Petition for Writ of Certiorari — Michael Rop, et al., Petitioners v. Federal Housing Finance Agency, et al.
Supreme Court briefFeb 2, 2023
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No. _________
In the
Supreme Court of the United States
__________________________________________
MICHAEL ROP, ET AL.,
Petitioners,
v.
FEDERAL HOUSING FINANCE AGENCY, ET AL.,
Respondents.
__________________________________________
On Petition for a Writ of Certiorari to the
United States Court of Appeals
for the Sixth Circuit
__________________________________________
PETITION FOR A WRIT OF CERTIORARI
__________________________________________
DAVID H. THOMPSON
Counsel of Record
PETER A. PATTERSON
BRIAN W. BARNES
JOHN W. TIENKEN
COOPER & KIRK, PLLC
1523 New Hampshire
Avenue, N.W.
Washington, D.C. 20036
(202) 220-9600
dthompson@cooperkirk.com
Counsel for Petitioners
February 2, 2023
i
QUESTION PRESENTED
In August 2009, the Director of the Federal
Housing Finance Agency resigned. The Senate did not
confirm a successor for over four years. In the
meantime, an individual—who was never nominated
by the President nor confirmed by the Senate—served
as “Acting” FHFA Director, exercising the full panoply
of powers granted to that office. The Sixth Circuit held
this extended acting tenure did not run afoul of the
Appointments Clause, and thus upheld the “Acting”
FHFA Director’s regulatory decisions.
The question presented is whether the challenged
decisions of the “Acting” FHFA Director should be
vacated because the Constitution does not permit the
President to designate an “acting” official to exercise
the powers of a principal officer indefinitely without
the advice and consent of the Senate.
ii
PARTIES TO THE PROCEEDING
Petitioners are Michael Rop, Stewart Knoepp, and
Alvin Wilson. Petitioners were the plaintiffs in the
United States District Court for the Western District
of Michigan and the plaintiffs-appellants in the
United States Court of Appeals for the Sixth Circuit.
Respondents are the Federal Housing Finance
Agency, Sandra L. Thompson, in her official capacity
as Director of the Federal Housing Finance Agency,
and the United States Department of the Treasury.
Respondents were the defendants in the United
States District Court for the Western District of
Michigan and the defendants-appellees in the United
States Court of Appeals for the Sixth Circuit.
iii
STATEMENT OF RELATED PROCEEDINGS
This case arises from the following proceedings:
• Michael Rop, et al. v. Federal Housing Finance
Agency, et al., No. 20-2071 (6th Cir. Cir.) (opinion
issued and judgment entered October 4, 2022).
• Michael Rop, et al. v. Federal Housing Finance
Agency, et al., 1:17-cv-497 (W.D. Mich.) (opinion
issued and judgment entered September 8, 2020).
iv
TABLE OF CONTENTS
Page
QUESTION PRESENTED........................................... i
PARTIES TO THE PROCEEDING ........................... ii
STATEMENT OF RELATED PROCEEDINGS....... iii
TABLE OF AUTHORITIES......................................vii
PETITION FOR A WRIT OF CERTIORARI ............. 1
OPINIONS BELOW .................................................... 1
JURISDICTION .......................................................... 1
CONSTITUTIONAL PROVISION INVOLVED ........ 1
INTRODUCTION ........................................................ 2
STATEMENT .............................................................. 7
REASONS FOR GRANTING THE PETITION ....... 14
I.
II.
The Sixth Circuit’s Decision Diverged From
Other Circuits. ................................................ 14
A.
The Sixth Circuit held that the
Appointments Clause places no limit
on the duration of an “acting” official’s
service. .................................................. 14
B.
Other courts of appeals have recognized
that the Appointments Clause imposes
a backstop on acting appointments. .... 16
The “Acting” FHFA Director Served In
Violation of the Constitution. ......................... 19
v
III.
A.
The text of the Constitution counsels
no acting service beyond two years. .... 21
B.
Historical practice advises that acting
officials can generally serve no longer
than six months.................................... 23
C.
