# How a Federal Agency Is Dismantled An ASCII-art process map of **the 2025–26 agency-dismantlement playbook, read as a procedure rather than a narrative** — from the authority problem it is built to work around, through headcount attrition, the reduction in force, function transfer by interagency agreement, the money choke points, and the reclassification of whoever is left, to the two places the process can actually be stopped. The status lines in brackets are **live as of August 24, 2026**. This is the process companion to the [[Federal Workforce Structure Tree]], which maps the personnel system this playbook operates on, and to [[How Federal Money Moves]], which maps the funding stream it interrupts. The institutional map of what is being dismantled is the [[Executive Branch Org Chart]]. The two adjacent process maps are [[Appropriations Process Flow]] (how the money is enacted) and [[Emergency Powers Crosswalk]] (the standby-authority layer, which is not used here — this playbook runs entirely on ordinary administrative law). > [!note] How to read this chart > **──▶** is the main path and **└─▶** a branch. **■** is a numbered stage, **◆** a named tool inside a stage, **◇** a decision point, and **✕** a place the process has actually been stopped by a court or by Congress. Bracketed items are **live August 2026 status**, not permanent features. Statute and regulation citations are given in the form a reader can look up. Names and abbreviations inside the code fence are plain text — code blocks do not render wikilinks, so the links live in the prose and Notes below. ``` HOW A FEDERAL AGENCY IS DISMANTLED — THE 2025-26 PLAYBOOK AS A PROCESS (as of August 24, 2026) │ ──▶ main path └─▶ branch ◆ tool ◇ decision point ✕ stopped [ ] live 2026 status │ Names inside this fence are plain text; the wikilinks are in the prose below. │ ■ STAGE 0 · THE AUTHORITY PROBLEM (what the whole playbook is built to work around) │ An agency created by statute can be abolished only by statute. The President's standing │ REORGANIZATION AUTHORITY — the fast-track power to send Congress a reorganization plan │ that took effect unless Congress objected — LAPSED IN 1984 and was never renewed. │ ⇒ Nothing below abolishes an agency. Everything below EMPTIES one. │ Every tool on this map is execution-side: personnel, money, and paperwork. │ ├──▶ STAGE 1 · DRAIN THE HEADCOUNT (voluntary exits — no RIF procedure applies) ⏱ MONTHS │ ├─◆ Hiring freeze + 4-to-1 rule .. EO 14210 (Feb 11, 2025): one hire per four departures │ │ [exempt: public safety, immigration, law enforcement] │ ├─◆ Deferred resignation ........ "resign now, stay on payroll" — full pay, no duties │ │ [~154,000 drew full salary for 6+ months; agencies │ │ reported ~144,000 more approved to exit by end-2025] │ ├─◆ Probationary terminations ... employees inside the 1-2 year window have almost no │ │ appeal rights; the cheapest cut in the entire playbook │ └─◆ Early retirement (VERA/VSIP) . the pre-existing, lawful, uncontroversial tool │ └─▶ NET EFFECT [Dec 2024 → Jan 2026]: about -256,000 employees, roughly -11 to -12 % │ — the largest federal workforce reduction since the 1990s, and a civilian │ headcount near 2.0-2.1 million, the lowest since the mid-1960s │ ├──▶ STAGE 2 · THE REDUCTION IN FORCE (the involuntary layer — 5 CFR Part 351) ⏱ 60+ DAYS │ ├─ EO 14210 orders agencies to "promptly undertake preparations to initiate large-scale │ │ RIFs," prioritizing functions NOT mandated by statute and staff not deemed essential │ │ in the agency's own SHUTDOWN CONTINGENCY PLAN — the plan repurposed as a target list │ ├─ OMB + OPM joint memo (Feb 26, 2025) → Agency RIF and Reorganization Plans due Mar 13 │ ├─ Mechanics: define the COMPETITIVE AREA (drawn narrow, the outcome is decided here) → │ │ build the retention register → rank → issue 60-day specific notice → separate │ ├─◇ Retention order — WHAT RANKS FIRST? │ │ ├─ Old rule ....... tenure group → veterans' preference → LENGTH OF SERVICE → rating │ │ └─ New rule ....... tenure group → PERFORMANCE (prior 3 years) → seniority as tiebreak │ │ [OPM final rule published Aug 3, 2026 · EFFECTIVE