Checks and Balances: October 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 an order from the Federal Communications Commission that moves the agency away from formal adjudication procedures; proposed rulemaking to reclassify administrative law judges in the excepted service; and new agency guidance aimed at implementing fairness principles in adjudication.

At the state level, we examine the nondelegation doctrine’s role in a Michigan case challenging coronavirus-related emergency orders; a challenge to administrative due process protections in Arizona; and a Colorado case concerning deference to state agency disciplinary procedures.

We also highlight a new book about the administrative state and new findings from Ballotpedia’s survey of all 50 state constitutions and administrative procedure acts examining state-level sunset provisions for administrative rules. As always, we wrap up with our Regulatory Tally, which features information about the 178 proposed rules and 279 final rules added to the Federal Register in September and OIRA’s regulatory review activity.

In Washington

New FCC order further narrows adherence to formal adjudication

  • What’s the story? The Federal Communications Commission (FCC) on September 14 released a Report and Order allowing the agency’s adjudicators to conduct more hearings through written testimony rather than in-person, trial-type procedures.
  • Although the Communications Act of 1934 does not require the FCC to hold on-the-record hearings or follow formal adjudication procedures, the agency has historically modeled its hearings on the Administrative Procedure Act’s (APA) formal adjudication procedures, which require trial-type hearings presided over by an administrative law judge (ALJ).
  • The FCC’s order shifts the agency’s default approach to hearings from formal, trial-type processes to informal procedures that rely on written testimony. In order to determine whether written testimony satisfies procedural due process requirements in a particular case, the presiding officer must apply the three-part test from the U.S. Supreme Court decision in Mathews v. Eldridge, which evaluates the fairness and reliability of existing procedures in addition to the added value of further procedural safeguards.
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OIRA directs agencies to implement fairness principles in adjudication

  • What’s the story? The Office of Information and Regulatory Affairs (OIRA) on August 31 issued guidance for federal agencies to implement Section 6 of President Trump’s Executive Order 13924, which calls for agencies to consider a list of fairness principles in agency adjudication proceedings and revise their procedures as appropriate.
  • The memo puts forth best practices for agencies to consider incorporating in order to address the following fairness principles in adjudication:

“a) Administrative enforcement should be prompt and fair.

(b) Administrative adjudicators should be independent of enforcement staff.

(c) Consistent with any executive branch confidentiality interests, the Government should provide favorable relevant evidence in possession of the agency to the subject of an administrative enforcement action.

(d) All rules of evidence and procedure should be public, clear, and effective.

(e) Penalties should be proportionate, transparent, and imposed in adherence to consistent standards and only as authorized by law.

(f) Administrative enforcement should be free of improper Government coercion.

(g) Administrative enforcement should be free of improper Government coercion.

(h) Liability should be imposed only for violations of statutes or duly issued regulations, after notice and an opportunity to respond.

(i) Administrative enforcement should be free of unfair surprise.

(j) Agencies must be accountable for their administrative enforcement decisions.”

Office of Personnel Management proposes to reclassify ALJs within civil service

  • What’s the story? The Office of Personnel Management (OPM) on September 21 issued a proposed rule that would reclassify administrative law judges (ALJ) within the federal civil service. The proposed rule aims to implement President Donald Trump’s (R) Executive Order 13843 of July 2018, which moved ALJs from the competitive service to the excepted service.
  • Prior to E.O. 13843, OPM screened ALJ candidates through a merit-based selection process as part of the competitive service. Agencies could only hire ALJs from OPM’s pool of vetted candidates.
  • President Trump issued E.O. 13843 in response to the United States Supreme Court’s June 2018 decision in Lucia v. SEC, which held that ALJs are officers of the United States who must be appointed by the president, the courts, or agency heads rather than hired by agency staff. The reclassification of ALJs as members of the excepted service allows agency heads to directly appoint ALJs and select candidates who meet specific agency qualifications, according to the order.
  • Opponents of Trump’s executive order argue that moving ALJs outside of the competitive service threatens their impartiality by allowing partisan agency heads to appoint ALJs based on their own standards. Proponents argue that the order strengthens ALJ subject matter expertise by allowing agency heads to consider qualifications beyond the scope of OPM’s generalist vetting criteria.
  • The proposed rule from OPM requires that agency heads appoint new ALJs to positions within the excepted service. The proposed rule also clarifies that certain protections aimed at ensuring the independence of ALJs remain intact, such as the prohibition against agencies subjecting ALJs to performance reviews and the role of the Merit Systems Protection Board (MSPB) in overseeing ALJ discipline. The proposed rule is open to public comments through November 20, 2020.
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In the states