This Court’s precedents confirm that
acting service must be limited and
temporary. ............................................ 28
This Case Presents A Good Vehicle to Address
An Important and Increasingly Common
Issue. ............................................................... 31
CONCLUSION .......................................................... 33
APPENDIX
Appendix A Opinion in the United States Court of
Appeals for the Sixth Circuit
(October 4, 2022) ........................... App. 1
Appendix B Judgment in the United States Court
of Appeals for the Sixth Circuit
(October 4, 2022) ......................... App. 55
Appendix C Opinion in the United States District
Court for the Western District of
Michigan
(September 8, 2020) .................... App. 57
Appendix D Order in the United States District
Court for the Western District of
Michigan
(September 8, 2020) .................. App. 141
vi
Appendix E Judgment in the United States District
Court for the Western District of
Michigan
(September 8, 2020) .................. App. 143
vii
TABLE OF AUTHORITIES
CASES
Page
Arthrex, Inc., v. Smith & Nephew, Inc.,
35 F.4th 1328 (Fed. Cir. 2022)................... 4, 16, 17
Collins v. Yellen,
141 S. Ct. 1761 (2021) .............................. 7, 8, 9, 11
Edmond v. United States,
520 U.S. 651 (1997) .............................. 2, 3, 5, 20, 3
Free Enter. Fund v. Pub. Co. Accounting
Oversight Bd.,
537 F.3d 667 (D.C. Cir. 2008) ................................ 5
Free Enterprise Fund v. Pub. Co. Accounting
Oversight Bd.,
561 U.S. 477 (2010) .............................................. 30
Freytag v. Commissioner,
501 U.S. 868 (1991) .............................................. 30
Lucia v. S.E.C.,
138 S. Ct. 2044 (2018) .......................................... 33
McCulloch v. Maryland,
17 U.S. 316 (1819) ................................................ 30
McIntyre v. Ohio Elections Comm’n,
514 U.S. 334 (1995) .............................................. 26
Morrison v. Olson,
487 U.S. 654 (1988) ........................ 5, 20, 21, 29, 32
Myers v. United States,
272 U.S. 52 (1926) ................................................ 23
viii
N.L.R.B. v. Noel Canning,
573 U.S. 513 (2014) ...................... 20, 21, 22, 23, 29
N.L.R.B. v. Sw. Gen., Inc.,
580 U.S. 288 (2017) .................... 5, 6, 21, 25, 30, 33
Ryder v. United States,
515 U.S. 177 (1995) .............................................. 33
Seila Law LLC v. CFPB,
140 S. Ct. 2183 (2020) ........................................ 7, 8
United States v. Arthrex, Inc.,
141 S. Ct. 1970 (2021) ................................ 3, 29, 31
United States v. Eaton,
169 U.S. 331 (1898) .......................... 4, 5, 17, 21, 29
United States v. Hilario,
218 F.3d 19 (1st Cir. 2000) .............................. 5, 19
United States v. Smith,
962 F.3d 755 (4th Cir. 2020) .................. 4, 5, 17, 18
Weiss v. United States,
510 U.S. 163 (1994) ........................................ 29, 30
Williams v. Phillips,
482 F.2d 669 (D.C. Cir. 1973) .............. 5, 18, 19, 27
CONSTITUTIONAL AND STATUTORY PROVISIONS
U.S. CONST., art. II, § 2, cl. 2 .................. 1, 2, 8, 20, 21
U.S. CONST., art. II, § 2, cl. 3 .............................. 20, 22
12 U.S.C.
§ 4511(b) ................................................................. 8
§ 4512(b)(1) ............................................................. 8
§ 4512(b)(2) ............................................................. 7
§ 4512(f) .................................................................. 8
ix
§ 4617(a) ................................................................. 8
§ 4617(a)(7) ............................................................. 8
LEGISLATIVE AND CONGRESSIONAL MATERIALS
Act of May 8, 1792, ch. 37, § 8, 1 Stat. 281 ........ 24, 25
Act of Feb. 13, 1795, ch. 21, 1 Stat. 415 ................... 25
Act of Feb. 20, 1863, ch. 45, 12 Stat. 656 ................. 25
Act of July 23, 1868, ch. 227, 15 Stat. 168 ............... 25
Act of Feb. 6, 1891, ch. 113, 26 Stat. 733 ................. 25
156 CONG. REC. S11070-71 (Dec. 22, 2010) .............. 10
156 CONG. REC. S7911-03 (Nov. 15, 2010) ................ 10
OTHER AUTHORITIES
Anne O’Connell, Actings,
120 COLUM. L. REV. 613 (2020) ............................ 25
4 JONATHAN ELLIOT, THE DEBATES IN THE SEVERAL
STATE CONVENTIONS ON THE ADOPTION OF THE
FEDERAL CONSTITUTION (2d ed. 1836), available at
https://bit.ly/3DsWckv.................................... 23, 24
FHFA, TABLE 1: QUARTERLY DRAWS ON TREASURY
COMMITMENTS TO FANNIE MAE AND FREDDIE
MAC PER PSPAs, https://bit.ly/3e0AlDK ............. 11
FHFA, TABLE 2: DIVIDENDS ON ENTERPRISE DRAWS
FROM TREASURY, https://bit.ly/33Bqlz0 ............... 11
Michael B. Rappaport, The Original Meaning of
the Recess Appointments Clause,
52 U.C.L.A. L. Rev. 1487 (2005) .................... 24, 25
Michael McConnell, THE PRESIDENT WHO WOULD
NOT BE KING (2020) ....................................... 20, 23
x
Pet., Arthrex v. Smith & Nephew, Inc., et al.,
No. 22-639 (U.S. Jan. 6, 2023) ............................. 17
Status of the Acting Director, Office of Management
and Budget, 1 Op. O.L.C. 287 (1977) ...... 16, 26, 27
The Biographical Directory of the United States
Congress, 1774–2005 (2005), available at
https://bit.ly/3l5SJSm .......................................... 26
THE DECLARATION OF INDEPENDENCE
(U.S. 1776) .......................................................... 2, 3
THE FEDERALIST No. 76 (J. Cooke ed. 1961)
(A. Hamilton)............................................ 20, 24, 32
THE FEDERALIST No. 77 (J. Cooke ed. 1961)
(A. Hamilton).......................................................... 3
Thomas Berry, Is Matthew Whitaker’s
Appointment Constitutional? An Examination
of Early Vacancies Acts, YALE J REGUL. NOTICE
& COMMENT (Nov. 26, 2018),
https://bit.ly/404TXgU ................................... 25, 26
1
PETITION FOR A WRIT OF CERTIORARI
Petitioners respectfully seek a writ of certiorari to
review the judgment of the United States Court of
Appeals for the Sixth Circuit.
OPINIONS BELOW
The opinion of the Court of Appeals is reported at
50 F.4th 562 and is reproduced at Pet. App. 1. The
United States District Court for the Western District
of Michigan’s opinion is reported at 485 F. Supp. 3d
900 and is reproduced at Pet. App. 57.
JURISDICTION
The Court of Appeals issued its judgment on
October 4, 2022. Pet. App. 55. Petitioner’s application
for an extension of time to file a petition for a writ of
certiorari up to and including February 2, 2023 was
granted by Justice Kavanaugh on December 17, 2022.
See Michael Rop, et al., v. Federal Housing Finance
Agency, et al., No. 22A542. This Court has jurisdiction
under 28 U.S.C. § 1254(1).
CONSTITUTIONAL PROVISION INVOLVED
Article II, Section 2, Clause 2 of the U.S.
Constitution provides, in relevant part, that the
President,
shall nominate, and by and with the Advice
and Consent of the Senate, shall appoint . . .
Officers of the United States, whose
Appointments are not herein otherwise
provided for, and which shall be established
by Law: but the Congress may by Law vest the
Appointment of such inferior Officers, as they
think proper, in the President alone, in the
2
Courts of Law,
Departments.
or
in
the
Heads
of
U.S. CONST., art. II, § 2, cl. 2.
INTRODUCTION
At the center of this Petition are actions taken by
the “Acting” Director of the Federal Housing Finance
Agency. But “Acting” is something of a misnomer, as
this official was “acting” in name only. He served for
over four years—longer than a Presidential term,
longer than the average tenure of a Cabinet secretary,
and longer than the service of exceptional ones, such
as Thomas Jefferson’s time as Secretary of State. He
was never nominated by the President. He was never
confirmed by the Senate. Yet the whole time this
“Acting” Director exercised significant authority of the
United States. The issue in this case is whether such
an end-run around the Appointments Clause is
constitutionally permissible. It is not.
The Sixth Circuit held that it is. In doing so, the
court determined that Congress could “authorize[]” an
acting official “to serve indefinitely via statute.” Pet.
App. 47 (Thapar, J., concurring in part and dissenting
in part). Such a holding renders the Appointments
Clause an empty formality, splits from other circuit
authority, disregards this Court’s precedents, and
establishes a dubious standard during an era when
the Executive’s reliance on “acting” officials has grown
precipitously.
The Appointments Clause “is more than a matter
of ‘etiquette or protocol’; it is among the significant
structural safeguards of the constitutional scheme.”
Edmond v. United States, 520 U.S. 651, 659 (1997).
Having experienced “swarms of [royal] Officers”
3
before the Revolution, THE DECLARATION OF
INDEPENDENCE ¶ 12 (U.S. 1776), the Founders
approached the problem of appointments with a twosided solution in the Constitution. Officers are
nominated by the President ensuring “the blame of a
bad nomination would fall upon the president singly
and absolutely.” THE FEDERALIST NO. 77, p. 517 (J.
Cooke ed. 1961) (A. Hamilton). Yet the Senate must
confirm these officers, “serv[ing] both to curb
Executive abuses of the appointment power, and to
promote a judicious choice of persons for filling the
offices of the union.” Edmond, 520 U.S. at 659
(cleaned up). In this way, both the President and the
Senate are held accountable for those who wield
significant authority of the United States. United
States v. Arthrex, Inc., 141 S. Ct. 1970, 1979 (2021).
Since the “Acting” FHFA Director never went
through Senate confirmation, all agree that his
exercise of significant authority was only
constitutionally permissible if his tenure falls under
an exception to the Appointments Clause. He was not
recess appointed, thus the only exception available is
if he was an “inferior officer” whose designation was
provided by Congress. In the mine run case, whether
an officer is “inferior” turns on the office’s authority
and supervision. In this sense, the “Acting” FHFA
Director was the polar opposite of an “inferior officer,”
heading an agency and making decisions that are not
“directed and supervised at some level by others who
were appointed by Presidential nomination with the
advice and consent of the Senate.” Arthrex, 141 S. Ct.
at 1980. He exercised the full authority of a principal
officer for over four years.
The “Acting” FHFA Director could only be
4
“inferior”—which is to say constitutionally exercising
the powers of his office—under one narrow
understanding of the term. This Court’s precedent in
United States v. Eaton, 169 U.S. 331 (1898)
establishes that an acting official is “inferior” and can
serve without running afoul of the Appointments
Clause, if that official performs the duties of Director
“for a limited time, and under special and temporary
conditions,” id. at 343.
