MSPB Regains Quorum, Questions Remain

Action: The Senate has confirmed a second member to the Merit Systems Protection Board (MSPB), restoring the quorum it lost in March after the President dismissed one member and another retired. However, questions remain about the independence of the MSPB, which is responsible for adjudicating disputes between Federal employees and agencies over disciplinary actions, whistleblower protections, and other personnel decisions within the civil service system. The Supreme Court will hear a case in December regarding the President’s authority to remove members of independent agencies, which would apply to the MSPB. In addition, in a case regarding the firing of two employees without cause, the Administration has argued that the MSPB must follow the “legal position of the Executive Branch” and is thus no longer an independent agency.

Trusted Insights for What's Ahead^®

• These developments raise concerns about the possibility of undue political influence on regular government functions, with potential implications for businesses dealing with the Federal government on regulatory issues, contracts, and other matters. CEOs should closely monitor the evolving legal and policy landscape when dealing with federal agencies—including independent regulatory agencies—to assess potential risks to regulatory consistency and contracting processes. CEOs should also proactively engage with policymakers and business associations, including The Conference Board, to understand the evolving landscape.
• The ongoing legal debates about the limits of the President’s authority over independent agencies have far-reaching implications. Since his inauguration, the President has sought to remove members of a variety of agencies, including the Federal Election Commission, Federal Trade Commission, Federal Reserve Board, and the MSPB. The statutes establishing these agencies as independent agencies generally limit the circumstances under which the President may remove their commissioners or other “members” to a few defined circumstances, including “neglect of duty or malfeasance.”
• In 1935, the Supreme Court held in Humphrey’s Executor v. United States that it was within Congress’s power to create independent, multi-member agencies whose leaders could only be removed by the President “for cause” when the agencies are “neither political nor executive, but predominantly quasi-judicial and quasi-legislative.”
• However, in its legal filings and public statements, the Administration has advanced a “unitary executive theory,” under which the President is considered to have the authority to control all the components within the Executive Branch, including independent regulatory agencies. The President issued an Executive Order to this effect in February.
• Many observers expect the Supreme Court to significantly narrow or overturn Humphrey’s Executor. Indeed, the Court has thus far preliminarily allowed the President to proceed with dismissing leaders and members of independent agencies while legal proceedings continue.
• Notably, the Court has indicated that it may consider the independence of the Federal Reserve’s establishment and monetary policy function to be a unique case.
• Changes to the independence of the MSPB, including the view that it must follow the legal opinions and guidance of the Executive Branch, raise significant questions about the survival of the merit system for Federal employees, which is rooted in reforms intended to transition civil service employment from a patronage-based system—where hiring was influenced by political affiliation or contributions—to a merit-based system. At a minimum, taken together, the changes increase the control of the Executive Branch over MSPB decisions.
• The MSPB has currently ceased operations during the government shutdown.