Deep Dive Episode 247 – Creatures of Statute II: Administrative Agencies and Policymaking
The Federalist Society’s Regulatory Transparency Project and Capitol Hill Chapter hosted the second in a lecture series on the administrative state’s role in policymaking in modern American government.
This second event of our co-sponsored series on the Administrative State focused on the role of the administrative state in policymaking. Through its various roles and capacities, the Administrative state can have great leeway to create policy that has similar effects to rules and laws created through the legislative process but comes to be via different means. Agencies can make rules, issue guidance documents that often carry significant weight, interpret statutes, and enforce their rules. All these can contribute to agencies making policies that have the force of law.
Some argue that this policy-making by non-elected individuals serving in the administrative state is improper and usurps elected officials’ authority. Others contend this is a valuable and necessary part of the Administrative State’s ability to operate as authorized, and that the policy-making capacity of the Administrative State is a net benefit.
Panelists David Fotouhi, a current partner at Gibson, Dunn & Crutcher LLP who spent four years serving with the EPA, and Richard Peirce, a professor of Law at George Washington University who focuses on the Administrative State, discussed the policy-making power of the Administrative State, and the practical ways in which that power can often be applied. Judge Lisa Branch moderated the discussion.
Although this transcript is largely accurate, in some cases it could be incomplete or inaccurate due to inaudible passages or transcription errors.
Introduction: Welcome to the Regulatory Transparency Project’s Fourth Branch podcast series. All expressions of opinion are those of the speaker.
On October 3, 2022, The Federalist Society’s Regulatory Transparency Project and the Capitol Hill Lawyer’s Chapter hosted part two of a three-part luncheon panel series. The following is the audio from the event, “Creatures of Statute II: Administrative Agencies and Policymaking.”
Steven Schaefer: Hello and welcome to “Creatures of Statute II: Administrative Agencies and Policymaking,” the second in a three-luncheon series on the role that the administrative state plays in modern American government. This series is brought to you by The Federalist Society’s Regulatory Transparency Project and the Capitol Hill Chapter. Savannah Griesinger and her external relations team co-planned this event.
My name is Steven Schaefer, and I’m the Director of the Regulatory Transparency Project, which is dedicated to fostering discussion about how regulations either succeed or fail and think about how we might improve them.
Today, we are pleased to have with us a panel of stellar experts on the administrative state in policymaking. If you look on your tables, there are Federalist Society QR codes which will help you to register for our third and final luncheon, which will take place here at the Capitol Hill Club on Monday, October 17, “Creatures of Statute III: Congress’s Responsibility to Answer Major Questions.”
Note, The Federalist Society takes no position on particular legal or public policy matters. All expressions of opinions are those of the speakers. To get right to today’s discussion, I will only share brief biographies of our stellar panel. To read more about their many achievements, please visit fedsoc.org. That’s fedsoc.org.
First is our Moderator, Judge Lisa Branch. Since March 2018, Judge Lisa Branch has served as a Circuit Judge on the U.S. Court of Appeals for the Eleventh Circuit. From 2012 to 2018, she served as judge on the Court of Appeals of Georgia. Before becoming a judge, Judge Branch was a partner and commercial litigator at Smith, Gambrell, & Russell, LLP in Atlanta, Georgia. From 2004 to 2008, Judge Branch was a senior official in the administration of President George W. Bush in Washington D.C., including as associate general counsel for rules and legislation at the U.S. Department of Homeland Security and as counselor to the administrator of the Office of Information and Regulatory Affairs, commonly known as OIRA, at the U.S. Office of Management and Budget.
Second, we have David Fotouhi. David Fotouhi is a Partner in the Washington D.C. Office of Gibson, Dunn & Crutcher LLP and a member of the firm’s environmental litigation and mass tort practice group. Before joining Gibson and Dunn in 2021, David spent nearly four years at the U.S. Environmental Protection Agency where he served as acting general counsel, principal deputy general counsel, and deputy general counsel. While at EPA, David led an office of 245 attorneys and staff, and he played a critical role in the rationale behind the regulatory definition of waters of the United States in the repeal of the 2015 Clean Water Act. David has provided legal counsel and managed litigation under the Administrative Procedure Act in every major environmental statute.
Third, we have with us Professor Richard J. Pierce Jr. Professor Pierce is the Lyle T. Alverson Professor of Law at George Washington Law School. He teaches courses on administrative law, antitrust, evidence, regulated industries, energy law, oil and gas law, energy tax policy, evidence, torts, and economic analysis of law. He was the author and co-author of several legal case books including, Federal Administrative Law, Cases and Materials, with Kristin Hickman, Administrative Law (Concepts and Insights), Modern Antitrust Law and its Origins, with Thomas D. Morgan, The Law of Regulated Industries, and many more. Prior to becoming a law professor, Professor Pierce was in private practice at Sutherland Asbill & Brennan LLP in Washington D.C. And he is a veteran of the U.S. Coast Guard.