An officer, who is “inferior” only because of his
“limited time” of service, must actually serve for only
a limited time. Yet in its decision, a divided panel of
the Sixth Circuit refused to recognize any temporal
limitations on “acting” officers. The Sixth Circuit held
that the tenure here was “temporary because” the
“Acting” Director’s appointment “would terminate
upon the appointment of [a Senate-confirmed]
successor.” Pet App. 23 (cleaned up). And the Sixth
Circuit refused to consider any limits on “whether the
President waited ‘too long’ before the confirmation of
a permanent principal officer” or any “parameters”
that might define when an inferior officer has
exceeded the “special [or] temporary conditions”
permitted by the Constitution. Pet. App. 24. As Judge
Thapar explained in dissent, this decision allows the
President and Congress to “scrap” the Appointments
Clause altogether. Pet. App. 32.
The Sixth Circuit’s holding that there are
effectively no constitutional limits on the tenure of an
acting official is an outlier. In fact, it diverges from
courts that have considered this issue, including the
D.C., First, Fourth, and Federal Circuits. Arthrex,
Inc., v. Smith & Nephew, Inc., 35 F.4th 1328, 1333
(Fed. Cir. 2022); United States v. Smith, 962 F.3d 755,
5
765 (4th Cir. 2020); United States v. Hilario, 218 F.3d
19 (1st Cir. 2000); Williams v. Phillips, 482 F.2d 669,
670 (D.C. Cir. 1973) (per curiam). These circuits
recognize that “a statute” that “may authorize an
acting tenure so lengthy that it exceeds the ‘special
and temporary conditions’ contemplated by Eaton”
could “amount[ ] instead to a circumvention of the
Appointments Clause.” Smith, 962 F.3d at 765 n.3
(emphasis added).
The Sixth Circuit’s decision cannot be squared
with this Court’s Appointments Clause precedents
either. From this Court’s very first recognition of the
temporary service exception to Senate confirmation,
this Court has implicitly recognized that there comes
a point when an inferior officer is impermissibly
“transformed into the superior and permanent
official.” Eaton, 169 U.S. at 343. In other words, it is
“[t]he temporary nature of the office [which] is the . . .
reason that acting heads of departments are
permitted to exercise authority without Senate
confirmation.” Free Enter. Fund v. Pub. Co. Acct.
Oversight Bd., 537 F.3d 667, 708 n.17 (D.C. Cir. 2008)
(Kavanaugh, J., dissenting) (first emphasis added).
This Court’s repeated statements that the “acting”
exception means “temporary” or “temporarily” only
reaffirms that such an official cannot serve
indefinitely. See, e.g., Edmond, 520 U.S. at 661;
Morrison v. Olson, 487 U.S. 654, 672 (1988); id. at 721
(Scalia, J., dissenting). If a temporary appointment
were not really temporary, “the structural protections
of the Appointments Clause” would be “avoided based
on . . . trivial distinctions.” N.L.R.B. v. Sw. Gen., Inc.,
580 U.S. 288, 314 n.1 (2017) (Thomas, J., concurring).
Constitutional text, history, and precedent all
6
indicate that, if an “acting” official exercises the duties
of a principal officer, that official may only serve
without Senate confirmation for up to six months or
at most two years. Pet. App. 40–44 (Thapar, J.,
concurring in part and dissenting in part). Thus, the
over four years that the “Acting” FHFA Director
wielded power far exceeds any constitutionally
permissible line or fair understanding of Eaton’s
“limited time” and “special or temporary conditions.”
And, at the time of the challenged actions in this case,
the “Acting” FHFA Director had been serving for over
three years, which certainly crosses that line as well.
Sw. Gen., Inc., 580 U.S. at 314 n.1 (Thomas, J.,
concurring) (explaining there is “nothing special or
temporary” about serving “more than three years in
an office limited by statute to a 4–year term, and . . .
exercis[ing] all of the statutory duties of that office”).
In fact, so far in this litigation, the Government has
failed to identify a single acting official during the
first two hundred years of the Constitution that
exercised the power of a principal officer without
Senate confirmation for as long as the “Acting” FHFA
Director did.
In recent decades, the rise of acting officers has
been “pervasive” with one survey indicating that from
1981 to 2020 “nearly as many acting officers have
filled cabinet positions as confirmed cabinet
secretaries.” Pet. App. 40 (Thapar, J., concurring in
part and dissenting in part). Some statutes “expressly
limit an acting officer’s tenure. Others do not.” Id.
Regardless of what any particular statute provides,
the Constitution—contrary to the Sixth Circuit—
must serve as the ultimate backstop. And this
structural protection of liberty is not something
7
Congress and the President can bargain away by
legislative compromise.
This Court should grant this Petition to clarify
that the Constitution does not permit an acting official
to serve indefinitely, that the “Acting” FHFA Director
exceeded those limits, and that relief should be
granted to Petitioners.
STATEMENT
Petitioners are shareholders in Fannie Mae and
Freddie Mac (the “Companies”), two for-profit
companies that are chiefly regulated by FHFA and for
which FHFA is currently acting as conservator.
The Director. FHFA is an “independent” agency
headed by a single director who serves a five-year
term and who, by statute, could only be removed by
the President “for cause.” 12 U.S.C. § 4512(b)(2). In
Collins v. Yellen, 141 S. Ct. 1761 (2021), this Court
held that FHFA’s “novel” structure violated the
separation of powers by concentrating executive
power “in a unilateral actor insulated from
Presidential control,” id. at 1784. And the Court noted
how powerful this agency (and by extension the
individual serving as Director) is: “no board or
commission can set aside the FHFA’s rules;” “FHFA
has regulatory and enforcement authority over two
companies [Fannie and Freddie] that dominate the
secondary mortgage market and have the power to
reshape the housing sector;” and “FHFA actions with
respect to those companies could have an immediate
impact on millions of private individuals and the
economy at large.” Id. at 1785 (citing Seila Law LLC
v. CFPB, 140 S. Ct. 2183, 2241 (2020) (Kagan, J.,
concurring in the judgment with respect to
8
severability and dissenting in part) (noting that “the
FHFA plays a crucial role in overseeing the mortgage
market, on which millions of Americans annually
rely”)).
As with all other principal officers of the United
States, the FHFA Director must be nominated by the
President and confirmed by the Senate. 12 U.S.C.
§ 4512(b)(1); U.S. CONST., art. II, § 2, cl. 2. But when
the office of FHFA Director is vacant, the Housing and
Economic Recovery Act (“HERA”) authorizes the
President to designate an acting official to exercise the
Director’s powers during a temporary vacancy. 12
U.S.C. § 4512(f).
The Conservatorship. In addition to creating
FHFA to regulate Fannie and Freddie, Congress
empowered FHFA to appoint itself as the Companies’
conservator under certain circumstances. See 12
U.S.C. §§ 4511(b), 4617(a). When acting as
conservator, the Director’s decisions are unreviewable
by “any other agency of the United States.” 12 U.S.C.
§ 4617(a)(7).
