English v. Trump and “Shall” v. “May”

by Daniel Hemel — Monday, Nov. 27, 2017

The deputy director of the Consumer Financial Protection Bureau, Leandra English, has filed a lawsuit asking a federal district court to prevent President Trump from installing Mick Mulvaney, who is currently the director of the Office of Management and Budget, as the CFPB’s acting chief. Based on everything I know, I think that English would do a better job of leading the agency. I’m still not persuaded, though, that the Dodd-Frank Act displaces the Federal Vacancies Reform Act provision allowing the President to appoint a Senate-confirmed official such as Mulvaney to be temporary agency chief. In particular, I’m skeptical of the claim that the use of the verb “shall” in Dodd-Frank gives that statute lexical priority over the FVRA, which uses the verb “may.”

The relevant provision of the Dodd-Frank Act, 12 U.S.C. § 5491(b)(5), says that the deputy director of the CFPB “shall . . . serve as acting Director in the absence or unavailability of the Director.” English’s complaint characterizes that as “mandatory text.” If read to be mandatory, § 5491(b)(5) would seem to conflict with a provision of the Federal Vacancies Reform Act, 5 U.S.C. § 3345(a)(2), which says that in the event of a vacancy at an executive agency:

the President . . . may direct a person who serves in an office for which appointment is required to be made by the President, by and with the advice and consent of the Senate, to perform the functions and duties of the vacant office temporarily in an acting capacity . . . .

For excellent summaries of the pro-English position, read Nina Mendelson’s post on this blog, Marty Lederman’s analysis at Balkinization, and Adam Levitin at Credit Slips.

My hangup on the textual argument is that “shall” does not always trump “may.” Indeed, 12 U.S.C. § 5491, the very statute on which the pro-English argument rests, illustrates as much. It says in subsection (c):

(1) The Director shall serve for a term of 5 years.

. . .

(3) The President may remove the Director for inefficiency, neglect of duty, or malfeasance in office.

I don’t think that anyone would argue that the “shall serve” language there prevents the President from removing a CFPB director for cause within the director’s five-year term. And that’s not because (c)(3) would be surplusage otherwise; 12 U.S.C. § 5491(c)(2) gives rise to circumstances in which a director can serve outside of her five-year term, so reading § 5491(c)(1) to trump § 5491(c)(3) would not render the latter superfluous. But it still would be an absurd way to read the statute.

This should not surprise speakers of the English language. Imagine if you saw a menu at a burger joint that read as follows:

Waiters shall serve burgers with a side of fries.

Customers may substitute a side of cole slaw.

You might think it’s a strangely worded menu. But you wouldn’t think that “shall serve” was mandatory language that overrode the customer’s ability to choose cole slaw.

That’s not far from where we are today. We have one statute that says the deputy director “shall . . . serve” as acting director. And we have another statute that says the President “may direct” another Senate-confirmed official to serve as acting director. The fact that one uses “shall” and the other uses “may” does not resolve the matter. Cf. Gutierrez de Martinez v. Lamagno, 515 U.S. 417, 432 n.9 (1995) (“Courts in virtually every English-speaking jurisdiction have held — by necessity — that shall means may in some contexts, and vice versa.” (quoting B. Garner, Dictionary of Modern Legal Usage 939 (2d ed. 1995))).

For two reasons, I think “shall” yields to “may” in this case. Curiously, neither of these reasons appears in the Office of Legal Counsel memorandum supporting the Trump administration’s position or CFPB general counsel Mary McLeod’s memo taking the same view.

First, the “shall” statute has a yield sign on it. As I noted in my earlier post, 12 U.S.C. § 5491(a) says that “[e]xcept as otherwise provided expressly by law, all Federal laws dealing with . . . officers . . . shall apply to the exercise of the powers of the Bureau.” The Federal Vacancies Reform Act is a federal law dealing with officers. And 12 U.S.C. § 5491(b)(5) does not provide expressly that the Federal Vacancies Reform Act is inapplicable. The Dodd-Frank Act is, at best, ambiguous on this point: “[S]hall . . . serve as acting Director” might mean “shall serve as acting Director come hell or high water,” or it might mean — as in the case of “[t]he Director shall serve for a term of 5 years” — that the deputy director “shall serve” unless another statutory provision says otherwise. Cf. Breuer v. Jim’s Concrete of Brevard, Inc., 538 U.S. 691, 695–96 (2003) (“[I]f an ambiguous term . . . qualified as an express provision . . . , then the requirement of an ‘express provision’ would call for nothing more than a ‘provision,’ pure and simple, leaving the word ‘expressly’ with no consequence whatever. ‘Express provision’ must mean something more than any verbal hook for an argument.” (alterations omitted)).