Judge Branch, the floor is yours.
Hon. Lisa Branch: Thank you, Steve, and also thank you to Savannah and to Chayila for putting this program together. I thank all of you for attending on what is now a cold and blustery day. And I also thank you to The Federalist Society and to the Capitol Hill Chapter for hosting us.
As a point of personal privilege, as you just heard from that introduction, I was the counselor to the administrator of OIRA, and I’m very pleased to have today in the audience one of my former bosses Susan Dudley, who was the administrator of OIRA during the George Bush administration. And also, it seems fitting that we’re having this event on another George Bush OIRA administrator’s birthday today. It’s John Graham’s birthday. It also is lovely for me to be up here and have the opportunity to connect with former law clerks who are sitting in the audience here today, and I always appreciate their willingness to attend when I’m no longer their boss.
So today, we are going to be examining various facets of the policymaking by administrative agencies and the tension between whether agencies are improperly usurping congressional power or simply exercising necessary discretion to allow the federal government to fulfill its roles to the American public. And our two distinguished panelists, Professor Pierce and Mr. Fotouhi will provide brief introductory remarks, and then we will engage in a conversation and perhaps a debate about this tension. Although I have noticed, and the Professor and I were discussing earlier, anytime we bring regulatory experts together and think we’re going to engage in a debate, I think we find that there’s more often common ground than not. So perhaps we can stir some things up today, but I make no promises.
I hope to turn it over to the audience for questions and answers at about 1:15, so start thinking about questions now. And without further ado, Professor Pierce.
Prof. Richard Pierce: Thank you, Judge Branch. Let’s see, is this working? Alrighty.
So rules are the dominant or most important means through which agencies make policy decisions, and rules come in several different categories. Substantive rules, sometimes called legislative rules, are the most important because they’re the most powerful. They’re the only rules that actually have legal effect. An agency has the power to issue substantive rules only if Congress has explicitly given it that power, and that’s important to remember because there are very important statutes where the implementing agencies lack that power. So for instance, there’s no agency that has the power to issue rules to implement any of the antitrust laws. Those can only be implemented through means other than substantive rules.
An agency can issue a substantive rule only through the use of the notice-and-comment process. That process is resource intensive, and it takes an average of two to five years to complete. Now, just before the luncheon, somebody was telling me they got one through in five months, but the way they did it was they told every lawyer in the agency, drop everything else you’re doing and work exclusively — you can do that. You can accelerate the process if you’ve got nothing else important going on, but otherwise, you’re making major sacrifices to accelerate it more than that.
And as David can tell you from painful experience, you also have to use that resource-intensive lengthy notice-and-comment process to amend or rescind a rule. Almost all major rules are subjected to judicial review, and it’s a pretty daunting form of judicial review. Courts wind up upholding about 70 percent of substantive rules. They reject about 30 percent because of one of the following: that either the agency exceeded statutory boundaries or it made a procedural error or it did not adequately explain the rule that it issued.
Now, in addition, major substantive rules issued by Executive Branch agencies are also reviewed by OIRA. Rules issued by so-called independent agencies are not subject to OIRA review. OIRA estimates in its annual reports that the major rules that it reviewed produced benefits that are on average six times greater than the cost that they imposed.
Now, the other kinds of rules that are issued on a regular basis, in fact, far more frequently than substantive rules, are interpretative rules or general statements of policy. Those two categories of rules are often lumped together and referred to as guidance documents. They do not have the force of law, but they can have very significant effects because they bind the staff of the agency so the only way you can get the agency to do something that is outside the boundaries of a guidance document is to go to the top of the agency to get that resolved.
Guidance documents can be issued without using any mandatory procedure, but increasingly, if they have a significant effect, they are likely to be subject to judicial review. And if they’re subject to judicial review, the agency better have included at the time it issued the document a pretty detailed explanation of why it came up with the interpretation or the set of policies that it announced in the document.
Guidance documents can be issued without any explicit statutory power. It actually is kind of hard to imagine any circumstance in which it would make sense to say that an agency that has responsibility to implement a statute cannot disclose to the public how it interprets the statute or the policies that it’s trying to pursue through its implementation of the statute. So all agencies have that inherent power.
Courts review guidance documents that have significant effects to determine whether they’re consistent with the statute that’s being implemented and to determine whether the agency has adequately explained its interpretations or policies and if it’s a change in policies, has adequately explained why the change is justified even though it obviously interferes with or undermines some of the expectations that were created by the prior policies.
Guidance documents are extremely valuable, transparent sources of information about the way an agency interprets a statute that it implements and the policies it will pursue in implementing those statutes. And to illustrate the value of guidance documents for that purpose, I would go initially to the antitrust laws where no agency has the power to issue any substantive rules to interpret or implement the Sherman Act or the Clayton Act but two agencies, FTC and DOJ, share responsibility to enforce those acts.