FHFA’s first Director, James Lockhart, exercised
the agency’s power to place the Companies into
conservatorship in September 2008. The next day,
FHFA entered into agreements with Treasury, in
which Treasury “exercised its temporary authority to
buy” the Companies’ stock. Collins, 141 S. Ct. 1772. In
exchange for providing each company up to $100
billion in capital, Treasury received “1 million shares
of specially created senior preferred stock in each
company.” Id. at 1773. With these shares, Treasury
received four key entitlements:
First, Treasury received a senior liquidation
9
preference equal to $1 billion in each
company, with a dollar-for-dollar increase
every time the company drew on the capital
commitment. In other words, in the event the
FHFA liquidated Fannie Mae or Freddie Mac,
Treasury would have the right to be paid back
$1 billion, as well as whatever amount the
company had already drawn from the capital
commitment, before any other investors or
shareholders could seek repayment. Second,
Treasury was given warrants, or long-term
options, to purchase up to 79.9% of the
companies’ common stock at a nominal price.
Third, Treasury became entitled to a
quarterly periodic commitment fee, which the
companies would pay to compensate Treasury
for the support provided by the ongoing access
to capital. And finally, the companies became
obligated to pay Treasury quarterly cash
dividends at an annualized rate equal to 10%
of
Treasury’s
outstanding
liquidation
preference.
Id. FHFA and Treasury later amended this deal twice
in 2009 to provide more capital support for the
Companies.
“Acting.” Director Lockhart resigned in August
2009. Pursuant to HERA, President Obama
designated Deputy Director Edward DeMarco as
“Acting” FHFA Director. DeMarco’s Deputy Director
position did not require Senate confirmation and thus
DeMarco had never been Senate confirmed. Thus
began the “acting” tenure at issue in this Petition.
Fifteen
months
later,
President
Obama
10
nominated Joseph A. Smith, Jr. to serve as FHFA
Director. See 156 CONG. REC. S7911-03 (Nov. 15,
2010). The Senate did not confirm Mr. Smith, so the
nomination was returned to the President on
December 22, 2010. See 156 CONG. REC. S11070-07
(Dec. 22, 2010). The President would wait more than
two years before nominating someone else.
In the meantime, “Acting” Director DeMarco ran
FHFA, exercising the full panoply of the office’s
statutory powers. Under his supervision, the
Companies were forced to dramatically write down
the value of their assets and to incur substantial noncash accounting losses that forced the Companies to
make more draws on Treasury’s funding
commitment—causing the liquidation preference on
Treasury’s Government Stock to swell to $189 billion.
Based on the Companies’ performance in the second
quarter of 2012, however, it was apparent the
Companies’ private shares still had value.
In August 2012, Mr. DeMarco, acting as the
Companies’
conservator,
signed
the
Third
Amendment to the PSPAs. Among other things, this
amendment imposed what is known as the “Net
Worth Sweep.” The Net Worth Sweep replaced the
Government Stock’s prior dividend structure with one
that required Fannie and Freddie to pay Treasury
their entire net worth on a quarterly basis, leaving
only a small capital buffer. Id. Effectively, the federal
government skimmed off the Companies’ net worth
every quarter. 1
Treasury and FHFA have since modified the quarterly
dividend payments to permit the Companies to build up capital
1
11
As FHFA expected, the Net Worth Sweep resulted
in massive and unprecedented payments to the
government. All told, through the third quarter of
2019, the Net Worth Sweep has required the
companies to transfer to Treasury over $300 billion in
purported dividends—$136 billion more than
Treasury could have received under the original
agreements. See FHFA, TABLE 2: DIVIDENDS ON
ENTERPRISE
DRAWS
FROM
TREASURY,
https://bit.ly/33Bqlz0. By that time, Treasury had
already recouped over $109 billion more than it
disbursed to the Companies. See id.; FHFA, TABLE 1:
QUARTERLY DRAWS ON TREASURY COMMITMENTS TO
FANNIE MAE AND FREDDIE MAC PER PSPAS,
https://bit.ly/3e0AlDK.
It was nearly another year after the imposition of
the Net Worth Sweep—in May 2013—when the
President finally sent another nomination to the
Senate. He nominated Congressman Melvin L. Watt
for FHFA Director. Seven months after that, the
Senate confirmed Mr. Watt on December 10, 2013.
Director Watt took office in January 2014.
For the first time in over four years, FHFA had a
Director who had been confirmed by the Senate.
Proceedings
Below.
Petitioners
are
shareholders who challenged FHFA’s actions, arguing
(among other things) that “Acting” Director
DeMarco’s lengthy tenure violated the Appointments
Clause. The Western District of Michigan had
jurisdiction over Petitioners’ claims under 28 U.S.C.
to specified thresholds; but as this Court has held, this
modification does not moot Plaintiffs’ request for relief. Collins,
141 S. Ct. at 1780.
12
§ 1331. On September 8, 2020, the district court
dismissed the complaint. Pet. App. 141. Petitioners
timely appealed.
A divided panel of the Sixth Circuit affirmed the
dismissal of Petitioners’ Appointments Clause claim.
Pet. App. 2–3. The panel majority held that “DeMarco
was not serving in violation of the Constitution when
he signed the” Net Worth Sweep. Pet. App. 16.
According to the Sixth Circuit, “when a government
official fills a vacancy of a principal officer, that acting
officer is an inferior officer. And inferior officers can
be designated by the President alone, so long as
Congress has vested the President with the authority
to do so.” Pet. App. 18. Since HERA authorized
DeMarco’s indefinite appointment by statute, the
Sixth Circuit rejected any constitutional argument
grounded in “text, history, and precedent” that his
tenure must be limited. Pet. App. 20. So long as there
is a statute without a time-limit, the Sixth Circuit
would hold that the Constitution allows an acting
officer to serve indefinitely.
Judge Thapar dissented because the Sixth
Circuit’s holding “permits the President and Congress
to scrap” the Appointments Clause. Pet. App. 32. 2
Although historical practice and this Court’s
precedents permit acting officials to serve without
confirmation for some period of time, “no acting officer
can serve without confirmation longer than the
Constitution permits.” Pet. App. 40. Judge Thapar
then suggested three “interpretative tools . . . for
Judge Thapar concurred in the majority’s decision to
remand Petitioners’ removal claim, which is not at issue in this
Petition. Pet. App. 32 n.1.
2
13
deciding when an acting officer has overstayed his
welcome.” Pet. App. 40.
“First, historical practice suggests a line at six
months. For up to six months, an acting officer may
fill a regularly occurring vacancy, while service
beyond that mark is presumptively unconstitutional.”
Pet. App. 40. Beyond six-months, there may be
“special” circumstances supporting a longer tenure—
as in Eaton, when a consul fell ill on the other side of
the planet “in an era before telephones, automobiles,
or airplanes.” Pet. App. 43. Since the vacancy that the
“Acting” FHFA Director filled was “routine,” his
tenure exceeded these limits. Pet. App. 43.
“Second, the Constitution’s text and structure
suggest an alternative line: An acting officer may
serve until the current Senate expires—that is, for up
to two years or as little as one day, depending on when
the vacancy occurs.” Pet. App. 43. To begin with, the
“the Appointments Clause itself states that
appointees must be confirmed by ‘the Senate.’” If “the
Senate” refers to “‘the Senate in existence when the
acting officer’s service begins,’ that gives the acting
officer at most two years to seek confirmation before a
new Senate sits.” Pet. App. 43. Tying service to the
Senate is further buttressed by the Recess
Appointments Clause, which would be a “dead letter”
if Acting officials—not appointed during any recess at
all—could serve longer than recess-appointed officials
who can serve, at most, for two years. Pet. App. 44.
Third, a functional, “reasonableness” inquiry into
the length of acting service “has an obvious appeal.
