Document ID: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-caDC-98-01002/USCOURTS-caDC-98-01002-0/pdf.json

Parties Involved:
Doolin Security Savings Bank, F.S.B.
Petitioner
Office of Thrift Supervision
Respondent

Document Text:

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United States Court of Appeals

FOR THE DISTRICT OF COLUMBIA CIRCUIT

Argued December 9, 1997 March 27, 1998

No. 97-1222

DOOLIN SECURITY SAVINGS BANK, F.S.B.,

PETITIONER

v.

OFFICE OF THRIFT SUPERVISION AND 

NICOLAS P. RETSINAS, DIRECTOR, OFFICE OF THRIFT SUPERVISION,

RESPONDENTS

On Petition for Review of an Order of the 

Office of Thrift Supervision

John C. Deal argued the cause and filed the briefs for 

petitioner.

Aaron B. Kahn, Principal Litigation Counsel, Office of 

Thrift Supervision, argued the cause for respondents. With 

him on the brief were Thomas J. Segal, Deputy Chief CounUSCA Case #98-1002 Document #340855 Filed: 03/27/1998 Page 1 of 22
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sel, Elizabeth R. Moore, Assistant Chief Counsel, and Jacqueline H. Fine, Trial Attorney.

Irene M. Solet, Attorney, U.S. Department of Justice, 

argued the cause for amicus curiae United States. With her 

on the brief were Frank W. Hunger, Assistant Attorney 

General, Mary Lou Leary, Acting U.S. Attorney at the time 

the brief was filed, Stephen W. Preston, Deputy Assistant 

Attorney General, U.S. Department of Justice, Douglas N. 

Letter, Litigation Counsel, and H. Thomas Byron, III, Attorney.

Theodore B. Olson, Paul Blankenstein, Mark A. Perry, 

John K. Villa, Mary G. Clark, Bettina M. Lawton, Frank J. 

Eisenhart, and Arthur W. Leibold, Jr., were on the brief for 

amici curiae Maxxam, Inc., et al. Richard P. Keeton entered 

an appearance.

Before: HENDERSON, RANDOLPH, and TATEL, Circuit Judges.

Opinion for the Court filed by Circuit Judge RANDOLPH.

RANDOLPH, Circuit Judge: Article II of the Constitution 

allows the President to appoint Officers of the United States 

by and with the consent of the Senate. The President may 

also make temporary appointments of Officers without Senate 

confirmation for "Vacancies that may happen during the 

Recess of the Senate." What if an appointee resigns or dies 

while the Senate is in session? Must the office remain 

unoccupied unless the President nominates, and the Senate 

confirms, someone else? For more than two centuries, legislation has given an answer. In its modern version, the 

Vacancies Act, 5 U.S.C. §§ 3345-3349, authorizes the Executive to fill positions temporarilygenerally, for no more than 

120 dayswhen a vacancy occurs as a result of an officer's 

resignation, death, illness or absence. A dispute about the 

meaning of the Vacancies Act is at the center of this case.

The dispute arose after an agency's "acting" director initiated administrative enforcement proceedings and then resigned before taking final agency action. The President 

invoked the Vacancies Act to name his replacement. This 

individual issued the final agency order now before us on 

judicial review. Neither the acting director nor the individual 

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named by the President had been nominated and confirmed 

for the position of agency director. According to petitioner, 

the President's authority under the Vacancies Act had already expired when he invoked the Act, both individuals 

illegally occupied the office of agency director, and the orders 

they signed are therefore null and void.

I

In September 1993, on behalf of the Office of Thrift Supervision, "Acting Director" Jonathan L. Fiechter signed a "Notice of Charges and Hearing for Issuance of Cease and Desist 

Order Directing Affirmative Action," thus beginning an administrative enforcement action against petitioner Doolin Security Savings Bank. See 12 U.S.C. §§ 1464(d)(1)(A) & 

1818(b). The usual thrusts and parries of litigation then 

ensued: subpoenas issued and motions to quash came back; 

extensions of time were sought and opposed; motions and 

memoranda were exchanged; depositions taken and objections noted; documents produced and withheld. Counsel for 

the Bank and counsel for OTS took their differences to an 

administrative law judge. After a year of this, a hearing 

began in Wheeling, West Virginia, with the ALJ presiding.

In April 1996, two and a half years after Acting Director 

Fiechter issued the Notice of Charges, the ALJ handed down 

his "Recommended Decision." The ALJ found that the Bank 

had violated the law and had engaged in unsafe and unsound 

banking practices. The ALJ's exhaustive findings of fact and 

conclusions of law ended with a proposed order for the 

"Acting Director," a position Fiechter was still occupying. 

The Bank and counsel for OTS filed exceptions. Before 

passing on the ALJ's recommendation, Fiechter resigned. A 

new Director, Nicolas P. Retsinas, extended the time for a 

final decision, reviewed the ALJ's proposal and the parties' 

exceptions, and issued a final written opinion and a cease and 

desist order against the Bank in March 1997. That order is 

the subject of the Bank's petition for judicial review.

Created in 1989, OTS is the principal oversight agency 

responsible for monitoring the financial health of thrift instiUSCA Case #98-1002 Document #340855 Filed: 03/27/1998 Page 3 of 22
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tutions. OTS is part of the Department of the Treasury, see 

12 U.S.C. § 1462a(a), but the Secretary of the Treasury is 

barred from intervening in matters before the agency. See 

12 U.S.C. § 1462a(b)(3) & (4). Congress placed OTS's broad 

oversight authority entirely in the hands of its Director. The 

Office of the Director is the only named position in OTS's 

governing statute, and it is the Director who is responsible 

for hiring staff and overseeing the regulation of savings 

associations. See 12 U.S.C. § 1462a(a)-(e) & (h); 12 C.F.R. 

