Notice & Comment

Regulatory Review for Independent Agencies, by Neomi Rao

rao_neomi_bannerThe gap between textbook administrative law and actual practice exists in many areas, but perhaps nowhere more so than with respect to the so-called independent agencies. In theory, such agencies operate “independent” of the control and direction of the President. In practice, the White House has myriad mechanisms to oversee and even to control these agencies. One practical area in which the separation remains is regulatory review—no President has extended direct regulatory oversight to independent agencies.

Should independent agencies be subject to White House regulatory oversight through the Office of Management and Budget (OMB) and the Office of Information and Regulatory Affairs (OIRA)? The 2016 Report to the President-Elect developed by the American Bar Association’s Section of Administrative Law and Regulatory Practice urges the President-Elect “to extend Executive oversight to many independent regulatory agencies.” As the Report explains, “Much of the policymaking of independent agencies is not functionally distinct from that of executive agencies, and where that is the case, presidential oversight is appropriate.”

The Report reflects widespread agreement about certain realities of “independent” agencies. First, the Supreme Court has consistently recognized that such agencies are part of the Executive Branch. See Free Enterprise Fund v. PCAOB, 561 U.S. 477 (2010); id. at 514 (Breyer, J., dissenting); see also Neomi Rao, Removal: Necessary and Sufficient for Presidential Control, 65 Ala. L. Rev. 1205, 1230-34 (2014) (discussing the cases).

Second, the Executive Branch has consistently taken the position that the independent commissions can lawfully be subject to regulatory review. The Office of Legal Counsel concluded in a 1981 Memorandum that regulatory review could be imposed on independent agencies. President Clinton’s Executive Order 12866 included independent agencies in the preparation of a “Unified Regulatory Agenda” and required independent agencies to prepare a “Regulatory Plan” including major regulatory action to OIRA. President Obama’s Executive Order 13563 encouraged, but did not require, independent agencies to comply with cost-benefit analysis and retrospective review requirements of earlier Executive Orders.

Furthermore, many legal scholars support bringing independent agencies within presidential review. And the ABA House of Delegates in 1990 recommended: “presidential review should apply generally to all federal rulemaking, including that by independent agencies.”

In effect, the Report recommends bringing regulatory review in line with the reality of the so-called independent agencies:

We strongly urge you to bring the independent regulatory commissions within the requirements for cost-benefit analysis, OMB review, and retrospective review of rules currently reflected in Executive Order 12866 and Executive Order 13563.

The full Report can be found here.

Neomi Rao is an Associate Professor of Law and Director of the Center for the Study of the Administrative State at the Antonin Scalia Law School at George Mason University.

This is post is part of the Symposium on the ABA AdLaw Section’s 2016 Report to the President-Elect. An introduction to the symposium is here, and all of the posts are collected here. The views in this post, which expand upon the recommendations set forth in the Report, are the author’s own and do not necessarily reflect the views of the ABA AdLaw Section. The full Report is available here.

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