Deep Dive Episode 126 – Minutes to Midnight, or Teeing Up a Second Term?

The next presidential inauguration will be on January 20, 2021. The six months between then and today will involve a flurry of regulatory activity, just as the final months of presidential terms always do. Whether the next inauguration features Donald Trump or Joe Biden, agencies will try to complete as many regulatory proceedings as possible before the inauguration, with an eye to not just the end of the current presidential term but also the beginning of the next one.

What actions should we expect agencies to take? To what extent can the current administration issue “midnight rules” affecting policy beyond January 20? And to what extent could the Congressional Review Act permanently erase those rules?

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TRANSCRIPT

Greg Walsh:  Welcome to The Federalist Society’s Teleforum Conference call. This afternoon’s topic is titled, “Minutes to Midnight, or Teeing Up a Second Term? Regulatory Policy in the Fourth Year of a Presidential Term.” My name is Greg Walsh, and I am Assistant Director of Practice Groups at The Federalist Society.

 

As always, please note that all expressions of opinion are those of the experts on today’s call.

 

Today, we are fortunate to have with us Mr. Daniel R. Perez, a Senior Policy Analyst at the GW Regulatory Studies Center, Professor Jack Beerman, the Harry Elwood Warren Scholar and Professor of Law at the Boston University Law School, and moderating is Professor Adam White, the Assistant Professor and Executive Director of the C. Boyden Gray Center for the Study of the Administrative State at the Antonin Scalia Law School at George Mason University.

 

After our speakers give their opening remarks, we will go to audience Q&A. Thank you all for sharing with us today.

 

Professor White, the floor is yours.

 

Prof. Adam White:  Thanks, Greg. And thanks everybody for joining us today. Needless to say, we’re in the middle of an election season. And every four years, with the possibility or the certainty in the case of the end of a second term of the end of a presidential administration, eyes begin to turn to those final weeks of administrative action from the incumbent administration and the possibilities of what might come in the early weeks or months of the new administration.

 

And so for today’s discussion, we’ve brought in scholars to consider two aspects of these issues. First, on the subject of the Congressional Review Act pertains to what a new administration might do to the final actions of the previous administration. And on the subject of midnight regulations, there’s the questions about what an incumbent administration and outgoing administration might be able to do in its final months, weeks, or even days to help lock in an agenda or lay the foundation for an agenda that might impact the next administration.

 

And so I’m so glad to be here with Daniel Perez and Jack Beerman to discuss these issues. We’re going to begin with Daniel on the Congressional Review Act. And then we’ll turn to Jack on midnight regulations. And once they’ve given their opening thoughts, I’ll have a few questions, but Greg will give everybody instructions on how to queue up for audience Q&A.

 

So with that, Daniel, what’s the Congressional Review Act? And what impact might it have on the weeks ahead and the first weeks of a new presidential term, if we have one?

 

Mr. Daniel R. Perez:  Yeah. Thanks for the introduction, Adam.

 

Yeah. I’ll just take briefly — give an overview of the Congressional Review Act and how it might be used by the next Congress to eliminate regulations issued towards the end of the Trump administration. Of course, as Adam’s pointed out, that would mostly depend on the outcome of the upcoming November elections. So it’ll be interesting to see.

 

So basically, the CRA provides Congress with a mechanism to disapprove final rules issued by federal agencies. And when I say disapprove, I mean eliminate or nullify a rule in its entirety. Okay. So it’s a bill in each house that requires only a simple majority vote in each chamber to past. And I’ll talk a bit about the fast track provisions that it has, making it a tool of expedited oversight relative to just your average legislation that would float through.

 

So there’s two things I wanted to cover. One is the outcome and the process, so what happens if a rule is nullified. I’ll just briefly mention that fast track provision that makes it the tool of expedited oversight. And the other thing I wanted to cover is a bit about the review window that Congress gets that can exercise this tool and how this review window is going to be particularly relevant given the upcoming congressional and presidential elections.

 

Now, just briefly, I know this is a one-hour teleforum call, not a three-hour teleforum call. So I’m not going to — in the interest of time, I’m not going to down the rabbit hole, so to speak, on what a day is for the Congressional Review Act. There’s four different definitions. I’m just going to use a definite. I’m going to call it a working day, and this is just basically when a chamber is in legislative session. I’ll say working day, and I’ll just get pass that complication. I’ll be happy to take questions about it later though.

 

I’ll also be using rule and regulation interchangeably. So the definition of what counts as a rule in the CRA is quite broad, and it covers almost everything that is a rule under the Administrative Procedure Act with some interesting exceptions.