§ 500.10.

Because the OTS Director exercises "significant authority 

pursuant to the laws of the United States," the occupant of 

the position undoubtedly qualifies as an "Officer" under the 

Constitution, and is thereby subject to the Appointments 

Clause, Article II, § 2, cl. 2, of the Constitution. Buckley v. 

Valeo, 424 U.S. 1, 126 (1976); Edmond v. United States, 117 

S. Ct. 1573, 1580 (1997). Congress did not vest the Director's 

appointment in the President or the Treasury Secretary. 

Instead the governing statute provides that the Director must 

"be appointed by the President, by and with the advice and 

consent of the Senate." 12 U.S.C. § 1462a(c)(1). "The Director shall be appointed for a term of 5 years," 12 U.S.C. 

§ 1462a(c)(2), but an incumbent may hold over "after the 

expiration of the term for which appointed until a successor 

Director has been appointed." 12 U.S.C. § 1462a(c)(4).

Despite the Appointments Clause, the statute governing 

OTS, and the significant regulatory responsibility lodged in 

OTS, the agency has a history of being run by individuals who 

were neither nominated by the President nor confirmed by 

the Senate for the position of OTS Director.

OTS's first Director, M. Danny Wall, served from August 9, 

1989, until he resigned on March 5, 1990. Wall had originally 

been appointed Chairman of the Federal Home Loan Bank 

Board, but was never nominated for the position of OTS 

Director. Two district courts held that his occupation of the 

office of OTS Director violated the Appointments Clause. 

See Olympic Fed. Sav. & Loan Ass'n v. Director, OTS, 732 

F. Supp. 1183, 1193 (D.D.C.), dismissed as moot, 903 F.2d 837 

(D.C. Cir. 1990); Franklin Sav. Ass'n v. Director, OTS, 740 

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F. Supp. 1535, 1541 (D. Kan. 1990), rev'd on other grounds,

934 F.2d 1127 (10th Cir. 1991).

After Wall's departure, President Bush designated Salvatore R. Martoche to serve as acting Director of OTS, effective 

March 6, 1990. The legality of Martoche's occupation of the 

office was also called into question. See Olympic, 732 

F. Supp. at 1199.

President Bush next nominated, and the Senate confirmed, 

Timothy Ryan to be OTS Director, effective April 4, 1990. 

Ryan served until December 4, 1992, when he resigned.

On his last day in office Ryan purported to delegate all his 

authority as Director to Jonathan L. Fiechter, who was then 

serving as OTS's Deputy Director for Washington Operations. 

See OTS Order No. 92-515 (Dec. 4, 1992). Ryan also formally designated Fiechter "Acting Director." See OTS Order 

No. 92-514 (Dec. 4, 1992). Fiechter served in that position 

for about four years, resigning on October 8, 1996.

Two days later, President Clinton invoked the Vacancies 

Act to designate Nicolas P. Retsinas as Director of OTS:

THE WHITE HOUSE

WASHINGTON

October 10, 1996

MEMORANDUM FOR THE HONORABLE NICOLAS 

P. RETSINAS 

Assistant Secretary of Housing and Urban 

Development 

Pursuant to the Constitution and the laws of the United 

States, including section 3347 of title 5, United States 

Code, you are directed to perform the duties of the office 

of Director of the Office of Thrift Supervision, Department of the Treasury, effective October 10, 1996.

/s/ William J. Clinton 

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Within 120 days of Retsinas's ascension, President Clinton 

nominated Ellen Seidman to serve as Director of OTS. 143 

CONG. REC. S1117 (daily ed. Feb. 6, 1997). The Senate 

confirmed Seidman on October 23, 1997, see 143 CONG. REC. 

S11,165, S11,171 (daily ed. Oct. 23, 1997), and she took over as 

Director shortly thereafter.

In the meantime, Retsinas had issued his written opinion 

and the cease and desist order. In doing so, Retsinas rejected the Bank's motion to dismiss for lack of jurisdiction, a 

motion resting on the Bank's arguments that "Acting Director Jonathan Fiechter lacked authority to initiate this 

proceeding when he signed the notice of charges on September 20, 1993, and that the current Director's authority is 

defective under the Vacancies Act."

II

The best way to approach the controversy about the Vacancies Act is to take up first the legality of Retsinas's tenure. 

If his status rendered the final order void, it will not matter 

whether his predecessor, Fiechter, had authority to initiate 

the administrative proceedings.

The Bank assumes the constitutionality of the Vacancies 

Act in general and, in particular, the constitutionality of 

§ 3347, the section relied upon by the President in directing 

Retsinas to perform the Director's duties. The Bank believes, however, that the President's authority to use § 3347 

expired long before he named Retsinas to the post. From 

this it concludes that Retsinas occupied the office illegally, in 

violation of not only the Appointments Clause, but also 12 

U.S.C. § 1462a(c)(1), and that the cease and desist order he 

issued is therefore void. See Ryder v. United States, 515 

U.S. 177 (1995); Federal Election Comm'n v. NRA Political 

Victory Fund, 6 F.3d 821, 828 (D.C. Cir. 1993).