So what FTC and DOJ have done for decades is they have issued joint guidelines that let the public know how they’re interpreting it and the statutes, what they are trying to accomplish with the interpretations. Those are guidance documents, and those, I think, are extraordinarily valuable to any firm that’s considering a merger or acquisition of another firm. And one of the ways you can judge the value of those documents is by their lack, their absence today.
The relatively newly appointed, the Biden administration appointees, to run the antitrust division at Department of Justice and to chair the FTC really disagree with just about everything that has happened in the world of antitrust over the last 45 years, and they have completely different ideas about what should happen. And those ideas certainly extend to the merger context, and so it’s quite clear that they are now applying criteria to propose mergers and acquisitions that are completely different from those that were ever set forth in any of the guidelines or any litigated cases.
And that puts everybody in a very difficult — anybody who’s considering a merger or an acquisition, in a very difficult situation because you know that they’re not going to adhere to the guidelines that are now in effect. They haven’t issued new guidelines, so you don’t know what criteria they are going to use and how they’re going to evaluate proposed mergers and acquisitions. But you know from the speeches they have made that they’re going to be using quite different criteria. So that just — the absence of guidance in that situation illustrates the value that guidance can have.
Hon. Lisa Branch: Thank you. And now, Mr. Fotouhi.
David Fotouhi: Well, thank you very much. It’s a pleasure to be with you all this afternoon.
So let me talk a little bit about policymaking from my perspective as someone who worked as a lawyer within a federal regulatory agency. Before I get into that, these are my personal views, not those of my firm or my clients so just wanted to preface my discussion with that.
I think one main point here is that for most agency actions, the policy decisions are what drives the legal decisions and rationale and not the other way around. And I think it’s important to understand the different roles of agency leadership in this regard. So you have the head of an agency and the assistant secretaries of the agency, they’re the policymakers. They’re setting the policy direction either based on executive orders or their own policy agendas in consideration of things like the problems that they think need to be addressed, the factual record, technological issues, and available options and also the legal risk. That’s a part of the calculus for the policymaker.
Now, that’s where the general counsel comes in. Their job is to advise the decision maker on the legal risk of the various policy options they are considering. And the tolerance for different degrees of legal risk is really up to the head of the agency. They may want to bear more legal risk if a particular policy is really important to them, or they may want to take a more reserved approach if what’s valuable to them may be something more incremental that can withstand judicial review more easily. And sometimes, the general counsel’s office also helps to develop alternatives that may be less risky that would be just as equally or close to as palatable for the head of the agency.
So what does an agency do when it’s assessing its legal authority to make policy? Now, sometimes, this is very straightforward. If the head of EPA wants to restrict the use of a pesticide, there’s pretty clear statutory authority to do that under FIFRA, the clear relationship between the policy to be executed and the statutory authority. Other times, it’s more complicated. If the head of EPA wants to reduce greenhouse gases from a particular source category, if the head of EPA wants to change the way that costs and benefits are weighed in EP rulemakings, that’s not necessarily intuitive about where you look in the statute for that authority. You might have multiple options, and you might be able to address those problems directly or you might be able to address them indirectly through some other regulation. Maybe a Clean Water Act regulation gets you greenhouse gas emission reductions as a co-benefit, as a term that people have used previously. Those are all things to be considered by the general counsel’s office when advising agency leadership.
And of course, the statutory text is what guides that analysis. And in my view, administrations of both parties have used broad and capacious statutory language to advance their policy preferences. I think recent clear examples of policies in search of statutory authority are the recent student debt cancellation based on the Heroes Act of 2003, also, a little less recent but the eviction moratorium based on CDC’s emergency authority to abate contagious diseases. These are very clear examples of the policy came first and the legal rationale was developed later to buttress it.
In the environmental space, in the space that I’m much more familiar with, my view is this happens much more frequently in Democratic administrations where there’s a push to expand agency authority based on ambiguous or broad statutory language. However, I think Congress is given the keys to federal agencies, generally speaking, to develop regulations that a number, I think, of conservatives would view as administrative overreach. And I’ll just go though some examples of these sort of keys to the kingdom.
Many environmental statutes have very high statutory standards or sometimes called safety standards. I’ll give you one example. Under the Resource Conservation and Recovery Act, that deals with solids and hazardous waste, regulations that pertain to solid waste have to meet a standard of no reasonable probability of adverse effects on health or the environment. That is a very high standard. Not even no reasonable probability. I mean, it’s almost a two-tiered safety standard in that statute. And courts have held that that provision needs to be viewed irrespective of cost. Other provisions either explicitly say costs cannot be considered or courts have held that costs cannot be considered.
The national ambient air quality standards under the Clean Air Act, I think, is the most well-known provision like this because of Justice Scalia’s opinion in the Whitman case from about 20 years ago on this question. But even in the recently amended Toxic Substances Control Act, there’s language that says EPA needs to look for unreasonable risk of injury or health — of injury to health or the environment from an existing chemical without consideration of costs or other non-risk factors. That direction to the agency results in an expansive view of regulatory authority when costs can’t be considered.