 

All right. So what happens when a rule is disapproved? So the rule is nullified. So it either doesn’t take effect or its effect is discontinued if it already had taken effect. All right. So once disapproved, the rule also may not be reissued in substantially the same form. And that’s the language in the CRA by the agency. So essentially, once a rule is disapproved, that agency would require Congress to specifically authorize it by law to issue a new rule that is substantially the same as the previously disapproved rule.

 

Now, the exception to that is if a statute or a court establishes a deadline for issuing a rule, okay. And then in that case, the disapproval doesn’t prohibit the agency from issuing future rules that are substantially the same. It simply extends the deadline to do so by a year, okay.

 

It’s worth noting that a bill can only target a single rule at a time, so there’s no bundling rules. Congress can’t pass one bill that bundles 500 rules. And it can’t pick and choose which parts of a rule or regulation to disapprove. It’s all an all or nothing thing. So it’s a sledgehammer as far as a tool. It’s more of a sledgehammer than a scalpel.

 

I won’t go too far into the fast track provisions, but the fast track provisions apply to the Senate. And they basically prevent these bills from being filibustered. You only need 30 senators to get it out of a committee, so it’s not likely to get stuck in a committee. Any senator can make a nondebatable motion to move it to the floor. This allows amendments. The floor debate is limited to 10 hours. So basically, if you can get 30 senators to agree that this should move forward, it’s all but certain to get a vote on the floor.

 

All right. So now, I wanted to talk a little bit about the timeline for all of this. So the review window, normally, Congress gets a 60 working day window to use the CRA after the agency sends the rule to Congress or publishes it in the Federal Register, whichever date is later.

 

Okay. Now, in addition to that normal 60-day review though, there’s a lookback provision in the CRA. And basically, how that works is that if a Congress does not get its full 60-day review period, then every single rule that was issued during that review period gets subject to a completely new review period in the next Congress.

 

So this is why the CRA’s likely to matter more after an election cycle, especially if control of Congress and the presidency shifts party, right, because in that case, the next Congress would exercise oversight. And it’s likely that that Congress, if they switch party, would have different policy priorities from the administration under which the regulations were issued.

 

So for example, after the 2016 elections, it was a Republican-controlled Congress exercising oversight of regulations issued in the last 60 working days of the Obama administration with a president, President Trump, who was likely to sign resolutions in disapproval of the law. That president is not likely to sign resolutions of disapproval into law if it’s his own agency, right. The political appointees and his own agency is issuing his own priorities.

 

So there’s a little bit of a wrinkle now that we’re in a pandemic. I just wanted to mention that briefly. So coronavirus is likely to affect the number of working days that are in Congress. We think it probably will broaden the window, but we were uncertain as to when the review period will open. So historically, that 60 days, if you count back from January 3, you count back — that’s the end of Congress, you count back 60 working days, that puts the review window to open sometime in July, historically. It’s been as early as May and as late as September. So coronavirus might put a little wrinkle in that where we’re not sure exactly, but we think it’ll broaden the window.

 

And the second thing is that some agencies have extended their comment periods on rules to accommodate folks during the pandemic. In that case, you could imagine if the rule’s right on the edge of being in or out of the window and you extend the comment period, you could get a situation for certain rules where now they’re in the window when they wouldn’t have been otherwise. So that’s just two things I wanted to mention given that this is a strange year.

 

Okay. So just briefly, if President Trump wins, I don’t think the CRA is going to get much traction. It definitely won’t get further than his desk. There were plenty of resolutions of disapproval that were presented to President Obama. Some things like clean power plant and, of course, he vetoed them. And Congress wasn’t able to muster the two-thirds majority to override the veto. So I think traction, using the CRA, whether things are on the chopping block, that’s all if we get a situation with a president Biden and the Democrats take both houses of Congress.

 

But briefly, wanted to mention that there are some — there are plenty of regulatory actions that are either have been issued likely in the window — we’re likely in the window right now, I should mention, so anything from now on is almost certainly going to be subject to this expedited oversight. Some things, since we’re unsure of when the window will open, are probably right on the fence, like the safe vehicles rule. That was issued on April 30. That could be really close. Definition of waters of the United States. It’s 4/21. So there’s still things — there’s still some uncertainty around what will be subject to this disapproval. And there’s certainly actions that the administration is still planning to get out there that are administration priorities that would almost certainly, at this point, be subject to that oversight.

 

So I’ll go ahead and stop there. I think that’s the general overview of it.

 

Prof. Adam White:  Daniel, just one question before we move onto Jack and [inaudible 10:10]. First question is, one thing that fascinates me about the Congressional Review Act is, as I understand it, the whole point of the Congressional Review Act really has less to do with agencies and more to do with Congress, right. Congress, it’s a bill to allow Congress to legislate and override of a rule. But Congress can, of course, always do that, right? Isn’t the whole point of the CRA is fast track? The fact that it allows for a turbo charged legislative process that isn’t hindered by things like a filibuster.