The Vacancies Act, in its entirety, provides as follows:

§ 3345. Details; to office of head of Executive agency or military department

When the head of an Executive agency (other than the 

General Accounting Office) or military department dies, 

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resigns, or is sick or absent, his first assistant, unless 

otherwise directed by the President under section 3347 of 

this title, shall perform the duties of the office until a 

successor is appointed or the absence or sickness stops.

§ 3346. Details; to subordinate offices

When an officer of a bureau of an Executive department or military department, whose appointment is not 

vested in the head of the department, dies, resigns, or is 

sick or absent, his first assistant, unless otherwise directed by the President under section 3347 of this title, shall 

perform the duties of the office until a successor is 

appointed or the absence or sickness stops.

§ 3347. Details; Presidential authority

Instead of a detail under section 3345 or 3346 of this 

title, the President may direct the head of another Executive department or military department or another officer of an Executive department or military department, 

whose appointment is vested in the President, by and 

with the advice and consent of the Senate, to perform the 

duties of the office until a successor is appointed or the 

absence or sickness stops. This section does not apply to 

a vacancy in the office of Attorney General.

§ 3348. Details; limited in time

(a) A vacancy caused by death or resignation may be 

filled temporarily under section 3345, 3346, or 3347 of 

this title for not more than 120 days, except that

(1) if a first or second nomination to fill such 

vacancy has been submitted to the Senate, the position may be filled temporarily under section 3345, 

3346, or 3347 of this title

(A) until the Senate confirms the nomination; or

(B) until 120 days after the date on which either 

the Senate rejects the nomination or the nomination is withdrawn; or

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(2) if the vacancy occurs during an adjournment of 

the Congress sine die, the position may be filled temporarily until 120 days after the Congress next convenes, subject thereafter to the provisions of paragraph (1) of this subsection.

(b) Any person filling a vacancy temporarily under 

section 3345, 3346, or 3347 of this title whose nomination 

to fill such vacancy has been submitted to the Senate 

may not serve after the end of the 120-day period 

referred to in paragraph (1)(B) or (2) of subsection (a) of 

this section, if the nomination of such person is rejected 

by the Senate or is withdrawn.

§ 3349. Details; to fill vacancies; restrictions

A temporary appointment, designation, or assignment 

of one officer to perform the duties of another under 

section 3345 or 3346 of this title may not be made 

otherwise than as provided by those sections, except to 

fill a vacancy occurring during a recess of the Senate.

5 U.S.C. §§ 3345-3349.

To identify the points of disagreement between the parties 

we need to work through the provisions step by step. The 

place to begin is § 3345 and § 3346. Is one or the other of 

these provisions applicable? The answer, both sides agree, is 

yes. OTS appears to be "an Executive agency" and so the 

position of Director is encompassed within § 3345. For the 

purpose of title 5, of which the Vacancies Act is a part, 

"Executive agency" includes "an independent establishment" 

in the Executive Branch. 5 U.S.C. §§ 104, 105. Given the 

location of OTS in the Treasury Department, the functions it 

performs and its statutory autonomy, OTS may fit this description. See 12 U.S.C. § 1462a(a) & (b)(3); Energy Research Found. v. Defense Nuclear Facilities Safety Bd., 917 

F.2d 581, 583 (D.C. Cir. 1990); Department of Justice v. 

Federal Labor Relations Auth., 39 F.3d 361, 365 (D.C. Cir. 

1995). Even if it is not within § 3345, OTS surely fits within 

§ 3346. Located in the Treasury Department, OTS is a 

bureau of a "department." Freytag v. Comm'r, 501 U.S. 868, 

886 (1991). As we shall see, the Vacancies Act is concerned 

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with positions requiring Presidential appointment. The Director of OTS is such a position and so the Director may be 

considered an "officer of a bureau of an Executive department" within § 3346's meaning.

The conditions for invoking § 3345 and § 3346 are the 

death, resignation, illness or absence of the official. When 

any one of these events occurs, the "first assistant"if there 

is oneautomatically fills the vacant position, unless the 

President, acting pursuant to § 3347, "direct[s]" someone else 

to perform the duties of the office. Under § 3347, the 

someone else must be an Executive officer holding another 

appointed position for which he was confirmed by the Senate. 

Retsinas qualified. He had been confirmed by the Senate as 

Assistant Secretary of Housing and Urban Development and 

was serving in that capacity when President Clinton directed 

him to take over at OTS.

This brings us to § 3348. Of the four causes of a vacancy 

mentioned in the Act, twoillness and absenceare ordinarily transitory. Apparently for this reason, the Act contains no 

time limits regarding vacancies resulting from illness or 

absence. Vacancies resulting from death or resignation are 

another matter. Here there are time limits. Section 3348(a) 

provides that a vacancy caused by either of these events may 

be filled pursuant to § 3347 "for not more than 120 days." 

An exception to the 120-day limitation is provided if a nomination to fill the vacancy has been submitted to the Senate 

during this period, in which case an individual occupying the 

office may remain "until the Senate confirms the nomination," 

or until 120 days after the Senate rejects the nomination or 

the nomination is withdrawn. 5 U.S.C. § 3348(a)(1).

The Bank thinks § 3348's 120-day period lapsed before the 

President named Retsinas. A necessary, though unstated, 

premise of its argument is that the Vacancies Act may be 

used only when there is a vacancy caused by the departure 

(or absence) of an individual who had been appointed to the 

position in compliance with Article II of the Constitution. 

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sor, Fiechter, could have caused a "vacancy" within the 

meaning of § 3348.