There are a couple of other types of provisions. Broad goals or policy sections at the beginning of statutes, we may get into this more in the discussion, anti-backsliding provisions that prevent changes to either regulations or permits that are less stringent than what those regulations are replacing. Provisions that allow states to assume regulatory programs but direct EPA to approve that assumption only if the state programs are no less stringent than the federal programs, again, driving an expansive view of agency authority.
So with that, I think I’ll just turn briefly, before we get into the Q&A, on what does an agency do to consider the type of vehicle it’s going to use to make policy? The different types that Professor Pierce laid out between legislative rules, different types of agency guidance, how does it choose? Well, there are a number of factors and I think it depends on the specific facts, but is the agency writing on a blank slate or are there existing regulations it’s seeking to amend? Is there a recent statutory amendment that needs to be implemented that results in a necessary change to regulatory text? That probably needs to be a legislative rule. Has the agency acted in this sphere before? And if so, what tools has it used previously? It probably makes sense to use similar tools again.
Is this a minor policy change or is this a major departure? The larger departure probably requires a legislative rulemaking and all of the bells and whistles that that requires. Similarly, is the agency looking to make incremental change? Maybe a guidance document or an interpretive rule is enough for something like that or even a press release or a question-and-answer document. Or is the agency really looking to make a break from the past and issue a new regulatory approach?
And lastly — two last points, is the agency seeking to bind the public and bind the regulated community? Or are they just trying to change the way the agency operates internally, and internal rules of agency procedure are a different category onto themselves. And lastly, the time and burden commitments that Professor Pierce talked about, undertaking a legislative rule is an immense undertaking for an agency, and you can only do so many at one time with the staff that you have. So weighing those priorities against each other is critical to selecting which tool you’re going to use in your regulatory toolbox.
So I hope to talk about some of these issues in more detail, and I’ll turn it back over to the Judge.
Hon. Lisa Branch: Thank you, both. I think what we’ve talked about that generally speaking, agencies are pursuing notice-and-comment rulemaking. And we’ve touched on some of the alternatives to notice-and-comment rulemaking here today. Certainly, guidance documents have been around for a long time. And certainly, during times of Covid, we’ve seen a lot of emergency rules. There’s also a vehicle called formal rulemaking, and during the Bush administration in 2007, executive Order 14322 came out and asked agencies to explore formal rulemaking in certain circumstances. And what I would love for the panel to address, with these alternative approaches that are available to agencies, how do those different approaches to notice-and-comment rulemaking, how do those different approaches affect policymaking by the agencies? Anybody?
Prof. Richard Pierce: Okay. I’ll give it a start and start with formal rulemaking. Formal rulemaking is a reference to rulemaking that includes notice-and-comment, everything that’s involved in a notice-and-comment rulemaking, and then adds to its oral evidentiary hearings that are at least supposed to be limited in their scope to material issues, differences of opinion with respect to material issues.
But as a practical matter in the vast majority of circumstances, if an agency is required to use formal rulemaking, that’s the equivalent of saying the agency doesn’t have the power to issue any rules at all. There are only a few circumstances in which agencies are required to use formal rulemaking, and in every one of those circumstances, the agency has just said we’re not going to try because you’re not talking two to five years now. You’re talking five, ten, fifteen years, and the likelihood that the disputes are going to remain static for that period of time is remote.
So agencies interpret requirements to use formal rulemaking as the equivalent of you don’t have the power to issue substantive rules.
Hon. Lisa Branch: Certainly, that has policy making implications too. Any thoughts on guidance documents, emergency rules?
David Fotouhi: Well, I think in terms of guidance, I think one big question is are guidance documents reviewable in court? And I think if you look at D.C. Circuit precedent, there’s a complicated web of factors to determine whether a guidance document is, first of all, is it a final action? And then second, is it, in fact, a guidance document or is it really a legislative rule masquerading as a guidance document? And those questions are very closely intertwined but they’re not perfectly overlapping.
And so you’ve got various opinions from the D.C. Circuit that say a guidance document is, in fact, reviewable. You have others that say no, this one doesn’t affect rights or obligations and so therefore, it’s not. You’ve got others that say well, no, this guidance document is actually a legislative rule and therefore, it is reviewable, or it’s an interpretive rule and therefore, it’s not reviewable. But then there’s another case that says it’s an interpretive rule, so it is reviewable.
So you’ve got a kind of hornet’s nest, a bit, of this issue from the judicial review perspective. So when an agency is deciding whether to act through a guidance document, the very conservative approach, small c cautious approach, would be don’t go too far beyond your legislative rule that’s already on the books. Perhaps, give a little more color about how to comply but don’t do a lot of interpreting. If you want to be more aggressive and avoid the costs of going through a full legislative rulemaking and you want to roll the dice a little bit, you can issue an interpretive rule or a Q&A document that includes quite a bit of interpreting.
