           Permissibility of Recess Appointments of Directors
                of the Federal Housing Finance Board


W here the S en ate has failed to act during a Session o f C ongress on the nom ination o f a person
   to an office, and that person is then serving in that office by recess appointm ent, the P re si­
   d en t m ay m ake a second recess appointm ent o f that person to the position w hen the previous
   recess co m m issio n expires.


A lthough the p ay m en t o f com pensation to successive recess appointees is generally d eem ed
    pro h ib ited b y 5 U .S.C. § 5503(a), that prohibition does not apply to positions that are not
    paid out o f appropriated funds.

                                                                              December 13, 1991

    M e m o r a n d u m O p i n io n f o r t h e D e p u t y C o u n s e l t o t h e P r e s id e n t


   This responds to your memorandum of September 4, 1991, concerning
the recess appointment of the directors of the Federal Housing Finance Board
(“FHFB”).1 The President made recess appointments of four current direc­
tors of the FHFB during the last intersession recess of the Senate. You ask
whether he may recess appoint these directors when their recess commis­
sions expire at the end of the present session of the Senate.2 You also ask
whether these directors may receive their salaries if the President recess
appoints them at that time. We believe that the President may recess ap­
point these directors when their present commissions expire and that they
may receive their salaries if so appointed.
   Congress established the FHFB in 1989 to “succeed to the authority of
the Federal Home Loan Bank Board (“FHLBB”) with respect to the Federal
Home Loan Banks.” Financial Institutions Reform, Recovery, and Enforce­
ment Act o f 1989 (“FIRREA”), Pub. L. No. 101-73, § 702(a), 103 Stat.
183, 413 (codified at 12 U.S.C. § 1422a(a)(l)). The FHFB is managed by a

   1 M em orandum for Timothy E. Flanigan, Principal Deputy Assistant Attorney General, O ffice of
Legal Counsel, from John P. Schmitz, Deputy Counsel to the President, Re: Recess Appointm ent o f
FHFB M embers (Sept. 4, 1991).
   2 Congress adjourned on November 27, 1991, and will stand adjourned until 11:55 a.m. on January 3,
1992, unless sooner called to reassemble by the Speaker of the House of Representatives and the M ajor­
ity Leader o f the Senate. See H.R. Con. Res. 260, 102d Cong., 1st Sess., 137 Cong. Rec. H11.857,
HI 1,873 (daily ed. Nov. 26, 1991). Unless Congress "by law appoints] a different day,” its next session
will begin at noon on January 3, 1992. U.S. Const, amend. XX, § 2. Consequently, it appears that the
present session o f the Senate will end at some time between 11.55 a.m. and noon on January 3, 1992.

                                                   91
 Board o f Directors comprising five members: the Secretary of Housing and
 Urban Development and four individuals appointed by the President with the
 advice and consent of the Senate. 12 U.S.C. § 1422a(b)(l). Each of the
 directors, other than the Secretary, serves a term of seven years; initial terms
 are staggered. Id. § 1422a(b)(l)(B), (3). The President designates one of
 the directors, other than the Secretary, to serve as Chairperson of the Board.
 Id. § 1422a(c)(l).
     The FHFB does not receive appropriated monies. Its funds derive prima­
 rily from semiannual assessments it imposes on the Federal Home Loan
 Banks. Id. §§ 1422b(c), 1438(b).3 The FHFB deposits its funds, which it
 uses to pay the directors’ salaries, in the Treasury of the United States. Id. §
 1422b(c). By law, the directors’ “[s]alaries . . . shall not be construed to be
 Government Funds or appropriated monies, or subject to apportionment for
 the purposes of chapter 15 of title 31, or any other authority.” Id. The
Departm ent o f the Treasury has advised us that it maintains the FHFB’s
funds in a special deposit account and that it does not commingle them with
appropriated monies.4
     In 1990, during the second session of the 101st Congress, the President
nominated four persons to serve as directors of the FHFB: Daniel F. Evans,
Jr.; Larry U. Costiglio; William C. Perkins; and Marilyn R. Seymann. The
Senate failed to act on any o f the nominations during the 101st Congress,
and the President subsequently recess appointed the nominees on December
 16, 1990. Pursuant to the Recess Appointments Clause, these appointments
will expire at the end o f the present session of the Senate. U.S. Const, art.
II, § 2, cl. 3.5 Earlier this year, during the current session of the Senate, the
President again nominated these persons to serve as directors; at this writ­
ing, the Senate has not acted on the nominations.
    You ask whether the President may recess appoint these persons as direc­
to rs if their recess commissions expire before the Senate acts on their
nom inations.6 We believe that he may. As we have explained in the past,
“there is no bar to granting . . . a second recess appointment [to a position]
even though [the person to be recess appointed] is already serving as a
recess appointee in that position. It is well-established that the President
may make successive recess appointments to the same person.” Memoran­
dum for C. Boyden Gray, Counsel to the President, from William P. Barr,

