Posted by: KC Stockbridge, Michael Stone, Tiffany Stuehling, Juliana Tallone, Santiago Teran, Jacob Valdez
“The government should be run like a business.” This oft-repeated maxim suggests what many consider to be the best approach for piloting the United States. For President Trump, business strategy might add a degree of efficiency to a bloated federal structure that has simply grown “too big to manage.” To effect this change and combat the size of the government, the President has issued an Executive Order that seeks to reduce the prevalence and impact of federal regulations by demanding that for every one new regulation implemented by a federal agency, two existing regulations be identified for repeal. However, in light of the Administrative Procedures Act (APA) and congressional statutes that require agencies to create regulations, this Executive Order may be beyond President Trump’s power. Litigation is pending on the matter, and as this blog discusses, it is likely the court will hold that this Executive Order exceeds the scope of the President’s power.
Executive Order on Reducing Regulation
On January 30, 2017, newly elected President Donald J. Trump signed into effect Presidential Executive Order on Reducing Regulation and Controlling Regulatory Costs (“Executive Order”). In essence, the Executive Order declares its purpose and goal to be cutting unnecessary regulations in an effort to ease the financial burden placed on private entities that are required to comply with federal regulations. In order to realize this goal, the Executive Order has mandated that for each new regulation proposed by a federal regulatory agency in the 2017 Fiscal Year, that agency must identify two existing regulations for repeal to offset the costs of imposing the proposed regulation. But how exactly does he justify achieving this goal? By utilizing one of the most powerful tools in the President’s arsenal: control over the federal budget.
According to the language of the Executive Order, all agencies are directed that the total incremental cost of all new regulations, including those being repealed, “shall be no greater than zero.” The Executive Order imposes this budgetary restriction on all federal regulatory agencies with two exceptions. The first exception provides that an agency may obtain an express written exemption or alternate course of action from the Director (“Director”) of the Office of Management and Budget (“OMB”), while the second exception allows for exceptions if “required by law.”
To implement the Executive Order, the Trump administration has offered an Interim Guidance providing direction for how agencies may comply with the Executive Order. Interestingly, the Interim Guidance appears to be modeled after a similar Executive Order issued by President Clinton in 1993. That order, Executive Order 12866, which was reaffirmed by former Presidents George Bush and Barack Obama, declared that federal regulatory agencies must implement a cost-benefit analysis for all new proposed regulations. Specifically, the Trump administration’s Interim Guidance adopts the language and ideas from President Clinton’s Executive Order such that only regulatory actions considered “significant” are subject to it. According to the Interim Guidance, “significant” regulatory actions are only those that have an annual effect on the economy of at least $100 million or those that adversely impact the economy, jobs, the environment, public health or safety, or State, local, or tribal governments or communities, or that raise novel legal or policy issues.
However, the Interim Guidance also provides for some interesting qualifications. For instance, if proposed “deregulatory actions that confer only savings to all affected parties generally will not trigger” the Executive Order’s requirement that the agency identify two existing rules for repeal. But, if the regulatory action incurs any sort of cost, it must be accounted for, even if the societal implications, savings, or other benefits outweigh the cost incurred.
Under 3 U.S.C.S. § 301, the President can allocate any power which is otherwise his own, or is one that he approves, to the head of any administrative agency. However, this power is subject to the contingency that the President is still accountable for the actions performed by the heads of agencies in connection with their duties delegated by him or her. President Trump, therefore, is relying on this statute to authorize the Director of the OMB to push the zero-sum budget goals he demands of administrative agencies. Whether or not this is reasonable as a matter of public policy has become a political issue. However, whether or not this is practical as a matter of law has become the subject of scrutiny from constitutional law scholars.
Regulations v. Laws
In order to address the constitutionality of the Executive Order, it’s important to note the roles of federal laws, regulations, and agencies. Federal laws derive from written statutes voted on by Congress. While Congress enacts statutes that reflect their specific policy goals, some of these statutes may fall outside of the purview of any existing governmental agency or department that might enforce them. Therefore, these statutes may also create federal agencies, usually within the Executive Branch, that are uniquely responsible for administering and enforcing the laws that Congress enacts.
For example, in the Occupational Safety and Health Act (“OSH Act”) Congress not only enacted the foremost federal law governing occupational health and safety standards, but it also created the Occupational Safety and Health Administration (“OSHA”) to enforce those standards.