If one focused only on the introductory clause in 

§ 3348(a)"A vacancy caused by death or resignation"it 

might be supposed that the departure of anyone occupying 

the office, even an unappointed acting official, could trigger 

the Vacancies Act. Viewed in context, however, it becomes 

clear that the statute contemplates only the death, resignation, illness or absence of someone appointed to the position 

by the President. The language quoted from § 3348(a) refers 

back to § 3345 and § 3346. Those provisions must be consulted to determine whose "death" or whose "resignation" will 

create a vacancy that may be filled pursuant to the Act. Only 

the "head of an Executive agency and the head of a military 

department" are covered by § 3345. Only an "officer of a 

bureau of an Executive department or military department" 

is covered by § 3346. Generally an "officer" is someone:

(1) required by law to be appointed in the civil service by 

one of the following acting in an official capacity

(A) the President;

(B) a court of the United States;

(C) the head of an Executive agency; or

(D) the Secretary of a military department

5 U.S.C. § 2104. Since we are dealing with the President's 

authority within the Executive Branch, we may put aside (B). 

Cf. Morrison v. Olson, 487 U.S. 654, 675-76 (1988). We may 

also exclude (C) and (D) from the list: § 3345 deals with the 

heads of Executive agencies and military departments, not 

those appointed by them; and § 3346 relates only to an 

officer "whose appointment is not vested in the head of the 

department." This leaves only (A), that is, positions requiring Presidential appointment. It does not matter to our 

decision whether § 3345 and § 3346 cover inferior officers 

whose appointment Congress has vested in the President 

alone, as Article II, § 2, cl. 2, of the Constitution allows, or 

only officers whose Presidential appointment requires the 

consent of the Senate. At the least the person whose "vacanUSCA Case #98-1002 Document #340855 Filed: 03/27/1998 Page 10 of 22
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cy" brings the Vacancies Act into operation must have ascended to the post through a Presidential appointment. 

There may be instances when a person, not constitutionally 

appointed, temporarily performs the duties of the "head of an 

Executive agency" (§ 3345) or of an "officer" in an Executive 

bureau (§ 3346). The Vacancies Act itself gives rise to this 

prospect. But the person's performance of those duties does 

not make him "head of an Executive agency" or an "officer" 

in a department's bureau for the purposes of the Act. Otherwise, § 3348's time limitation could be easily avoided by a 

series of temporary replacements followed by resignations, 

with each resignation triggering a new 120-day period. See

16 Op. Att'y Gen. 596 (1880); 20 Op. Att'y Gen. 8, 9 (1891).

In short, § 3345 and § 3346and thus § 3347apply only 

to those vacancies caused by the departure of an officer of the 

Executive Branch who had been appointed by the President. 

Ryan was such an "officer." Fiechter was not. It follows 

that even if Fiechter had lawfully been serving as Acting 

Director, his resignation did not create a "vacancy" enabling 

the President to invoke the Vacancies Act and name Retsinas 

to the empty post. Only Ryan's departure triggered the 

President's authority under § 3347 to direct someone to 

perform the duties of the vacant position.

We now come to the heart of the controversy. Does the 

§ 3348 clock begin ticking the moment there is a "vacancy" 

caused by the death or resignation of a constitutionally appointed officer? The Bank believes so. If the Bank is right, 

the deadline for filling the Director's position passed years 

before the President named Retsinas.1 On the other hand, 

OTS and the Department of Justice as amicus curiae believe 

__________

1 Ryan resigned as OTS Director on December 4, 1992, during 

an adjournment of the Congress sine die. See 138 CONG. REC.

H12,606 (daily ed. Oct. 9, 1992); 138 CONG. REC. S17,707 (daily ed. 

Oct. 8, 1992). Congress reconvened on January 5, 1993. See 139 

CONG. REC. S1 (daily ed. Jan. 5, 1993). Under the Bank's interpretation, § 3347 and § 3348 gave the President authority to direct 

another presidential appointee to take over the OTS Director's 

duties only until May 4, 1993, the 120th day of Congress's new 

session. See 5 U.S.C. § 3348(a)(2).

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the time limit in § 3348 does not begin running until someone 

actually takes office pursuant to the Vacancies Act, either 

through a "detail" under § 3345 or § 3346 or through a 

Presidential directive pursuant to § 3347. On this view, 

Retsinas was lawfully serving as Director on March 29, 1997, 

when he issued the cease and desist order against the Bank.2

The language of the Vacancies Act strongly supports OTS's 

position. Nothing in the Act expressly deals with the amount 

of time that may transpire before the President exercises his 

§ 3347 authority to designate a temporary replacement. Section 3348 specifies a time limit in these terms: "[a] vacancy 

caused by death or resignation may be filled temporarily 

under section 3345, 3346 or 3347 of this title for not more 

than 120 days...." This language tells us how long the 

position may be "filled," not when the President must do the 

filling. The Bank would have a good case if § 3348 said the 

President must act "within" 120 days. But § 3348 says 

something quite different. The time limit is placed not on 

Presidential action, but on the tenure of the President's 

designee.

There will be instances when the 120-day period of service 

commences with the occurrence of the vacancy. This will 

happen when a "first assistant" is detailed to a vacant position 

by operation of § 3345 or § 3346, or when the President 

issues a § 3347 directive immediately upon the office holder's 

departure.3 But when an officer who dies or resigns had no 

"first assistant" and the President does not immediately act 

__________

2 As OTS sees it, the President's directive of October 10, 1996, 

initially authorized Retsinas to perform the duties of the Director 

for 120 days, or until February 6, 1997. When the President 

nominated Ellen Seidman to fill the position of Director on the last 

day of the 120-day period, this extended Retsinas's term of service 

pursuant to § 3348(a)(2). Retsinas continued lawfully to exercise 

the powers of acting Director until the Senate confirmed Seidman 

on October 23, 1997.

