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The Checks and Balances Letter: August 2018
From Ballotpedia
The Checks and Balances Letter delivers news and information from Ballotpedia’s Administrative State Project, including pivotal actions at the federal and state levels related to the separation of powers, due process and the rule of law.
This edition:
We take a closer look at President Donald Trump’s new executive order (EO) on administrative law judges (ALJs), who preside over hearings involving regulatory enforcement. The order allows the judges to be hired based on agency-specific criteria rather than the procedures otherwise applicable to civil servants.
We also examine the views of U.S. Supreme Court nominee Brett Kavanaugh on the legitimacy of the administrative state; a federal appeals court ruling that the structure of the Federal Housing Finance Agency is unconstitutional; and President Trump’s rescission of the Obama Administration’s guidance on considering race in higher ed admissions.
The Checks and Balances Letter
In Washington
Trump exempts agency judges from civil service procedure
- What's the story? President Trump on July 10 issued Executive Order 13843 to exempt administrative law judges (ALJs) from the competitive hiring process of the civil service.
- The EO allows agency heads to appoint ALJs based on agency-specific criteria rather than general vetting by the Office of Personnel Management. The EO does not change the judges’ civil service removal protections, according to the Office of Personnel Management (OPM).
- Prior to the executive order, ALJs were subject to a competitive examination process administered by the OPM. Agencies were only allowed to hire ALJs from the pool of vetted candidates.
- The EO was issued shortly after the U.S. Supreme Court's June 2018 decision in Lucia v. SEC, which held that ALJs are officers of the United States who, according to the Appointments Clause, must be appointed by the president or agency heads rather than hired by agency staff.
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Agency’s single-director structure ruled unconstitutional
- What's the story? The Federal Housing Finance Agency (FHFA) is run by a single director who is only removable by the president for cause. That structure, which is identical to the embattled Consumer Financial Protection Bureau, was ruled unconstitutional on July 16, 2018 by a three-judge panel of the U.S. Court of Appeals for the Fifth Circuit (in Collins v. Mnuchin).
- The case was brought by shareholders of Fannie Mae and Freddie Mac—the government-sponsored mortgage giants currently in government conservatorship and overseen by the FHFA.
- The appeals court panel held that the FHFA structure violates the U.S. Constitution’s separation of powers because the agency director is insulated from presidential control. The court struck the statutory language that only allowed the president to dismiss the FHFA director for cause.
- The structure of the Consumer Financial Protection Bureau was likewise ruled unconstitutional in a June ruling by Judge Loretta Preska of the Southern District of New York.
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Trump administration rescinds Obama guidance on factoring race in college admissions
- What's the story? The Trump Administration on July 3, 2018 rescinded six guidance documents from the Obama Administration on considering race in college admissions. (The guidance had been issued jointly by the Departments of Justice and Education.) In announcing the revocations, U.S. Attorney General Jeff Sessions characterized the Obama guidance as “unnecessary, outdated, inconsistent with existing law, or otherwise improper.”
- The DOJ launched an investigation last year into Harvard University’s consideration of race in its admission procedure. The school is also embroiled in a civil lawsuit alleging discriminatory practices intended to limit the enrollment of Asian-American students.
- Guidance documents do not carry the force of law, but are supposed to interpret policy and clarify regulatory procedure. Nonetheless, there are numerous examples of agencies using guidance as the basis of enforcement action.
- In an attempt to restore the proper scope of guidance, Sessions circulated a memo last year prohibiting the Department of Justice from issuing guidance that effectively imposes regulatory requirements or amends the law. The memo is intended to prevent the department from evading proper rulemaking procedures, including public notice and comment.
- Last year, the Trump administration rescinded Obama-era guidance documents that allowed transgender students to use bathrooms based on their gender identity and mandated procedures for educational institutions to investigate and resolve student allegations of sexual assault.
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In the States
Missouri lawmakers violated state Constitution by defunding ALJ
- What's the story? Missouri lawmakers violated the state Constitution by defunding a state ALJ position in the Missouri Department of Labor and Industrial Relations held by former labor department director Lawrence Rebman.
- According to briefs filed in the lawsuit to block Rebman’s removal, the state argued that lawmakers had the right to remove Rebman due to his involvement in settlements costing the state upwards of $3 million. The state argued that Rebman posed a risk for future settlements.
- Judge Beetem ruled that the legislature’s effort to defund Rebman’s position was unconstitutional on the following grounds:
- Lawmakers violated the state Constitution’s prohibition against special legislation;
- Lawmakers failed to abide by an existing state law governing the removal process for state ALJs through a bipartisan review committee;
- The removal legislation violated the separation of powers because only department heads possess the authority to select or remove an appointed position within the department;
- The removal effort violated the state Constitution’s declaration that “all persons are created equal and are entitled to equal rights and opportunity under the law.”
- If the state appeals the decision, the case will most likely be heard by the Missouri Supreme Court because it involves questions of constitutionality.