SEPTEMBER 2, 2026 — also │ │ rewrites RPL, CTAP, ICTAP and transfer-of-function rules, and moves RIF, │ │ suitability and probationary APPEALS from MSPB adjudication to OPM] │ └─◇ Can a court stop it? — see STAGE 7. [SCOTUS stayed the government-wide injunction │ 8-1 on Jul 8, 2025, expressly reserving judgment on any individual agency plan] │ ├──▶ STAGE 3 · MOVE THE FUNCTIONS OUT (the paperwork layer — no statute repealed) ⏱ MONTHS │ │ A statutory program cannot be cancelled, so its DAY-TO-DAY ADMINISTRATION is │ │ contracted out to another department by INTERAGENCY AGREEMENT. The program still │ │ exists on paper, at the original agency, funded by the original appropriation. │ ├─◆ Interagency agreement ....... signed by two secretaries; no vote, no rulemaking, │ │ no public comment, no Federal Register notice required │ ├─◆ Transfer of function ........ employees follow the work, or don't; either way the │ │ sending agency's org chart hollows out │ └─ THE WORKED EXAMPLE — Department of Education │ ├─ Mar 20, 2025 EO: close the Department "to the maximum extent appropriate and │ │ permitted by law," while continuing delivery of programs Congress authorized │ ├─ [as of Jul 1, 2026: 14 published interagency agreements moving day-to-day │ │ management of ~150 programs to SIX agencies — Labor, Interior, State, HHS, │ │ Treasury, DOJ. Labor now oversees K-12 grants, including Title I] │ ├─ [the reimbursements are trivial: up to $262,000 in FY2025, ~$807,000 in FY2026 │ │ — the transfers are not being priced as if they were transfers] │ ├─ ✕ Congress FULLY FUNDED the Department in the FY2026 bills. The transfers │ │ continued anyway. Funding an agency does not staff it. │ └─ [Jul 15, 2026: House Education & Workforce approved 10 bills to CODIFY the │ dispersal, near party-line — the first attempt to make any of it law] │ ├──▶ STAGE 4 · CHOKE THE MONEY (the appropriation stays enacted; the cash stops moving) │ ├─◆ Grant termination ......... 2 CFR 200.340(a)(4) — terminate when an award "no longer │ │ effectuates the program goals or agency priorities" │ │ ✕ [D. Mass., Jul 17, 2026 — 20 states, 3 governors and D.C.: the Termination │ │ Clause "does not permit agencies to terminate grants based on program goals and │ │ agency priorities identified AFTER grants were awarded." Declaratory judgment │ │ only; no terminated grant was reinstated. OMB has proposed rewriting the │ │ regulation, which would move the ground out from under the ruling.] │ ├─◆ Contract termination ...... "for convenience" clauses, FAR Part 49 — always lawful, │ │ remedy is money later, never the work continuing now │ ├─◆ Apportionment footnotes ... OMB releases the money slowly, or conditionally, or in a │ │ way that guarantees it cannot be obligated in time │ ├─◆ Pocket rescission ......... propose a rescission inside the last 45 days of the │ │ fiscal year, then sit on the funds until they expire │ │ [SCOTUS allowed ~$4B in foreign aid to lapse this way, 6-3 on the emergency │ │ docket, Sept 2025 — Jackson, Sotomayor and Kagan dissenting] │ └─◆ Impoundment ............... simply not spending it │ [GAO was reviewing ~39 possible Impoundment Control Act violations as of Apr 2025 │ and has issued violation decisions on DOT/NEVI, HHS Head Start, NIH grants, │ IMLS, and DOE school funds. GAO's remedy is a REPORT and a referral. That is all.] │ ├──▶ STAGE 5 · RECLASSIFY THE SURVIVORS (make the remaining workforce removable) ⏱ ONGOING │ ├─◆ Schedule Policy/Career .... moves career positions that are "policy-influencing" out │ │ of the competitive service and into the excepted service, │ │ stripping adverse-action and appeal protections │ │ [EO 14410, Jun 3, 2026 — about 8,000 positions, from a 229-page appendix of │ │ ~4,800 position descriptions. OPM's own earlier estimate ran up to 50,000.] │ ├─◆ Performance system ........ forced distributions in the current ratings cycle — which │ │ now feeds directly into RIF retention under the new rule │ └─◆ Return-to-office + relocation .. attrition by working condition, no procedure at all │ ├──▶ STAGE 6 · WHAT CONGRESS CAN ACTUALLY DO (three real tools, one of them brand new) │ ├─◆ Appropriations riders ..... THE ONE THAT BIT. The FY2026 minibus (enacted Jan 2026) │ │ bars covered agencies from spending funds to reorganize without ADVANCE NOTICE to │ │ the Appropriations Committees — reprogramming to create or end a program, moving │ │ an office, or cutting >5 % of a program's staff or funding — and requires │ │ 45 DAYS' PRIOR NOTICE OF ANY RIF. [Covers DOJ, Interior, Commerce, Energy, EPA, │ │ NSF, NASA and more; reprogramming requests were due by Jun 30, 2026.] │ ├─◆ The ICA / GAO referral .... GAO finds the violation; the Comptroller General may sue. │ │ No automatic penalty, no automatic release of funds. │ ├─◆ Authorizing legislation ... abolish it properly, or restore it properly. Needs 60 in │ │ the Senate, which is why it is the least-used tool here. │ └─◆ Oversight and confirmation hearings, holds, subpoenas — leverage, not remedy │ └──▶ STAGE 7 · WHAT COURTS HAVE ACTUALLY DONE (four tracks, and only two of them work) ├─ TRACK A · APA "arbitrary and capricious" ....... the strongest theory, slowest relief │ ✓ Voice of America / USAGM — Mar 17, 2026, D.D.C.: dismantlement unlawful and │ arbitrary and capricious; 1,042 employees ordered back to work Mar 23 │ ✕ [appeals panel STAYED that order Mar 31, 2026 pending appeal] ├─ TRACK B · Tucker Act channelling .............. the theory that KILLED most funding │ suits: a grant termination is in substance a contract claim, so it belongs in the │ Court of Federal Claims — which can award DAMAGES but cannot order the money to │ keep flowing. [Dept. of Education v. California, Apr 2025 · NIH v. APHA, Aug 2025] ├─ TRACK C · Civil-service channelling ........... RIF challenges belong in the MSPB/FLRA │ system, not district court — and OPM's new rule moves that adjudication in-house │ ✕ [SCOTUS stay, Jul 8, 2025, 8-1 · Ninth Circuit vacated the 22-agency injunction │ Sept 19, 2025 · but the D.C. Circuit sitting EN BANC reinstated the CFPB │ injunction, argued Feb 24, 2026 — the one agency-wide block still standing] └─ TRACK D · Breach of an appropriations DEAL ..... the narrowest and most effective ✓ After the 43-day Oct-Nov 2025 shutdown, the reopening deal barred shutdown-period RIFs. The court held every RIF taken from Oct 1 NULL AND VOID, ordered rescission and full back pay, restored employees to their Sept 30, 2025 status, and barred further RIF steps at State, Education, GSA and SBA through Jan 30, 2026. ⇒ A CONTRACT theory beat every constitutional one on the board. ────────────────────────────────────────────────────────────────────────────────────────────── THE FIVE STRUCTURAL FACTS ────────────────────────────────────────────────────────────────────────────────────────────── ① THE APPROPRIATION IS NOT THE CONTROL. Congress fully funded the Department of Education and the dispersal continued. Money is authority to spend, not a duty to staff. ② NARROW THE COMPETITIVE AREA AND YOU HAVE DECIDED THE RIF. Everything after that is arithmetic. The contested judgment happens before any employee is ranked. ③ THE REMEDY IS THE WHOLE FIGHT. Damages later ≠ the program running now. Tucker Act channelling did not say the terminations were lawful — it said the courthouse was wrong. ④ PROCEDURE BEATS PRINCIPLE. The tools that actually stopped things were an appropriations rider and a reopening deal. The separation-of-powers arguments are still pending. ⑤ NONE OF IT IS PERMANENT, AND THAT IS THE POINT. No statute was repealed, so every agency on this map still legally exists. Rebuilding institutional capacity, however, is not a paperwork step — and unlike the dismantlement, it has no fast track. ``` ## Notes **The frame worth keeping — this is not an abolition process, it is a defunding-in-place process, and the difference is what makes it fast.