The three-judge panel, all appointed by Republican presidents, flatly rejected arguments from the Justice Department's Office of Legal Counsel, which claimed the president has discretion to decide that the Senate is unavailable to perform its advice and consent function.
"Allowing the president to define the scope of his own appointment power would eviscerate the Constitution's separation of powers," Chief Judge David Sentelle wrote in the 46-page ruling. He was appointed by Republican President Ronald Reagan.
The court ruled that during one of those pro forma sessions on Jan. 3, the Senate officially convened its second session of the 112th Congress, as required by the Constitution.
Sentelle's opinion was joined by Judge Thomas Griffith, appointed to the court by President George W. Bush, and Karen LeCraft Henderson, who was appointed by President George H.W. Bush.
"With this ruling, the D.C. Circuit has soundly rejected the Obama administration's flimsy interpretation of the law, and [it] will go a long way toward restoring the constitutional separation of powers," said Sen. Orrin Hatch, R-Utah.
GOP House Speaker John Boehner welcomed the ruling as "a victory for accountability in government."
If the ruling stands, it means that hundreds of decisions issued by the board over more than a year would be invalid. It also would leave the five-member labor board with just one validly appointed member, effectively shutting it down. The board is allowed to issue decisions only when it has at least three sitting members.
Obama used the recess appointment to install Deputy Labor Secretary Sharon Block, union lawyer Richard Griffin and NLRB counsel Terence Flynn to fill vacancies on the labor board, giving it a full contingent for the first time in more than a year. Block and Griffin are Democrats, while Flynn is a Republican. Flynn stepped down from the board last year.
"I think this is a very important decision about the separation of powers," said Carl Tobias, a constitutional law professor at the Virginia's University of Richmond. "The court's reading has limited the president's ability to counter the obstruction of appointments by a minority in the Senate that has been pretty egregious in the Obama administration."
Sen. Tom Harkin, D-Iowa, urged the NLRB to continue conducting business until the Supreme Court rules on the issue.
"Today's circuit court decision is not only a radical departure from precedent, it ignores the fact that President Obama had no choice but to act," Harkin said. "Throughout his presidency, Republicans have employed unprecedented partisan delay tactics and filibusters to prevent confirmation of nominees to lead the NLRB, thus crippling the board's legal authority to act."
If Obama's recess appointment of Cordray to the newly created consumer board is eventually ruled invalid, it could nullify all the regulations the consumer board has issued, many of which affect the mortgage business.