Second, I’m skeptical that Congress would have wanted the CFPB to be headed indefinitely by an official who was not presidentially appointed or Senate confirmed, without any statutory avenue for the President to pick someone else. This would be especially surprising given that the explanatory statement accompanying 12 U.S.C. § 5491 from the Dodd-Frank conference committee said that Congress intended for the bureau to be “run by a Director who is Presidentially appointed and Senate confirmed,” with “the authority and accountability to ensure that existing consumer protection laws and regulations are comprehensive, fair, and vigorously enforced.” Those with a dimmer view of legislative history and a broader view of executive authority might arrive at the same conclusion on the basis of the constitutional avoidance canon and separation-of-powers concerns. Jonathan Adler sketches out this line of argument over at the Volokh Conspiracy. As a predictive matter, that strikes me as a likely guess as to how the current Supreme Court would resolve the issue, even though it’s not the route I’d take.

Three addenda:

— (1) I don’t think that English gains any mileage from the canon that “the specific governs the general.” See, e.g., Morales v. Trans World Airlines, Inc., 504 U.S. 374, 384 (1992). First, it’s not clear to me which of these two statutes is more specific. On the one hand, the FVRA applies generally to all agencies, and Dodd-Frank applies specifically to the CFPB, so in that sense the latter is more “specific.” But on the other hand, the FVRA applies specifically to vacancies, while the Dodd-Frank Act applies generally to all cases of “absence or unavailability,” vacancies or otherwise. Neither statute strikes me as intrinsically more specific than the other.

And even if the Dodd-Frank Act is more specific, recall that the specific statute itself says that general federal laws dealing with agency officers apply “[e]xcept as otherwise provided expressly by law.” In effect, the Dodd-Frank Act says: general rules apply unless we specifically say otherwise. So if the “specific governs the general” canon would apply here, I think the Dodd-Frank Act turns it off.

— (2) For similar reasons, I don’t think English is aided by the argument that 12 U.S.C. § 5491(b)(5) would “be largely superfluous if its only function were to provide an alternative, rather than an exclusive, means of filling the vacancy.” (Marty Lederman makes this point—and points out its limits—in an update to his comprehensive and insightful analysis of the dueling-directors debate.) True, the FVRA establishes a default rule that the “first assistant” (here, the deputy director) steps in as acting head when that position becomes vacant. But 12 U.S.C. § 5491(b)(5) still would apply in cases of “absence” short of vacancy (e.g., when the CFPB director goes on a week-long canoe trip without cell phone service). And it still would provide a means for the deputy director to serve as acting head when the deputy director otherwise would be ineligible under the FVRA. For example, the FVRA wouldn’t allow the deputy director to serve as acting head if she had been deputy for less than 90 days prior to the vacancy and then was nominated by the President to the directorship. See 5 U.S.C. § 3345(b)(1). Likewise, the FVRA wouldn’t allow the deputy director to serve as acting head for more than 210 days. See 5 U.S.C. § 3346. In those cases, the deputy director would have to rely on 12 U.S.C. § 5491(b)(5) in order to fill the acting director role.

— (3) Finally, I don’t think that English gains much from the argument that Congress intended for the CFPB to be an “independent bureau” and that the appointment of an “at-will employee” (Mulvaney) to be acting director undermines the independence of the CFPB. (See pp. 8–9 of the very well written memorandum in support of English’s motion for a temporary restraining order filed by the top-notch team of constitutional litigators at Gupta Wessler.) The most plausible view of the law is that English, too, serves at the will of the President: the for-cause removal protection in the CFPB applies to the director, not the acting or deputy director, and the D.C. Circuit has said that is “unwilling to infer [for-cause removal] protection absent clear evidence that Congress intended it.” Swan v. Clinton, 100 F.3d 973, 988 (D.C. Cir. 1996). On this view, neither Mulvaney nor English is more insulated from the President than the other, so the argument is a wash. And if English’s argument is that she enjoys for-cause removal protection notwithstanding the fact that she was neither presidentially appointed nor Senate confirmed, then her argument flies in the face of the conference committee’s intent for the CFPB to be endowed with “accountability.”

[Cross-posted at Whatever Source Derived.]

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