 

Mr. Daniel R. Perez:  Yeah, that’s right. It was part of 1996, that was part of the brief and an effort to increase congressional oversight of federal agency rulemaking. So I think that’s why you get elements in the Congressional Review Act like the agency cannot issue the rule in substantially the similar form. I think the idea is whatever Congress delegates brought authority to the agency, whatever the agency decided in this particular case to do with that, Congress was displeased with it. It exercised this authority. And so it would like the agency to think about doing it a different way perhaps.

 

Like I said, the exception to that is if Congress specifies that this is something the agency has to issue every year or by a certain date, then it just kicks back the deadline to do so by another year.

 

Prof. Adam White:  Now, I don’t know if you know, but since you tend to track these things over at the Regulatory Studies Center at George Washington University, just curious, you mentioned some of the rules that are coming out of the agencies that might be targeted by Congressional Review Act resolutions. But have you seen any specific activism coming out of some of the regulatory interest groups, targeting specific rules or action under the CRA if the political wind’s blowing the right direction?

 

Mr. Daniel R. Perez:  Yeah. So I’ve definitely read news reports, I believe something in the Wall Street Journal, suggesting that there are plenty of folks compiling lists, right. This is something that strategically would make sense to do if you were trying to figure out what rules you’d like to target if your side gets the power, that sort of thing.

 

It’s worth noting that Democrats have already sent some — they’ve introduced resolutions, certainly, under the Trump administration on things, for example, like the Department of Education’s borrower defense rule. And so it’s just that since you have President Trump right now, he’s not going to sign that. That’s his agency issuing that.

 

So we’ve already seen — there’s already been evidence that people are thinking about using the tool, people are actively using the tool, that Congress is interested, at least in some subset of rules. In terms of what’s going forward, I could imagine a situation where Democrats and even some Republicans might be interested in looking through, perhaps, some of the Department of Homeland Security immigration rules, for example, or eligibility requirements for SNAP.

 

So yeah, I think there’s evidence of it has been used and could be certainly — its use would increase after the election under those conditions.

 

Prof. Adam White:  Okay. And this generally is my last question before I move onto Jack. You alluded to the fact that one of the other key provisions of the CRA is the fact that if Congress and the President enact a CRA resolution striking down a rule, then that agency is barred by the statute from promulgating a new rule in substantially the same form until new legislation actually specifically authorizes that rule.

 

And there’s all sorts of uncertainty about what substantially the same form means. I wrote a piece with Sam Batkins for Regulation magazine a few years ago just noodling through that. And it’s just so uncertain. We don’t know how it’ll play out.

 

But one of the interesting dynamics here is that if we had a Biden administration and a Democratic Congress following the Trump administration, what you might see being subjected to CRA resolutions are Trump administration rules that are deregulatory relative to whatever rule was in its place before.

 

And so I’m curious if an agency sees its deregulatory rule struck down and it’s prohibited from promulgating a new rule in substantially the same form, doesn’t that mean that there’s basically a new regulatory floor or a more explicit regulatory floor prohibiting the agency from going underneath it until it gets new legislation?

 

Mr. Daniel R. Perez:  Yeah. I think that’s basically right. So if you would imagine that we’re talking about stringency of a regulation over a certain subject area and on a scale of 1-10, it was 8. Then someone decided that evidence suggested that we consider — deregulate and now it’s a 5. If you strike down that rule with the CRA, you’re basically back to that floor of 8.

 

It’s an interesting thought experiment because as you pointed out, we don’t know what substantially the same is. And this issue has never been tested. So the first Congress under the Trump administration was the first time that the CRA was used more than — the only time they had used it before that is under the W. Bush administration one time on a single rule, an ergonomics rule, the Department of labor. And that rule was just — the Department never issued anything that looked anything like it. So we never got a chance to test that. We still haven’t gotten a chance to test it even though there’s been about 15 rules struck down. So until we see what happens with it, we just wouldn’t know.

 

The other interesting thing is that the actions under the CRA are not judicially reviewable. It says it in the CRA. “No determination finding action shall be subject to judicial review.” So if an agency did plan on issuing something that was substantially similar, I suppose Congress, using the CRA, would be the only entity that could strike down that new rule. That’s not 100 percent, but it’ll be interesting to see. I’m very interested to see how these things play out if they do.

 

Prof. Adam White:  Well, so am I. And thank you for all that very interesting information.

 

Let’s turn now to Jack Beerman. Jack, thanks again for being so patient. As was mentioned at the outset, Jack is a law professor at Boston University. He’s written a lot on midnight rules specifically, in addition to law review articles titled, “Midnight Deregulation,” “Midnight Rules: A Reform Agenda,” and “Combating Midnight Regulation,” all written around the years of 2009 to 2013.