According to the agency, OSHA’s mission is to “assure safe and healthful working conditions for working men and women by setting and enforcing standards and by providing training, outreach, education, and assistance.” This mission statement clearly reflects the policy goals pursued by the enactment of the OSH Act; however, neither these goals nor the law are self-fulfilling. Therefore, it is necessary that these agencies establish rules and standards that govern and dictate the ways these laws are to be executed. These rules and standards are regulations. In essence, regulations particularize the generalities in which Congress speaks.
Congress derives its authority to pass laws from Article I, Section 2, Clause 1, the Vesting Clause of the Constitution. The procedures for passing this legislation are then found in significant detail within Article I, Section 7, Clause 2. However, relative to regulations and regulatory agencies, Congress’ power is less defined.
First, Congress’ power to establish regulations and regulatory agencies is often found in Article I’s Commerce Clause. Congress often cites this language directly in the statutes that establish the agencies. For example, the statute that establishes OSHA explicitly invokes the Commerce Clause by stating its authority to establish is found in “its powers to regulate commerce among the several States and with foreign nations and to provide for the general welfare.”
Second, Congress’ source of authority in relation to regulations is the Necessary and Proper Clause. This clause is found in Article I, Section 8, Clause 18 of the Constitution. This clause gives effect to the laws promulgated by Congress pursuant to its Commerce power.
As mentioned earlier, regulatory agencies are created to execute and enforce the laws enacted by Congress. Because agencies such as OSHA serve executive roles, they often naturally exist within the Executive Branch. The authority for the delegation of such authority derives from Article II’s Take Care Clause which states that the President shall “take care that the Laws be faithfully executed.” When such authority is delegated to agencies within the Executive Branch, the agencies are then subject to Article II, Section 2, Clause 2, which provides that the President “shall appoint… Officers of the United States… which shall be established by Law.” This means the President is responsible for appointing the heads of those agencies created by Congress within the Executive Branch. The logical interaction of these clauses necessarily provides that the President maintains the authority to ensure that the Officers of the agencies within the Executive Branch execute those Laws established by Congress.
Administrative Procedure Act and the Congressional Review Act
In 1933, President Franklin D. Roosevelt and Congress enacted several statutes that created a series of federal agencies within the Executive Branch to combat the Great Depression. Unsurprisingly, the constitutionality of such a grant quickly came under attack as members of Congress became increasingly concerned over the potentially limitless power of these agencies and their ability to promulgate rules that essentially carry the force of law. Congress feared that in granting agencies the authority to promulgate their own regulations, rulemaking was being taken out of the hands of democratically elected officials and being given to agencies with no guarantee of democratic accountability, creating separation of powers issues.
In response, Congress spent 13 years meticulously crafting the APA to implement democratic protections for those Americans whose affairs are regulated or controlled by federal agencies. The APA’s purpose is primarily to ensure that agencies keep the public informed on their organization, procedures, and rules; to provide for public participation in the rulemaking process; to establish set standards for formal rulemaking; and to define the scope of judicial review. The APA also lays out specific procedures for agencies that intend to make, amend, or repeal a rule. Finally, in 1946, the APA was passed and granted the full force of law over the rulemaking process.
Under the APA, the agency must follow explicit procedures, such as an informal notice and comment process, whenever proposing a new rule. The logic behind this is simple – because rules affect the general public, the APA requires a notice to the public of the proposed rule, and then an opportunity for the public to comment on the proposed rule. This notice is provided by publishing the proposal in the Federal Registrar where interested parties can comment by submitting written data or arguments. Once the comment period has closed, the APA requires agencies to consider the comments and incorporate a short, general statement stating the basis and purpose of the final rule. This statement along with the final rule must then be published in the Federal Registrar at least 30 days before the proposed rule’s effective start date. Finally, once the rule is completed and printed in the Federal Registrar as a final rule, it is then codified in the Code of Federal Regulations (CFR). By the same process, regulations may be repealed.
In addition to the APA’s procedural requirements, the Congressional Review Act (CRA), enacted by Congress in 1996, provides Congress with an additional means of checking the regulatory power of the Executive Branch. Under the CRA, a new rule may not take effect until an agency submits a rule report to each House of Congress and to the head of the US Government Accountability Office. Congress then has 60 legislative days to deny the rule or else the rule automatically goes into effect. It is important to note, however, that Congress has only used the CRA once to overturn one rule in 2001.
Regulations Under Attack
Today, the rules promulgated under the authority of statutes, such as the OSH Act, have become the target of President Trump’s Executive Order. As stated earlier, the OSH Act requires the agency to promulgate rules it deems necessary in order to “assure safe and healthful working conditions.” The APA requires that these rules, beyond the procedural requirements discussed, be feasible. Feasibility primarily considers general economic feasibility; so if costs of the new rule would threaten the industry’s existence or competitive nature, they will not be implemented.
