By Ray Birch
WASHINGTON—With similar arguments as another case that could upend long-standing legal precedent and redefine the limits of presidential power over independent federal agencies, the U.S. District Court for the District of Columbia held arguments late last week as ousted NCUA board members Todd Harper and Tanya Otsuka challenged their removals—raising constitutional questions that echo through similar legal battles now moving toward the Supreme Court.
The U.S. District Court for the District of Columbia heard arguments from dismissed NCUA board members Todd Harper and Tanya Otsuka, as well as the Department of Justice on behalf of the NCUA.
Both parties have filed motions for summary judgment. Judge Amir H. Ali heard arguments on both sides Thursday.
Harper and Otsuka are seeking an injunction reinstating them to the NCUA board and nullifying any actions taken with Chairman Kyle Hauptman as the sole board member. Since Harper and Otsuka were dismissed in April, the board has conducted one meeting with no votes taken.
The DOJ claims the president can remove board members at will and that the Federal Credit Union Act provides no “for cause” removal protections to NCUA board members.
CUToday.info spoke with America’s Credit Unions Ann Petros, who attended the hearing, about her perspectives on the proceedings.
Petros, ACU vice president of policy engagement and credit union operations, pointed out that Judge Ali is relatively new to the bench—appointed in December of 2024.
“So, not a lot to glean from his history on the bench,” she said. “Both parties did a great job highlighting what was already covered extensively in their briefs, and it's a very interesting case in how it relates to other pending challenges that are before the D.C. Circuit Court and even, potentially, before the Supreme Court.”
Many Legal Challenges
Petros pointed to all of the challenges facing the Trump Administration currently in the D.C. court system, such as the legal case over the removal of the FTC commissioners in Slaughter v. Trump and Wilcox v. Trump, which asserts that Trump’s firing of National Labor Relations Board Member Gwynne Wilcox was illegal.
“There was a line of questioning from Judge Ali yesterday about how the NCUA compares to the Federal Reserve—what would happen if, for example, President Trump sought to remove Board Chair (Jerome) Powell,” Petros said. “Of course, the government refused to answer that question. This is a fascinating issue because all of these related cases are going to decide the fate of that 1935 precedent in Humphrey’s Executor.”
As CUToday.info has reported, Humphrey’s Executor v. United States is a U.S. Supreme Court case that established limitations on the president's authority to remove certain federal officials. The Court determined that Congress has the power to create independent agencies whose leaders cannot be dismissed by the president without just cause. The case concerned President Franklin D. Roosevelt's attempt to remove a commissioner of the Federal Trade Commission due to policy disagreements. The Court held that this action was unlawful, given that the FTC was intended to function independently.
Petros noted, however, that over the years there has been a slow erosion of that precedent.
Petros pointed out the FTC, the Federal Reserve, FHFA and CFPB have explicit statutory protections and limits on presidential removal in their agencies’ Acts.
“We don't have that in the Federal Credit Union Act. The attorneys for the plaintiffs tried to focus on when the FCU Act was amended in 1978,” she explained. “It's a compelling argument that there was an amendment to the Act, the NCUA board structure was created, and the language that the board members or heads of the NCUA serve at the pleasure of the president was removed. But, because all of these other agencies have those specific protections and the Federal Credit Union Act doesn't, it makes it much more difficult to argue that NCUA board members should receive the same protections.
Ann Petros
“In fact, we're starting to see some indications that the Supreme Court is leaning into this theory the Trump Administration has adopted that the president has the authority to remove heads of independent agencies,” continued Petros. “The government was arguing yesterday that the presumption is the President can remove heads of independent agencies, without clear statutory indication otherwise.”
Similar Authorities
Petros observed the plaintiffs did a good job of outlining how the NCUA’s functions and authorities are similar to that of the FDIC and the Federal Reserve.
“They were really trying to tie the NCUA to those other agencies and make the case that they have these quasi-judicial and quasi-legislative authorities that would put the NCUA within Humphrey’s Executor, and protect its board members from removal,” she explained. “But, again, the Humphrey’s Executor case may be overturned by the Supreme Court soon—if the Wilcox case gets up to the Supreme Court.”
Those following the NCUA case are now simply waiting for a decision from Judge Ali on the cross motion for summary judgment.
“We’ll see a decision, I would think, in the next couple months. And, a final decision is appealable by either side,” Petros noted.
How long will NCUA Chairman Kyle Hauptman continue as the lone board member?
“There appears to be a hesitation from the Trump Administration to nominate replacements for Harper and Otsuka,” Petros said. “It could be a situation where we are left with just a single board member for many months.”
Petros reminded that America’s Credit Unions has consistently taken the position that credit unions should be regulated by a strong, independent agency, and has called for Trump to nominate replacements to fill the two vacancies to ensure a bipartisan, three-person board for the NCUA.