3 For the first time in its reply brief, the Bank argues that 

Fiechter was actually Ryan's "first assistant," and therefore automatically succeeded to the position of the Director upon Ryan's 

resignation under § 3345 or § 3346. Hence the 120-day period 

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pursuant to § 3347, the vacancy has not been "filled" under 

§ 3348 and the 120-day period of service therefore has not 

begun to run.

As against this interpretation, the Bank stresses the word 

"When" at the beginning of § 3345 and § 3346. From this it 

concludes that both "sections take effect 'when' a vacancy 

arises"which is accurateand that the President has only 

120 days to fill the vacant position, which is not accurate. It 

is not accurate for the reasons we have already given. Those 

reasons do not, as the Bank claims, lead us to a result in 

conflict with the history of the Act. It is the Bank's position 

that runs counter to history.

__________

began running immediately and the President's authority to invoke 

§ 3347 expired during Fiechter's time in office. See 17 Op. Att'y 

Gen. 530, 531 (1883) ("When the vacancy is thus temporarily filled 

once for that period, the power conferred by the statute is exhausted; it is not competent to the President to appoint either the same 

or another officer to thereafter perform the duties of the vacant 

office for an additional period....").

The Bank's argument comes too late to be considered. See 

Rollins Environmental Servs. (NJ), Inc. v. U.S. EPA, 937 F.2d 649, 

652 n.2 (D.C. Cir. 1991). Whether Fiechter was the Director's 

"first assistant" within the meaning of the Vacancies Act is far from 

so clear that the Bank did not have to raise the point in its opening 

brief or in the administrative proceedings. See Marine Mammal 

Conservancy, Inc. v. Department of Agric., 134 F.3d 409, 411 (D.C. 

Cir. 1998). Fiechter's official title was Deputy Director for Washington Operations. According to OTS, he was one of two deputy 

directors, and there is no statute or regulatory provision ranking 

the status of OTS employees. The governing statute itself names 

only one positionthat of Directorand grants the Director discretion to hire all other staff. See 12 U.S.C. § 1462a(b) & (h); 12 

C.F.R. § 500.10. If the position of "first assistant" is not created 

by statute, one line of authority indicates that § 3345 and § 3346 of 

the Vacancies Act do not apply. See 2 Op. Off. Legal Counsel 113, 

115 n.5 (1978) (noting that the Attorney General's office has consistently interpreted the term "first assistant" as applying only to 

officials whose appointment has been specifically provided for by 

statute).

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The origins of the modern Vacancies Act go back to the 

beginning of the nation. President Washington's first cabinet 

appointmentsHamilton for the Treasury Department, Knox 

for the War Department and Jefferson for Statewere accomplished in a flash. Nominations were sent up one day in 

1789; Senate confirmation followed on the same day, or the 

next. S. ELKINS & E. MCKITTRICK, THE AGE OF FEDERALISM:

THE EARLY AMERICAN REPUBLIC, 1788-1800, at 52 (1993). By 

the election year 1792, Congress must have realized that 

transitions might not always go so smoothly; that, in any 

event, some provision should be made for temporary absences 

and illnesses of Presidential appointees; and that, as Justice 

Holmes later put it, "the machinery of government would not 

work if it were not allowed a little play in its joints." Bain 

Peanut Co. of Tex. v. Pinson, 282 U.S. 499, 501 (1931). The 

Second Congress passed An Act making alterations in the 

Treasury and War Departments, section 8 of which provided 

that "in case of the death, absence ... or sickness" of the 

Secretaries of State, Treasury or the War Department, or of 

any officer in those departments, "it shall be lawful for the 

President ... to authorize any person or persons at his 

discretion to perform the duties of the said respective offices 

until a successor be appointed, or until such absence or 

inability by sickness shall cease." Act of May 8, 1792, ch. 37, 

§ 8, 1 Stat. 279, 281. Three years later, in 1795, during the 

second Washington administration, Congress enacted an 

amendment limiting the length of service of those occupying 

offices under section 8: "no one vacancy shall be supplied, in 

manner aforesaid, for a longer term than six months." Act of 

Feb. 13, 1795, ch. 21, 1 Stat. 415.

Thus, from the beginning Congress limited how long the 

President's designee could serve, not how swiftly the President had to use this legislative authority to fill the vacancy. 

For the next half century, the same system remained in place. 

Congress took up the matter again in 1863, expanding the 

President's power to fill vacancies in "any Executive Department of the Government." Act of Feb. 20, 1863, ch. 45, 12 

Stat. 656. The 1863 amendment also restricted the President's choice of replacements to officers in Executive DepartUSCA Case #98-1002 Document #340855 Filed: 03/27/1998 Page 14 of 22
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ments who had been previously appointed by the President to 

some other position, a restriction now reflected (as modified) 

in § 3347 of the present Vacancies Act. The six-month 

limitation on term of service remained unchanged.

In 1868 Congress repealed the existing statutes on the 

subject of vacancies and enacted in their stead a single 

statute reflecting prior law. See Act of July 23, 1868, ch. 227, 

15 Stat. 168-69; see also CONG. GLOBE, 40th Cong., 2d Sess. 

1163 (1868) (remarks of Senator Trumbull). The 1868 Act 

provided that "in case of the death, resignation, absence, or 

sickness of the head of any executive department of the 

government, the first or sole assistant thereof shall" take over 

"until a successor be appointed or the absence or sickness 

shall cease." Act of July 23, 1868, ch. 227, 15 Stat. 168. 