 

He also wrote the report for the Administrative Conference of the United States, a major federal advisory board or advisory commission on regulatory process. I really encourage people to look up this report, “Midnight Rules: A Reform Agenda,” from 2012 and the recommendation that the Administrative Conference adopted on the basis of Jack’s research. So Jack, thanks for joining us. Can you tell people what are midnight rules and why are they so important?

 

Prof. Jack Beerman:  Great. Well, thanks, Adam. I really appreciate it. Just to echo what you said about reading the administrative conference material, if you only have a few minutes, just reading the recommendations gives you a good sense of the scope of the issue and the problem and what the possible reforms might be that could deal with how problematic it is.

 

But I have a pretty short time to discuss this sprawling topic, so I’m going to focus on five things. First, why it happens, second, what it is and how bad it is, third, what outgoing administrations should do, fourth, what incoming administrations should do, and fifth, what legal reforms might help.

 

So I’m going to combine the first two and talk about why there’s this problem of midnight rulemaking and how bad it is. And obviously, there’s a lot of different reasons why the output of regulations goes up substantially at the end of every presidential term, especially when the next president is going to be of the other party.

 

But I have to say that my research for the Administrative Conference taught me that most rulemaking in the last quarter of an administration is pretty routine and is nothing to worry about. That is that there’s just a high volume of things that have to get done all the time. And so the vast majority of rulemaking that’s going on is pretty routine. It’s been out there for a long time. None of it was a secret. Things were proposed years before. So it’s really nothing to worry about in terms of democracy and accountability. Everybody knew what was coming.

 

It happens, though, that there is a substantial increase and especially it happened — the first time it really got noticed was when Jimmy Carter left office after only one term thinking he was going to be a two-term president. And he substantially increased the output of rulemaking and other regulatory activity. And people started noticing and studying.

 

But it happened also with the Clinton administration, the George W. Bush administration, the Obama administration, and even earlier also, there are some examples. So what are the causes of this? Well, first of all, there’s the natural human tendency to work the deadline, which it’s called the Cinderella Constraint, and it’s really nothing to worry about. People, human beings, tend to — they work on something up to a deadline and then they finish it at the deadline.

 

The second reason that you see it is that some administrations seem to hurry at the end, take as much action as they possibly can near the end of their term to project their administration’s agenda into the future. And this, I think, is something that’s worth worrying about a bunch. And especially when you have an administration that seems to operate a great deal by executive action and with clinching the limits of legality of how they — you’re likely to see a big flurry of activity that may not be as well considered, and it may push the limits of the law and may try substantially to, as I said, to extend that administration’s agenda into the future.

 

The third possibility is waiting to take controversial action until the end of the term so that you can mute the political consequences of it. And this is something to worry about a little bit. But it doesn’t happen very often. And the reason it doesn’t happen very often is it takes a long time to take any major regulatory initiative so that it’s very hard to do something that’s a secret up until after the election.

 

I believe there was one case where the George W. Bush administration put through a major initiative on workplace safety rules that had never been revealed before the election on any sort of regulatory agenda. And that was a little bit troubling, but it wasn’t a — it’s a very small problem because of the fact that it takes so long.

 

Now, sometimes, there’s delay by external forces that prevent administration from taking action until late in the term. This is partly related to the tendency to work the deadline that the rulemaking process is so cumbersome that it takes a long time already. And then you have things like, for example, the ergonomics rule, which was the only rule before the Trump administration that ever got disapproved. That rule was delayed by seven years of appropriations writers that prohibited the Clinton administration from doing it. They finally — President Clinton threatened to veto the entire Department of Labor budget so Congress took the rider out. But then, of course, once they issued the rule, it was so late that it could be reversed.

 

And there’s another aspect is what I call timing. And that’s timing things to late in the term but right before the election to help your party somehow in the election, either congressional candidates or someone running to succeed you. And I don’t really have any problem with this because that’s really — the election has influence. If the administration thinks it can take action that’s going to please the electors, then more power to them. They ought to.

 

Now, the strongest critique against the significant increase in rulemaking that happens at the end of the term, what we call midnight regulation, is that if the intention with the president’s obligation to take care that laws are faithfully executed and also to faithfully execute the office of the president, and there’s an obligation to the public interest and to the successor. And the problem is that late term actions have two negative consequences.

 

First of all, many of them tend to be hurried, the ones that are problematic. It’s a relatively small universe, I want to stress, but the ones that are problematic may be less well considered so that they are lower quality. And also, they overload the incoming administration with things to sort through, which delays the incoming administration’s ability to get things up and running.

 

So before that, the outgoing administrations should take it into account the distraction and energy that’s necessarily associated with reviewing late term actions and the increased possibility of errors in the rush. And I think it violates the oath of office for the president if the incoming administration is saddled with too many midnight rules and other late term actions that impede the incoming president’s ability to take care that the laws be faithfully executed immediately upon taking office.