But it lacks any apparent rooting in the Appointments
Clause’s text, historical practice, or the Constitution’s
14
structure.” Pet. App. 44–45. Nonetheless, even under
such an inquiry—informed by the Executive Branch’s
own guidance on how long is too long for an acting
official to serve—the “Acting” FHFA Director “flunks
even this amorphous standard.” Pet. App. 45.
As Judge Thapar explained, under “whichever
metric . . . DeMarco’s tenure violated the
Appointments Clause. No viable interpretation of the
Clause permits an acting officer to skip confirmation
for three years under these circumstances. By the
time DeMarco signed the [Net Worth Sweep,] he
signed it unlawfully.” Pet. App. 46.
REASONS FOR GRANTING THE PETITION
I.
The Sixth Circuit’s Decision Diverged
From Other Circuits.
A.
The Sixth Circuit held that the
Appointments Clause places no limit
on the duration of an “acting”
official’s service.
The Sixth Circuit drew a simple, if plainly wrong,
line: if Congress authorizes acting tenure, then the
Constitution must as well. The majority explained
that Congress “accounted for vacancies by providing
for an Acting Director to take on the responsibilities
of FHFA Director under certain circumstances.” Pet.
App. 18. “President Obama complied with this
procedure when he designated Deputy Director
DeMarco to serve as Acting Director upon the
resignation of Director Lockhart” and the “Acting”
Director’s “service terminated . . . upon the
appointment of the new Director.” Pet. App. 18–19.
“Therefore,” the Sixth Circuit said, “we find no
violation of the Appointments Clause.” Pet. App. 19.
15
In reaching its conclusion that whatever line
Congress draws is coextensive with whatever the
Constitution permits, the Sixth Circuit made several
points. First, the majority rejected Petitioners’
argument based on “constitutional text, history, and
precedent.” Pet. App. 20. Disregarding the first two
centuries of historical practice under the federal
Constitution, the Sixth Circuit observed that “[t]he
President has installed acting officers, who Congress
has declined to place time restrictions on, for well over
twenty years.” Pet. App. 23. This recent history
“represents longstanding congressional acquiescence
to the reality that disagreements between the
President and the Senate result in vacancies that
require principal officers’ duties to be carried out
temporarily by acting officials.” Pet. App. 23. Relying
on this Court’s decision in Noel Canning, the Sixth
Circuit explained that the past two decades of practice
was “entitled to great regard.” Pet. App. 23.
Second, the Sixth Circuit held that under this
Court’s decision in Eaton the “Acting” Director’s
tenure was actually temporary. Pet. App. 23–24. It did
end after all—when his successor was appointed more
than four years later. Pet. App. 69–70.
Third, the Sixth Circuit declined to consider
whether other provisions in the Constitution, namely
the Recess Appointments Clause, offered insight into
how long acting officials may permissibly serve. In its
view, “[t]he presidential practice of appointing acting
officers to fill vacancies, which can arise at any time
and last for unknown duration, cannot be logically
tied to the comings and goings of the Senate.” Pet.
App. 25. Besides, the Sixth Circuit stated again,
“Congress has acquiesced to this practice and is free
16
to impose time limits on acting officials’ terms of
service.” Pet. App. 25.
Fourth, the Sixth Circuit rejected consideration of
a “functionalist” approach to determine the
reasonableness of an acting officer’s tenure. Pet. App.
25. Such an approach would have been chiefly derived
from the Executive Branch’s own guidance that an
acting appointment should “not continue beyond a
reasonable time.” Pet. App. 26. (quoting Status of the
Acting Director, Office of Management and Budget, 1
Op. O.L.C. 287, 289–90 (1977)). An evaluation of the
reasonableness of an acting official’s tenure, according
to the Sixth Circuit, “contemplate[d] an evaluation
plainly committed to the political branches and wholly
irrelevant to interpreting the text of the
Appointments Clause.” Pet. App. 26.
In sum, the Sixth Circuit saw no “reason to read
an explicit time limit on acting officials into the
constitutional . . . scheme[].” Pet. App. 19.
B.
Other courts of appeals have
recognized that the Appointments
Clause imposes a backstop on acting
appointments.
The Sixth Circuit did not cite any other circuit
court decisions in support of its novel indefinite
service rule. For good reason, the other circuits that
have addressed this issue have all recognized that the
Appointments Clause serves as a backstop on the
length of service of an “acting” official.
On remand from this Court, the Federal Circuit
evaluated whether the Commissioner for Patents
could constitutionally issue a rehearing decision
consistent with the Appointments Clause. Arthrex,
17
Inc., v. Smith & Nephew, Inc., 35 F.4th 1328, 1333
(Fed. Cir. 2022). In Arthrex, the office of the Director
of the Patent and Trademark Office was vacant.
Under an agency directive, the Commissioner fulfilled
the responsibilities of that office on an acting basis.
The Federal Circuit upheld this under an
Appointments Clause challenge, in part, because the
Commissioner was in fact serving “for a limited time”
when the relevant decision was reached. Id. “[T]he
Commissioner denied Arthrex’s rehearing request on
his 268th day performing the Director’s duties, which
is less than the 309 days the Supreme Court deemed
acceptable in Eaton.” Id. at 1335. The fact that the
Commissioner was serving less than a year, in
“combination” with other limits—such as the
President’s ability to name a replacement Acting
Director and the eventual appointment of a
successor—meant that “the Commissioner was
performing the Director’s duties ‘for a limited time,
and under special and temporary conditions.’” Id.
(quoting Eaton, 169 U.S. at 343) (emphasis added).
Under the Federal Circuit’s analysis, the length of
time of service mattered. 3
The Fourth Circuit similarly considered the
length of time of acting service in United States v.
Smith, 962 F.3d 755 (4th Cir. 2020). In Smith, the
Fourth Circuit upheld the actions of the Acting
Attorney General from an Appointments Clause
challenge. Yet in doing so the Fourth Circuit
A petition for a writ of certiorari is currently pending in
Arthrex. But the petitioners in Arthrex do not seek review of the
Federal Circuit’s Appointments Clause holding. See Pet.,
Arthrex, Inc. v. Smith & Nephew, Inc., et al., No. 22-639, at 15
n.1 (U.S. Jan. 6, 2023).
3
18
explained that “[t]o be sure, it is possible that a
statute may authorize an acting tenure so lengthy
that it exceeds the ‘special and temporary conditions’
contemplated by Eaton, and amounts instead to a
circumvention of the Appointments Clause.” Id. at 765
n.3. But that was not the case in Smith because the
Acting Attorney General “held his post for only a few
months.” Id. This less-than-one-year of acting service
was presumptively reasonable.
The D.C. Circuit likewise considered “the
existence of presidential authority to make an interim
appointment without Senate approval” in a case
involving an Acting Director of the Office of Economic
Opportunity. See Williams v. Phillips, 482 F.2d 669,
670 (D.C. Cir. 1973) (per curiam). In that case, the
Government sought a stay of the district court’s
decision that the Acting Director had served “illegally
in his position since he ha[d] not been nominated by
the President and confirmed by the Senate.” Id. The
D.C. Circuit denied the stay, explaining that “[t]he
Government concedes that the President cannot
designate an acting officer indefinitely without any
presentation to the Senate for confirmation.” Id. at
671 (emphasis added). Looking to congressional
enactments regulating the length of service of acting
officials, the Court held that thirty days of service was
“[a]n indication of the reasonable time” and that the
Government had not demonstrated that “the
President was entitled to hold [the Acting Director] in
office for a four-and-a-half-month period without any
nomination.” Id. Under Williams, the “Acting” FHFA
Director would have overstayed his constitutional
limit more than ten-times over.
