WASHINGTON—A federal judge has ruled that President Trump’s removal of Federal Trade Commissioner Rebecca Kelly Slaughter was illegal—a decision that could ripple into a closely watched case involving the two ousted NCUA board members, analysts agree.
The ruling, which orders Slaughter’s reinstatement, underscores limits on presidential power to remove leaders of independent agencies and is expected to be appealed to the Supreme Court, where it could shape the fate of NCUA’s former Chairman Todd Harper and Board Member Tanya Otsuka.
U.S. District Judge Loren AliKhan, a Biden administration appointee, said the Trump administration’s “attempt to remove” Slaughter “did not comply with the FTC Act’s removal protections,” The Hill stated.
“Defendants repeatedly want the FTC to be something it is not: a subservient agency subject to the whims of the President and wholly lacking in autonomy. But that is not how Congress structured it," AliKhan wrote in her opinion.
“Undermining that autonomy by allowing the President to remove commissioners at will inflicts an exceptionally unique harm distinct from the mine run of wrongful termination cases,” she added.
The court’s decision could or could not have an impact on the Harper/Otsuka case, Brandy Bruyere, partner at Honigman, LLP, told CUToday.info.
Brandy Bruyere
“One key difference in these cases is that the FTC Act has language that the FCU Act does not have – that the president may remove an FTC commissioner for inefficiency, neglect of duty, or malfeasance,’” Bruyere explained. “The decision to reinstate an FTC commissioner hinged largely on this particular language. By contrast, the FCU Act states the president can appoint NCUA board members, and those board members have terms of six years. Removal is not as directly discussed, leaving things open to interpretation.”
That means a court could look at the outcome for the FTC commissioner as being due to the specific language of the FTC Act on removals, so not as relevant for considering the NCUA board case, Bruyere said.
“The Harper/Otsuka case makes other arguments, like pointing to 1978 amendments to the FCU Act to shift from a single administrator who served at the pleasure of the president to a board, with no reference at all to any removal powers,” Bruyere said. “That said, the Administration seems to seek the end to a long-standing precedent that has been viewed as preventing termination of commissioners/board members of various federal agencies designed by Congress to be independent, called Humphrey’s Executor, which also involved FTC commissioners. This issue will be litigated to the Supreme Court, and the effort may be successful as the Court has demonstrated willingness to overrule long-standing precedents.”
According to Bruyere, that may lead to an outcome where unless Congress explicitly limits the President’s removal powers, the President has the ability to remove commissioners or board members at independent agencies.
“There are other possible outcomes as well, but overall, it is quite possible for the FTC and the NCUA to have differing outcomes in court in the long run on this issue depending on the direction the Supreme Court takes when this lands on its docket,” she concluded.
Carrie Hunt
ACU’s Perspective
“If you look at the court's analysis in the Slaughter case, I think it could be relevant or helpful for NCUA Board Members Harper and Otsuka,” stated America’s Credit Unions Chief Advocacy Officer Carrie Hunt. “All of these matters tend to rely on the same precedent— Humphrey’s Executor.”
But Hunt added there are a few distinctions between the FTC case and NCUA’s.
“One is that almost certainly the decision that was rendered relative to the FTC will be appealed by the Trump Administration. Ultimately, that would mean if it continues along the legal process it would make its way up to the Supreme Court, along with potentially the NCUA case, if that is what is decided,” Hunt said. “There's another D.C. Circuit Court case involving the removal of the National Labor Relations Board officials. So, there are lots of different avenues here and we've got different courts that may take different interpretations. So, while this (Slaughter) decision is certainly interesting and relevant, it is certainly not necessarily clear cut as to how the court will rule.”
Hunt pointed to perhaps the most important distinction.
Jason Stverak
“The FTC Act specifically says the board members and commissioner can only be removed for inefficiency, neglect of duty, or malfeasance in office. And with the NCUA, the Federal Credit Union act is silent on removal altogether. Certainly, when the judge looks at the NCUA matter and the Federal Credit Union Act, that distinction will have to be addressed,” Hunt said. “But nothing has changed about our core position that America's Credit Unions strongly supports a separate and strong regulator for credit unions run by a bipartisan board. We certainly will continue to advocate for NCUA’s independence from other federal banking regulators.”
DCUC’s View
While this issue works its way through the court system, the Defense Credit Union Council said it is committed to working to ensure a strong and independent NCUA.
“We look forward to working with the NCUA, Congress and the Administration to ensure long-term viability of the agency to guarantee a robust credit union industry serving over 140 Americans and their families,” said DCUC Chief Advocacy Officer Jason Stverak.