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Hawaii creates new class of emergency administrative rules
- What's the story? Hawaii Governor David Ige (D) signed Act 56 into law on June 27, 2018. The law allows state agencies to issue emergency regulations in response to changes in controlling federal or state statutes or case law.
- Prior to Act 56, Hawaii state agencies could only issue emergency rules in the event of a threat to public health or safety.
- Created in response to the United States Supreme Court’s decision in Janus v. American Federation of State, County, and Municipal Employees, the law was crafted in order to grant state agencies the ability to adjust collective bargaining regulations without being required to wait until the state legislature amended its relevant statutes. Janus held that public sector unions cannot require non-member employees to pay agency fees covering the costs of non-political union activities.
- Supporters of the law argue that the change will allow state agencies to be more flexible in their response to court orders and avoid litigation-related delays to agency projects. Opponents claim that state agencies could potentially abuse the law by crafting emergency regulations to avoid implementing court decisions.
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Responses to President Trump’s Executive Order 13843
- Executive Order 13843 authorizes federal agencies by bypass civil service procedures for hiring of administrative law judges (ALJ), who preside over hearings involving regulatory enforcement. Below, we feature selected responses to the order:
| “ | This change will politicize our courts, lead to cronyism and replace independent and impartial adjudicators with those who do the bidding of political appointees. This is a decision that should be reversed. If allowed to go forward it would be the equivalent of placing a thumb on the scale of justice. | ” |
| —Marilyn Zahm, president of the Association of Administrative Law Judges | ||
| “ | This process gives agency heads a greater flexibility and responsibility for ALJ appointments and is very, very similar to the process under which federal attorneys are currently hired. | ” |
| —James Sherk, special assistant to the president for domestic policy | ||
| “ | The EO allows the current administration (and then perhaps later administrations) to pack the agency’s ALJ corps with those whom it thinks are sympathetic to the current administration’s positions. ... This packing could lead to a one-sided culture within the ALJ corps and eventually criticism—similar to that in the 1930s before the Administrative Procedure Act—that agency adjudicators are unprofessional and biased in favor of the agency. | ” |
| —University of Georgia law professor and administrative law specialist Kent Barnett | ||
| “ | Some commentators have said that the ALJs will now be ‘political appointees.’ But that phrase normally connotes someone installed by the political apparatus, who leaves an agency when the administration, or potentially the installing official’s own time in office, comes to an end. The ALJs, by contrast, are tenured positions, by statute (dating back to the Administrative Procedure Act of 1946, or APA) removable only for “good cause” as found by the Merit Systems Protection Board, or MSPB, another independent agency. The Executive Order (contrary to some early reporting on Twitter and elsewhere) does not, and cannot, alter these important protections on removal, which are designed to ensure the ALJs’ decisional independence. | ” |
| —Daniel Walfish, attorney and former senior counsel for the Securities and Exchange Commission’s Enforcement Division | ||
SCOTUS spotlight: Kavanaugh on the administrative state
The New Civil Liberties Alliance (NCLA), a public interest law firm with a focus on the administrative state, published an assessment of Kavanaugh’s approach to legal issues involving the administrative state. Here are takeaways:
- Kavanaugh would oppose attempts by agencies to exercise legislative, executive and judicial functions.
- Kavanaugh has raised concerns in judicial opinions about ongoing violations of the U.S. Constitution’s separation of powers.
- He contends that the judicial branch has enabled, rather than checked, Congressional delegations of authority to the executive branch.
- Kavanaugh has a critical record of Chevron deference—the practice of federal courts deferring to a agency interpretations of ambiguous statutory language. He has described the principle as “an atextual invention by the courts” that shifts power from Congress to the executive branch.
- He has described independent agencies as the “headless fourth branch of the U.S. Government,” and warned that they threaten individual liberties and the system of checks and balances.
- Want to go deeper? Click here to check out Ballotpedia’s full coverage of the NCLA assessment: Possible 2018 U.S. Supreme Court nominees' views on the administrative state
Regulatory Tally
Federal Register
- The Federal Register in July increased by 6,590 pages, bringing the year-to-date total to 37,420 pages. Between 2009-2016, the year-to-date total at the end of July averaged 45,217 pages.
- The Federal Register included 176 proposed rules and 260 final rules during July 2018. The regulations covered a variety of topics, such as natural gas exports, retirement contributions, small business lending programs, and credit assistance for water infrastructure projects.
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Office of Information and Regulatory Affairs (OIRA)
- OIRA’s recent regulatory review activity includes:
- Review of 36 significant regulatory actions. Between 2009-2016, the Obama administration reviewed an average of 53 significant regulatory actions each July.
- Approval of two rules without change and recommended changes to 34 proposed rules.
- Review of 190 significant rules since January, compared to 139 significant rules over the same period in 2017.
- As of August 1, 2018, OIRA’s website listed 79 regulatory actions under review.
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Footnotes
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