Nondelegation doctrine resurfaces in challenge to Michigan coronavirus orders

  • What’s the story?: The Michigan Supreme Court on October 2 revived the nondelegation doctrine in an opinion holding in part that Michigan’s Emergency Powers of the Governor Act (EPGA) violates the nondelegation doctrine by unconstitutionally delegating legislative power to the executive branch.
  • Governor Gretchen Whitmer (D) claimed that the declared states of emergency and disaster in response to the coronavirus pandemic authorized her to issue executive orders instituting coronavirus-related restrictions. Whitmer stated that the EPGA and the Emergency Management Act (EMA) allowed her to extend those emergency declarations without the state legislature’s approval.
  • Medical groups challenged an order, since rescinded, that placed restrictions on nonessential medical and dental procedures.
  • The district court asked the Michigan Supreme Court to consider in part whether the EPGA or the EMA violated the state constitution.
  • The majority held that the EMPGA violated the nondelegation doctrine because it delegated lawmaking authority to the executive branch. Justice Stephen Markman wrote in the majority opinion, “[T]he EPGA is in violation of the Constitution of our state because it purports to delegate to the executive branch the legislative powers of state government— including its plenary police powers—and to allow the exercise of such powers indefinitely.”
  • Justices McCormick, Bernstein, and Cavanagh, and Bernstein disagreed with the majority’s holding. The justices claimed that the United States Supreme Court and the Michigan Supreme Court have historically applied the nondelegation doctrine via a “standards” test (i.e. intelligible principle test) that only strikes down delegations of authority without guiding standards for agency discretion. The delegations of authority under the EPGA, the justices argued, contained sufficient guiding standards for the agency.
  • Justice Viviano agreed with the majority’s holding and suggested that the court in future cases adopt the nondelegation doctrine approach put forth by U.S. Supreme Court Justice Gorsuch in Gundy v. United States, which focuses on whether Congress delegated lawmaking power to the executive rather than whether Congress provided a guiding standard.
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Administrative due process deficits challenged in Arizona

  • What’s the story? Maricopa County Superior Court Judge Douglas Gerlach on September 9 upheld a decision by then-Arizona Department of Child Safety (DCS) Director Gregory McKay in a case challenging the constitutionality of the procedural due process protections available to individuals during the agency’s adjudication of child abuse allegations.
  • McKay placed Phillip B. (the only name provided) on the child abuse registry despite a finding by an administrative law judge (ALJ) that no probable cause existed to do so. Arizona law permits the DCS director to substitute his own judgment for that of the ALJ.
  • Phillip B. challenged the low standard of proof (probable cause) in the agency’s review process; the lack of cross-examination of witnesses; and the unilateral power of the DCS director to reverse an ALJ’s findings. The DCS director, according to the challenge, is not an impartial adjudicator because he exercises both investigatory and adjudicatory functions.
  • Gerlach declined to rule on the constitutional challenges raised by Phillip B. for factual reasons. He wrote in part that the bias challenge “flies in the face of well-settled law that ‘the combining of investigatory and adjudicatory functions [in a single agency] does not violate due process’ unless actual bias is shown.”
  • Phillip B. plans to appeal the decision.
  • “The court decided not to review the myriad due-process and separation-of-powers problems for factual reasons,” said attorney Aid Dynar of the New Civil Liberties Alliance in a statement. “At the same time, the court decided not to take a look at the facts to avoid the serious legal problems with Arizona’s administrative law. The court’s double-dodge offers an enticing recipe for appeal, and that is precisely what we plan to do.”
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Colorado Supreme Court to consider deference to agency disciplinary decisions

