On January 11, 2005, President Bush nominated federal judge Michael Chertoff to succeed Ridge. Chertoff was confirmed on February 15, 2005, by a vote of 98-0 in the U.S. Senate. He was sworn in the same day. In February 2005, DHS and the Office of Personnel Management issued rules relating to employee pay and discipline for a new personnel system named MaxHR. The Washington Post said that the rules would allow DHS "to override any provision in a union contract by issuing a department-wide directive" and would make it "difficult, if not impossible, for unions to negotiate over arrangements for staffing, deployments, technology and other workplace matters." In August 2005, U.S. District Judge Rosemary M. Collyer blocked the plan on the grounds that it did not ensure collective-bargaining rights for DHS employees. A federal appeals court ruled against DHS in 2006; pending a final resolution to the litigation, Congress's fiscal year 2008 appropriations bill for DHS provided no funding for the proposed new personnel system.DHS announced in early 2007 that it was retooling its pay and performance system and retiring the name "MaxHR". In a February 2008 court filing, DHS said that it would no longer pursue the new rules, and that it would abide by the existing civil service labor-management procedures. A federal court issued an order closing the case.

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