 

So I’m a strong believer that politics should influence rulemaking, obviously within the limits of reason. And the big question for the current administration is whether they can actually act rationally in a way that’s likely to be acceptable to the courts. They seem to be losing more cases than other administrations while they’re still in office. And the question is whether that will even get worse once they leave office.

 

So what should the incoming administrations do to try to fight midnight rulemaking? I’ve already talked about how I think that outgoing administrations ought to tone it down and make sure that everything they do is necessary and well considered. So typically, incoming administrations have frozen all rules on coming in, try to delay the effective date of midnight rules, and also try to pull things from the federal register that have been sent to them but not yet published.

 

And this is — it’s an odd fact that the prior administration’s rules continue to be public for two or three or four or even sometimes five days or more after a new president takes office because there’s a backup at the federal register because they can’t print everything on time. Now, so they ought to — the incoming administration has to engage in that kind of a review. And they have to be priority at the beginning of the administration to make sure there aren’t any ill-considered or otherwise undesirable rules and especially rules that derogate the change in politics that ought to occur based on the election.

 

Now, when this freeze and review occurs, the incoming administration has to make sure to dot all their i’s and cross all their t’s because overreach — in these situations, the courts have been very careful not to abandon administrative law requirements of notice and comment and reason decision making. And the administrative conference said that any delays ought to be done with notice and comment, both for transparency reasons and also to avoid the litigation risk, that if you do it without notice and comment, you might get reversed.

 

And we’ve seen several cases in which agency — at the beginning of administrations, agency delays without notice and comment have been thrown out as violating the Administrative Procedure Act. Now, the Obama administration put forward a rule to make it more difficult for its successor to pull rules from the federal register that have not been published but had been finalized by the agency. And I thought that was a terrible idea because it took away one of the incoming administration’s tools for dealing with this problem.

 

And that rule didn’t go anywhere. I’m not sure it didn’t go anywhere because there was an outcry against or because they thought at the last minute that Hillary Clinton was going to win the election and so they didn’t have to worry about it. But in any case, the incoming administration has to follow a notice and comment. They have to compile a sufficient record for whatever delay or alteration they want to make. And the question is whether that can be difficult or it’s going to be easy in the next transition.

 

And assuming that the election goes to the other party, which is a big assumption, the outgoing administration, the Trump administration, has to be very careful to do everything properly so that their rules are not as vulnerable to being easily reversed by the incoming administration.

 

Now, I want to talk about my proposal for dealing with this, which is, in my opinion, that the outgoing administration should just act the way it would normally act throughout the transition but that Congress ought to adopt a proposal to allow a new administration to have freedom to revise or rescind the rules that were adopted by the prior administration as long as the original rulemaking record would’ve supported the new administration’s decision.

 

Most of the time, there is material in the record that would support a whole spectrum of decisions. And the problem is that for an incoming administration is once the outgoing administration has acted and they’ve used that record to justify their rule, the new administration has to go through an entirely new rulemaking and create a whole new record in order to do anything in contradiction to that.

 

I think that’s unfortunate because it basically takes away the value of the election. And it also puts the new administration through a lot of extra work. And there’s a — the Administrative Conference has a recommendation, which is consistent with this, that Congress should authorize agencies to delay for up to 60 days without notice and comment the effective dates of midnight rules. And I would add to that recommendation, but I couldn’t get it through the administrative Congress, that they ought to be able to revise the rule or even rescind it all together so long as the original rulemaking record would’ve supported it. I think that would go a long way towards really eliminating the whole problem. We wouldn’t be talking about this after the next transition.

 

And with that, I’ll conclude and open it up for — I’m happy to take questions from anyone, Adam included.

 

Prof. Adam White:  Thanks, Jack. Just a couple and then I’ll turn it over to the audience. I don’t know if you’ve seen this in the news in the last few weeks, there was a report in Axios online, it was discussed elsewhere, that President Trump interpreted the Supreme Court’s recent decision in a DACA repeal case as getting a green light for much more agency action in the weeks ahead. And specifically, what he said was because President Obama was able to create the DACA program without going through notice and comment but then the Supreme Court directed the agencies to go through much more of an analysis in rolling it back.

 

But this means that President Trump can create some new policy—he suggested immigration, healthcare, and other issues—without a process. But then the courts would require a future administration to go through a greater process in rolling back those programs. I don’t presume that you saw that news, but if you did, I’d be curious for your thoughts on it or any thoughts you might have in general on the DACA rollback case and so on.

