Checks and Balances: August 2020

The Checks and Balances Letter delivers news and information from Ballotpedia’s Administrative State Project, including pivotal actions at the federal and state levels related to the separation of powers, due process and the rule of law.

This edition:In this month’s edition of Checks and Balances, we review the U.S. Supreme Court’s decision to hear a case that could expand executive removal power; the momentum behind the Regulations in Need of Scrutiny (REINS) Act in the U.S. Senate; and a lawsuit from Montana Governor Steve Bullock (D) challenging the acting head of the Bureau of Land Management’s exercise of executive power.

At the state level, we examine a ruling from the Wisconsin Supreme Court that upholds dramatic changes to administrative processes in the state; the Kansas State Board of Education’s vote to block the governor’s order delaying school openings; and an effort from county commissioners in Florida seeking to reclaim delegated emergency response authority.

We also highlight new scholarship examining international approaches to judicial deference as well as new findings from Ballotpedia’s survey of all 50 state constitutions and administrative procedure acts regarding requirements to exhaust administrative appeals before challenging agency actions in court. As always, we wrap up with our Regulatory Tally, which features information about the 182 proposed rules and 339 final rules added to the Federal Register in July and OIRA’s regulatory review activity.

In Washington

U.S. Supreme Court agrees to hear case challenging FHFA director’s removal protections 

  • What’s the story? The U.S. Supreme Court on July 9 agreed to hear Collins v. Mnuchin, a case that questions whether the single director of the Federal Housing Finance Agency (FHFA) can lawfully have protections against removal by the president. Just 10 days prior, the U.S. Supreme Court held in Seila Law v. Consumer Financial Protection Bureau that restrictions on the president’s ability to remove single agency heads unconstitutionally limit presidential control of agencies and violate the separation of powers.
  • The FHFA director is appointed by the president and confirmed by the U.S. Senate for a five-year term. The president may only remove the director for cause.
  • Shareholders of Fannie Mae and Freddie Mac—government-sponsored mortgage entities regulated by the FHFA—sued the FHFA, claiming that a 2012 agreement between the agency and the Treasury Department (the “net worth sweep”) rendered their shares valueless. The shareholders also argued in part that the structure of the FHFA violates the U.S. Constitution because the agency is headed by a single director who is only removable for cause.
  • The U.S. Court of Appeals for the 5th Circuit ruled 12-4 in September 2019 that the FHFA director’s removal protections unconstitutionally limit the president’s removal power. The court held that the FHFA’s single-director structure does not satisfy the exception established in the 1935 case Humphrey’s Executor v. United States that allows removal protections for members of the multi-member commissions that head independent agencies.
  • Despite finding the FHFA’s structure unconstitutional, a separate 9-7 majority held that the agency’s flawed structure did not provide a basis for setting aside the net worth sweep. The plaintiffs appealed to the U.S. Supreme Court, arguing that the FHFA’s unconstitutional structure requires the court to set aside the agency’s action.
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U.S. Senate committee advances REINS Act

  • What’s the story? The U.S. Senate Committee on Homeland Security and Governmental Affairs on July 22 voted to send the Regulations from the Executive in Need of Scrutiny Act (REINS Act) to the full U.S. Senate for a vote without offering any amendments.
  • The REINS Act is a proposal designed to amend the Congressional Review Act (CRA) of 1996. Under the CRA, Congress has the authority to issue resolutions of disapproval to block new agency regulations. The REINS Act would broaden the CRA to not only allow Congress to issue resolutions of disapproval, but to also require congressional approval of major agency regulations (those with an economic impact of $100 million or more, among other considerations) before those regulations take effect.
  • Senator Rand Paul (R-Ky.) introduced the REINS Act in the Senate for the 116th Congress. The REINS Act had 42 Republican cosponsors in the U.S. Senate as of July 22. Representative James Sensenbrenner (R-Wis.) introduced a companion version of the REINS Act in the U.S. House. The House version of the bill had 15 Republican cosponsors as of July 22. Congressmen have introduced versions of the REINS Act since the 112th Congress (2011-2013).
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Montana governor lawsuit challenges nomination of Bureau of Land Management director