Further, the First Circuit briefly addressed this
19
issue in United States v. Hilario, 218 F.3d 19 (1st Cir.
2000), in which a career Justice Department official
served for more than six years as “interim United
States Attorney,” 218 F.3d at 21. Given this
“inordinate length” of service, an Appointments
Clause challenge naturally arose. The court
recognized that while “an inferior officer can stand in
for a principal officer[,] . . . [s]hould the stand-in
remain so long in office that he became
indistinguishable from the latter, an argument could
be made that his continued service required
nomination by the President and confirmation by the
Senate.” Id. at 29 (emphasis added). But the First
Circuit did not need to reach that question in Hilario
because it determined that United States Attorneys
are not “principal officers.”
*
*
*
The Sixth Circuit’s decision diverges from these
circuits in at least two critical ways. First, the other
circuits all recognized the Constitution provides a
limit on the tenure of “acting” officials, while the Sixth
Circuit effectively held there is none. Second, the
“Acting” FHFA Director’s tenure at issue in this
Petition far exceeds the quite limited tenures of most
of the acting officials in those cases. Nevertheless, the
Sixth Circuit upheld Mr. DeMarco’s protracted stay at
the top of an agency without the constitutionally
required advice and consent of the Senate.
II.
The “Acting” FHFA Director Served In
Violation of the Constitution.
The Appointments Clause and its requirement for
advice and consent by the Senate is the default means
for appointing officers of the United States. The
20
Senate’s constitutional role in this process is more
than a mere technicality or historical accident. See
Michael McConnell, THE PRESIDENT WHO WOULD NOT
BE KING 157 (2020) (explaining the final version of the
Clause “was a major step away from a fully unitary
executive—the
President
would
not
have
subordinates fully of his own choosing”). “[T]he need
to secure Senate approval provides ‘an excellent check
upon a spirit of favoritism in the President, and would
tend greatly to preventing the appointment of unfit
characters from State prejudice, from family
connection, from personal attachment, or from a view
to popularity.’” N.L.R.B. v. Noel Canning, 573 U.S.
513, 523 (2014) (quoting THE FEDERALIST NO. 76, p.
513 (J. Cooke ed. 1961) (A. Hamilton)).
“Acting” designations strip the Senate of its key
role. The Constitution, of course, provides one explicit
path for the President to fill vacancies without Senate
consent—the Recess Appointments Clause. U.S.
CONST. art. II, § 2, cl. 3. But the “Acting” FHFA
Director was not so appointed. For “apparent[] . . .
reasons of efficiency and practicality,” McConnell,
supra, 266, the Constitution additionally included the
last provision of the Appointments Clause,
“sometimes referred to as the ‘Excepting Clause,’”
Edmond, 520 U.S. at 660. This provides that
“Congress may by Law vest the Appointment of such
inferior Officers, as they think proper, in the
President alone, in the Courts of law, or in the Heads
of Departments.” U.S. CONST. art. II, § 2, cl. 2.
In Eaton, this Court interpreted “inferior” to
include temporary service. This is, as Justice Scalia
described, an “admittedly sketchy precedent in this
area.” Morrison, 487 U.S. at 721 (Scalia, J.,
21
dissenting); see also Sw. Gen., 580 U.S. at 313
(Thomas, J., dissenting) (questioning whether acting
officers can even serve as “principal officers”). But this
Court has held that some temporary service,
authorized by Congress, is broadly consistent with
congressional practice at the time of the Founding and
longstanding practices since. Sw. Gen., 580 U.S. at
294 (“Since President Washington’s first term,
Congress has given the President limited authority to
appoint acting officials to temporarily perform the
functions of a vacant PAS office without first
obtaining Senate approval”); N.L.R.B. v. Noel
Canning, 573 U.S. 513, 600 (2014) (Scalia, J.,
concurring in the judgment).
Yet since an “acting” officer can only avoid Senate
confirmation to the extent that officer is actually
“inferior”—which is to say actually serving
“temporarily”—it
is
this
Court’s
“solemn
responsibility” to demarcate when that acting official
is “transformed into the superior and permanent
official” serving unconstitutionally. Noel Canning,
573 U.S. at 571; Eaton, 169 U.S. at 343. In this, as
Judge Thapar explained, the Constitution’s text,
history, and precedent provide guidance: no more
than six months absent unusual circumstances, and
never more than two years. Pet. App. 40–44 (Thapar,
J., concurring in part and dissenting in part).
A.
The text of the Constitution
counsels no acting service beyond
two years.
Start with the text. The Constitution’s text does
not contemplate “acting” appointments, thus it is
similarly silent on the permissible duration of those
22
appointments. But the Constitution is not silent as to
“vacancies.” The Recess Appointments Clause “gives
the President alone the power ‘to fill up all Vacancies
that may happen during the Recess of the Senate, by
granting Commissions which shall expire at the End
of their next session.’” Noel Canning, 573 U.S. at 519
(quoting U.S. CONST., art. II, § 2, cl. 3). This Court’s
interpretation of that clause allows an official
appointed under the Recess Appointments Clause “to
serve for . . . almost 2 years” depending on when the
President makes the appointment within a
congressional session. Id. at 534. And it ties that
service to the expiration of the Senate’s session. 4
“[T]he rule against surplusage dictates that the
Recess Appointments Clause must be as large as the
acting-officer exception or larger. Otherwise, the
President could do with acting officials what he could
not with recess appointments.” Pet. App. 44 (Thapar,
J., concurring in part and dissenting in part). There
would be no need to recess appoint, if the President
could simply announce an acting appointment to last
indefinitely—even longer than the two-year sitting of
The Constitution addresses vacancies in two other
provisions: the House Vacancies Clause and the Senate
Vacancies Clause. The Founders did not allow for the Governors
of the several states to fill vacancies in the House, but the
original Senate Vacancies Clause (and as amended by the
Seventeenth Amendment) makes a provision for temporary
appointments of Senators. This clause allowed these
appointments to last “until the next Meeting of the Legislature,
which shall then fill such vacancies.” This is yet further evidence
that indefinite “temporary” appointments to fill vacancies are
foreign to the Constitution’s design. And, critically, here too the
Founders tied the Executive authority to fill a temporary
vacancy to the meeting of the Legislature.
4
23
the Senate. But “[i]t is unthinkable that such an
obvious means for the Executive to expand its power
would have been overlooked during the ratification
debates.” See Noel Canning, 573 U.S. at 596 (Scalia,
J., concurring in the judgment).
If the text of the Constitution for “practical
reason[s]” envisages an officer acting without Senate
confirmation for at most two years, McConnell, supra,
266, then a largely atextual practice of designating
acting officials cannot permit service longer than what
the text otherwise provides. Under this test, the
“Acting” FHFA Director exceeded his lawful tenure
well before he took the action that Petitioners
challenge in this case.
B.
Historical practice advises that
acting officials can generally serve
no longer than six months.
History only underscores the unlawfulness of the
“Acting” FHFA Director’s tenure. Here, Founding era
evidence provides guidance, Noel Canning, 573 U.S.
at 514, and the actions of the early Congresses and of
President Washington’s administration have unique
salience, cf. Myers v. United States, 272 U.S. 52, 136
(1926). See Pet. App. 42 (Thapar, J, concurring in part
and dissenting in part).
To begin with, the idea that a President may
struggle to fill a role with the Senate’s approval was
well-known to the Founders. As future-Justice Iredell
explained at the North Carolina ratifying convention,
“The President proposes such a man for such an office.
