Note 2.a. (insert at page 175): Executive orders, “regulatory budgeting,” and direct presidential control.

President Trump wasted little time in issuing several executive orders with potentially significant consequences for agency rulemaking. He issued Executive Order 13771, “Reducing Regulation and Controlling Regulatory Costs” on January 30, 2017. It requires agencies to cap “incremental costs” of regulations for FY 2017 at zero, and to offset “any new incremental costs associated with new regulations . . . by the elimination of existing costs associated with at least two prior regulations.” It remains somewhat unclear what effect this “one in, two out” order will have in practice, but it is relatively certain to trigger a fair amount of discussion within regulatory agencies and, eventually, judicial review. In response to some of the many questions raised by the Order, the Office of Management and Budget released a guidance memorandum for Exec. Order 13771 on March 4, 2017.

 He issued Executive Order 13777, “Enforcing the Regulatory Reform Agenda”, on February 24, 2017. It seeks to help implement Exec. Order 13771 by requiring agencies to designate Regulatory Reform Officers (RROs) to oversee regulatory reforms and to create Regulatory Reform Task Forces to recommend additional reforms. This is one mechanism for assuring implementation of President Trump’s policy mandates.

 The above Executive Orders apply across the board to all agencies subject to presidential directives (generally not including independent agencies). President Trump has also intervened directly with respect to particular issues. While he is not the first do to so (e.g., President Obama issued a Presidential Memorandum on carbon pollution standards) he has been more aggressive in taking direct control of the regulatory process, and he appears to be the first to do so by Executive Order. For example Executive Order 13778, issued February 28, 2017, directs the Environmental Protection Agency and the Corps of Engineers to consider revising the “waters of the United States” rule to interpret “the term ‘navigable waters,’ as defined in 33 U.S.C. 1362(7), in a manner consistent with the opinion of Justice Antonin Scalia in Rapanos v. United States, 547 U.S. 715 (2006).” Since Justice Scalia’s was only a plurality opinion, this direct presidential attempt to influence statutory interpretation raises serious questions about the application of the Chevron doctrine, which we will examine in Chapter 5.

300, note 3a., An executive order changes ALJ appointments.

In Lucia v. SEC, 138 S. Ct. 2044 (2018), the Supreme Court held that SEC ALJs are “inferior officers” subject to the requirements of the Appointments Clause of Article II. (See discussion of Lucia at note 4.a. (at page 80) of this Supplement). Ostensibly in response, President Trump issued an Executive Order Excepting Administrative Law Judges from the Competitive Service (July 10, 2018) (EO). The EO changed the way in which ALJs are appointed. Historically, ALJs had been selected by designated agency officials from a list compiled by the Office of Personnel Management (OPM). The OPM list is based on candidates’ scores on a civil service examination administered by OPM. Only the top three performers on the list at the time of selection are eligible for appointment by the agency as an ALJ. In general, individuals, including ALJs, hired based on their examination scores are considered part of the “competitive service.”

The EO moved the position of ALJ from the competitive service to the excepted service, meaning the civil service exam is no longer required for appointment. Under the EO, ALJ appointments may be made directly by, and at the discretion of, agency heads. The only limiting feature of the EO is that ALJ candidates must either already be a judge or have a current license to practice law in the United States or one of its territories. EO at § 3(a)(ii). Proponents of the EO note that it will allow agencies to target subject matter experts in hiring, rather than non-experts who performed well on the civil service exam. Critics suggest that by removing OPM from the process, ALJ appointments will become more political, allowing an agency to staff its ranks of initial adjudicators with individuals who are sympathetic to the political views of the agency heads. Supporters respond by pointing out that all ALJ decisions are reviewable de novo by the agency heads, such that the agency heads’ political preferences can be realized with or without support from the presiding ALJ. By contrast, critics note that very few of the ALJs’ decisions are in fact reviewed by the agency, and thus agencies could jeopardize their accountability and legitimacy if their ALJs are perceived as politically aligned with the chief policymakers.

Based on the government’s litigation position in Lucia challenging the constitutionality of for-cause removal protections for ALJs, questions have also arisen about the effect of the EO on ALJ removal. Although the EO states that the “Civil Service Rules and Regulations shall not apply to removals” of ALJs anymore, EO at § 3(b)(iii), the statutory requirements that ALJs may only be removed by the Merit Systems Protection Board, and only for cause, still apply. See 5 U.S.C. § 7521.