Removal of Holdover Officials Serving on the Federal Housing

Finance Board and the Railroad Retirement Board

The President may rem ove, without cause, members o f the Federal Housing Finance Board and the 

Railroad Retirem ent Board who are serving in holdover capacities and do not enjoy express tenure 

protection by statute.

August 1, 1997

M e m o r a n d u m O p in io n f o r t h e C o u n s e l t o t h e P r e s id e n t

You have asked for our opinion about the President’s power to remove, without 

cause, members of the Federal Housing Finance Board (“ FHFB” ) and Railroad 

Retirement Board (“ RRB” ) who are serving in holdover capacities. Members of 

neither board enjoy express tenure protection.1 Your question therefore requires 

us to address whether, in the face of congressional silence, a restriction on the 

President’s power to remove the board members should be inferred. See Wiener

v. United States, 357 U.S. 349 (1958). Without such an implied removal restriction, the President may remove the board members without cause even before 

their terms have expired. See Myers v. United States, 272 U.S. 52 (1926).

We conclude that although there is some small risk that a court would find 

a tenure protection during the holdover period, the clearly better legal view is 

that such a protection should not be inferred. The President may therefore remove, 

without cause, the board members serving in holdover capacities.

I.

In a thorough review of removal jurisprudence from the early days of the 

Republic to the present, our Office concluded that tenure protection should no 

longer be inferred when Congress is silent. See The Constitutional Separation of

Powers Between the President and Congress, 20 Op. O.L.C. 124 (1996); see also

id. at 168 n.115 (explaining that rationale of Wiener, in which Court inferred 

a removal restriction for a quasi-adjudicatory officer, is suspect in light of subsequent cases, but continues to be followed by some courts). In accordance with 

this position, there would be no implied tenure protection during FHFB or RRB 

directors’ regular terms, let alone during their holdover periods.

Nevertheless, some courts have continued to suggest that tenure protection may 

sometimes be inferred when Congress is silent. See, e.g., Swan v. Clinton, 100 

F.3d 973, 981-84 (D.C. Cir. 1996); FEC v. NRA Political Victory Fund, 6 F.3d 

821, 826 (D.C. Cir. 1993), cert, dismissed, 513 U.S. 88 (1994). These courts have

1 By “ tenure protection,” we mean a prohibition against removal without cause See, e.g., 5 U S C § 121 I (1994) 

(“ The Special Counsel may be removed by the President only for inefficiency, neglect of duty, or malfeasance 

in office ” )

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held that such protection is justified whenever Congress has indicated, through 

the functions it has vested in an agency or through legislative history or statutory 

language, that the agency must be insulated from the control of the President 

in order to perform its functions adequately. This rationale does not necessarily 

extend to board members serving in holdover capacities, however, as they by definition are subject to the President’s ability, with the Senate’s advice and consent, 

to appoint successors to their positions. See Swan, 100 F.3d at 984. In holdover 

situations, therefore, a court may first ask (as did the court in Swan, despite the 

objections of the concurring judge, 100 F.3d at 990 (Silberman, J.)) whether tenure 

protection should be inferred during board members’ terms of office. See id. at 

981-83. If the court finds that tenure protection should be inferred, it asks whether 

such protection should also be inferred during holdover periods. See id. at 984— 

87. In answering this second question, courts are likely to require some rationale 

other than the one supporting tenure protection during appointed terms. See id.

at 984. We have examined the question of removal of FHFB and RRB holdovers 

under this methodology in order to be as thorough as possible, although it is our 

view that removal is not limited even during the directors’ terms, in light of the 

congressional silence on the question.

II.

The FHFB is an “ independent agency in the executive branch.” 12 U.S.C. 

§ 1422a(a)(2) (1994). It is composed of the Secretary of Housing and Urban 

Development and four other directors appointed by the President with the advice 

and consent of the Senate. See id. § 1422a(b)(l). The four appointed directors 

must have “ extensive experience or training in housing finance” or “ a commitment to providing specialized housing credit.” Id. § 1422a(b)(2)(A). At least one 

of the directors must also be chosen from an “ organization with more than a 

2-year history of representing consumer or community interests on banking services, credit needs, housing, or financial consumer protections.” Id.

§ 1422a(b)(2)(B). No more than three of the directors, including the Secretary, 

may be of the same political party. See id. § 1422a(b)(2)(A). No more than one 

of the appointed directors may be from any single district of the Federal Home 

Loan Bank System. See id.

