This blog is part of the blog symposium published in conjunction with a new ACS issue brief: Reforming “Regulatory Reform”: A Progressive Framework for Agency Rulemaking in the Public Interest. View the other blogs in the symposium by Adam Zimmerman, Dan Farber, Peter Shane, and Rena Steinzor.

Presidents since Ronald Reagan have, by executive order, required agencies to submit significant regulatory actions to the White House for review. Academic and public interest observers have variously criticized this review as slow, opaque, chaotic, lawless, and power-grabbing. Yet every president in the intervening years has not only embraced but also deepened the control of the White House over individual regulations.

Even President Obama, who announced early in his first term that he was conducting a top-to-bottom review of this process, ultimately embraced strict White House control over the rulemaking proceedings of the executive agencies. President Trump has taken White House control over rules to a whole different dimension by ordering agencies to revoke two existing rules for every new rule they issue and by giving them "budgets" for the costs they may impose on private entities.

One way to address some of the recurring criticisms of White House review would be for the Office of Information and Regulatory Affairs (OIRA), which runs the review process, to hew more closely to the actual provisions of the Clinton-era executive order that still structures this process. Closer adherence to the existing executive order's provisions on review deadlines, transparency, and an orderly process for elevation of issues to the President would address some of the criticisms about undue delays, a lack of transparency, and a chaotic decision-making process.

However, these procedural reforms would not address two basic criticisms: that White House review unlawfully supplants the authority of the agency that Congress has charged with making the relevant decisions and that the cost-benefit criterion that executive orders impose on agency rules is inconsistent with many of the regulatory statutes under which the agencies operate. In addition, the transparency-related provisions of the existing executive order, even if closely followed, would not be sufficient to achieve the degree of transparency we desire. To address these concerns, we propose four additional, and more fundamental, reforms.

Our first proposal is to return the White House review process to the understanding articulated when President Reagan issued the first executive order creating a systematic process of White House review. In 1981, soon after he entered office, President Reagan issued an executive order providing for an approval process quite similar to the one that exists today under a Clinton-era executive order. The Office of Legal Counsel in the Department of Justice reviewed Reagan's executive order for legality. In its opinion confirming the legality of the executive order, the OLC emphasized that the executive order did not purport to displace the authority of the acting agency. The OLC stated that "a wholesale displacement might be held inconsistent with the statute vesting authority in the relevant official."

We believe the OLC opinion had it right. Just as Congress's instructions as to the decisions an agency makes should be followed and not countermanded by the President and aides in the White House, so, too, should Congress's instructions as to the decisionmaker be followed. Some statutes explicitly delegate decision-making authority to the President; most do not. Yet the existing executive orders on regulatory review treat all laws delegating authority to executive agencies as if they delegate decision-making authority to the President. We think the presumption should be reversed: that laws delegating decision-making authority to executive agencies do not delegate decision-making authority to the President.

Our second proposal is to reorient the White House review process to focus on whether a proposed regulatory action is consistent with the underlying statute, and away from the current focus on satisfying a quantitative cost-benefit standard. Very few federal regulatory statutes establish formal cost-benefit analysis as the decision-making criterion. Injection of a formal cost-benefit standard into the White House review process drives a wedge between statutory standards and the standards the White House applies. The current approach inevitably leads to overemphasis on factors that can be easily quantified, encourages dubious efforts to convert all benefits to monetary terms, conflicts with the precautionary approach embodied in many statutes, and disfavors regulatory programs that aim to protect against future harms. For these reasons, we believe that rather than asking, “Does this rule satisfy cost-benefit analysis?,” OIRA should ask, “Does this rule establish a policy that is consistent with the underlying statutory framework and the evidence before the agency? Has the agency engaged in a rigorous analysis of the evidence?” Under this approach, White House review would not inject a new, extra-statutory consideration – satisfaction of a quantitative cost-benefit criterion – into the decision-making process on rules.

