CFPB Director Kraninger reported to have resigned; President Biden expected to appoint Acting Director

Ballard Spahr LLP

Ballard Spahr LLP

According to media reports, Director Kraninger has submitted her resignation to President Biden.  President Biden has nominated Rohit Chopra to serve as the CFPB’s next Director and is expected to appoint an individual to serve as Acting Director pending Mr. Chopra’s confirmation by the Senate. 

Several media reports have indicated that Mr. Chopra could serve as Acting CFPB Director while his nomination is pending Senate confirmation.  In our view, however, the Federal Vacancies Reform Act (FVRA), the law that addresses who can serve as an acting officer when there is a vacancy in a position requiring Senate confirmation, does not allow Mr. Chopra to serve as Acting Director while he is President Biden’s nominee for Director.  

The FVRA (5 U.S.C. 3345(a)) allows the President to fill a vacancy in a position requiring Senate confirmation with someone currently serving as the first officer to the vacated position (e.g. the Deputy CFPB Director), someone already serving in a position that requires Senate confirmation, or a senior agency employee who meets certain qualifications.  Because Mr. Chopra’s current position as an FTC Commissioner required Senate confirmation, he would be eligible to serve as Acting Director under the FVRA.   

However, the ability of individuals eligible to serve as an acting officer under Section 3345(a) is subject to a limitation also contained in the FVRA (5 U.S.C. 3345(b)(1)).  Section 3345(b)(1) provides that an individual eligible to serve as an acting officer may not do so if such individual: (a) during the 365-day period preceding the creation of the vacancy did not serve in the position of first assistant to the vacated position or served in the position of first assistant for less than 90 days, and (b) the President submits such individual’s nomination to the Senate to fill the vacant position.  (Section 3345(b)(2) contains an exception for certain persons serving as first officer to a vacated position.)

Accordingly, since Mr. Chopra has never served as the Deputy CFPB Director and has been nominated by President Biden to serve as Director, Section 3345(b)(1) disqualifies him from serving as Acting Director.  (In its 2017 decision in NLRB v. SW General, Inc., the U.S. Supreme Court interpreted Section 3345(b)(1) to mean that “[s]ubject to one narrow exception, it prohibits anyone nominated to fill a vacant position [requiring Senate confirmation] from performing the duties of the office in an acting capacity, regardless of [which subsection of 3345(a) the individual otherwise qualified under].”)

Because Deputy CFPB Director Tom Pahl left the Bureau earlier this week, the CFPB currently does not have a Deputy Director.  As a result, under the FVRA, the only individuals eligible to serve as Acting CFPB Director would be someone other than Mr. Chopra currently serving in a Senate-confirmed position or a senior employee who satisfies the FVRA’s qualifications.  (To qualify, such senior employee, during the 365-day period preceding Director Kraninger’s resignation, would have to have been employed by the CFPB for at least 90 days and paid at least at a GS-15 rate.)

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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