The four appointed directors of the FHFB serve seven year terms, see id.

§ 1422a(b)(l)(B), unless appointed to fill a vacancy occurring prior to the expiration of a director’s term, in which case they serve for the remainder of the original 

term, see id. § 1422a(d)(l). Vacancies “ shall be filled in the manner in which 

the original appointment was made.” Id. Upon expiration of a director’s term, 

that director “ may continue to serve until a successor has been appointed and 

qualified.” Id. Directors enjoy no express tenure protection. See id. § 1422a.

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The primary duty of the FHFB is to ‘ ‘ensure that the Federal Home Loan Banks 

operate in a financially safe and sound manner.” Id. § 1422a(a)(3)(A). Specifically, the FHFB supervises the Federal Home Loan Banks and ensures that they 

carry out their housing finance mission and stay adequately capitalized in the capital markets. See id. § 1422a(a)(3)(B). To carry out these duties, the FHFB may 

promulgate and enforce regulations and orders, may suspend or remove for cause 

Federal Home Loan Bank employees, may assess the Banks for the Board’s 

expenditures, and may use the United States mails. See 12 U.S.C. § 1422b(a) 

(1994).

The FHFB is in many ways indistinguishable from the Board of the National 

Credit Union Administration (“ NCUA” ) at issue in Swan, a recent case considering tenure protection during holdover periods. In that case, the D.C. Circuit 

found that although it might infer tenure protection for NCUA Board members 

during their fixed terms, it would not infer such protection during holdover 

periods. See 100 F.3d at 988. The D.C. Circuit made these determinations by 

examining the NCUA Board’s structure, function, and legislative history, much 

of which is similar to that of the FHFB.2

Like the NCUA Board, nothing in the statutory language establishing the FHFB 

or its legislative history explicitly grants any protection from Presidential control. 

Moreover, the FHFB explicitly resides within the executive branch and is not 

among the “ independent regulatory agenc[ies]” listed in the Paperwork Reduction 

Act, 44 U.S.C. §3502(10) (1994), which identifies many of the agencies whose 

members are thought to have tenure protection.3 Two aspects of the FHFB, however, suggest that Congress may have wanted the FHFB’s directors to be independent from the President. These aspects are shared with the NCUA Board and 

were cited by the D.C. Circuit as indicators of independence. First, members of 

both boards serve for fixed terms of office. Although fixed terms alone do not 

provide removal protection, Parsons v. United States, 167 U.S. 324, 338-39 

(1897), they may offer evidence of agency independence when combined with 

other factors. See Swan, 100 F.3d at 982. Second, the FHFB and NCUA Board 

serve similar functions in that both Boards regulate financial institutions. The D.C. 

Circuit determined that this type of function often is a sign of independence from 

the President as “ people will likely have greater confidence in financial instituRemoval o f H oldover Officials Serving on the Federal H ousing Finance Board and the Railroad

Retirement Board

2 The D C Circuit refrained from making any actual holding about the tenure protection of Board members during 

their ordinary terms On the other hand, the district court had ‘‘decline[dj to infer a restriction upon the President’s 

power to remove NCUA Board members where none was expressly provided for by Congress.” Swan v. Clinton, 

932 F Supp 8, 13 (DDC 1996) (footnote omitted) This holding apparently would have extended to removal 

dunng a Board member’s regular term, as well as during the holdover penod

3 The FHFB could, however, fall within the “ other similar agency” language of the Paperwork Reduction Act. 

44 U S C §3502(10) (1994)

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tions if they believe that the regulation of these institutions is immune from political influence.” Id. at 983.4

In addition to these features, the Swan court relied on legislative history to suggest that tenure protection might be inferred for NCUA Board members. See id.

at 982-83. It is less clear from the legislative history of the FHFB that tenure 

protection should be inferred. The NCUA Board was created in 1978 to replace 

the NCUA Administrator who had explicitly served at the pleasure of the President. The amendments creating the NCUA Board deleted all reference to the President’s removal power. The D.C. Circuit interpreted this silence after an explicit 

reference as bolstering the inference of tenure protection during NCUA Board 

members’ terms. In contrast, the directors of the FHFB, or its predecessor body, 

never explicitly served at the pleasure of the President. Early versions of the bill 

establishing the FHFB did provide that the President could remove the Board’s 

directors at his discretion. See S. 413, 101st Cong. § 702(b) (1989). The proposed 

removal provision was later dropped without comment and the reports accompanying the enacted bill were silent on removal. See H.R. Conf. Rep. No. 101— 