The Executive Order’s requirement that agency’s apply a strict cost/benefit analysis to the rulemaking process in regards to the national budget adds an additional component which Congress has not required in either the APA or the CRA. Arguably, mandating the repeal of two occupational safety and health safety standards solely to ensure that the national budget stay at zero for the purpose of adopting one could be considers “arbitrary, capricious, and an abuse of discretion.” This arbitrary and capricious standard was set by the Supreme Court case Chevron, U.S.A. v. Natural Resources Defense Council, Inc. Here, the Court said that “[i]f Congress has explicitly left a gap for the agency to fill, there is an express delegation of authority to the agency to elucidate a specific provision of the statute by regulation. Such legislative regulations are given controlling weight unless they are arbitrary, capricious, or manifestly contrary to the statute.”
However, it is important to note that statutes may either require or authorize an agency to write and issue certain types of regulations. This can have a significant impact on the types of rules agencies make because these statutes can either (1) delineate what that agency’s rules should require OR (2) leave the rulemaking to the agency’s discretion. For example, the Employee Retirement Income Security Act gives the Pension Benefit Guaranty Corporation no discretion in that the Act instead specifies to the dollar what the rates should be. In other cases, however, statutes may give rulemaking agencies substantial discretion in how rules are developed. For example, the Agricultural Adjustment Act provides a broad grant of rulemaking authority to the Secretary of Agriculture, stating only that agricultural marketing should be “orderly” but providing little guidance regarding which crops should have marketing orders or how to apportion the market among growers.
These facts raise the question: what factors have Congress intended agencies to consider? Must agencies only consider rules that present a clear, defined, and experientially proven track record of social benefits? This cannot necessarily be the case because, while many statutes describe clear policy goals, Congressional statutes are usually silent on individualized issues, leaving the agencies and the President to interpret what Congress intended to be covered in both their declarations and silence.
Separation of Powers through a Broad Lens
In Youngstown Sheet & Tube v. Sawyer (1952), the Supreme Court held President Truman’s Executive Order authorizing the seizure of steel mills was unconstitutional, stating that the President acted contrary to the will of Congress. But, what exactly is the will and intent of Congress? According to an influential concurrence written by Justice Jackson, there are three categories where Congressional intent can impact whether presidential action may be challenged:
The first category is Congressional Delegation where a President acts pursuant to an express or implied authorization from Congress. The President’s actions are strongest in this category because he is acting with the powers proscribed by the constitution in addition to the powers Congress has granted him.
The second category is Congressional Silence where a President acts without a congressional grant or denial of authority. In this situation, if the powers of the President and Congress are overlapping then the President may act because Congress is silent on the topic.
The third category is Congressional Resistance where the President is acting against the will of Congress. If there is an overlap in the powers of the President and Congress, then under the third category the President may not act contrary to Congress. Here, the President’s power to act is at its lowest ebb because the President can only rely on the powers enumerated to the Executive in the constitution.
Justice Jackson’s concurrence takes the view that the powers of Congress and the President, while separate, are sometimes overlapping. In certain circumstances each branch has authority to control the same areas of law. Jackson argues that “Presidential powers are not fixed, but fluctuate depending on their disjunction or conjunction with those of Congress.” While the constitution delegates power to each branch, “it also contemplates that practice will integrate the powers into a workable government.” Thus, according to this view, for the government to function properly the powers should be considered interdependent.
In the present case, one can argue that President Trump’s Executive Order represents any of the 3 categories, depending on how one interprets Congress’ interactions with these statutes.
- Category 1: The express provisions of 3 U.S.C.S. § 301 provide that “the President of the United States is authorized to designate and empower the head of any department or agency in the Executive Branch.” In other words, the President can allocate or direct power which is otherwise his own, to the head of any administrative agency. As such, one can argue that this statute is evidence of Congressional authorization granting the President the ability to direct how agency heads must execute the laws. From this perspective, the President may, if he deems it necessary, conceivably direct the head of OSHA to repeal two regulations for every one new regulation in order to faithfully execute the OSH Act.
- Category 2: As noted earlier, President Bill Clinton’s Executive Order 12866 was issued in 1993, which mandated a cost-benefit analysis for “significant” regulations. Since then, Congress has neither passed legislation authorizing nor repudiating this Executive Order. The implications, then, of congressional silence, render Trump’s analogous (if not identical) action to a Category 2 action.