 

Prof. Jack Beerman:  No, I did see that. And I think that President Trump’s impression of what the Supreme Court did is correct from a couple of different perspectives. First of all, I would surprise my liberal friends by saying out loud that I don’t understand for the life of me why anyone could possibly argue that if an administration puts in a rule without notice and comment, that the following administration has to use notice and comment to get rid of it. I think that that’s completely wrong.

 

And I also think that the more effective you make informally adopted policies, the more freedom it gives for every administration, obviously, to informally adopt a policy and put it into effect. What the Supreme Court has done with DACA is basically said, as it has done in more than one occasion with the current administration, like for example the census, putting the citizenship question on the census, is that whatever you do, administrative law constrains you to doing things in a way that’s reasonable, that you have to have a reasonable basis for [how] you act. And you can only support what you do based on the true reasons for doing it. So you can’t give a false justification for something you’re doing, and you have to have good reasons for doing it.

 

But it’s true that it’s — for example, if President Trump put in, let’s say, a new DACA, which was much narrower than the old DACA and gave good reasons for it, then the subsequent administration would have to then — if they wanted to change it, under that precedent, the subsequent administration would have to have similarly good reasons for changing it in whichever direction it changes.

 

So I think that that’s correct. And I don’t — the DACA thing wasn’t a midnight rulemaking example, but it’s an example of how you get pass the things you — once an administration takes an action in some direction, the succeeding administrations have to act reasonably in changing direction. And that let’s — so I think that’s correct. And I think that if this administration started putting in programs, assuming they could actually muster the reasonable basis for the programs they want to put in, which can be a big if sometimes with the new administration, then they would obviously set it up so that their agenda would have effects into the future.

 

Prof. Adam White:  Yeah. Past dependency is a good way of putting it. I often phrase the similar issue in terms of first mover advantages of a current administration.

 

Prof. Jack Beerman:  Exactly.

 

Prof. Adam White:  You mentioned that you surprise your liberal friends when you, I guess, criticize the reasoning of the DACA, the Supreme Court’s DACA decision. I surprise my conservative friends by taking the opposite position actually, but maybe we’ll get into that later.

 

Just one more question for you Jack. We’ve been talking about midnight regulations. I kind of wonder about something related to that, midnight interpretations, midnight guidance documents. Sine the regulatory process does require notice and comment and that takes a little bit of time and a record and so on, I’ve always wondered how agencies in an outgoing administration might get more creative in trying to create some first mover advantages or past dependency through sub-regulatory actions.

 

And I think especially in the aftermath of the Supreme Court’s Kisor decision where the Court said one of the reasons why they give more deference to an interpretation is if it’s consistent with previous interpretations, which means that the first administration to start issuing interpretations of rules or statutes would get a little bit of inertia in their interpretations.

 

So I guess I’m curious in your study of midnight regulation, have you thought about midnight interpretations, midnight guidance, or other related issues?

 

Prof. Jack Beerman:  Yeah. I actually lumped all that together when I was looking at the problem because — and, you know, I actually — it’s interesting because obviously guidance’s and other interpretive rules can be issued without notice and comment. And I’m a little bit surprised that the Supreme Court has been as strict as it’s been on the reasoning you need in order to change one of those kinds of documents.

 

But I think that any sort of guidance or interpretation that’s going to be changed has to be changed in a manner that meets the standards of rationality that the Court articulated in the DACA case and in the Census case.

 

I also think that there’s a completely different phenomenon which is midnight personnel changes, where you take political people and make them more permanent. And that’s something I was actually reading about, the transitions even in the 19th century where President Grant was seriously signing papers making personnel decisions on the morning of the inauguration of his successor. And that’s a very common aspect of the presidential transitions.

 

So I think that — and as far as the issue with the first mover, in my opinion, what ought to be the most persuasive is the interpretation given at the time that a statute is enacted or at the time some regulatory action was originally taken.

 

I’m a strong believer in the Skidmore factors, I guess. Whether they’re an administrable way of judicial review, I’m not so sure. But I think if you have contemporaneous understandings of what a statute means, whether it’s through an actually formally issued interpretation or just through practice, I think that ought to be pretty persuasive because if the political communities that was behind taking the action in the first place, telling you what action they brought was taken, I think that ought to be very persuasive on judicial review.

 

Prof. Adam White:  Jack, the thing you mentioned about political appointees getting moved over to civil service, I think that’s referred to as burrowing in, which I always thought was sort of a —

 

Prof. Jack Beerman:  Burrowing in, yeah.

 

Prof. Adam White:  — a good metaphor.

 

Prof. Jack Beerman:  Nina Mendelson has a good paper about that.

 

Prof. Adam White:  Oh, okay. Well, Daniel, Jack, do you have any thoughts on each other’s presentations before we move to audience questions? Any thoughts or reactions?