209, at 427-29 (1989). This change in a draft of a bill is less indicative of congressional intent than an amendment to an already enacted law. The change prior 

to enactment, however, might lend some support to the argument that at least 

some members of Congress did not want to give the President express discretion 

to remove directors at will.5

The FHFB therefore shares some, but not all, of the features of the NCUA 

Board that led the D.C. Circuit to state that it would likely infer tenure protection 

during NCUA Board members’ fixed terms of office. See Swan, 100 F.3d at 983- 

84.6 Even if a court were to reach a similar conclusion with the FHFB, however, 

the D.C. Circuit held that such features did not necessitate tenure protection during 

holdover periods. See id. at 988. The reasoning behind this holding applies equally 

to the FHFB as to the NCUA Board. The D.C. Circuit found that inferring holdover protection was not necessary to ensure the independence of NCUA Board 

members because holdover members can be replaced by a Senate-confirmed successor at any time, including a time when the President disagrees with the mem4 As the district court in Swan observed, however, the Comptroller of the Currency and the Office of Thrift Supervision “ perform similar functions . . albeit with respect to other financial instituuons,” but “ Congress has not 

. . . found it necessary to insulate these entities from executive control.” 932 F. Supp at 13 n.8 (citations omitted).

5 Other aspects of the A ct’s legislative history, however, indicate that Congress was not primarily concerned with 

the FHFB’s independence from the Executive. Even though Congress explicitly describes the Board as an “ independent agency,” 12 U.S.C. § I422a(a)(2), Congress was more concerned about the Board’s independence from 

the banking industry and the Department of the Treasury than from the President, see S Rep. No. 101-19, at 5 -

6 (1989), H.R. Conf. Rep. No. 101-209, at 428. Indeed, the President's involvement with the Board was designed 

to help ensure independence from the banking industry and Treasury Department. See S Rep. No 101-19, at 5. 

All that should be inferred from the status of an “ independent agency” is that the entity is not located within 

another department or agency

6 A major difference between the two boards is that the Secretary of Housing and Urban Development serves 

on the FHFB, and one of the directors of the FHFB is, therefore, necessarily subject to the plenary supervision 

of the President. This structural feature may indicate that independence from the Executive is not necessary for 

the FHFB to carry out its functions However, it may also indicate an increased need to insulate the FHFB’s other 

directors from the power o f the President

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ber’s decisions. See id. at 984. “ [H]oldover members know that even if they 

cannot be removed directly, an unpopular decision may lead the President to nominate a successor immediately or encourage the Senate to speed up confirmation 

hearings.” Id. Similarly, FHFB directors serving in holdover capacities can be 

replaced at any time. See 12 U.S.C. § 1422a(d)(l). Therefore, during the holdover 

period there is no independence to be protected by restricting removal by the 

President.

The FHFB holdover clause is somewhat different from the NCUA Board holdover clause, however. The FHFB clause permits a director to serve until a successor has been “ appointed and qualified,” id., whereas the NCUA Board holdover clause permits a member to serve until a successor has “ qualified,” see

12 U.S.C. § 1752a(c) (1994). The D.C. Circuit suggested in Swan that the use 

of “ appointed and qualified,” as opposed to just “ qualified,” may indicate 

Congress’s intent to keep holdovers in office until the Senate has confirmed the 

President’s appointees. See Swan, 100 F.3d at 986. Congress’s intent presumably 

would be both to provide that the office would not be “ vacan[t]” for purposes 

of the Recess Appointment Clause, so that there would be no ground for a recess 

appointment by the President, see Wilkinson v. Legal Services Corp., 865 F. Supp. 

891, 900 (D.D.C. 1994), rev’d on other grounds, 80 F.3d 535 (D.C. Cir.), cert,

denied, 519 U.S. 927 (1996); Mackie v. Clinton, 827 F. Supp. 56, 57-58 (D.D.C. 

