WASHINGTON—A federal appeals court delivered a significant setback Friday to former NCUA Board Members Todd Harper and Tanya Otsuka in their lawsuit challenging the Trump Administration’s decision to remove them from the agency last year.
In a 2–1 ruling, a D.C. Circuit panel held that the president may remove members of the National Labor Relations Board and Merit Systems Protection Board regardless of statutory protections requiring cause for dismissal, according to reporting from Washington journalist Kyle Cheney.
Although the case did not directly involve NCUA, the legal reasoning mirrors the key issue at the center of the Harper–Otsuka challenge: whether Congress can limit the president’s removal authority for members of independent regulatory boards.
As CUToday.info has reported, the Harper/Otsuka lawsuit argues that NCUA board members—like those at the CFPB, FTC, and other independent agencies—are intended to be insulated from political interference through for-cause removal protections. The Administration has countered that such limits violate the president’s Article II authority, and it has sought dismissal of the suit on those grounds.
Friday’s ruling strengthens the Administration’s position by extending the Supreme Court’s recent trend toward weakening removal restrictions and expanding presidential control over independent regulators, analysts stated.
Brandy Bruyere, partner at Honigman, LLP, noted this decision could be appealed, asking for an en banc review by the entire appellate court, or to the Supreme Court.
"That said, the Supreme Court already declined to take on the NCUA board members' case," she said. "This is likely because the issue is already in front of the Court more generally. On Monday, Dec. 8, the Supreme Court will hear oral arguments in a similar case involving the FTC, the outcome of which is likely to impact independent agencies generally rather than solely the NCUA. Should the Supreme Court agree that under the statutes as written, the president can fire board members and commissioners of independent agencies, then these regulators will all be subject to the swing of the regulatory pendulum when there is a change in power in the White House rather than benefit from the stability that can come with set terms and only being removable for cause."