In fact, White House involvement is most questionable when it is based on statutorily impermissible factors. For instance, the White House might direct the agency to take a proposed action on the basis of cost, when the statute requires a decision based purely on public health. The Supreme Court has made it clear that this is a basis for invalidating an agency decision. In Whitman v. American Trucking Associations, after first holding that cost was not a factor that the EPA could consider in setting National Ambient Air Quality Standards (NAAQSs), Justice Scalia went on to say:

Respondents' speculation that the EPA is secretly considering the costs of attainment without telling anyone is irrelevant to our interpretive inquiry. If such an allegation could be proved, it would be grounds for vacating the NAAQS, because the Administrator had not followed the law.

Courts should not inquire into the decision-making process without a strong showing based on publicly available information. But in some cases, this barrier might be overcome. When further inquiry confirms that the agency’s decision was based on legally irrelevant factors, a court reviewing an agency rule should send the rule back to the agency for reconsideration.

Our third proposal is to beef up the existing provisions on the transparency of regulatory review. The Clean Air Act offers a good model in this regard.  The Clean Air Act requires the EPA to place in the rulemaking docket all drafts of proposed and final rules submitted to OIRA, documents accompanying them, and written comments by other agencies along with EPA's responses to them. We would propose that these requirements be applied to all agencies and that the documents not only be added to the public docket but be included in the administrative record for judicial review.

Our final recommendation would be the repeal of Executive Order 13,771, issued by Donald Trump on January 30, 2017. That order goes well beyond the information gathering and coordination roles on which earlier presidents relied to support the White House review process. Executive Order 13,771 instructs agencies, in order to issue new rules, to identify two existing rules appropriate for revocation. It also instructs OIRA to impose on rulemaking agencies an annual ceiling on the gross costs to the economy that they may impose through new regulations. These provisions, which effectively amend agencies’ existing statutory authorities, go well beyond any constitutionally rooted presidential role; the president's duty is to faithfully execute the law, not to amend the law by executive order.

This blog is part of the blog symposium published in conjunction with a new ACS issue brief: Reforming “Regulatory Reform”: A Progressive Framework for Agency Rulemaking in the Public Interest. View the other blogs in the symposium by Lisa Heinzerling, Dan Farber, Peter Shane, and Rena Steinzor.

The vast majority of cases in our civil justice system are not decided in federal courts, but instead inside the quiet, understated offices of administrative agencies. Administrative courts make millions of critical decisions for people every year--like whether to discharge student debt, how to grant work visas or asylum for refugees, or when to pay for vital medical equipment, workplace injuries, disabilities or death benefits. But, as crushing case loads create more delays, inconsistent outcomes and new barriers to legal access, those tribunals are now experiencing a crisis. On September 19, 2018, for example, the Department of Education reported that over 105,000 students continued to anxiously wait for the Department to hear their claims for loan forgiveness, three years after the cataclysmic collapse of Corinthian Colleges. The Department of Veterans Affairs also recently acknowledged that veterans face average wait times of six years to obtain their disability benefits. Sadly, the "day in court ideal" has begun to fade as endless numbers of unrepresented claimants wait to resolve the same kinds of decisions before understaffed administrative tribunals.

As reformers appropriately call for more resources, judges, and even technological solutions, recently some agencies have begun to consider tools long used by federal courts to resolve common claims raised by large groups of people: class actions and other aggregate procedures.  In a series of articles, Michael Sant'Ambrogio and I have also explained why we think agencies can improve efficiency, consistency and legal access by taking a lesson from how our federal and state courts hear such cases.

Agencies have always enjoyed a lot of power to create procedures for the cases they hear. Unlike federal courts, agencies are not even constrained by the requirement that parties have “standing” or by statutes like the Rules Enabling Act, which prevent courts from adopting procedures that alter people’s substantive legal claims.  In our report to the Administrative Conference of the United States, a body that provides important guidance for all federal agencies, we found that Congress often gives agencies broad discretion under their organic statutes to adopt aggregate procedures. And indeed, over 70 agencies have adopted some kind of consolidation, class action or other rule to aggregate cases.  But we also found very few actually use those rules on the books.