1993), vacated as moot, 1994 WL 163761 (D.C. Cir. 1994), and to grant tenure 

protection against removal during holdover periods. It seems unlikely, however, 

that Congress had this intent with the FHFB. First, in suggesting such an intent, 

the D.C. Circuit relied on the fact that Congress explicitly changed the NCUA 

Board holdover clause from “ appointed and qualified” to “ qualified.” In contrast, Congress never made any changes to the FHFB holdover clause. Indeed, 

Congress was completely silent on the issue and in the absence of clear and 

express legislative intent, a court should not assume that Congress intended to 

restrict the President’s recess appointment powers. Cf. Franklin v. Massachusetts,

505 U.S. 788, 800-01 (1992) (textual silence insufficient to subject President to 

Administrative Procedure Act); see also Application of 28 U.S.C. §458 to Presidential Appointments of Federal Judges, 19 Op. O.L.C. 350 (1995). Second, contrary to the D.C. Circuit’s suggestion, the “ qualified” in “ appointed and qualified” does not have to mean confirmed in order to avoid being surplusage. Rather, 

nominees qualify when they take their oaths and are sworn in to office, regardless 

if they have been confirmed by the Senate or have taken office through a recess 

appointment.7 See Brief for Appellees at 39 n.7, Swan v. Clinton, 100 F.3d 973 

(D.C. Cir. 1996) (No. 96-5193). We therefore conclude that tenure protection 

should not be inferred for FHFB directors serving in holdover capacities.

Removal o f Holdover Officials Serving on the Federal Housing Finance Board and the R ailroad

Retirement Board

7 It would not be possible to argue that the requirement that FHFB vacancies “ shall be filled in the manner 

in which the original appointment was made,” 12 U S.C § 1422a(d)(l), indicates Congress’s intent to bar recess 

appointments and keep holdovers in office. See, e .g , Staebler v. Carter, 464 F Supp. 585, 590-91 (D D C. 1979).

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III.

The RRB is an “ independent agency in the executive branch.” 45 U.S.C. 

§231f(a) (1994). It is composed of three members appointed by the President 

with the advice and consent of the Senate. The President must choose one member 

from recommendations made by representatives of railroad employees and another 

member from recommendations made by representatives of railroad employers. 

The President appoints the final member, the Chairman, without recommendation. 

All three members serve five year terms, unless appointed to fill a vacancy occurring prior to the expiration of a Board member’s term, in which case they serve 

for the remainder of the original term. Upon expiration of a member’s term, that 

member “ shall continue to serve until his successor is appointed and shall have 

qualified.” Id. Members of the Board enjoy no express tenure protection. See

id.

The Board is charged with exercising all duties and powers necessary to administer the Railroad Retirement Act. See id. §231f(b). These duties and powers 

include determining what portion of the taxes collected under the Railroad Retirement Tax Act should be credited to the various benefit accounts, determining who 

receives annuities and death benefits, making decisions upon issues of law and 

fact relating to such benefits, arranging payment, keeping records of eligibility 

and payments, and developing rules and regulations to oversee the process. See

id.

Nothing in the statutory language establishing the Board or its legislative history 

explicitly indicates a determination by Congress that the Board’s functions require 

it to be independent of the President’s plenary supervision. Moreover, the Board’s 

structure contains features that militate against such independence. The Board is 

within the executive branch, see id. §231f(a), and is not listed as an “ independent 

regulatory agency” in the Paperwork Reduction Act, 44 U.S.C. §3502(10). In 

addition, the statutory language explicitly provides that “ [vacancies in the Board 

shall not impair the powers or affect the duties of the Board or of the remaining 

members of the Board, of whom a majority of those in office shall constitute 

a quorum for the transaction of business.” 45 U.S.C. §231f(a). This provision 

could militate against independence because it could eviscerate the employer/ 

employee balancing requirement whenever the employer or employee seat is 

vacant.

On the other hand, the Board’s structure contains features that have been considered indicators of independence. First, the Board members serve for fixed terms. 

See Swan, 100 F.3d at 982; but see Parsons, 167 U.S. at 338-39 (fixed terms 

alone do not provide removal protection). Second, the Board has some quasijudicial functions, which until Morrison v. Olson, 487 U.S. 654 (1988), was a 

determining factor in declaring an agency independent and therefore protecting 

its board members from arbitrary removal. See Wiener, 357 U.S. at 353-56.