There’s a case I’m litigating right now in the D.C. Circuit where we’ve challenged a set of EPA actions including a press release where we say EPA is in fact interpreting its rules in a manner that’s inconsistent with the text through its press release and a number of actions it followed from that. So guidance documents don’t need to be labeled guidance documents. They can take the form of anything from a website posting to a Q&A to a press release to an enforcement action, anywhere where the agency is telling you what it thinks either the statute means or its existing regulations mean.
Hon. Lisa Branch: And would anybody care to comment, especially as we are emerging from Covid, about the emergency rules which include the eviction moratorium which include the cruise ship rule which include any number of rules that have since gone through court challenges.
Prof. Richard Pierce: Sure. I can start with that. An agency, any agency, can issue a rule, a substantive rule, without going through notice-and-comment or what they always do which is reverse the process. First, issue the interim emergency rule and at the same time, make that the notice and proposed rulemaking to decide what the permanent rule should be applicable to that subject matter.
But in order to do that, the agency must make a finding — make and support a finding, that it has good cause to issue a rule without first going through the notice-and-comment process. And the courts have always been very tough on that, and the Supreme Court lately has been even tougher than courts traditionally have been about it. So it’s not easy for an agency to rely on the good cause exception as the basis to issue a rule on the theory that they’re responding to an emergency.
David Fotouhi: Yeah. I think it’s important to distinguish between an agency’s emergency authority to issue a site-specific order, for example, like a Safe Drinking Water Act 1431 order to a water system that says hey, you’ve got a serious problem with your water system. Take action immediately or take action state that oversees that water system as opposed to a rule of general applicability that forgoes notice-and-comment. That is, I agree with the Professor, that’s a much higher threshold, and courts scrutinize those findings of good cause very closely because a departure from that traditional practice is scrutinized closely and should be that way.
Hon. Lisa Branch: Thank you. Let’s pivot a little bit to the role of OIRA, certainly, a role that is near and dear to my heart. But how has OIRA’s approach shaped policy decisions across different administrations? Certainly, we’ve been talking about guidance documents, and that same executive order that I had mentioned that was issued during the Bush administration, OIRA assumed review over guidance documents. During the Trump administration, we see the deregulatory nature, the one in and two out. And now, we have a different approach in the Biden administration. How has the role of OIRA shaped regulatory policy coming out of the agencies?
David Fotouhi: I would say I think OIRA has two main functions. One is to ensure policy consistency across the Executive Branch and the other is a cost-benefit type function to ensure both that the costs and benefits of rules are explained clearly and made clear to the public. And to the extent the agency is going to rely on that cost-benefit analysis for its rulemaking, that that is also done in a consistent way. That distinction is important, right? Some rules, including the statutory provisions I just talked about that prohibit consideration of costs, you may still find a cost-benefit analysis appended to that proposed rule because the agency still needs to show what the effects of its rule will be even if it can’t consider those costs and benefits when it’s deciding between the alternatives it’s looking at for its proposed rule.
And so I think the OIRA process where the agency sends its draft rule to the Office of Management and Budget, it’s then circulated to other agencies that have interests or equities in the process. It can go through multiple rounds of inter-agency review and the agency will address all that feedback and comments. I think it makes for, when that process is — when OIRA is in power to do its job in a robust way, it makes for, at the end of the process, a more defensible, more well-thought through regulations that are more clearly explained to the public, both at proposal and at final.
It’s a very frustrating process when you’re in the middle of it because it extends the timeline of the rulemaking, responding to all of these questions and comments from DOJ and White House lawyers and White House economists and the rest. But I do think it’s a net beneficial process when it’s allowed to play out. Sometimes, it’s short circuited to meet a deadline or to put a policy — ram a policy through the process, and that may be appropriate in certain circumstances that are unique circumstances. But in general, I think, when OIRA is allowed to play its role, the end product tends to be better.
Prof. Richard Pierce: I agree completely with David on all of those points. And I would just add a little bit about there is some degree of variation from one administration to another in terms of the significance that’s attached to OIRA review. And the way that the administrator views their roles varies a bit from administration to administration. If you want a really good description of those variations, I’d recommend that you read a volume of the Administrative Law Review that records all of the views that were expressed by every OIRA administrator at a symposium that Susan Dudley ran a number of years ago.
And then I’d add that the Trump administration really was more different than that. The differences between Republican and Democratic OIRA administrators, I summarize as the Republican administrators tend to say well, my job is to make sure there’s not excessive regulation that harms the regulators in the public, and the Democratic administrator might say something like my job is to make sure that the rules are as good as they possibly can be. And there’s a tremendous amount of overlap and the differences are subtle.
The Trump administration was different because President Trump made it very clear that independent of whatever his OIRA administrators were interested in, he didn’t want to hear anything about benefits of rules. He only wanted to focus on the costs of rules, and so that really was a bigger difference than we had seen in the past in terms of the role of OIRA.