- Category 3: As discussed, the APA explicitly directs agencies to go through the notice and comment period for repealing regulations. However, the Executive Order is creating a new standard for adopting a regulation in addition to what Congress has enacted. The Executive Order requires the regulation to first be submitted to the OMB. If the OMB will not let an agency propose a regulation then the OMB is preventing the regulation from even getting to the APA notice and comment period. The APA was enacted to prevent this exact situation from happening. Further, if Congress has enacted a statute that requires agencies to promulgate regulations, such as the OSH Act, and the Executive Order tells the agencies that they have to repeal those regulations, then the President is acting against an order from Congress.
Separation of Powers through a Strict Lens
Another way of interpreting Congressional action is found in Immigration and Naturalization Service v. Chadha (1983). In Chadha, the Supreme Court considered the “One-House Veto” provision of the Immigration and Nationality Act (INA), which authorized one Congressional House to unilaterally overturn decisions by the Executive Branch; specifically, in this case, the Attorney General and Immigration and Naturalization Service’s (INS) decision to suspend the deportation of an alien. Congress argued that the One-House Veto provision, also known as a legislative veto, was purported to “establish a uniform Rule of Naturalization” in accordance with Congress’ power defined in Art. I, § 8, cl. 4. However, rather than considering Congress’ ability to establish such rules, the Court analyzed the constitutionally required procedures for establishing such rules.
In its analysis, the Court applied a strict reading and historical analysis to the text of the Bicameral and Presentment Clauses in Art. I, § 1 and § 7, which require “every bill passed by the House and Senate, before becoming law, to be presented to the President, and, if he disapproves, to be repassed by two-thirds of the Senate and House.” To the Court, these requirements represented the framers’ desire to limit legislative powers to a “single, finely wrought and exhaustively considered procedure.” Here, the Court relied solely on the text of the Constitution and the intent of the framers to determine the One-House Veto violated an explicitly defined constitutional procedure.
Additionally, the Chadha Court also made note of the distinct legislative powers enumerated in Art. I. The Court held that, because the One-House Veto provision effectively altered the legal rights and duties of persons, including the Attorney General and other Executive Branch officials, the provision was “essentially legislative in purpose and effect.” Consequently, it was a legislative power subject to the procedural requirements of Art. I. For these reasons, the Court found the provision unconstitutional.
Through the Chadha lens, it is conceivable that President Trump’s Executive Order could be subject to judicial approval. For example, because the INA delegated deportation authority to the Executive Branch pursuant to Art. I, the Chadha lens required that Congress abide by that delegation of authority until it chose to legislatively alter or revoke that delegation through the same procedures. Here, because Congress delegated authority to the Executive Branch to promulgate regulations, a court may find that President Trump’s Executive Order is valid unless Congress formally invalidates the Executive’s regulatory authority through the procedures outlined in Art. I.
However, the Chadha lens could also command judicial resistance. Here, a court could consider President Trump’s Executive Order to be legislative in purpose and effect, as it alters the statutory rights and duties of agency heads mandated to promulgate regulations by subjecting them to procedural requirements outside of the APA’s notice and comment period. Therefore, a court could find that, because the Executive Order is legislative in nature, it is unconstitutional unless subjected to the procedural requirements of Art. I.
Because the Chadha holding was largely dependent on the Court’s subjective reading of the text and resulted in a considerable limitation on Congress’ ability to check the Executive’s delegated authority, Congress responded by passing the Congressional Review Act (CRA). In addition to the APA’s procedural requirements, the CRA provides Congress with the ability to unilaterally check on the actions taken by the Executive under its delegated authority, while satisfying the Bicameral and Presentment Clauses. Under the CRA, a new rule may not take effect until an agency submits a rule report to each House of Congress and to the head of the US Government Accountability Office. Then, each house may pass a resolution denying the rule before presenting it to the President for his approval. Finally, if the President refuses to sign the resolution, Congress may override his decision pursuant to Art. I.
The Executive Order poses some constitutional questions. The Order circumvents the procedures outlined in the APA. The APA was designed to ensure democratic protections for the public. The Executive Order may create concerns for the public over repealing regulations that provide important safety and health protections. Currently, Public Citizen, Natural Resources Defense Council, and Communications Workers of America have filed suit in the D.C. Circuit Court challenging the constitutionality of the Executive Order. The named defendants are President Donald Trump and the heads of the administrative agencies. The Plaintiffs contend that the Executive Order exceeds the President’s power under the Constitution, violates the Take Care Clause, and commandeers Congress’s legislative authority. It will be interesting to see how the court views the Executive Order in relation to separation of powers, because serious doubts exist as to the constitutionality of President Trump’s Executive Order.