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We do not believe these features, without more, are enough to conclude that 

Congress intended the Board to possess that independence conferred by tenure 

protection. The Board is far from the War Claims Commission at issue in Wiener.

For example, unlike the Board, see 45 U.S.C. § 23lg (1994), that Commission 

was not subject to judicial review. The Board is more like the Social Security 

Administration, when it was part of the Department of Health and Human Services, than the War Claims Commission. Even if a court concluded, however, that 

the Board’s functions require independence and Board members therefore need 

tenure protection to carry out these functions, it would not necessarily follow that 

the Board members would enjoy tenure protection while serving in holdover 

capacities. See Swan, 100 F.3d at 984. Rather, a court would most likely require 

that the nature of the holdover capacity or language and history of the holdover 

clause also provide some evidence of Congress’s intent to provide tenure protection. See id.

The Board’s holdover clause provides little evidence of an intent to grant tenure 

protection during holdover periods. First, holdover members can be replaced by 

a successor at any time, including a time when the President and Senate disagree 

with the member’s decisions. See id. Second, tenure protection under the holdover 

clause is not necessary to ensure the Board’s continuity, as the Board may continue to function with one or two members. See 45 U.S.C. §231f(a). Third, Congress did not seem to be contemplating tenure protection when it added the holdover clause in 1968. See Amendments to the Railroad Retirement Act, Pub. L. 

No. 90-257, § 106, 82 Stat. 16, 21 (1968). In a report explaining the 1968 amendments, the House’s only explanation of the holdover clause was that its “ purpose 

is apparent and is similar to provisions for other agencies.” H.R. Rep. No. 90— 

1054, at 27 (1968), reprinted in 1968 U.S.C.C.A.N. 1622, 1649.

The only possible indication of holdover tenure protection is the language of 

the holdover clause itself. One court has held that the use of “ shall,” as opposed 

to “ may,” in a holdover clause indicates Congress’s intent that an office occupied 

by a holdover official not be considered vacant for purposes of recess appointments until the Senate has confirmed the President’s appointees. See Wilkinson,

865 F. Supp. at 900. Arguably, an additional consequence of the reading might 

be to grant tenure protection during holdover periods. However, because the 

statute here does not limit the holdover period, this reading of the holdover clause 

would give the Senate the power to keep holdovers in office indefinitely by simply 

refusing to confirm the President’s appointees. See Swan, 100 F.3d at 986-87; 

Staebler, 464 F. Supp. at 590-91. While there is at least an argument (although 

not one we would endorse) that such power may be justified when Congress has 

explicitly stated the need to keep the agency free of political pressures, see

Wilkinson, 865 F. Supp. at 900, it is unjustified when Congress has not explicitly 

stated that need, see Swan, 100 F.3d at 986; Staebler, 464 F. Supp. at 591. ThereRemoval o f H oldover Officials Serving on the Federal Housing Finance Board and the R ailroad

Retirement Board

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O pinions o f the O ffice o f Legal Counsel in Volume 21

fore, holdover tenure protection should not be inferred from the use of the word 

“shall” in the holdover clause.

Nor should holdover tenure protection be inferred from the “ appointed and 

qualified” language of the holdover clause. As discussed above, the D.C. Circuit 

has suggested that the use of these terms, as opposed to just “ qualified,” may 

indicate Congress’s intent to bar recess appointments and keep holdovers in office 

until the Senate has confirmed the President’s appointees. See Swan, 100 F.3d 

at 986. However, the legislative history of the Board’s holdover clause does not 

support an inference of this intent. The House’s description of the clause states 

that it “ provide[s] that a Board member would continue to serve until his successor has qualified.” H.R. Rep. No. 90-1054, at 27, reprinted in 1968 

U.S.C.C.A.N. at 1649. The House thus appears to have made no distinction 

between “ appointed and qualified” and “ qualified.” The language of the Board’s 

holdover clause therefore provides little evidence of Congress’s intent to give 

Board members tenure protection during their holdover periods. If it did, it would 

apply to recess appointments too. In the absence of clear and express legislative 

intent, a court should not assume that Congress intended to restrict the President’s 

recess appointment powers. See, e.g., Staebler, 464 F. Supp. at 590-91. We therefore conclude that tenure protections should not be inferred for members of the 

RRB serving in holdover capacities.

RICHARD L. SHIFFRIN 

Deputy Assistant Attorney General

Office of Legal Counsel

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