However, the few agencies that have experimented with such rules have found that, in appropriate cases, aggregate procedures can provide more efficiency, consistency and access to justice.  The Office of Medicare Hearings and Appeals—facing a backlog of over 600,000 claims—instituted a new “Statistical Sampling Initiative,” which will resolve hundreds of common medical claims at a time by statistically extrapolating the results of a few hearing outcomes.  Although OMHA’s statistical sampling initiative is in its early stages, sampling will permit OMHA to resolve thousands of similar claims by the same appellants, sometimes involving the same beneficiary with only a different service date, in a handful of proceedings. Since launching the program, OMHA has been urged by medical providers to expand opportunities to aggregate and resolve large numbers of claims.

Similarly, the Equal Employment Opportunity Commission has long relied on an administrative class action procedure, modeled after Rule 23 of the Federal Rules of Civil Procedure, to resolve “pattern and practice” claims of discrimination by federal employees before administrative judges. The EEOC deems this process indispensable in light of the volume of claims it processes each year, the need for expert legal assistance, and the potential for inconsistent judgments.

The history behind the EEOC class action demonstrates how aggregate procedures don't just promote efficiency and consistency, but how they have played a significant role in promoting access to justice and structural reform. The Civil Service Commission, which heard government employment claims before the process was taken over by EEOC, first adopted a class action rule in response to litigation brought by the NAACP Legal Defense Fund. The NAACP sued the CSC in its effort to end discriminatory practices at NASA, which in the early 1970s employed fewer women or racial minorities than any other federal agency in the United States.  But the only way to show that NASA, or government employers like it, engaged in a "pattern and practice" of discrimination, was through a class action. The NAACP argued that the failure of the Civil Service Commission to hear class actions deprived government employees of tools they needed to prove workplace discrimination. In a case called Barrett v. U.S. Civil Service, the NAACP won, and, in March 1977, the Civil Service Commission adopted the first class action rules to adjudicate discrimination claims inside the federal government.

In 2016, based on our research, the Administrative Conference of the United States adopted new guidelines for agencies considering class actions and other complex procedures in their own hearings. Since that time, agencies have cautiously begun to explore using class actions and other complex procedures, illustrating the potential benefits class actions and other similar techniques for ordinary citizens seeking access to justice.

First, the Department of Education adopted a class action-like procedure to resolve groups of students claims for debt relief, following the collapse of the Corinthian Colleges and ITT.  Although the current administration has attempted to suspend the rule, a September 2018 court decision may reinstate it along with a number of other provisions for students seeking relief from schools that have committed fraud or gone bankrupt. With over 100,000 claims languishing at the Education Department for years, such a aggregate procedure could provide a path for groups of students with the same claims to get a timely hearing before the Department and, if necessary, an appeal to a federal court.

Second, the Federal Maritime Commission will hear arguments over its power to hear class actions in a case brought by American automakers and dealers who have sued various Chinese shippers for price fixing.  After a federal district court held that plaintiffs only could pursue their claims before the Commission, an administrative law judge dismissed the claims in May 2018, observing that the Commission had never before heard a class action.  The full Commission will determine whether it indeed has the power to hear those claims later this year.

Third, for the first time, an en banc panel of judges at the nation's Veterans Court in August 2018 recognized that it would hear class actions brought by veterans for systemwide problems at the Veterans Administration. Already a number of veterans legal clinics and service organizations have filed class actions to challenge disparate treatment of lawyers, unlawful rating decisions, mass delays and regulations denying groups of veterans benefits for radiation exposure.  The Chief Judge of the court called the opinion to hear class actions a "watershed" decision that will increase timely and efficient adjudication of claims for veterans and their families.

Administrative tribunals have long been seen as an alternative to the large number of complex cases seeking reform or relief in our federal courts. Years ago, even the Supreme Court barred federal courts from aggregating certain claims, stating that they defy judicial resolution. Instead, it called on Congress to establish administrative programs to provide “the most secure, fair, and efficient means of compensating victims.” And yet, our study of those same programs supports a very different conclusion: far from pushing the limits of adjudication, aggregate procedures form an essential part of the adjudication process in any court.