Notice & Comment

Rulemakings at Multimember Agencies by Todd Phillips

I’ve recently accepted a publication offer from the Yale Journal on Regulation for my new article titled Commission Chairs, a draft of which is available on SSRN. My article is a quantitative and qualitative analysis of the statutes creating and governing 82 federal multimember agencies (commissions) to understand the powers given to commission chairs and to associate commissioners. It also discusses how the findings fit within the unitary executive theory. In brief, the majority of commissions operate under a “strong-chair” model in which chairs maintain the power to decide which items receive a vote (agenda authority) and the power to direct staff to work on—or not work on—particular projects (chief-executive authority). Using these two authorities, commission chairs dictate the policy documents staff develop and which items receive a vote, meaning that a commission majority cannot enact policy if its chair prohibits staff from drafting regulatory text and a preamble or if the chair refuses to allow a vote to occur.

This has real-world consequences. The power struggle late last year at the FDIC was about whether the Republican chair truly had the agenda authority she claimed, and the Democratic board members perhaps only won the struggle because the CFPB Director, an ex officio member of the FDIC, was able to use his agency’s staff to develop documents that the Republican chair prohibited FDIC staff from creating.

This blog post fleshes out something I hint at in the article: Two core doctrines used by courts to review agency rulemakings immensely strengthen chairs’ powers vis-à-vis their associate commissioners when combined. First, courts review agency rulemakings to determine whether agencies have “really taken a ‘hard look’ at the salient problems, and ha[ve] … genuinely engaged in reasoned decision-making.” Second, courts review agency actions based on the agencies’ contemporaneous rationalizations and the records before them at the time the decisions were made. These are certainly reasonable doctrines in the abstract—we don’t want agencies making decisions without thinking deeply about the consequences of their decisions—but they create problems for associate commissioners when they form a commission majority but do not manage agency staff.

Agencies demonstrate contemporaneous, hard look rationalizations through extensive rule preambles, which requires a large number of agency staff to complete. Each rulemaking requires subject matter analysts to develop policy, economists to analyze the rule’s effects, and administrative and subject matter lawyers to ensure the rule and preamble are legally sufficient. An associate commissioner frequently supervises a small personal-office staff of between one and five staffers (if any), and while so few individuals can craft new CFR provisions, they simply lack the capacity to develop the extensive preambulatory text that courts require while also staying abreast of all other activity happening at their agency. Simply as a matter of disparate resources, commission chairs direct staff to draft regulations that adhere to their visions while associate commissioners are left to negotiate textual changes to their chairs’ documents.[1]

I see three paths forward for addressing this power dynamic with multimember agency rulemakings. First, we can be fine with it. An associate commissioner can play hardball with her vote and could vote against and prevent passage of the chair’s priorities. The associate commissioner would thus incentivize the chair to permit staff to develop the associate commissioner’s policy priorities to gain passage of their own. Further, because the President selects a large majority of commissions’ chairs, an argument can be made that having chairs be in the majority for practically every agency action aligns well with the unitary executive theory.

Second, Congress can change the power structure of commissions so that they are more democratic, and staff develop the top policy priorities of commission majorities rather than solely those policies that chairs support. For example, commission chairs could be selected by their members, and thus could be demoted if their activities do not align with the wishes of commission majorities. Congress could also write better commission governance procedures into the Administrative Procedure Act (e.g., commissions must use Robert’s Rules of Order), or could ensure that each associate commissioner is given their own staff of a size sufficient to effectively participate in commission policymaking.

Finally, courts can change the way they review multimember agencies’ rulemakings. Courts use rule preambles as a proxy for contemporaneous reasoned decisionmaking when they are not. For many rulemakings, the preambulatory text does not express policymakers’ thinking; as an agency lawyer, several times I advised staff economists to rewrite their economic analyses because they did not sufficiently justify the policy selected by decisionmakers, and it is doubtful that official decisionmakers (at multimember or single-member agencies, for that matter) even read large rules’ preambles. Courts could recognize that, while the heads of a single-member agencies will always be able to direct staff to draft legally sufficient preambles, commission majorities might not, and courts could accept other demonstrations of reasoned decisionmaking, such as emails or affidavits.

My personal vote is for the second path—Congress should consider amending the APA to ensure that commissions truly operate in the majoritarian spirit in which they were created—but I have no expectation that Congress will actually take up these reforms. Therefore, I encourage courts to consider whether there are methods of validating contemporaneous reasoned decisionmaking beyond rules’ preambles. While I believe this would be a significant improvement over current practice for reviewing all rulemakings, it would be especially so for those commission actions in which chairs are not in the majority.

Todd Phillips is a non-resident fellow with the Duke Law Global Financial Markets Center and is a policy advocate in Washington, D.C. The views expressed are his alone and not of any affiliate or employer.

[1] This power dynamic is contrary to Congress’s intention and is an accidental development of history. Congress’s first commissions allowed commissioners to select their own chairs. But the 1940s Hoover Commission recommended chairs be granted chief executive authority; its Committee on Independent Regulatory Commissions found it “very difficult for five or more commissioners to direct the work of the bureaus, or for the bureau chief to report to five or more masters,” and recommended that commission chairs “be specifically designated as the person responsible for administration” within each agency. The Committee took pains to note that “the chairman’s primary responsibility for administration should not supplant the ultimate authority of the entire commission on matters which are of major significance to the agency.” This supplantation happened when Congress implemented the Commission’s recommendations, especially since Congress allowed the President to select the chair in many commissions rather than letting commissioners select their own.

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