Hon. Lisa Branch: Well, and I would point out one more distinction that I would see, certainly as somebody who served in the Bush administration and with what we saw with President Trump’s regulatory agenda which was more of a deregulatory approach. And I would ask the panelists, what challenges does an administration face if it wants to reduce regulatory burdens?
David Fotouhi: Yeah. I’m happy to take that. Maybe one response to the Professor’s characterization of the focus on benefits, I would say the focus in the Trump administration was more on quantifiable direct benefits as opposed to qualitatively characterized benefits or co-benefits, and we can get more into that in a minute. But in terms of deregulating, I think the key piece that I think deregulating sort of implies an absence of regulation that’s left in the wake of certain repeal. I think in most instances, what we’re talking about is a repeal with a replacement that follows.
One of the key challenges here that I think most people who don’t live and breathe administrative law every day is a repeal of an existing rule is a rule. It must go through the same process by which the initial rule was promulgated. And sometimes, parties have argued in court, although I’ve never seen a court endorse this view, that if a guidance document is being withdrawn and the guidance document was actually a legislative rule in disguise but was never challenged in court or never vacated, you still need to go through notice-and-comment rulemaking to vacate that guidance document because just because it didn’t follow the process to begin with doesn’t mean you don’t have to follow it now.
So it can be very onerous to repeal a rule that already exists. Another example of this is an attempt to either delay the effective date or stay an existing rule. Courts have held that a delay of a rule, let’s say, for two years, that is effectively a repeal of that rule for two years. So that must go through notice-and-comment, and you must weigh all the benefits and risks of basically the world with that rule for two years against the world without that rule for two years. And that can be, basically, its own little mini legislative rulemaking, well, not so mini, its own legislative rulemaking.
So I think that’s the main threshold issue with a more deregulatory approach which is you have to go through the same procedural process to effectuate it as you would if you were just regulating to begin with. So I think the more traditional way would be if an agency doesn’t like a rule, you just propose a replacement for it. You don’t go through the two-step of repeal and replace.
When there’s a policy concern about the existing regulatory regime being in place for even a day longer because the concern is that any amount of time that that existing regulatory regime is in place is a bad thing, then a two-step approach where you promulgate a repeal and return to the status quo ante while you take the longer amount of time you need to replace it with a more thought through new version of that regulation, that is something that the Trump administration, I think, did more than previous administrations. And you’re seeing, at least in the environmental space that I follow, the Biden administration take that same approach of the two-step repeal and replace. And so I think we’ll just have to watch that and see how it develops.
Prof. Richard Pierce: Again, I agree with everything David said. The only couple of things I’d add is first, deregulation in the Reagan administration was very different from deregulation in the Trump administration in part because in the Reagan administration, it was largely accomplished by repealing statutes and eliminating agencies. We now live in an era in which it’s virtually impossible to get Congress to take any significant action in the regulatory area. So the president of either party has no real choice except to try to use unilateral executive action to accomplish anything.
And I think it’s actually quite a bit harder to move in a deregulatory direction than a regulatory direction in that situation because almost certainly, if you’re trying to eliminate a rule or trying to cut back on the stringency of a rule, that rule that you’re attacking has already been upheld by a court and approved by OIRA. And there’s going to be all sorts of statements and judicial opinions and in the OIRA documents that the opponents of your deregulatory efforts are going to be able to point to to say, well, wait a minute, this very agency just said five years ago the opposite of what it’s now saying, and a court said that was good and OIRA said that was good. So it just — it really makes deregulation moving in that direction much, much more difficult than moving in a regulatory direction or certainly, the kind of deregulation Reagan accomplished through legislative action.
Hon. Lisa Branch: So we’ve looked at the internal workings of the regulatory process, what is going on with agencies, what is going on with OIRA. If we just shift as we run up to the end of our time before I open it up to the audience, shift external for a second and talk about the role of Congress. What steps can Congress take to reduce, if it perceives that an agency is overreaching in a certain area, what steps can Congress take? And what role does the Congressional Review Act play in the regulatory process?
David Fotouhi: I’m happy to take that first part. I think in terms of legislating, there are some things that Congress can do. It’s obviously easy for me to say as someone who’s never worked in the Legislative Branch, but I do think there are some important elements here that if Congress were to pay heed to could reduce the likelihood of rules coming out of administrative agencies that members of Congress would say well, that’s our job, that that’s exceeding the regulatory authority.
One I think is clearer statements of authority and specifically narrower goals sections of statutes. Now I think goals sections are not — they don’t confer authority, but they certainly help an agency interpret ambiguous provisions elsewhere in the statute. And so if you have a goals section like the Clean Water Act which came up in this morning’s argument in the Supreme Court in the Sackett case that says the objective of this chapter is to restore and maintain the chemical, physical, and biological integrity of the nation’s waters, and it is a national goal that the discharge of pollutants into navigable waters be eliminated by 1985, if that’s the goal of the statute, interpreting an ambiguity in that statute more narrowly is going to be challenging. And so you saw that in this morning’s questioning from Justices Sotomayor and Jackson. So I think that’s one thing.