Instead of elevating the "first or sole assistant," the President 

could authorize any other constitutionally appointed officer to 

perform the duties of the vacant office until a successor was 

appointed or the prior occupant of the position was able to 

return to his post. Id.

When introduced on the floor of the Senate, the bill stated: 

"no one vacancy is to be supplied in this manner for a longer 

term than thirty days." Senator Fessenden objected, asking 

Senator Trumbull "if thirty days is not unnecessarily long?" 

CONG. GLOBE, 40th Cong., 2d Sess. 1163 (1868). The Senate 

agreed, and the final version provided, "That nothing in this 

act shall authorize the supplying as aforesaid a vacancy for a 

longer period than ten days when such vacancy shall be 

occasioned by death or resignation...." Act of July 23, 1868, 

ch. 227, § 3, 15 Stat. 168.

Congress amended the Vacancies Act several times after 

1868. In 1891, it lengthened the 10-day limit to 30 days: a 

"vacancy occasioned by death or resignation must not be 

temporarily filled under [the Vacancies Act] for a longer 

period than thirty days." Act of Feb. 6, 1891, ch. 113, 26 

Stat. 733 (emphasis added). In 1966, Congress recodified 

title 5, making a few minor changes in the statute's wording. 

In place of the introductory clause "In case of" the death, 

resignation, absence or sickness of an officer, the recodified 

version inserted the word "When," which is how § 3345 and 

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§ 3346 now begin. No "substantive changes" were intended. 

S. REP. NO. 89-1380, at 20, 70-71 (1966). Congress amended 

the Act once more in 1988, expanding the time limit on 

service from 30 to 120 days. Entitled "Extension of Time for 

Interim Service," Pub. L. No. 100-398, § 7(a), 102 Stat. 985, 

988 (1988) (emphasis added), the amendment was meant to 

"change[ ] the amount of time a vacancy caused by death or 

resignation may be filled temporarily under section 3345, 

3346 or 3347...." 4 S. REP. NO. 100-317, at 23 (1988) (emphasis added).

From the beginning, then, the various time limits6 

months, 10 days, 30 days and now 120 dayswere placed on 

the tenure of the person occupying the office. While history 

is thus not on the Bank's side, it thinks policy is.5 At oral 

argument, the Bank's counsel asked "what incentive would 

the President, any President, ever have to fill any office" if 

§ 3348(a) limited only length of service (as we believe it 

does)? Transcript of Oral Argument at 20. The question is 

loaded. The Vacancies Act was never meant to give the 

President an "incentive" to fill vacant positions with appointees confirmed by the Senate. The function of the Act is to 

allow some breathing room in the constitutional system for 

appointing officers to vacant positions, to validate the actions 

of those temporarily occupying the positions. If no one is 

__________

4 The 1988 amendment also substituted "Executive agency" for 

"Executive department" in § 3345.

5 For more than a century, the Office of the Attorney General 

has interpreted the Vacancies Act to place time limits only on the 

length of the temporary replacement's service, not the length of 

time the office may remain vacant. See 25 Op. Att'y Gen. 258, 259 

(1904) (stating that the ten day limitation in the Vacancies Act "was 

to be computed from the date of the President's action, and not 

from the time when the vacancy occurred"); 15 Op. Att'y Gen. 457, 

458 (1878) (same). A footnote in a later Opinion of the Office of 

Legal Counsel (1 Op. Off. Legal Counsel 150, 152 n.1 (1977)) 

described two other Attorney General Opinions (15 Op. Att'y Gen. 

596 (1880); 32 Op. Att'y Gen. 139 (1920)) as advising that the 

vacancy must be filled within the Act's time limit. The footnote is 

an inadvertent error. Neither of those Attorney General Opinions 

supports that view.

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detailed or directed pursuant to § 3345, or § 3346, or § 3347, 

or if someone is named but the 120-day period in § 3348(a) 

expires, the position will either remain vacant or wind up 

being occupied by someone not constitutionally entitled to 

exercise the powers of the office.6In either situation, there 

will still be incentives for the President to send up a nominee 

to fill the vacancy. The incentives derive from the Appointments Clause of the Constitution and the political and legal 

consequences of staffing high positions with non-appointed 

"acting" officials. See Ryder, 515 U.S. at 182-183; Glidden 

Co. v. Zdanok, 370 U.S. 530 (1962).

We therefore conclude that the President legally named 

Retsinas to serve as OTS Director pursuant to § 3347 and 

that Retsinas lawfully occupied that position on March 29, 

1997, when he issued the cease and desist order against the 

Bank.

III

In addition to attacking Retsinas's status, the Bank, joined 

by an amicus curiae, argues that his predecessor, Fiechter, 

illegally exercised authority as Acting Director of OTS. 

Fiechter became Acting Director when outgoing Director 

Ryan delegated to him "all the powers of the Director." 

Although the OTS statute permits the Director to delegate 

"any power," 12 U.S.C. § 1462a(h)(4)(A)(ii), the Bank denies 

that it allows a Director to delegate "all powers" and then 

immediately resign, never to take back the reins or monitor 

the delegation. While the statute also authorizes an OTS 

Director to designate a replacement to serve in his "absence," 

12 U.S.C. § 1462a(h)(4)(A)(i), the Bank contends that Ryan 

could not use this provision to designate Fiechter. An "absence," it says, is of limited duration, pending the return of 

__________

6 Because we conclude that Retsinas was authorized to perform 

the duties of the Director of OTS under the Vacancies Act, we do 

not reach OTS's argument that the President has inherent power, 

beyond that granted him in the Vacancies Act, to make temporary 

designations to ensure that the laws are faithfully executed. The 

issue arose once before in this court in a stay application in 

Williams v. Phillips, 482 F.2d 669, 670 (D.C. Cir. 1973).

