Recent actions by President Donald Trump could accelerate his push to rollback onerous regulations on banks and other businesses, but they also risk setting precedents.
Two
The moves fit within the idea of unitary executive theory — that all functions of the federal government that are not expressly the domain of Congress or the courts fall under the jurisdiction of the president — which has been the
But if the actions survive anticipated legal challenges, policy and legal experts say they could remove a key check on regulators while also opening the door to wild changes in policy from one administration to the next.
"The logic of this, if it stands, is that if a president tells an agency to write a regulation or delete a regulation or amend a regulation, notice-and-comment doesn't apply," said Todd Phillips, a law professor at Georgia State University and former lawyer for the Federal Deposit Insurance Corp. "And that is scary."
Phillips added that the administration's effort to curtail public commentary requirements could remove a key tool that banks and their lobbyists use to address problems in new frameworks before they go into place.
"[Banks] should want the notice-and-comment process protected," he said. "They're one of the biggest users of it."
The orders were both issued on April 9. The first,
The memo was a follow-up from a February order directing agencies to identify and ultimately repeal regulations that could be deemed unlawful under new administrative law precedents.
The new document highlights
The order drew applause from those who believe the current administrative state has grown too large and overbearing. In a statement, Wayne Crews, a fellow at the Competitive Enterprise Institute, a regulatory reform advocacy group, said the action was a step toward a more sensible regulatory environment.
"This new initiative goes beyond previous orders invoking typical platitudes about efficiency, cost-benefit and 'outdated, unnecessary, or ineffective' by specifically invoking 'deconstruction' of an administrative state now largely regarded as unconstitutional and irredeemable," Crews said.
But others question both the method and the intent of the order. Good cause is invoked by agencies regularly, but typically it is reserved for minute adjustments to existing policies or procedural changes, such as delayed or expedited implementations. Usually — and almost always if the change is significant — the clause is used in emergency situations, said David Zaring, a law professor at the University of Pennsylvania's Wharton School of Business.
"It's supposed to be about emergencies or a need for immediate implementation of a rule, and there's plenty of occasions where that happens," Zaring said. "But a bunch of precedents by the Supreme Court announced over the past 10 years doesn't suggest that there's an emergency basis for the repeal of the rules. It's not clear to me that these agencies can get away with just simply repealing them without going through notice and comment."
Phillips said the order also raises questions about what constitutes "facially unlawful" and who gets to make that determination. He acknowledged that the court rulings cited in the order have undone certain regulations and upended long-running practices. Most notably, the Loper Bright decision ended the so-called Chevron doctrine, which instructed courts to defer to agency interpretations of ambiguous statutory obligations. But, Phillips said, it should be left up to the courts to determine which rules and elements should be voided, not politically appointed agency heads.
"The administration is just saying, 'If you think there is a rule that is illegal, wipe it off the books without asking anyone first, without getting comment from the public.' That's just not how this is supposed to work," he said. "In our legal system, it's not the executive branch or the agencies that determine whether a regulation is illegal, it's the courts, and [the orders] are really bypassing all of that."
The second challenge to the APA rulemaking process is tucked into
The APA does not apply to the White House, but the assertion that the president can transfer that immunity to an agency is unprecedented. In fact, some lawyers and observers say the statement is so brazen that the administration could be inviting a legal challenge on the belief that friendly courts will ultimately bolster the president's powers.
But even in light of the Supreme Court's recent rulings that have whittled away agency independence in favor of a stronger executive, some feel like the move will prove to be a step too far. Zaring said the APA was passed in 1946 as a conservative Republican response to President Franklin Delano Roosevelt's New Deal-era buildup of the administrative state and was meant to serve as a means of holding future administrations accountable to the public.
Even if the current justices on the Supreme Court are largely sympathetic to the Trump administration and its pursuits, Zaring said he questions whether they would sign off on that check being removed.
"The courts think about things in the long run. They don't have to worry about the next election because they're unelected — they serve as long as they want to, and their salaries cannot be reduced," Zaring said. "That long term perspective means they'd be unlikely to just think about what's good for these four years, but rather what's a rule which is durable and won't lead to chaos in the Sean Penn administration or whatever."