Another thing would be if Congress wants an agency to consider certain factors when promulgating rules, it should delineate those factors and should not include a catch all provision at the end that says and any other appropriate factor because that opens the door to things like, in my space, the Endangered Species Act, the National Historic Preservation Act, NEPA, the Migratory Bird Act. There’s a number of what I would call super statutes that apply across the board that agencies need to consider when taking a final action, an agency action. There’s different triggers for each of those statutes, but they do have some overlap.
If Congress is direct, and there’s Supreme Court case law that says if there’s a list of nine factors and it says consider only these nine factors, then all of these other super, super factors, super statutes don’t come into play.
And the last thing I would say is be clearer — Congress should be clearer when it’s directing the agency to consider costs and benefits. And if Congress wants the agency to consider only direct benefits as opposed to indirect or co-benefits, then it should speak clearly to that. If you look at a lot of the cost and benefit analysis of rules that EPA promulgates under the Clean Water Act that regulate the clean energy sector, the majority of the benefits from those rules are improved air quality because facilities subject to those rules will either change, will either shut down or repower or change. So if Congress has an issue with that, they should speak more clearly to how the agency is supposed to consider the benefits and the costs once it undertakes that analysis.
Prof. Richard Pierce: So let me take this Congressional Review Act part of Judge Branch’s question. As a practical matter the Congressional Review Act only exists when Republicans control the White House, the Senate, and the House of Representatives so every 20 years or so. You get a couple years where the CRA is a relevant factor. Otherwise, it’s utterly irrelevant. And even in those two years, it doesn’t have much effect.
What we had when President Trump was in that situation for two years, it was about 30 rules that were eliminated through CRA actions. That’s out of a population of about 3,000 rules, and Dan Farber at Stanford took a look at the 30 that were eliminated and said what’s the pattern here? There was no pattern at all so far as he could determine and anybody’s been able to determine, it’s just a matter — some powerful constituency got really upset about some particular rule that might’ve been a very minor rule but if it’s a powerful constituency, that’s the end of the rule in one of those brief periods.
But it also, even though there’s rules in the CRA about how much floor time, for instance, can be taken up. 10 hours of Senate floor time — my god, Senate floor time is one of the most scarce commodities in the whole world. And so you’d better have something really important if you want to try and get 10 hours of Senate floor time to address it. So I don’t think it — my opinion is it’s close to as utterly irrelevant as anything could be.
Hon. Lisa Branch: All right. With that, I’d like to open up the floor to questions. I see we’ve got one right here.
Dennis Burke (sp): Dennis Burke, and having suffered under that APA — suffered under the APA, what would you do to change it to modernize and improve the regulatory process?
Hon. Lisa Branch: Who wants to tackle that?
Prof. Richard Pierce: Well, that could not be addressed in less than 2,000 pages. And I would not undertake the task because it’s never going to happen because even before we reached today’s extreme political polarity circumstances where as soon as any Republican says anything, every Democrat says I hate it and vice versa. Even in the old days when it was theoretically possible to come up with compromises in the way of amending legislation, it was impossible to amend the APA in any way. I don’t see that ever happening.
Hon. Lisa Branch: Question over here.
Questioner 2: I have to admit, I’m one of these people that doesn’t follow administrative law day by day, but here’s the bet, we have —
Prof. Richard Pierce: Congratulations. [Laughter]
Questioner 2: Thank you, but the lunch was good. [Laughter] So we’ve seen a spectacular example in the efficacy of removing a law, at least temporarily, through non-enforcement with the Biden administration’s approach to immigration law. Now, were you suggesting in one of the earlier comments that let’s say we have a Republican president that don’t control both Houses of Congress, you can basically circle any administrative agency rule that you want, obviously subject to political consideration, and you just give the word, “Well, don’t enforce this. This is out during my term.” Is that a possibility?
Prof. Richard Pierce: Well, that — now you’re talking about something very different from eliminating a rule. You’re talking about declining to enforce a rule, and that can be done in one of two ways. One way, the dumb way, is the honest, straightforward, transparent way. If you say —
David Fotouhi: Just say you’re doing it.
Prof. Richard Pierce: This is a rule, and we will not enforce it. You’re in trouble.
Questioner 2: I forgot to say the border is secure. I understand.
Prof. Richard Pierce: Oh, well, that’s different. That’s just the old malarkey we get and have heard in this town from every politician forever. But you’ve got a rule that says thou shalt do X or thou shalt not do Y, and you say we will not enforce this, then you’re often running in court, and you’re in a lot of trouble in court. If, however, you just, you know, we’ve got a thousand things to do, and yeah, okay. I just assign this one guy who never comes to work anyway to do this, when he gets around to it, and he’s never gotten around to it, you’re fine. There’s not a damn thing the courts can do about that.