   1 By law, the FHFB succeeded to all funds held by the FHLBB in a special deposit account at the
Treasury. FIR REA , § 725, 103 Stat. 429 (codified at 12 U.S.C. § 1437 note). T hese funds do not
consist o f appropriated monies. Like the FHFB, the FHLBB derived its funds from assessments on the
Federal H om e Loan Banks. 12 U.S.C. §§ 1438(b), 1439 (1988).
   4 Telephone Interview o f John E. Bowman, Assistant General Counsel, Banking and Finance, Office
o f the G eneral Counsel, Department of the Treasury, by M ark L. Movsesian, Attomey-Advisor, Office
o f Legal Counsel (Oct. 23, 1991) (Telephone Interview).
   5 The R ecess Appointm ents Clause provides that “ [t]he President shall have Power to fill up all Va­
cancies that m ay happen during the Recess o f the Senate, by granting Commissions which shall expire
at the End o f their next Session.”
   6 You have not inquired regarding, and w e do not here address, the implications o f the “holdover"
provision o f 12 U.S.C. § 1422a(d)(l).

                                                   92
Assistant Attorney General, Office o f Legal Counsel at 2 (Nov. 28, 1989).
See Power o f President to Fill Vacancies, 2 Op. Att’y Gen. 525 (1832).
Accordingly, the President may grant these four directors successive recess
appointments if the Senate fails to act on their nominations by the end of its
current session.
   You also ask whether these persons may receive their salaries if the Presi­
dent recess appoints them under these circumstances. We believe that they
may. The only relevant restriction on the payment of salaries to recess
appointees is contained in 5 U.S.C. § 5503(a),7 which provides:

            Payment for services may not be made from the Treasury of
          the United States to an individual appointed during a recess of
          the Senate to fill a vacancy in an existing office, if the va­
          cancy existed while the Senate was in session and was by law
          required to be filled by and with the advice and consent of the
          Senate, until the appointee has been confirmed by the Senate.

By express terms, this prohibition does not apply “if, at the end o f the
session, a nomination for the office, other than the nomination of an indi­
vidual appointed during the preceding recess of the Senate, was pending
before the Senate for its advice and consent.” Id. § 5503(a)(2).
    Although its language is far from clear, section 5503(a) has been inter­
preted as prohibiting the payment of compensation to successive recess
appointees. See Recess Appointments Issues , 6 Op. O.L.C. 585, 586 (1982)
(relying on opinions o f the Comptroller General); Recess Appointments, 41
Op. Att’y Gen. 463, 472, 474, 480 (1960) (same analysis under predecessor
statute). The legislative history o f section 5503(a) supports this interpreta­
tion. See S. Rep. No. 1079, 76th Cong., 1st Sess. 1 (1939). Nonetheless, we
do not believe that section 5503(a) would prohibit the payment of com pen­
sation to the directors in this case. Section 5503(a) prohibits only payment
“from the Treasury.” No such payment is at issue here.
   As we discussed above, the directors’ salaries do not derive from appro­
priated funds. See supra p. 92. Rather, they derive from non-appropriated
funds that the FHFB has deposited in a special Treasury account. The Trea­
sury pays the directors with checks drawn on this account. Telephone
Interview. It strictly segregates the FHFB’s funds from its own “general
funds,” which it makes available to other agencies. It does not commingle
the FHFB’s funds with appropriated monies. Id.


  7 A provision in the annual Treasury, Postal Service, and General Government appropriations bill
prohibits the paym ent of appropriated funds "to any person for the filling o f any position for which he or
she has been nom inated after the Senate has voted not to approve the nomination o f said person.”
Treasury, Postal Service and General Government Appropriations Act, 1992, Pub. L. No. 102-141, §
610, 105 Stat. 834, 869 (1991). This provision will not apply if, as we assume for purposes o f this
analysis, the Senate merely fails to act on the directors' nominations. In any event, the directors are not
paid with appropriated funds. See infra p. 93 .

                                                   93
    In a 1984 opinion involving the Federal Deposit Insurance Corporation,
we concluded that section 5503(a)’s prohibition against payments “from the
Treasury” should be construed to apply only to payments from the Treasury’s
general funds, and not to payments from non-appropriated funds on deposit
with the Treasury. See Memorandum for Fred F. Fielding, Counsel to the
President, from Robert B. Shanks, Deputy Assistant Attorney General, Of­
fice of Legal Counsel (Aug. 24, 1984) (section 5503(a) would not prohibit
payment of salary, from non-appropriated funds deposited with the Treasury,
to recess appointee to the Federal Deposit Insurance Corporation). Relying
on standard principles o f the law of negotiable instruments, we reasoned that
when the Treasury pays checks drawn on a special account maintained with
the Treasury, it acts merely as the depositor’s agent, and incurs no liability
itself. Id. at 8. We see no reason to depart from that conclusion in this case.
Accordingly, we conclude that when the Treasury pays the FHFB’s directors
with checks drawn on the FHFB’s own account, it does not make payments
“from the Treasury” within the meaning of section 5503(a). Consequently,
section 5503(a) would not prohibit payment o f the salaries in the circum­
stances you have described.

                                            TIMOTHY E. FLANIGAN
                                        Acting Assistant Attorney General
                                             Office o f Legal Counsel




                                      94
