Loan Banks) and that its funds were deposited in segregated accounts at Treasury but not co-mingled with general funds, OLC found that the Pay Act’s “prohibition against payments ‘from the Treasury’ should be construed to apply only to payments from the Treasury’s general funds, and not to payments from non-appropriated funds on deposit with the Treasury.” 15 OLC 91 (1991).

Whatever you think of this reasoning, there seems little doubt that OLC would employ it, or something similar, to exempt the CFPB from the Pay Act’s prohibition. I am not aware that OLC has publicly opined on the precise question, although I have to assume that the administration’s failure to submit a nomination for CFPB Director this year reflects its position that the statute does not apply. But this is only a partial explanation- since it doesn’t cost the administration anything to submit a nomination, it is hard to see why it would not have done so even if it believes that the Pay Act is inapplicable.

There are four reasons why it would make sense to get a GAO opinion on this issue specifically. First, as far as I know, GAO has not interpreted the “from the Treasury” language in the Pay Act, and it is entirely possible that it would give this language a broader reading than does OLC.

Second, it is worthwhile for Congress to clarify the extent to which the Pay Act applies to agencies funded outside the normal appropriations process. Whether or not GAO concludes that the Pay Act applies, it seems clear that Congress did not intend to exempt the CFPB from the statutory requirements. If necessary, Congress can and should fix this problem legislatively.

Third, if in fact CFPB is not subject to the Pay Act, this would seem to underscore the argument that the agency operates outside of normal constitutional checks and balances. Therefore an adverse GAO opinion would probably help those who believe, like the plaintiffs in the State National Bank case, that CFPB itself is unconstitutional under separation of powers doctrine.

Finally, it should be of concern to every Senator, regardless of his or her policy or constitutional views on the CFPB, that the administration has not submitted a nomination to fill the vacancy at the agency. The requirement that a timely nomination be submitted after a recess appointment has been made is not merely a technical requirement of the Pay Act, but a fundamental norm of the RAC. Raising this issue with the GAO highlights the fact that the administration is violating the spirit, not merely the letter, of the RAC.

Conclusion 

For the reasons I lay out above, it is surprising that no one in Congress has yet seen fit to seek a GAO opinion on the January 2012 recess appointment. Perhaps this post will convince someone to do so. (Hey, stranger things have happened!)

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