For decades, Executive Orders requiring executive branch agencies to submit draft regulatory proposals to the White House Office of Information and Regulatory Affairs (OIRA) have exempted independent agencies. A lingering question has been whether this is because the White House lacks the authority to impose such requirements on independent agencies, because the Executive Branch sought to respect the functional independence of such agencies, or because no Administration wanted to risk asserting such authority and then getting rebuffed in Court.
In October 2019, the Department of Justice’s Office of Legal Counsel conducted a review of this question, and concluded that the President could indeed require independent agencies to comply with the regulatory review requirements of Executive Order 12866. The memo was not released publicly, however, until this week, when it was posted on the DOJ website.
The introduction to the 31-page memo, “Extending Regulatory Review Under Executive Order 12866 to Independent Regulatory Agencies.” reads:
You have asked whether the President may direct independent regulatory agencies to comply with the centralized regulatory review process of Executive Order 12866 of September 30, 1993, 3 C.F.R. 638 (1994) (“EO 12866”). EO 12866 requires all agencies to submit an annual regulatory plan and agenda to the Office of Information and Regulatory Affairs (“OIRA”) in the Office of Management and Budget (“OMB”). But it exempts “independent regulatory agencies,” as defined in 44 U.S.C. § 3502, from the rest of the order, which requires agencies to submit significant regulatory actions to OIRA for review. OMB has proposed that the President eliminate that exemption and require independent regulatory agencies to comply with all of EO 12866.
Article II of the Constitution vests “[t]he executive Power” in the President, who “shall take Care that the Laws be faithfully executed.” U.S. Const. art. II, § 1, cl. 1; id. § 3. By vesting the executive power in the President alone, the Constitution ensures that “a President chosen by the entire Nation oversee[s] the execution of the laws.” Free Enter. Fund v. Pub. Co. Accounting Oversight Bd., 561 U.S. 477, 499 (2010). The President can hardly ensure that the laws are faithfully executed “if he cannot oversee the faithfulness of the officers who execute them.” Id. at 484. The President’s constitutional authority therefore extends to the supervision of all agencies that execute federal law, including so-called “independent” agencies.
Although the Supreme Court has held that Congress may insulate independent agencies to some degree from presidential supervision, the proposed executive action would not test any statutory limits. Congress has often provided that the heads of those agencies are removable only for particular causes, such as “inefficiency, neglect of duty, or malfeasance in office.” E.g., 15 U.S.C. § 41. But statutory restrictions on removal, standing alone, do not bar those agencies from complying with EO 12866; indeed, the terms of such good-cause restrictions presuppose that the President may supervise an agency head to ensure compliance with the duties of office and with principles of good governance. Other structural features associated with independent agencies, such as multi-member governance, independent litigating authority, or open-meeting requirements, likewise do not preclude those agencies from complying with EO 12866. We therefore conclude that the President may direct independent agencies to comply with EO 12866.
This memorandum may be something of a gift for the Biden Administration. Unless the memo is withdrawn, it will serve as a basis for President Biden to assert greater authority over independent agencies, such as the Federal Communications Commission (FCC), Securities & Exchange Commission (SEC) and Federal Energy Regulatory Commission (FERC).
This assertion of authority may be particularly useful for the Biden Administration’s climate policy efforts, as it may make it easier to coordinate and direct climate policy initiatives across agencies, including those like the SEC and FERC, that have relevant authority. FERC, for instance, could adopt policies facilitating greater deployment of low-carbon power sources and accommodating the adoption of state-level carbon pricing. The SEC, for its part, could adopt policies requiring greater climate disclosures. If the President can require such agencies to engage in regulatory review, it would seem the President could also require climate-policy reviews as well.
It is possible that the assertion of such authority could provoke legal challenge, but would the courts stand in the way? The trend at the Supreme Court has been toward greater recognition of Presidential authority over agencies, limiting Congress’s ability to insulate the heads of agencies from presidential control, as in Free Enterprise Fund v. Public Company Accounting Oversight Board and Seila Law v. Consumer Financial Protection Bureau. The general thrust of both opinions would suggest a White House asserting the authority to impose centralized review requirements on independent agencies would stand a good chance of prevailing in Court.
The Trump Administration has laid the groundwork for a greater assertion of Presidential authority during the Biden Administration. We will see whether President Biden seeks to exercise it.
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