Federal Judge Declines to Stay Ruling Reinstating NCUA Board Members Harper, Otsuka, for Now

On Tuesday, Judge Ali ruled that President Trump acted unlawfully when he removed Harper and Otsuka earlier this year. He found that Congress intended to protect NCUA Board members from at-will removal when it restructured the agency in 1978. In his ruling, he wrote, “the text and history of the NCUA statute, along with the structure and function of the NCUA Board, confirm Congress restricted the President’s power to remove Board members.”

Late Tuesday, Trump Administration attorneys filed a motion to stay the judge’s ruling pending an appeal.

One of the government’s core arguments was that the NCUA statute does not include language that explicitly limits the president’s removal authority.

“First, the Supreme Court and the D.C. Circuit have repeatedly emphasized that absent a specific provision to the contrary, the power of removal from office is incident to the power of appointment,” Trump’s motion read in part. “The Court has said that to ‘take away’ the power of at-will removal from an appointing officer, Congress must use ‘very clear and explicit language.'”

The government also argued it would be irreparably harmed without a stay, and the balance of the equities and public interest favors a stay pending an appeal.

“Again, the Supreme Court explained in [Trump v. Wilcox] that its “stay reflects our judgment that the Government faces greater risk of harm from an order allowing a removed officer to continue exercising the executive power than a wrongfully removed officer faces from being unable to perform her statutory duty.”

In the Trump v. Wilcox case, a federal district court ordered the reinstatement of a removed NLRB member and a Merit Systems Protection Board member. The U.S. Supreme Court, however, granted a stay blocking reinstatement during appeal. The D.C. Circuit court also noted that forcing the president to work with removed principal officers interferes with his constitutional authority to oversee the executive branch.

In addition to the Wilcox ruling, the D.C. Circuit court has granted similar stay motions in recent cases that are pending appeals, involving the removal of a Federal Labor Relations Authority member and the removal of two members in the Privacy and Civil Liberties Oversight Board.

What’s more, the U.S. Supreme Court ruled in 2021 that a restriction on the president’s ability to remove the head of the Federal Housing Finance Agency (a single director agency) violated the separation of powers, and in 2020, the Supreme Court ruled the CFPB’s single director structure with for cause removal protection was unconstitutional.

In a separate minute order posted on the federal docket on Tuesday, Judge Ali has granted a motion by Jeffrey Moats to file an amicus brief in this case. He argued that Harper himself previously acknowledged in court filings that board members are removable at will. Moats, represented by the Pacific Legal Foundation, highlighted what he calls a “direct contradiction” between Harper’s position in his own lawsuit and his current legal argument in this case.

Moats’ brief further contended that any statutory protections from removal would be unconstitutional under Supreme Court precedent.

The NCUA fired Moats from the $93.9 million Edinburg Teachers Credit Union in Edinburg, Texas after it was conserved in 2021. Two years later, the federal agency issued a four-count notice of charges with the U.S. Office of Financial Institution Adjudication (OFIA), accusing the former CEO of legal violations and fiduciary breaches that allegedly caused more $4 million in losses to credit union. The OFIA is an interagency group of administrative law judges based in Arlington, Va. Moats is challenging the constitutionality of the NCUA’s enforcement framework under Section 1786 of the Federal Credit Union Act. After a Texas district court dismissed his suit last year, ruling it lacked jurisdiction, Moats appealed before the U.S. Court of Appeals for the Fifth Circuit in New Orleans. Arguments before the Appeals Court were heard in June and a ruling is pending.

Peter Strozniak can be reached at pstrozniak@cutimes.com.