A federal judge ruled late Wednesday that Office of Management and Budget director Mick Mulvaney can keep his second job as acting director of the Consumer Financial Protection Bureau for now.
US District Judge Timothy Kelly found that CFPB official Leandra English, who is claiming to be the rightful acting director, was unlikely to succeed in her lawsuit challenging President Trump's decision to name Mulvaney as acting director after former director Richard Cordray stepped down in November.
Kelly denied English's request for a preliminary injunction that would undo Mulvaney's appointment and block Trump from appointing anyone else. The ruling sets the stage for an anticipated appeal by English's attorneys.
Kelly wrote that Trump's authority to fill federal agency vacancies could "override" a leadership succession order laid out in the federal law that created the bureau, the Dodd-Frank Act.
"Under English’s reading, the CFPB’s Director has unchecked authority to decide who will inherit the potent regulatory and enforcement powers of that office, as well as the privilege of insulation from direct presidential control, in the event he resigns. Such authority appears to lack any precedent, even among other independent agencies," Kelly wrote.
Kelly also rejected English's argument that Trump's appointment of a sitting executive branch official as the acting head of the bureau undermined its independence. Other structural features meant to protect that independence — such as the fact that the CFPB receives funding through the Federal Reserve instead of Congress, and the limits on the president's ability to remove the director — remained in place, the judge wrote, and Mulvaney's appointment was by definition temporary. He also wrote that there was nothing in Dodd-Frank that barred the head of OMB from also serving as acting director of the CFPB.
The judge agreed with English that there was a public interest in clarifying who is in charge of the bureau right now — Mulvaney and English have both been holding themselves out to be the acting director since late November. But the judge concluded that issuing the injunction that English wanted wouldn't solve the problem.
"The President has designated Mulvaney the CFPB’s acting Director, the CFPB has recognized him as the acting Director, and it is operating with him as the acting Director. Granting English an injunction would not bring about more clarity; it would only serve to muddy the waters," Kelly wrote.
Cordray announced on Nov. 24 that he would step down effective midnight; he has since announced that he is running for governor of Ohio. He named English, who was his chief of staff, as the bureau's deputy director. Under a succession order in the Dodd-Frank Act, English would become acting director once Cordray's resignation took effect.
But the same day that Cordray announced he was leaving, the White House announced that Trump had appointed Mulvaney to serve as the acting director under the Federal Vacancies Reform Act, which gives the president the power to fill open seats in federal agencies.
Trump was backed by the Justice Department's Office of Legal Counsel and the CFPB's general counsel, who both issued memos on Nov. 25 concluding that the president had authority to fill the acting director job under the vacancies reform act.
On Nov. 26, English filed her lawsuit challenging Mulvaney's appointment in the US District Court for the District of Columbia. On Nov. 28, Kelly denied her request for an immediate temporary restraining order blocking Trump from appointing Mulvaney while the lawsuit moved forward. English then filed the motion for a preliminary injunction to block Mulvaney's appointment, and Kelly heard arguments on Dec. 22.
English's attorney, Deepak Gupta, previously indicated in court that they would appeal if they lost in the district court. He said in a statement to BuzzFeed News that they were disappointed with Kelly's decision. He did not say if or when they would appeal.
"The law is clear: President Trump may not circumvent the Senate confirmation process by installing his White House budget director to run the CFPB part time. Mr. Mulvaney's appointment undermines the Bureau's independence and threatens its mission to protect American consumers," Gupta said.
Justice Department spokeswoman Lauren Ehrsam said in a statement: "We are pleased the court vindicated the President’s authority to appoint Mick Mulvaney as Acting Director of CFPB, finding that Ms. English had not shown a substantial likelihood of success on the merits, and is unlikely to suffer irreparable harm."
Updated with comment from a Justice Department spokeswoman.