 

Prof. Jack Beerman:  The only thing I wanted to say about Daniel’s is that so far, the Congressional Review Act only will be used when the stars align perfectly, which is an outgoing administration and an incoming administration of different parties where the new administration’s party has control of the Congress. And that happened so far really once where it was used.

 

Prof. Adam White:  Daniel, do you — yeah, go ahead.

 

Mr. Daniel R. Perez:  You get a lot of resolutions introduced actually overtime and some of them even make it past one chamber. But yeah, you do need to have the situation where — I think the only exception has been President Trump signed a disapproval for a CFPB rule. And so that agency, obviously given the recent Supreme Court case and what we know about how it’s structured, is a little bit of a strange agency. It’s an independent agency, quite independent.

 

So obviously, there you would probably not think that that is — that whatever’s coming out of there wouldn’t necessarily you call it a Trump administration priority perhaps. So that, I think is the one exception to where a president signed a disapproval for something that was promulgated under their administration. But, yeah, I think generally, you would — really, after the midnight period is when the CRA gets most of its action.

 

Prof. Adam White:  Greg, do you want to announce the procedure for queueing up for questions?

 

Greg Walsh:  Absolutely. Professor White?

 

Prof. Adam White:  Greg, let me just offer one closing thought while people queue up. One of the issues that arose around the Congressional Review Act, especially in the first couple of years of the Trump administration, was the fact that the definition of rule in the CRA is actually pretty broad and includes more than just notice and comment rulemakings. And groups like, I think, the Heritage Foundation, the Pacific Legal Foundation, began to track lots of guidance documents and other things that qualified as rules but had never been submitted for CRA review by Congress. And so the clock for a CRA resolution hasn’t started.

 

It’ll be interesting to see how the next — if there is a change in political alignment, as Jack said, and you get a democratic House, Senate, and presidency, to what extent guidance documents promulgated more than 60 days out of this administration might get teed up for CRA resolutions.

 

But with that, why don’t we go to audience questions. What’s the first question?

 

Greg Walsh:  We will now go to the first question. Caller, you’re on the air.

 

Gary:  Hello. My name is Gary. I’m calling from Palo Alto. And I think the challenge is if we look at unilateral presidential action and an example is the recent Kodak loan. And under the Obama administration, we saw the same unprofessional behavior with Solyndra, that when a president takes advantage of a situation, the president can use debt and financial instruments to his personal advantage.

 

And that is much more significant than certain administrative actions because the amount on the table is often in billions of dollars. And in this case, the Kodak transaction, the goal was to undermine big pharma. He announced the transaction, but 24 hours before the transaction, there was significant volume of insider trading. You can actually look this up. Rolled through the transaction and then announced to pharma that he was having a meeting. Nobody in big pharma showed up.

 

That is tremendous unilateral action that’s normally not seen during an election period or a midnight period because you have to work with people. And I think it suggests a presidential administration that is set on an agenda. And this also happened with the Obama administration and actually undermined the Obama administration federally with the Affordable Care Act. Instead of going to service providers, they had unilateral action. And that unilateral action caused a set of administrative procedures that are still hard to unwind. And I’d like you to comment on that because it’s very real. It’s practically real and is right now happening.

 

When a president has an agenda, it could be anything. It could be “I think chloroquine works –”

 

Prof. Jack Beerman:  Well, let me —

 

Greg Walsh:  We seem to have lost that caller, Professor White. Do you want to take it away?

 

Prof. Adam White:  Sure, thanks. Thanks for the question. Seems to be less an issue of Congressional Review Act and midnight regulations, but it’s midnight action of another sort. Jack, you and I talked in the past about just some very general terms about issues of spending and how it fits in with administration. Have you given much thought to that in the midnight context? And also, it occurs to me, what about midnight adjudication, agency adjudications in the waiting days of an administration?

 

Prof. Jack Beerman:  All right. Let me — I think that the — what the question reveals is that there are certain things that really are — could be done as midnight actions that can’t really be unwound. And that’s — a big giveaway is to favored interests after a president’s party, let’s say, loses the election or big giveaways are timed for after the party even wins reelection that they would’ve never done before the election because it would’ve created a problem for them in the election.

 

So what the question raises is just a serious problem, and there are many actions that the president can take that are — that can’t be unwound in any easy way. So that’s just a problem of the quality of the president and the administration. But so I think that midnight adjudications, most of the big policy kind of adjudicatory action is going to be in independent agencies.

 

The presidential agencies do a lot less policy in their adjudications and do a lot more just sort of individual dispute resolution kind of things, usually disputes with the government over benefits or some sort of status. And the midnight rulemaking problem is a little bit less — it’s not timed with — all right. The midnight adjudication problem in independent agencies is going to be timed with the departure of people when their terms end less than with the president. Although, if there’s an open spot, then that would create a majority obviously. They might want to rush something through before the new president can get their choice in place. So it’s not as much of a problem.

