WASHINGTON (Reuters) - A federal appeals court ruled on Friday that President Barack Obama violated the U.S. Constitution when he used recess appointments to fill a labor board, a decision that could curtail the president's options in filling vacancies.
Obama, frustrated by Republican opposition to his nominees, made the three "recess" appointments to the National Labor Relations Board in January 2012, while the Senate was on one of its many recesses but not formally adjourned for the year.
"Considering the text, history, and structure of the Constitution, these appointments were invalid from their inception," said the ruling by a three judge panel of the U.S. Court of Appeals for the District of Columbia Circuit.
The panel said the Senate was not truly in recess when Obama made his appointments.
White House spokesman Jay Carney called the ruling "novel and unprecedented" and said it contradicted 150 years of practice by both Democratic and Republican administrations.
Carney would not say whether the White House would appeal the decision. He referred questions to the Justice Department, which did not immediately respond to request for comment.
It was unclear what immediate impact the ruling will have on the board and the decisions it has issued with the new members.
In the near-term, the ruling casts doubt on the ability of the NLRB, an independent agency that oversees labor disputes, to conduct its business if it does not have enough members. It also could make its recent rulings vulnerable to challenge.
The ruling also throws into question the appointment of Richard Cordray, the head of the new Consumer Financial Protection Bureau. Obama used the same type of recess appointment to install Cordray, but his appointment was challenged in a separate lawsuit.
In the longer term, the court's ruling could diminish the U.S. president's ability to make recess appointments, because it appeared to narrow the definition of a recess.
"If the decision stands, it would be a significant reduction of the president's recess power," said John Elwood, a Washington lawyer who was deputy assistant attorney general in the Office of Legal Counsel from 2005 through 2009.
"This is a big, big decision for executive power," Elwood said. "It is one of the most important decisions in decades."
Republican lawmakers, who had joined the legal challenge to the NLRB appointments, jumped on the ruling as an indication of the administration's overreach.
"The D.C. Circuit Court today reaffirmed that the Constitution is not an inconvenience but the law of the land," Mitch McConnell, the top Republican in the Senate, said in a statement.
Nancy Cleeland, a spokeswoman for the NLRB, had no immediate comment. CFPB representatives did not respond to requests for comment on what the ruling means for the agency.
The suit started as a routine dispute between soda bottling company Noel Canning and the labor board, but lawyers for Senate Republicans seized on the suit as a chance to challenge the appointments.
The case was seen as a test of the president's ability to bypass a Senate vote on nominees by making appointments during a recess. The Constitution allows the Senate to block nominees and both Democratic and Republican president have used recess appointments as a way around this in recent years.
When Obama made the NLRB appointments, the Senate was not officially in recess, meeting every few days for minutes at a time but accomplishing no work and with few senators present. Obama's nominees had remained on the Senate calendar, blocked by Republicans from up or down votes on their confirmation.
The court's decision hinged on what constitutes a "recess" and whether it includes short breaks while the Senate is still technically in session.
"An interpretation of ‘the Recess' that permits the President to decide when the Senate is in recess would demolish the checks and balances ... giving the President free rein to appoint his desired nominees at any time he pleases," said the panel of three judges, all of whom were appointed by Republicans. "This cannot be the law."
Once rare, recess appointments became more common in the late 1970s as a way to bypass the confirmation process, which senators have used increasingly to block nominees.
Recent presidents pushed the boundaries. George W. Bush took the rare step of filling a judgeship during a recess, while Obama appointed the NLRB members while the Senate was holding "skeleton" sessions set up to keep it from going into recess.
Cordray's appointment was challenged in a separate lawsuit brought in June by the State National Bank of Big Spring, Texas, and other institutions. That suit presented a similar argument that the recess appointment was invalid because the Senate was technically not in recess.
Cordray's appointment followed months of rancorous debate over the new consumer bureau, which was created by the 2010 Dodd-Frank financial oversight law to police markets for products such as credit cards and home loans.
Obama on Thursday renominated Cordray to head the CFPB, but it is unclear how long the confirmation process will take.
Even though the new ruling doesn't deal with the consumer agency, it could call into question supervisory actions and regulations it has taken. "The CFPB world has been turned upside down," said financial services lawyer Richard Gottlieb of the Dykema law firm.
Reporting By Aruna Viswanatha, with additional reporting by Emily Stephenson and Joan Biskupic; Editing by Karey Wutkowski and Doina Chiacu