** Abolishing the [[Department of Education]] takes sixty Senate votes; emptying it takes fourteen [[Interagency Agreement]] signatures and a [[Reduction in Force]]. Because the [[Reorganization Authority]] that once let a President submit a reorganization plan subject to congressional disapproval lapsed in 1984, every tool on this map had to be assembled from ordinary execution-side authorities — personnel regulations, grant terms, apportionment footnotes — none of which was designed to carry this weight and none of which requires a vote. The consequence runs both ways: nothing here is durable, because no statute was repealed and every agency on the map still legally exists. What has been destroyed is not the legal entity but the staff, the institutional memory, and the grant relationships, and those are the parts with no fast track back. **The single most instructive fact on the map is that Congress fully funded the Department of Education for FY2026 and the transfers proceeded anyway.** An appropriation is permission to spend, not an obligation to operate. As of July 1, 2026 the Department had published fourteen interagency agreements moving day-to-day management of roughly 150 programs to six other agencies, with the Department of Labor now administering K-12 grants including Title I. The reimbursement figures — up to $262,000 in FY2025 and about $807,000 in FY2026 — are the tell: these are not being priced as if a hundred and fifty programs had changed hands. On July 15, 2026 the House Education and Workforce Committee approved ten bills to codify the dispersal on a near party-line vote, which is the first attempt in eighteen months to give any of it a statutory basis. **The remedy question decided more cases than the merits question did.** In [[Department of Education v. California]] (April 2025) and [[NIH v. American Public Health Association]] (August 2025) the Supreme Court held on the emergency docket that grant-termination challenges are in substance contract claims belonging in the [[Court of Federal Claims]] under the [[Tucker Act]] — a court that can award damages but cannot order an agency to keep funding anything. Neither ruling held that a single termination was lawful. Both simply moved the plaintiffs to a courthouse where the only available relief arrives after the program has already died. That is the mechanism worth naming: **when the remedy is money later, "later" is the whole holding.** **The two things that actually worked were both procedural and neither was constitutional.** The FY2026 appropriations minibus enacted in January 2026 bars covered agencies from spending appropriated funds on reorganization without advance notice to the Appropriations Committees — reprogramming that creates or eliminates a program, relocating an office or its employees, or cutting more than five percent of a program's staff or funding — and requires forty-five days' prior notice of any RIF. And after the forty-three-day October–November 2025 shutdown, the reopening agreement's no-shutdown-RIFs provision produced the broadest relief anyone has won: every RIF taken from October 1 declared null and void, rescission ordered, full back pay, employees restored to their September 30, 2025 status, and no further RIF steps at State, Education, GSA or SBA through January 30, 2026. A contract theory beat every separation-of-powers theory on the board. The [[Separation of Powers]] arguments in [[Administrative Procedure Act]] litigation are, as of August 2026, still pending. **Structural notes:** - **The competitive area is where a RIF is decided.** Under 5 CFR Part 351 the agency defines the organizational and geographic boundary within which employees compete for retention. Draw it around a single office and there is no one to bump. Every subsequent step — the retention register, the ranking, the sixty-day notice — is arithmetic executed on a judgment already made. - **The RIF retention order is being inverted on September 2, 2026.** [[Office of Personnel Management]] published a final rule on August 3, 2026 making performance — the prior three years' ratings — the primary retention factor after tenure group, with length of service demoted to a tiebreaker. The same rule rewrites the reemployment priority list, [[Career Transition Assistance Program]] and transfer-of-function rules, and moves adjudication of RIF, suitability and [[Probationary Period]] appeals from the [[Merit Systems Protection Board]] to OPM. Read together with the forced-distribution performance system that OPM Director [[Scott Kupor]] has said applies to the current ratings cycle, the rating becomes the retention decision, and OPM reviews the appeal. - **[[Executive Order 14210]] (February 11, 2025) is the load-bearing document for Stages 1 and 2.