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the temporarily unavailable officer. Ryan resigned. He 

would never return. Ryan's leaving caused a "vacancy" and 

the statute provides explicitly for such an event: a "vacancy 

in the position of Director which occurs before the expiration 

of the term for which a Director was appointed" shall be filled 

by Presidential appointment with the consent of the Senate. 

See 12 U.S.C. § 1462a(c)(1) & (3). As the Bank sees it, to 

read these provisions otherwise would be to confer upon the 

Director of OTS the power to appoint singlehandedly his 

permanent successor, a power denied even the President.7

If the Bank is right, if Fiechter had no authority to issue 

the Notice of Charges, does it automatically follow that 

Retsinas's cease and desist order is invalid? 8 As to this 

question, the Bank is completely silent. There is not a word 

in its opening brief or its reply brief on the subject. OTS is 

of no help either. Without mentioning the question, it defends on the grounds that Fiechter lawfully occupied the 

Director's office, and that in any event the de facto officer 

doctrine or Retsinas's implicit ratification of the Notice saves 

the cease and desist order.

The parties may think it self-evident that an invalid Notice 

will cause the final order to be invalid, but we are far from 

certain about this. Our doubt stems from the last sentence of 

§ 706 of the Administrative Procedure Act: on judicial review 

of agency action, "due account shall be taken of the rule of 

__________

7 One district court concluded that Ryan validly placed Fiechter 

in charge. Office of Thrift Supervision v. Paul, No. 96-1315 (S.D. 

Fla. Oct. 28, 1997).

8 A notice of charges may be issued when the agency has 

"reasonable cause to believe" that the respondent is engaging in 

unsafe or unsound practices or is otherwise violating the law. 12 

U.S.C. § 1818(b)(1). The notice is in the nature of a complaint. In 

issuing a notice, the OTS Director is performing a prosecutorial 

function. Ultimately, the Director may perform a different role in 

the same case, acting as a quasi-judicial officer passing judgment on 

the evidence bearing on the charges. Although the Administrative 

Procedure Act generally forbids agency personnel from engaging in 

both the prosecution and the decision of a case, an exemption 

permits a member of the body comprising the agency to wear both 

hats. See 5 U.S.C. § 554(d)(2)(C).

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prejudicial error." This sentence "sums up in succinct fashion the 'harmless error' rule applied by courts in the review of 

lower court decisions as well as of administrative bodies," 

UNITED STATES DEPARTMENT OF JUSTICE, ATTORNEY GENERAL'S 

MANUAL ON THE ADMINISTRATIVE PROCEDURE ACT 110 (1947),

reprinted in ADMINISTRATIVE CONFERENCE OF THE UNITED 

STATES, FEDERAL ADMINISTRATIVE PROCEDURE SOURCEBOOK 67, 

176 (2d ed. 1992). The rule tempers judicial consideration of 

challenges to "preliminary, procedural, or intermediate agency action," 5 U.S.C. § 704, in much the same way the harmless error rule affects appellate review of other types of cases. 

Take, for instance, Bank of Nova Scotia v. United States, 487 

U.S. 250 (1988), and United States v. Mechanik, 475 U.S. 66 

(1986). These Supreme Court decisions hold that irregularities in grand jury proceedings leading to indictment may be 

disregarded "unless such errors prejudiced the defendants." 

487 U.S. at 254; see 475 U.S. at 71-72. The petit jury's 

verdict of guilty in Mechanik "rendered harmless any conceivable error in the charging decision that might have flowed 

from the violation." 475 U.S. at 73. If one analogized the 

Notice of Charges against the Bank to a grand jury indictment, and the cease and desist order to a criminal conviction, 

harmless error analysis may mean that irregularities regarding the Notice should also be disregarded. Because the 

parties have not addressed the question, we will say no more. 

Still, what we have written thus far ties directly into a 

question the parties have addressedwhether Retsinas ratified Fiechter's action and thereby cured any deficiency 

caused by Fiechter's lack of lawful authority.

On the matter of ratification, the Supreme Court's decision 

in Federal Election Commission v. NRA Political Victory 

Fund, 513 U.S. 88 (1994), is a useful starting point. The 

Federal Election Commission filed a petition for a writ of 

certiorari in the case. It had no authority to do so without 

the Solicitor General's approval, which it had not received. 

After the time for petitioning expired, the Solicitor General 

authorized the filing. As to whether the authorization had 

retroactive effect, the Supreme Court said that "the question 

is at least presumptively governed by principles of agency 

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law, and in particular the doctrine of ratification." 513 U.S. 

at 98. Ratification occurs when a principal sanctions the 

prior actions of its purported agent. See RESTATEMENT (SECOND) OF AGENCY § 82 (1958). But it is "essential that the 

party ratifying should be able not merely to do the act 

ratified at the time the act was done, but also at the time the 

ratification was made." NRA Political Victory Fund, 513 

U.S. at 98 (citing Cook v. Tullis, 85 U.S. (18 Wall.) 332, 338 

(1874)); see also RESTATEMENT (SECOND) OF AGENCY, supra, 

§ 90, Comment a ("The bringing of an action, or of an appeal, 

by a purported agent can not be ratified after the cause of 

action or right to appeal has been terminated by lapse of 

time."). In NRA, the Solicitor General's ratification came too 

late; the time for petitioning had expired. And so the Court 

dismissed the certiorari petition for lack of jurisdiction.