  • What’s the story? Montana Governor Steve Bullock (D) on July 20 filed a lawsuit aimed at prohibiting William Perry Pendley, acting director of the U.S. Bureau of Land Management (BLM), from exercising the agency’s director authority. The lawsuit argues that Pendley holds the post in violation of the Federal Vacancies Reform Act (FVRA) and the Appointments Clause of the U.S. Constitution.
  • President Donald Trump (R) named Pendley as the acting director of the BLM in July 2019. Trump later nominated Pendley to serve as the agency’s director on June 30, 2020.
  • The lawsuit argues that the Appointments Clause of the U.S. Constitution requires the U.S. Senate to confirm Pendley’s nomination before he can exercise the director’s powers. Since Pendley’s nomination to the permanent position is currently pending, the lawsuit further claims that Pendley is in violation of the FVRA by continuing to serve as acting director. Bullock requested that the U.S. District Court for the District of Montana issue an injunction blocking agency actions taken under Pendley.
  • Bullock argued, “The Federal Vacancies Reform Act bars Presidents from circumventing the Constitution by putting people in charge of federal agencies before they are Senate-confirmed. But that is precisely what has happened here. Pendley’s tenure—and the actions the Bureau has taken, and continues to take during that tenure—violate the law.”
  • Conner Swanson, a U.S. Department of the Interior spokesman, told Bloomberg Law, “This is a frivolous and politically motivated claim that has no legal standing.” Swanson added that Secretary of the Interior David Benhardt issued an order delegating the power to exercise the authority of BLM director to Pendley.
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In the states

Wisconsin Supreme Court upholds legislation changing administrative processes, strikes down guidance document provisions

  • What’s the story? The Wisconsin Supreme Court on July 9 upheld the constitutionality of the majority of the legislation passed by state lawmakers during the 2018 extraordinary legislative session, with the exception of certain provisions concerning guidance documents.
  • The legislation brought major changes to administrative processes, including eliminating judicial deference to state agencies, abolishing sue-and-settle practices, and setting new standards for agencies’ regulatory guidance documents.
  • A group of Wisconsin unions led by the Service Employees International Union (SEIU) filed suit, claiming that the legislation violated the separation of powers by increasing legislative authority over executive branch actions. The plaintiffs brought a facial challenge—meaning they claimed that the legislation violated the separation of powers in all of its applications. The Wisconsin Supreme Court disagreed, ruling that the legislation (with the exception of certain provisions concerning guidance documents) could be applied lawfully in some cases and that the facial challenge should have been dismissed by the lower court.
  • The court ruled that certain provisions regarding guidance documents violated the separation of powers because, according to the court, the legislative branch does not have the authority to dictate the manner in which the executive branch carries out its power to execute the law. “We conclude that when the legislature prohibited the executive branch from communicating with the public through the issuance of guidance documents without first going through a preclearance process and including legislatively-mandated content,” wrote Justice Daniel Kelly in the opinion, “it invaded the executive branch’s exclusive province to ‘take care that the laws be faithfully executed.’”
  • Kelly’s opinion clarified, however, that “a guidance document does not have the force of law and does not provide the authority for implementing or enforcing a standard, requirement, or threshold, including as a term or condition of any license.”
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Kansas education board blocks governor’s order delaying school start date 

  • What’s the story? The Kansas State Board of Education on July 22 voted to block an executive order issued by Governor Laura Kelly (D) that would have delayed the start of public and private school instruction in the state until after Labor Day.
  • Kelly issued the executive order on July 20 in light of Kansas’ spike in coronavirus statistics. The order would have barred public and private schools in the state from holding classes from August 10 through September 8 with the goal of providing school personnel “the opportunity to prepare for safe and effective student instruction.”
  • Republican lawmakers passed legislation in June that required Kelly to gain approval from the State Board of Education in order to change school opening dates. The State Board of Education is a constitutionally created board that functions as part of the executive branch. However, the board’s 10 members are elected by the public and, therefore, are not subject to direct control by the governor. The board voted 5-5 to block the order—one vote shy of the six votes that would have been required for approval.
  • “Our decisions must be informed by public health experts not politics,” said Kelly in a statement following the board’s decision. “This vote puts our students, faculty, their families and our economy at risk.”
  • Board members opposed to the executive order disagreed with the governor’s statewide approach, arguing that school opening decisions should be made at the local level. “This virus is not the same across the state,” said board member Jean Clifford.
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Florida county commissioners seek to reclaim delegated emergency response powers