The Senate has to consider upon it. If they think him
improper, the President must nominate another,
whose appointment ultimately again depends upon
24
the Senate.” 4 JONATHAN ELLIOT, THE DEBATES IN THE
SEVERAL STATE CONVENTIONS ON THE ADOPTION OF
THE FEDERAL CONSTITUTION 134 (2d ed. 1836),
available at https://bit.ly/3DsWckv. This should not be
too much of a problem because for a “vacant” office,
there might be a “hundred men on the continent . . .
equally well[-]qualified” among whom the President
may choose. Id. But Senate refusal, as Hamilton put
it, would necessarily lead to “a second or . . .
subsequent nomination” by the President. THE
FEDERALIST NO. 76, supra, p. 512. There may be many
reasons, both practical and political, for the President
and Senate to come to an agreement on a nominee
sooner rather than later. But the fact that an office
would not be filled without agreement was well
understood.
Equally well-understood was that a previously
filled principal officer role may be temporarily
unoccupied. Initially, Congress only authorized acting
appointments of an officer in the Departments of
State, Treasury, and War and in only three specific
circumstances: “death, absence from the seat of
government, or sickness.” Act of May 8, 1792, ch. 37,
§ 8, 1 Stat. 281. Congress provided in only these
circumstances that the President may “authorize any
person or persons . . . to perform the duties of the said
respective offices until a successor be appointed, or
until such absence or inability by sickness shall
cease.” Id. 5 Yet only three years later, Congress
5 This
statute thus provides no support for any indefinite
stay in office because of a prior official’s resignation. In all events,
some have argued that the 1792 statute was unconstitutional.
See Michael B. Rappaport, The Original Meaning of the Recess
25
amended the statute in two relevant ways. See Act of
Feb. 13, 1795, ch. 21, 1 Stat. 415. First, Congress
removed the restrictions on the type of vacancy,
referring only to a “case of vacancy.” Id. And second,
Congress stated that “no one vacancy shall be
supplied, in manner aforesaid, for a longer term than
six months.” Id. This six-month period appears to
accord with prior understandings under English law.
Pet. App. 41 n.6. (Thapar, J., concurring in part and
dissenting in part).
In the 1860s, Congress expanded the number of
offices for which the President could authorize acting
service—but service in an acting capacity “occasioned
by death or resignation” was limited to only ten days.
See Anne O’Connell, Actings, 120 COLUM. L. REV. 613,
626 & n.51 (2020) (citing Act of July 23, 1868, ch. 227,
15 Stat. 168 and Act of Feb. 20, 1863, ch. 45, 12 Stat.
656). The ten-day limit was extended to thirty days in
1891. See id. at 626 & n.53 (citing Act of Feb. 6, 1891,
ch. 113, 26 Stat. 733). These statutes remained until
1988. Sw. Gen., 137 S. Ct. at 935–36.
Executive designation of “acting” officers largely
complied with Congress’s commands. According to one
survey, from 1792–1868 only one individual ever
appears to have served close to a year in an “acting”
capacity. See Thomas Berry, Is Matthew Whitaker’s
Appointment Constitutional? An Examination of
Early Vacancies Acts, YALE J REGUL. NOTICE &
Appointments Clause, 52 U.C.L.A. L. REV. 1487, 1516 n. 80
(2005).
26
COMMENT (Nov. 26, 2018), https://bit.ly/404TXgU. 6
The majority served less than six months, and none
served for anything close to the over four year tenure
of FHFA’s “Acting” Director. Id.
“Where the constitutional text is silent, ‘the
widespread and long-accepted practices of the
American people are the best indication of what
fundamental beliefs it was intended to enshrine.’” Pet.
App. 41 (Thapar, J., concurring in part and dissenting
in part) (quoting McIntyre v. Ohio Elections Comm’n,
514 U.S. 334, 378 (1995) (Scalia, J., dissenting)). For
most of the first two centuries of the Constitution’s
history, Congress’s customary practice was to impose
statutory time limits on the duration of acting officers’
tenure—time limits that were never more than six
months and often considerably less.
The historical understanding of Congress is
largely consistent with past Executive branch
guidance. In a 1977 opinion, President Carter’s Office
of Legal Counsel addressed how long the Acting
Director of the Office of Management and Budget
could serve. Status of the Acting Director, Office of
Management and Budget, 1 Op. O.L.C. 287 (1977).
The opinion stated unequivocally that “[w]hile there
is no express statutory limit on the length of such
6 Chief Clerk of the War Department George Graham began
his service as Secretary of War ad interim on October 22, 1816.
His tenure carried over from the end of the Madison
Administration into the first year of the Monroe Administration.
His designation formally ended either on October 8, 1817 (when
John C. Calhoun was appointed) or on December 10, 1817 (when
Calhoun entered upon his duties). See BIOGRAPHICAL DIRECTORY
OF THE UNITED STATES CONGRESS, 1774–2005, at 5 (2005),
available at https://bit.ly/3l5SJSm.
27
tenure as Acting Director, it may not continue
indefinitely.” Id. (emphasis added). This accords with
the position taken by the Nixon Administration. See
Williams, 482 F.2d at 671 (noting that “[t]he
Government concedes that the President cannot
designate an acting officer indefinitely”).
The 1977 OLC opinion, written in an era when
constitutional text and history often received less
than their due regard, identified a number of
“pertinent” factors that could inform whether an
officer’s acting tenure was “reasonable.” Id. at 290.
Those factors included “the specific functions being
performed” by the acting official; “the manner in
which the vacancy was created,” whether death,
resignation, firing, or other reasons; “the time” within
the session of the Senate “when the vacancy was
created”; whether a nomination is pending; and
“particular factors affecting the President’s choice” or
“ability to devote attention to the matter.” Id. at 289–
90. These factors suggested that the Acting OMB
Director’s tenure of three months was permissible, but
the President needed to “make a nomination . . .
within a reasonable period.” Id. at 290.
The “Acting” FHFA Director’s time in office vastly
exceeded a reasonable tenure for acting service under
OLC’s guidance. He held office for fifteen months
before the President even nominated someone else to
the post. And once that nomination was returned to
the President, another two years passed before the
President put forth a new nominee. Thus, when the
“Acting” FHFA Director signed the Third
Amendment, he had served the previous eighteen
months as “Acting” Director without a nomination
even pending. And by that time, whatever might have
28
influenced the President’s choice when he first
designated the “Acting” FHFA Director—such as the
need for quick action in response to an ongoing
financial crisis—those factors no longer held: The
financial crisis had passed, and the Companies were
about to report the largest profits in their history.
The upshot of history is clear: neither
Congressional practice nor Executive Branch
guidance on this issue demonstrates that the
President possessed the authority that the Sixth
Circuit has now conferred.
C.
This Court’s precedents confirm
that acting service must be limited
and temporary.
This Court’s precedents inform this analysis in
three ways. First, Eaton expressly held that there is a
limit to how long an individual can serve as a principal
officer—only to the extent it is for a “limited time” and
“under special and temporary conditions.” In that
case, it appears that Vice Consul Eaton served for 309
days. That is less than one fifth of the “Acting” FHFA
Director’s tenure here. And, it is important to note
that the “special and temporary conditions” that
existed in Eaton were the illness and eventual death
of the Consul to Siam. Eaton had to step in to serve,
thousands of miles away from the United States’
shores “in an era before telephones, automobiles, or
airplanes.” Pet. App. 43 (Thapar, J., concurring in
part and dissenting in part). To the extent the
Appointments Clause under Eaton permits some
“special circumstances” to allow an acting officer to
serve for a prolonged period without Senate
confirmation, such circumstances are not present
29
during an ordinary resignation and subsequent
impasse on filling that office—even if it would be more
efficient if the Constitution permitted such a practice.