David Fotouhi: I agree with that. I think a lot of what gets agencies in trouble is telegraphing what they’re going to do before they do it. And that’s an unfortunate thing to say because we want agencies to be transparent and open to the public about what their aims and goals and actions are, but yes, we had an issue in 2020 right when Covid happened. The Enforcement Office at EPA issued a policy memorandum that said, “We’re going to”—and I’m not going to get this exactly right—“but due to Covid, due to the inability of inspectors to go onsite at particular facilities, we’re going to temporarily alleviate certain recordkeeping and submittal obligations under various environmental statutes.”
And the agency was sued and said this is a rule that’s basically effectively repealing your existing rules by saying you’re not going to enforce them. And we ultimately got a favorable opinion in that case, and then the policy sunset. So it didn’t result in a dispositive appellate opinion telling us exactly what it was. But trying to give the public that sort of clarity puts a target on the back of the agency that facilitates a challenge to a particular document as opposed to an ethereal, like, you’re not enforcing enough.
Hon. Lisa Branch: Right there.
Jeff Steele: Jeff Steele, American Legion. Pre-Nobbs, the Department of Veterans Affairs did not perform abortions. Post-Nobbs, in August, Secretary of VA issued a regulation, an interim rule, to allow VA perform abortions under certain circumstances. Congress debated a bill last week that was germane to this. In ’92, Congress passed a law that said Congress wouldn’t do abortions. In ’96, Congress passed a law delegating the authority to the Secretary to define what’s called a basic health package. That is the statute upon which the Secretary has started to perform the abortions. Can that ’96 law be construed as superseding the ’92 law without explicitly taking away the ’92 law about abortion? Thank you.
David Fotouhi: I think I’d have to see the text. I think if the ’92 law was statutory language and not budget language or congressional resolution or something like that, if it was a statutory provision that says the Secretary of the VA lacks authority or shall have no authority to promulgate X and then the subsequent statute either clearly speaks to that or perhaps speaks to a broader term, you could say the specifics control the generals so the ’92 statutory provision prevails. You could also say no, this is Congress granting a broader authority, and then you’ve got an issue of well, is a grant of very broad general language like that enough to support a regulation that “raises an eyebrow” as Chief Justice Roberts said in the West Virginia case about the agency’s authority.
And I’ll just pivot to talk about that case briefly. This is the clean power plant case in the Supreme Court where the language on its face in 111(d) of the Clean Air Act was pretty broad, “best system of emission reduction adequately demonstrated.” And Justice Kagan in dissent said what part of best system do you not understand? This is best system. They picked the best system. And Chief Justice Roberts said no, we need something clearer than that when what the agency is claiming authority to do is restructure the nation’s energy market, something that EPA has not done before and is not well-situated to do.
So maybe you can analogize to that. If this is a broad grant of authority to VA to do something that it’s not traditionally been under its umbrella and it’s just now for the first time trotting out this newfound authority to impose a regulatory obligation. Now, it’s a little different here because this is an obligation on itself, essentially. So there’s a lot of factors here that I’d have to think about before weighing in. But that’s just my initial reaction.
Prof. Richard Pierce: And the only thing I could add, I guess a couple things. One is as a law professor, I’m just delighted that this field is such a god-awful mess, that I have no way of answering your question without knowing tons and tons of things because that’s how my students get jobs. Oh my god. The amount of work required.
Now, I think also David at the end of his answer was getting us into the world of the major questions doctrine, and that is going to be everybody’s favorite tool to try and attack anything that the government does forever as long as it exists. And at this point, nobody knows the scope of it. Nobody knows where it’s going to be used, how it’s going to be used. And to go back to another point that David was making earlier, agency general counsels are scared to death of that. They say how do I know? How do I know? And the answer is you don’t.
Everything you do is potentially subject to that, and unless and until the Supreme Court provides a lot more clarity about the scope and effect of the doctrine, it’s going to continue to provide jobs for my students.
Hon. Lisa Branch: Well, and that’s a good question to end with because that’s Part III, the next luncheon program is going to be dealing with — and that’s why we didn’t touch on the major questions doctrine. But I thank you all for coming here today and for giving up a good chunk of your lunchtime and early afternoon. And always, thank you to The Federalist Society.
Steven Schaefer: Yeah. I want to thank everyone here for attending today’s event, and please join me in thanking this stellar panel for sharing their expertise and insight.
Conclusion: On behalf of The Federalist Society’s Regulatory Transparency Project, thanks for tuning in to the Fourth Branch podcast. To catch every new episode when it’s released, you can subscribe on Apple Podcasts, Google Play, and Spreaker. For the latest from RTP, please visit our website at regproject.org. That’s regproject.org.
This has been a FedSoc audio production.