  • What’s the story? The Hillsborough Board of County Commissioners on July 21 unanimously approved a draft order that would dissolve the county’s Emergency Policy Group (EPG) and return its delegated emergency response authority—including the authority to respond to the coronavirus pandemic—to the county commissioners.
  • The EPG, which consists of three county commissioners, the sheriff, the chair of the Hillsborough County Public Schools Board of Education, and the mayors of Tampa, Plant City, and Temple Terrace, currently exercises emergency response authority delegated by the county commissioners. The EPG was created with the goal of addressing short-term emergencies, such as hurricanes, but the group has also directed the county’s coronavirus response efforts, including mask mandates and curfews.
  • Board Chairman Les Miller (D) on July 15 proposed amending the EPG’s orders to return the group’s delegated coronavirus response authority to the board of county commissioners. As the county’s elected legislative body, the commissioners agreed that the board was the appropriate government entity to manage the long-term pandemic response. Though some commissioners expressed concern about changing strategies mid-pandemic, all supported the change.
  • Following Miller’s proposal to repeal the EPG’s coronavirus response authority, county employees recommended that the board eliminate the group altogether (Hillsborough County is the only Florida county with an EPG or similar group). The board on July 21 unanimously approved a draft order to repeal the EPG. A public hearing and a final vote are scheduled for August 5.
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Feature section

New scholarship examines Chevron deference across the globe

New scholarship from Kent Barnett, associate professor at the University of Georgia School of Law, and administrative law scholar Lindsey Vinson examines judicial approaches to agency statutory interpretation in Germany, Italy, the United Kingdom, Canada, and Australia in order to inform the debate surrounding Chevron deference in the United States.

The authors provide the following overview in the article’s abstract:

“This article presents our comparative findings of how courts in five other countries review agency statutory interpretation. These comparisons permit us to understand and participate better in current debates about the increasingly controversial Chevron doctrine in American law, whereby courts defer to reasonable agency interpretations of statutes that the agency administers. Those debates concern, among other things, Chevron’s purported inevitability, functioning, and normative propriety. Our inquiry into judicial review in Germany, Italy, the United Kingdom, Canada, and Australia provides useful and unexpected findings. Chevron, contrary to some scholars’ views, is not inevitable because only one of these countries has something analogous to Chevron. Indeed, one country has expressly rejected Chevron in dicta. Nevertheless, all but one or two of the countries (depending how one counts) have at least some limited space for deference to agency statutory interpretations. We do not call for American law to wholesale adopt any particular country’s form of judicial review. But our comparative study provides useful suggestions for improving Chevron’s overall functioning and for better grounding it on its theoretical foundations.”

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50-state study shows states that require exhaustion of administrative appeals before challenging agency action in court

A Ballotpedia survey of all 50 state constitutions and administrative procedure acts (APAs) concluded that 18 states require individuals to exhaust administrative remedies offered by an agency before they can challenge that agency’s adjudication actions in state court.

  • 18 states limit appeals from agencies to state courts until after the plaintiffs have exhausted all available administrative remedies at the agency.
  • The Utah and Washington APAs allowed state courts to waive the requirement that parties first exhaust administrative remedies if those remedies are inadequate or if those remedies would result in irreparable harm.

Some states place other limits on access to state courts to challenge agency actions. Ballotpedia examined those provisions here.

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Regulatory tally

Federal Register

Office of Information and Regulatory Affairs (OIRA)

OIRA’s recent regulatory review activity includes:

  • Review of 73 significant regulatory actions.
  • Nine rules approved without changes; recommended changes to 62 proposed rules; one rule withdrawn; one rule subject to a statutory or judicial deadline.
  • As of August 6, 2020, OIRA’s website listed 135 regulatory actions under review.
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