See Noel Canning, 573 U.S. at 601 (Scalia, J.,
concurring in the judgment) (“The Constitution is not
a road map for [a] maximally efficient government.”).
Second, this Court has previously discussed the
role of “acting” officials. In Noel Canning, this Court
explained its view that “[a]cting officers may have less
authority than Presidential appointments” and that
reliance on “acting officers” would be an “inadequate
expedient” to appointments. 573 U.S. at 541
(emphasis added). As Justice Scalia explained, this
view was apparently based on Executive branch
guidance that described an “acting official” as a
“caretaker without a mandate to take far-reaching
measures.” Id. at 601 (Scalia, J., concurring in the
judgment). This “caretaker” view accords with Eaton’s
reference to the Vice Consul as a “subordinate” officer.
Eaton, 169 U.S. at 343; see also Morrison, 487 U.S. at
721 (Scalia, J., dissenting). “An inferior officer must at
least be subordinate to another officer of the United
States.” Morrison, 487 U.S. at 721 (Scalia, J.,
dissenting); accord Arthrex, 141 S. Ct. at 1980.
An “acting” official that fills in during a principal
officer’s illness or temporary absence is subordinate in
the sense that the principal may in fact return,
potentially undoing anything the acting official does.
An acting official serving while a nomination is
pending may also be similarly and precariously
situated. But an acting official who persists at the top
of an agency for years on end is no caretaker and is
subordinate to no other officer. Such an “acting
officer” is instead “circumventing the Appointments
30
Clause.” Weiss v. United States, 510 U.S. 163, 174
(1994). The Constitution does not permit such an
expedient disregard of its structural provisions.
Third, contrary to the Sixth Circuit’s conclusions,
congressional acquiescence is emphatically not a
ground to permit a structural violation of the
Constitution. As Judge Thapar put it, “[c]onfirmation
is not a Senate prerogative to be disposed of for the
government’s convenience. It is a check designed to
protect the people against the misuse of governmental
power.” Pet. App. 47–48. Since “[t]he structural
interests protected by the Appointments Clause are
not those of any one branch of Government but of the
entire Republic,” “[n]either Congress nor the
Executive can agree to waive this structural
protection.” Freytag v. Comm’r of Internal Revenue,
501 U.S. 868, 880 (1991). Free Enter. Fund v. Pub. Co.
Acct. Oversight Bd., 561 U.S. 477, 497 (2010) (“[T]he
separation of powers does not depend . . . on whether
the
encroached-upon
branch
approves
the
encroachment.” (cleaned up)). And courts must “be
concerned about protecting the separation-of-powers
interests at stake” when a private party raises a
violation of the Appointments Clause. Freytag, 501
U.S. at 879–80. While the settlements of the early
Congresses are relevant to determining the original
public meaning of the Constitution’s provisions,
McCulloch v. Maryland, 17 U.S. 316, 401 (1819), later
twentieth and twenty-first century innovations are
not, cf. Sw. Gen., 580 U.S. at 308 (rejecting reliance on
1998 enactment of the Federal Vacancies Reform Act
as evidence of “historical practice” or congressional
approval).
Such congressional bargaining away of a say on
31
the tenure of acting officials, as was done in HERA, is
particularly problematic in the Appointments Clause
context because that structural feature of the
Constitution compels the President and the Senate to
share accountability for the most senior positions in
the federal government. The Senate “shares in the
public blame ‘for both the making of a bad
appointment and the rejection of a good one.’” Arthrex,
141 S. Ct. at 1979 (quoting Edmond, 520 U.S. at 660).
Congress cannot assist the Senate to shirk this duty.
Pet. App. 32 (Thapar, J., concurring in part and
dissenting in part).
III.
This Case Presents A Good Vehicle to
Address An Important and Increasingly
Common Issue.
As Judge Thapar’s opinion describes, the rise “of
acting officers is striking.” Pet. App. 40. “A recent
survey shows that from 1981 to 2020, nearly as many
acting officers have filled cabinet positions as
confirmed cabinet secretaries—a ratio of 147 to 171.”
Id. “And no definitive tally exists for the sub-cabinet
level. This species of officer is as little documented as
it is pervasive.” Id.
Moreover, the length of time that acting officers
are wielding significant authority of the United States
is growing. As discussed, during the first century of
the Constitution, there is evidence that only a single
individual headed a cabinet-level department in an
acting capacity for a year. And the Government has
not identified a single acting official during the first
two hundred years of the Constitution that exercised
the power of a principal officer without Senate
confirmation for as long as the “Acting” FHFA
32
Director did. Although the Constitution’s limits have
not changed, in recent times the tenure of acting
officials has expanded dramatically beyond historical
precedent. The Bureau of Alcohol, Tobacco, Firearms
and Explosives had acting directors for over seven
years (early 2006 to July 2013). The Social Security
Administration had an acting administrator for
nearly four years, followed by another acting
administrator for two and a half more (February 2013
to January 2017; January 2017 to June 2019). The
National Labor Relations Board’s acting general
counsel served for over three years (June 2010 to
October 2013). These agencies—no less than FHFA—
have significant authorities with material effects on
the everyday lives of millions of Americans. Yet, by
the Sixth Circuit’s lights, the individuals leading
these agencies need not be confirmed by the Senate so
long as a statute—enacted by a single Congress and
signed by a single President—allows indefinite
“acting” service.
It is, of course, hardly surprising that the political
branches may find it expedient to do away with one of
the Constitution’s structural protections. Cf.
Morrison, 487 U.S. at 733 (Scalia, J., dissenting). The
Appointments Clause is a bulwark to ensure that
significant powers are only entrusted to those
individuals that the President and a majority of the
Senate can agree upon. See THE FEDERALIST No. 76,
supra, p. 513. It also ensures political accountability
for both the President and the Senate for choosing
“unfit characters” who are ill-suited to the
responsibilities of governance. Id. Accomplishing both
ends necessarily requires time, effort, and due
33
diligence with which the political branches may
rather not be encumbered.
This case calls for this Court’s intervention
because, as this Court has said in the Appointments
Clause context, incentives matter. Lucia v. S.E.C., 138
S. Ct. 2044, 2055 n.5 (2018); Ryder v. United States,
515 U.S. 177, 183 (1995). The Sixth Circuit’s decision
and the Government’s current litigating position
provides the President and the Senate exactly zero
incentive to bother with confirming officials. It also
provides the President no incentive to ever recess
appoint an official—why bother with putting a time
limit on service when simply calling an official
“acting” stops the clock? The structural protections of
the Constitution should not turn on such “trivial
distinctions,” Sw. Gen., 580 U.S. at 314 n.1 (Thomas,
J., concurring), but that is what the Sixth Circuit has
done. Such a decision should not be allowed to stand.
CONCLUSION
The petition for a writ of certiorari should be
granted.
Respectfully submitted,
February 2, 2023
DAVID H. THOMPSON
Counsel of Record
PETER A. PATTERSON
BRIAN W. BARNES
JOHN W. TIENKEN
COOPER & KIRK, PLLC
1523 New Hampshire
Avenue, N.W.
Washington, D.C. 20036
(202) 220-9600
dthompson@cooperkirk.com
Counsel for Petitioners
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