The timing problem posed in NRA is not present here. No 

statute of limitations would have barred Retsinas from reissuing the Notice of Charges himself and starting the administrative proceedings over again. It is as if, in NRA, there had 

been no time limit on petitioning for certiorari and the 

Solicitor General had approved the FEC's filing after the fact. 

In those circumstances the Court presumably would have 

come out the other way. See Forbes Pioneer Boat Line v. 

Board of Comm'rs, 258 U.S. 338, 339 (1922). On the other 

hand, the situation in this case is not easily characterized as 

between a principalRetsinasand an agentFiechter. 

They were never even at OTS together. Fiechter and Retsinas might both be viewed as agents of the United States. 

There is some authority for the proposition that one agent 

may ratify the acts of another, RESTATEMENT (SECOND) OF 

AGENCY, supra, § 93(3), but we need not go down this path. 

While NRA is not directly on point, a precedent of this circuit 

is.

In Federal Election Commission v. Legi-Tech, Inc., 75 

F.3d 704 (D.C. Cir. 1996), the FEC brought an enforcement 

action against Legi-Tech after finding probable cause to 

believe a violation of the election laws had occurred. In 

response to another decision of this court holding that the 

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FEC was unconstitutionally constituted, the FEC cured the 

illegality and the newly constituted commission ratified the 

pending enforcement action. We sustained the ratification 

despite misgivings about whether the new FEC had engaged 

in a "real fresh deliberation." 9Id. at 707, 709.

To some extent, the Legi-Tech decision echoes the harmless error analysis mentioned previously. Forcing the FEC 

to "repeat the entire administrative process and, only thereafter, ... bring suit," we thought, would promise "no more 

detached and 'pure' consideration of the merits of the case 

than the Commission's ratification decision reflected." Id. at 

708, 709. The situation here is somewhat different, but not in 

ways that assist the Bank. We have no doubt that Director 

Retsinas made a detached and considered judgment in deciding the merits against the Bank. Rather than simply writing 

a letter or a memorandum adopting the Notice of Charges as 

his own, he acted in the normal course of agency adjudication. 

His reasoned conclusion that the Bank violated the law as the 

Notice of Charges had alleged was necessarily an affirmation 

of the validity of the charges,10 and hence a "ratification," 

even though he did not formally invoke the term.11 See 

Andrade v. Regnery, 824 F.2d 1253, 1257 (D.C. Cir. 1987). 

We are also sure that redoing the administrative proceedings 

__________

9 The Federal Election Commission must engage in a lengthy, 

elaborate series of administrative steps involving investigation and 

deliberation before it votes to bring an enforcement action in court. 

See, e.g., Federal Election Comm'n v. Rose, 806 F.2d 1081, 1082-83 

(D.C. Cir. 1986) (describing a two-year long investigation before the 

Commission filed suit); Common Cause v. Federal Election 

Comm'n, 489 F. Supp. 738, 741-42 (D.D.C. 1980) (describing a 

three-year long investigation).

10 The Notice charging the Bank with violating OTS's regulations and engaging in "unsafe and unsound" practices, listed five 

such practices. In his recommended decision, the ALJ concluded 

that the Bank had committed seven separate regulatory violations 

based on these same practices. Retsinas's decision and order 

confirmed the ALJ's conclusions of law.

11 The Bank protests that sustaining the cease and desist order 

on the basis of ratification is a "post hoc rationalization," and 

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would bring about the same outcomea cease and desist 

order against the Bank. To require another Director sign a 

new notice containing charges already found to be supported, 

not merely by probable cause, but by substantial evidence 

would do nothing but give the Bank the benefit of delay 

(assuming that we would refuse to stay our judgment pending 

reinstitution of agency proceedings against the Bank). Because we hold that Retsinas effectively ratified the Notice of 

Charges signed by Fiechter at a time when he could have 

initiated the charges himself, we do not decide whether 

Fiechter lawfully occupied the position of Director.12

IV

In addition to challenging the authority of Fiechter and 

Retsinas, the Bank complains that its procedural rights were 

denied and that the Director's findings were unsupported by 

substantial evidence in the record. None of the Bank's 

arguments in support of these contentions warrants discussion. After reviewing the record, we have concluded that the 

decision was supported by substantial evidence, and that the 

Bank was not denied the procedural protections afforded it 

under OTS's statutes and regulations.

The petition for judicial review is denied.

__________

therefore cannot be relied upon to support the agency's action. Of 

course we may not "substitute our judgment for that of the agency...." Oil, Chemical & Atomic Workers Int'l Union v. NLRB, 46 

F.3d 82, 93 (D.C. Cir. 1995). But OTS is not claiming that 

ratification was the "basis" for the cease and desist order. Retsinas 

issued the order after reviewing the evidence, explaining his reasons, and concluding that the Bank had violated the law. See supra

note 9. This had the legal consequence of ratifying Fiechter's 

Notice of Charges, representing as it did an affirmation of the 

decision to commence an enforcement proceeding, even though 

Retsinas did not say as much. See Henry J. Friendly, Chenery 

Revisited: Reflections on Reversal and Remand of Administrative 

Orders, 1969 DUKE L.J. 199, 224.

12 Nor do we address the argument that Fiechter's actions 

should be validated under the de facto officer doctrine.

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