In its May 2022 ruling in United States v. Arthrex—let’s call it Arthrex II—the Federal Circuit significantly undercut the Federal Vacancies Reform Act of 1998, acknowledging that its interpretation rendered the Act’s application “vanishingly small.” The FVRA is, of course, the statutory structure that reinforces the President’s obligation to subject top officials to formal nomination and the Senate confirmation process by strictly limiting who may serve as an “acting” official in PAS posts and for how long. The Federal Circuit allowed the agency nonetheless to address a vacancy in the Senate-confirmed post of Patent and Trademark Office (“PTO”) Director by delegating the office’s powers, wholesale and without time or other apparent limits, to an unconfirmed official. As I and others have discussed elsewhere, this sort of strategy has been widely used in recent years, creating a class of “shadow” acting officials.
Background and Constitutional Issues
The Federal Circuit issued this decision involving acting officers on remand from the Supreme Court’s Appointments Clause decision in United States v. Arthrex. The Supreme Court had found a violation in the Patent Trial Appeals Board’s staffing by administrative patent judges, who are inferior officers. The Court singled out the failure to allocate the final decision on patent challenges in inter partes review proceedings (IPRs) to a properly appointed principal officer. The remedy was to sever the limits on the Senate-confirmed Patent and Trademark Office (“PTO”) Director’s authority to review PTAB decisions. (Becky Eisenberg and I have discussed the decision and its implications here.)
But at the time the Court ruled, no individual had been presidentially nominated, let alone Senate-confirmed, to serve as PTO Director. Seemingly unbothered, the Court stated that the case would be remanded “to the Acting Director.” On remand to the Federal Circuit, that court found no Appointments Clause violation (unsurprisingly) in the roughly nine months of temporary service of an unconfirmed individual, based on the Supreme Court’s 1898 decision in United States v. Eaton. (I have discussed the Appointments Clause issue here and advocated that constitutional doctrine permit only much shorter periods of acting service.)
The FVRA Issue
Despite the Supreme Court’s allusion to an “Acting Director,” the person claiming to exercise the powers of the office was not, in fact, an FVRA-compliant “Acting Director.” (The FVRA allows a “first assistant” to serve as an acting official; it also authorizes the President to select among other eligible officials.) Instead, the previous PTO Director had issued an Agency Organization Order delegating the office’s powers to named individuals, should the office become vacant. Under the Order, that ended up being long-serving Patents Commissioner Drew Hirschfeld, who asserted that he was merely “Performing the Duties and Functions” of the PTO Director.
Disappointingly, the Federal Circuit nonetheless found no violation of the Federal Vacancies Reform Act. As I mentioned, the panel (and the government) conceded that its interpretation “renders the FVRA’s scope ‘vanishingly small.'” Slip op. at 12. I’ll add that the panel’s interpretation would have made the 1998 FVRA wholly ineffective to address the very circumstances—the “mischief”—that motivated its passage. This was the use of delegations by the Clinton-era Justice Department to authorize “acting” service by senior officials whom the Senate was unwilling to confirm, among them two Assistant Attorneys General and a Solicitor General. I’ve discussed that here, as well as the consequences of widespread use of such delegations to create shadow acting officials. Anne Joseph O’Connell has weighed in on the delegation issue here and here in her article, “Actings.”
The Arthrex panel justified its ruling in the text of the statute’s enforcement provisions, which apply to a “function or duty” defined as one required by statute or regulation only to be performed by a particular officer. (The hard-hitting enforcement section renders noncompliant actions “of no force or effect” and bars after-the-fact ratification.) But the panel’s interpretation also doesn’t acknowledge important statutory text. The text that defines the key statutory term, “function or duty,” defines it only for purposes of the enforcement section, not the entire statute. See 5 U.S.C. 3348(a) (“In this section . . .”). And there is no reason to think the FVRA impliedly repeals the Administrative Procedure Act’s general review provisions, so they (along with a harmless error rule and the potential for ratification) could continue to cover actions undertaken by illegal “actings” when the FVRA’s specific enforcement provisions do not apply.
The panel ruling also makes superfluous the FVRA’s “exclusivity” provision. That language bars an agency from relying on “general authority” to “delegate duties” as a substitute for properly designating an acting official. A statute or regulation that made a function or duty exclusive to one official would bar the application of general delegation authority anyway. (And there are other textual difficulties with this interpretation, as DC District Judge Randolph Moss explained in L.M.M. v. Cuccinelli.) The Federal Circuit’s ruling admittedly is consistent with recent dicta from the D.C. Circuit and a 2009 ruling in the Second Circuit, though it remains in tension with multiple district court rulings, including both L.M.M. and a 2022 ruling in the D.C. District Court, as well as one in the District of Montana.
I’ll add that the Arthrex case presents a particularly weak case for delegations as a vacant office workaround. No statute or regulation made powers exclusive to the Director. The delegation in this case, which went into effect only when the Director post was vacant, thus covered the entirety of the office’s powers. The powers under the delegation, unlike those of an FVRA-authorized acting official, were not time-limited. Finally, the delegation was what I would call a horizontal, or unsupervised, delegation. The outgoing Senate-confirmed PTO Director signed an order delegating their own office’s powers, in the event of vacancy, to a series of lower-level officials. The delegating official of course was no longer present, since the office was vacant, and the document did not expressly authorize anyone else to revoke the delegation if the lower level official did not perform properly. This arrangement worsens the accountability problems that were among Congress’s concerns in enacting the FVRA.
The Arthrex panel also added a new and disturbing nuance with an alternative holding—that the FVRA’s exclusivity provision, even if it applies, only bars reliance upon delegations issued by agency heads, not lower-level officials. This yields the bizarre result that lower level PAS officials could freely—and horizontally—delegate authorities, even if an agency head—presumably more visibly and in a more politically accountable manner—could not. Slip op. at 16-17.
To be sure, there’s a serious problem to resolve here. We need the administrative state to function. Meanwhile, nominations are slow and Senate confirmations perhaps even slower. In April 2022, the Senate confirmed Kathi Vidal to serve as PTO Director. But it is worrisome to see how easily the agency was able to bypass the FVRA prior to Vidal’s nomination. The accountability problems are worst in a case such as this one, when the delegation is specifically in response to a vacancy, formally unsupervised, wholesale rather than selective, and not time-limited. Perhaps courts could, at a minimum, apply the FVRA’s bar on using general delegation to cases like these, where wholesale delegation is triggered only in response to a vacancy. Perhaps targeted statutory reform will be required.
Nina A. Mendelson is the Joseph L. Sax Collegiate Professor of Law at the University of Michigan Law School. She teaches and conducts research in the areas of administrative law, environmental law, statutory interpretation, and the legislative process.