 

Prof. Adam White:  Great. Next question, if there is one.

 

Greg Walsh:  It doesn’t look like we have another caller in the queue.

 

Prof. Adam White:  We’ll just give it one more moment. I have, I don’t know if this’ll be a closing observation or we’ll see. Greg, are there any other questions?

 

Greg Walsh:  It does not look like it, no.

 

Prof. Adam White:  Well —

 

Mr. Daniel R. Perez:  Adam, I have —

 

Prof. Adam White:  Great. Yeah, Daniel —

 

Mr. Daniel R. Perez:  — one quick thought on one of your questions about deregulation in the floor. So my example that I talked about like what happens if a rule gets CRA, gets disapproved in CRA, and you were asking does it set the floor essentially. I was talking about stringency; I think you’re probably right about that. But there are other ways to deregulate, right?

 

So just because the original rule was a deregulatory action that maybe lowered the stringency, maybe we’re talking about levels of particulate matter or greenhouse gas emissions or something like that, it certainly doesn’t put a moratorium on all other deregulatory aspects. So you could imagine paper work reductions. You can imagine deregulating in the same space, just in a different way. And maybe that wouldn’t mean that the agency wouldn’t run afoul of that substantially the same form, and you can still get some form of regulatory relief. And so that’s kind of a — I’ll be thinking about this for a while.

 

Prof. Adam White:  That provision about substantially the same form is just so nebulous that it’d be fascinating to see how it plays out. But, of course, the thing is for these things to play out will take years, right, going from one CRA resolution to the subsequent rule, maybe a subsequent administration’s rule, and judicial review over that.

 

Jack, Daniel, do you have any closing thought before we wrap up?

 

Greg Walsh:  I think Professor Beerman just may have dropped off, maybe due to a connection issue. Mr. Perez, do you have any closing thoughts?

 

Mr. Daniel R. Perez:  I think — so I agreed with pretty much everything that Professor Beerman said about midnight regulations. I think one of the things that agencies and the administration will have to consider and they always have to consider when they rush rulemaking is, and Professor Beerman talked about this a little bit, the record, the evidence that they use, did they take comments seriously? All of that will affect whether the rule survives judicial review.

 

And so there’s sort of this balance that agencies are playing, right. They want to — they work to deadlines. They want to get their policy priorities out. But they also need to do it in a way where they’re doing their homework correctly, right. This has to pass review by OIRA. And so I think that’s always a tension.

 

The other thing that I agree with it, midnight regulations are not so much a democratic accountability problem. What I worry about is making sure that things don’t overwhelm the oversight body, so that they don’t overwhelm OIRA, that the agency has chance to work with agencies to improve the rules and make sure that things were considered, that evidence was used correctly.

 

And so I just think from an analytical perspective, from a policy perspective, I just want to make sure that rules have the right amount of oversight so they’re as quality a rule as you can get. I think that’s the one thing about midnight regulations, you don’t want to surprise the office out of nowhere. But that’s probably rare when it happens to the Professor’s point. So —

 

Prof. Adam White:  Well, thanks, Daniel. I’ll just add a closing thought of my own. In Jack’s presentation, he mapped some of the thoughts on midnight rulemaking to notions of the president’s take care obligation, to take care that the laws are faithfully executed, to take care to faithfully execute his office. And when he said that, it reminded me of there were a couple of federalist papers that are always worth reading, particularly at this time and administration.

 

After Hamilton saying the Federalist 70 on executive power, energy, and the executive and so on, the next couple papers after that in defending the duration of a president, his eligibility to seek multiple terms, Hamilton warned about the risks of the wild swings in policy from one administration to the next and the need for steadiness from one administration to the next.

 

Now, of course, at the given moment focusing on President Trump administration, that seems to be in favor of Trump over, maybe, Biden reform agenda. But I think it goes for any administration. The incoming administration last time and the incoming administrations to come. One of the greatest constitutional challenges in our system is ensuring that steadiness in handing off from one administration to the next.

 

And so I encourage our listeners, this audience especially, to take a look at those essays, Federalist 71 and 72. And maybe with that, we’ll bring this discussion to a close. Okay, Greg?

 

Greg Walsh:  Perfect. On behalf of The Federalist Society, I want to thank our speakers for the benefit of their valuable time and expertise today. We welcome listener feedback by email at info@fedsoc.org. Thank you all for joining us. We are adjourned.

Jack Beermann

Harry Elwood Warren Scholar and Professor of Law

Boston University Law School


Daniel Pérez

Senior Policy Analyst

GW Regulatory Studies Center


Adam J. White

Assistant Professor and Executive Director, The C. Boyden Gray Center for the Study of the Administrative State

Antonin Scalia Law School


Regulatory Process

Federalist Society’s Practice Groups

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