** It imposed the four-to-one hiring ratio, ordered agencies to prepare large-scale RIFs, and — the detail most often skipped — told agencies to prioritize functions not mandated by statute and staff not designated essential in the agency's own **shutdown contingency plan**. A document written to keep government running in a funding lapse was repurposed as a target list. The OMB/OPM joint memorandum of February 26, 2025 turned that into Agency RIF and Reorganization Plans due March 13, 2025. - **The workforce numbers overlap and should not be summed.** The ~154,000 who drew full salary for six months or more under the [[Deferred Resignation Program]] and the ~144,000 agencies reported as approved to separate by the end of 2025 are not cleanly additive figures from a single ledger. The reliable aggregate is the net: roughly 256,000 fewer employees, about 11 to 12 percent, between December 2024 and January 2026 — the largest reduction since the 1990s, leaving a federal civilian workforce near 2.0–2.1 million. - **The grant-termination ruling is real but narrow, and may be short-lived.** On July 17, 2026 the District of Massachusetts held that 2 CFR 200.340(a)(4) of the [[Uniform Guidance]] does not authorize terminating a grant over program goals or agency priorities adopted *after* the award, reasoning from the regulation's own notice requirements and from [[Spending Clause]] notice doctrine. The court granted declaratory relief only and **reinstated nothing**. OMB has separately proposed revising the termination provisions, which would change the regulatory ground the decision rests on for awards made afterward. - **[[Impoundment Control Act]] enforcement has no self-executing teeth.** [[Government Accountability Office]] was reviewing roughly thirty-nine possible violations as of April 2025 and has issued violation findings involving the Department of Transportation's electric-vehicle infrastructure program, HHS Head Start funds, NIH grants, the Institute of Museum and Library Services, and Department of Energy school funds. The statutory consequence of a GAO finding is a report and a possible suit by the Comptroller General. Separately, the Supreme Court allowed roughly $4 billion in foreign aid to lapse by pocket rescission on the emergency docket in September 2025, 6–3. - **The [[Consumer Financial Protection Bureau]] is the outlier and worth watching for that reason.** The D.C. Circuit sitting en banc reinstated the injunction against dismantling it and heard argument on February 24, 2026 — the only agency-wide block still standing after the July 8, 2025 Supreme Court stay in the government-wide case and the Ninth Circuit's September 19, 2025 order vacating the twenty-two-agency injunction. The [[Voice of America]] order of March 17, 2026 restoring 1,042 employees was itself stayed on appeal two weeks later. - **Deliberately not on this map:** emergency and standby statutory authorities. Nothing in this playbook required a national emergency declaration; it runs on personnel regulations, grant terms and appropriations mechanics. The standby layer is mapped separately at [[Emergency Powers Crosswalk]]. ## See also - [[Federal Workforce Structure Tree]] — the personnel system this playbook operates on - [[Federal Statistical System Tree]] — thirteen agencies this playbook was applied to in parallel, and why a decentralized system has no single moment at which it is visibly under attack - [[How Federal Money Moves]] — the funding stream Stage 4 interrupts - [[Executive Branch Org Chart]] — the institutional map of what is being emptied - [[Appropriations Process Flow]] — how the money Stage 4 chokes was enacted - [[Emergency Powers Crosswalk]] — the standby-authority layer this playbook deliberately does not use - [[Federal Agencies Hub]] · [[Budget Hub]] · [[Foundations Hub]]