The Merit Systems Protection Board ruled Lois Starkey's 2017 firing from the Housing and Urban Development Department was politically motivated, due in part, to pressure from an industry association.

The Merit Systems Protection Board ruled Lois Starkey's 2017 firing from the Housing and Urban Development Department was politically motivated, due in part, to pressure from an industry association. Buyenlarge / GETTY IMAGES

MSPB political firing case raises new questions on Schedule F

The Housing and Urban Development Department’s 2017 firing of a probationary employee over alleged leaks was politically motivated, the agency tasked with enforcing civil service laws said last week.

The Merit Systems Protection Board last week ruled that the Housing and Urban Development Department improperly fired a probationary employee over her political affiliation in a case that raises a handful of new questions about Schedule F, were it to be revived under a Republican administration.

In 2017, HUD hired Lois Starkey to serve as a manufactured housing specialist, a GS-14 career position in the department’s Office of Manufactured Housing Programs, which sets standards for home design and construction. Though Starkey had extensive job experience related to housing issues, she also had extensive past connections with Democratic politics, including serving as a political appointee in the Carter administration, on her local party committee and managing her husband’s campaign for elected office.

But just days later, the Manufactured Housing Association for Regulatory Reform, an industry trade organization, issued the first of multiple complaints regarding Starkey’s hire to HUD leadership, calling her an “Obama administration holdover” and donor and describing the hiring as “amazingly ill-considered, offensive and arguably scandalous.”

In August of that year, her supervisor tasked her with reaching out to the Oregon Manufactured Housing Association as part of an effort to resolve a dispute between HUD and the Oregon State Administrative Agency. But in September, the state agency complained about her overture to the state trade group and threatened to withdraw from its partnership with HUD.

That December, Starkey’s supervisor was reassigned from their GS-15 post to a job “described as comparable to that of an administrative assistant,” and the next day Starkey was terminated, despite just one month prior being rated as “outstanding” on her performance appraisal, in which she was described as "an invaluable asset." Starkey appealed her removal to the MSPB, where an administrative judge issued an initial ruling in her favor.

Last week, the MSPB affirmed that initial ruling, finding that reaching out to state trade groups to resolve disputes between HUD and its state agency partners followed existing agency policy for dealing with similar situations and that Starkey was fired despite her supervisor informing agency leaders that she had acted on the supervisor’s orders.

The board found that HUD’s then-General Deputy Assistant Secretary for Housing Dana Wade, a Trump appointee, ordered Starkey’s termination, and found the department’s arguments that the decision was not politically motivated wanting.

“The agency asserts that there is no evidence to prove that the GDASH reviewed the appellant’s resume, that she was present during the meet-and-greet event in which the appellant discussed her [political] background or that she reviewed any specific MHARR letter complaining about the appellant’s politics,” MSPB wrote. “We are not persuaded by the agency’s arguments. There is ample evidence that the head of MHARR was quite focused on the politics of the appellant and her second-level supervisor—so much so that he regularly lodged complaints about them that were well known and widely distributed.”

Although the case may appear to have only a tenuous connection to the former president’s abortive effort to strip federal workers of their due process protections—including MSPB appeal rights—known as Schedule F, insofar as the case involves an employee fired over perceptions that she was a Democratic loyalist accused of leaking information, the decision raises a host of new questions about how Schedule F could be used—and challenged—if revived under a new Republican administration.

First, while much discussion of Schedule F, which would create a new job category within the excepted service for “policy-related” positions, has surrounded the specter of agencies purging—or threatening to purge—political opponents and replacing them with loyalists, little has been said about how it could open a new avenue for industry groups to pressure agencies into firing individual federal regulators for perceived misdeeds.

“The conclusion MSPB reached here is that the dismissal was for political causes, and that an outside pressure in the form of an interest group set that up and created that pressure,” said Don Kettl, professor emeritus at the University of Maryland and former dean of its School of Public Policy. “The question of whether or not there are grounds for dismissal for political reasons, and whether or the not pressures come from outside groups could become a more widespread phenomenon—or problem—within the government service.”

But the case also highlights a potentially new avenue to challenge Schedule F, or at least to challenge personnel actions taken under that banner. Starkey was still within her probationary period when she was fired, a time in which new hires typically do not have access to most due process protections afforded to tenured federal employees, including MSPB review.

However, the U.S. Code states that a probationer—or any other federal worker whose appeal is “not required [to be heard] by statute” may receive an appellate review of their termination if it is done “for political reasons or marital status.”

“One thing that struck me as interesting is first, that the MSPB has ruled on this, for starters, and second, that while Schedule F intends to eliminate MSPB from the appellate chain, those appeals rights are granted in law,” Kettl said. “So if there’s a question as to whether an executive order [establishing Schedule F] can override the law, the answer is almost certainly no . . . But proponents of Schedule F are more than aware of that and are certainly prepared for that battle.”