  • What’s the story? The Colorado Supreme Court is set to evaluate disciplinary procedures for the state’s 30,000 civil service members in a case concerning the firing and reinstatement of a state employee.
  • The Colorado Department of Corrections (DOC) argues that the State Personnel Board overstepped its authority when it reinstated a DOC employee who had been fired for drug use. DOC attorneys claim that the board is required to defer to state agency disciplinary decisions and can only reverse a firing under a specific set of circumstances that favor the agency.
  • “The decision… concentrates power over 30,000 state classified employees with the board. It has far-reaching consequences for state agencies’ ability to run their organizations that the legislature never intended, and injects unnecessary uncertainty into decisions made by appointing authorities following their policies,” wrote DOC attorneys in a court brief.
  • Attorneys for the State Personnel Board disagree, arguing that no deference to state agencies is required and that the board must independently review the facts of a case when reviewing an employee’s appeal.
  • Denise DeForest, a former Colorado administrative law judge, told The Denver Post that the independence of State Personnel Board decisions operate as a check on agency power in the state. “You can’t be a watchdog if nobody will file an appeal because an appeal is just a rubber stamp,” said DeForest.
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New book: Law & Leviathan: Redeeming the Administrative State, by Cass Sunstein and Adrian Vermeule

Administrative law scholars Adrian Vermeule and Cass Sunstein released a new book, Law & Leviathan: Redeeming the Administrative State, that aims to defend the moral foundation of the administrative state. Drawing from the moral legal principles put forth by philosopher Lon Fuller, Vermeule and Sunstein argue that agency procedures that seek to enhance accountability and transparency in rulemaking and adjudication bolster the morality of the rule of law. The principles of law’s morality, according to the authors, can help settle conflicts in administrative law and support its just application.

In a piece for The New York Times, the authors provide snapshots of law’s morality as applied by the courts:

“In our view, courts should be taking the morality of law quite seriously. Fortunately, they often do. Indeed, many of the principles of legal morality that Professor Fuller listed have been invoked by the Roberts court in a number of domains.

“The Roberts court has emphasized, for example, that agencies must follow their own rules, reducing the risk that they will make decisions on a case-by-case basis. It has also repeatedly emphasized the importance of “reliance interests,” which arise whenever people act in ways that depend on existing rules, and thus the court has worked to combat unduly rapid changes in the law. A recent example is the court’s decision on the “Deferred Action for Childhood Arrivals program, or DACA, which required the Department of Homeland Security to do more to consider the reliance interests of program participants. Right or wrong, the decision was animated by an account of law’s morality.

“Law’s morality also animated some lower court decisions that invalidated Obama administration initiatives. One example is the decision that issued an injunction against the Obama administration’s initial adoption of the DACA program and the related Deferred Action for Parents of Americans program, on the ground, among others, that the administration had attempted to disguise a substantive change in the law as a mere exercise of enforcement discretion. The court claimed, in effect, that there was a mismatch between rules as announced and rules as administered.”

Ballotpedia study shows that 11 states have sunset provisions for administrative rules

A Ballotpedia survey of all 50 state constitutions and administrative procedure acts (APAs) concluded that 11 state constitutions or APAs contain sunset provisions for administrative rules, as of September 2020.

  • 11 states have APAs with sunset provisions for administrative rules.
  • 2 states have APAs with conditional sunset provisions for administrative rules that only kick in in certain circumstances.
    • In Arizona, the Governor’s Regulatory Review Council may choose to impose sunsets on rules during regular review periods.
    • In Vermont, the Legislative Committee on Administrative Rules may impose sunsets for rules that have not been readopted or amended in the preceding six years.
  • 37 states do not have APAs or constitutions with sunset provisions for administrative rules.

Ballotpedia also examined state APAs and constitutions that provide for regulatory review bodies. View those results 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 48 significant regulatory actions. Between 2009-2016, the Obama administration reviewed an average of 45 significant regulatory actions each September.
  • Four rules approved without changes; recommended changes to 42 proposed rules; two rules withdrawn.
  • As of October 2, 2020, OIRA’s website listed 125 regulatory actions under review.
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This Checks and Balances newsletter is part of Ballotpedia’s Administrative State Project, a nonpartisan encyclopedic resource that also features the latest data on federal regulatory activity, including a rolling page count of the Federal Register and the volume of rulemaking.

You can view an index of these pages here. View the pages and you will come away knowing the difference between the administrative state, the regulatory state, and the dark state—and so much more. New entries to our encyclopedia are added weekly.