Author

Caitlin Styrsky

Caitlin Styrsky is a staff writer at Ballotpedia and can be reached at caitlin.styrsky@ballotpedia.org

Fed proposes to unilaterally broaden regulatory authority

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 edition, we review President Donald Trump’s (R) nominee to serve as the administrator of the Office of Information and Regulatory Affairs (OIRA); advocacy efforts by the San Francisco Federal Reserve Bank to address climate change; a Trump administration challenge to the constitutionality of the Consumer Financial Protection Bureau; a proposed rule from the United States Department of Agriculture to limit states’ expansion of food stamp eligibility; and a series of executive orders from President Trump targeting administrative practices.

At the state level, we review a fight between the Kansas governor and attorney general over the proper means of instituting the state’s strict new online sales tax; a multi-state challenge to new Endangered Species Act rules; and the violation of a court order by a Texas agency.

As always, we wrap up with our Regulatory Tally, which features information about the 159 proposed rules and 276 final rules added to the Federal Register in September and OIRA’s regulatory review activity.

The Checks and Balances Letter

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In Washington

Fed proposes to unilaterally broaden regulatory authority

What’s the story? The San Francisco Federal Reserve Bank is preparing to host a November 8th conference on climate change—a subject upon which several of the central banks are increasingly active.
The bank has proposed including what it called green finance in the credits awarded to banks under the Community Reinvestment Act (CRA). The act, passed in 1977, monitors bank lending in low-to-moderate income communities. The proposed climate adaptation loans would be targeted for low-to-moderate income communities to respond to what it calls the “shocks and stresses of climate change.”
The proposal would allow the Fed to reinterpret the scope of its authority under the CRA.
The Federal Reserve Banks of Richmond and Dallas have also been active on climate-related issues. The Richmond Fed issued a report in 2018 claiming that rising summer temperatures could reduce economic growth. The Dallas Fed issued a report in July 2019 arguing that increased severe weather activity could have negative economic consequences.
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Trump administration asks SCOTUS to rule on CFPB constitutionality

What’s the story? The Trump administration filed a brief with the United States Supreme Court (SCOTUS) on September 17 in Seila Law v. Consumer Financial Protection Bureau (CFPB) arguing that the CFPB is unconstitutional and asking the court to weigh in.
The Trump administration asserts in its brief that the CFPB structure violates the separation of powers because it prevents the president from unilaterally firing the agency’s single director.
Selia Law, a national law firm, challenged the constitutionality of the bureau’s structure because its single director is only removable for cause. According to the firm, “the importance of the [separation of powers] question presented [by this case] cannot be overstated.”
The 9th Circuit Court of Appeals on May 6 upheld the bureau’s structure as constitutional, concluding that the for-cause removal protections are similar to those of the Federal Trade Commission (FTC) (which were upheld by the United States Supreme Court in the 1935 case Humphrey’s Executor v. United States).
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USDA challenges states’ expansion of food stamp eligibility

What’s the story? The U.S. Department of Agriculture (USDA) received more than 14,700 public comments by the September 23 deadline on a proposed rule to limit categorical eligibility—a policy that allows recipients of other forms of public assistance to qualify automatically for the Supplemental Nutrition Assistance Program (SNAP), commonly known as food stamps.
The Food and Nutrition Act of 2008 requires that households receiving means-tested benefits from the Temporary Assistance for Needy Families program be eligible to also receive federal SNAP benefits.
The USDA claims that some states have broadened the parameters of categorical eligibility to include programs that either do not require means-testing or have requirements that exceed SNAP eligibility. The agency estimates that 3.1 million SNAP recipients in 2020—roughly 8 percent of all SNAP recipients— will qualify through expanded categorical eligibility.
The proposed rule would redefine the type of benefits that confer categorical eligibility; and require state agencies to report all TANF benefits that qualify for categorical eligibility to the USDA.
Opponents argue that the Food and Nutrition Act grants states the authority to confer categorical eligibility, and any change to categorical eligibility would require action by Congress. The USDA asserts that the proposed rule does not change the law, but rather updates the regulations governing categorical eligibility requirements.
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Trump nominates new OIRA administrator

What’s the story? President Donald Trump (R) on October 1 announced his nomination Paul Ray to serve as the next administrator of the Office of Information and Regulatory Affairs (OIRA). Ray has been the acting administrator of the office since the departure in March of former OIRA Administrator Neomi Rao (who replaced Brett Kavanaugh on the United States Court of Appeals for the District of Columbia Circuit).
As the head of OIRA, Ray would oversee the Trump administration’s regulatory review process as well as its information collection requests, statistical practices, and privacy policies. OIRA’s regulatory review responsibilities include reviewing and coordinating significant regulatory actions by federal agencies.
“OIRA’s cost-benefit review ensures that agencies disclose their rules’ anticipated impacts, which is critical for public transparency and accountability,” said Ray at a September 13 administrative law conference at George Mason University’s Antonin Antonin Scalia Law School.
Ray joined OIRA as associate administrator in March 2018. He previously served as counselor to former Labor Secretary Alexander Acosta and as an associate with the law firm Sidley Austin LLP. Ray formerly clerked for Justice Samuel Alito on the Supreme Court.
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Trump issues executive orders to prohibit binding guidance, control agency spending

What’s the story? President Donald Trump (R) issued three executive orders on October 9 and 10 that aim to limit the use of guidance documents by federal administrative agencies, require agencies to provide fair notice of regulations, and control agency spending.
The first executive order prohibits agencies from issuing binding regulations through guidance documents. The order clarifies that agencies can only issue binding regulations through the rulemaking process or case-by-case adjudication.
The second executive order aims to curb what the order refers to as administrative abuses by prohibiting agencies from enforcing rules without first providing advance notice to the public.
The final executive order seeks to restore the principle of administrative pay-as-you-go (PAYGO)—a requirement that agencies include one or more proposals to reduce mandatory spending alongside a proposal to increase discretionary spending—by instructing agencies to submit administrative PAYGO proposals to the director of the Office of Management and Budget for review.
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In the States

Kansas officials quarrel over online sales tax

What’s the story? Kansas Attorney General Derek Schmidt (R) on September 30 issued a legal opinion calling on Governor Laura Kelly (D) to rescind the state’s new policy for collecting online sales tax. The policy, issued by the Department of Revenue, is considered one of the strictest in the nation because it does not include exemptions for small businesses.
The policy was made to comply with the United States Supreme Court decision in South Dakota v. Wayfair Inc., in which the court held that states can collect online sales tax even if the vendor does not have a physical presence in the state.
Schmidt argues that the Kelly administration exceeded its authority by unilaterally imposing the policy change through a notice. Instead, the agency should have instituted the policy through the rulemaking process, which requires public hearings and review by officials outside the department, Schmidt says.
“This is about protecting our friends and neighbors doing business on Main Street and throughout our local communities across Kansas,” said Kelly in response to Schmidt’s opinion. “They are working hard, playing by the rules and deserve to be on a level playing field with out-of-state retailers.”
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Multi-state coalition challenges new Endangered Species Act rules

What’s the story? A coalition of 17 states filed suit against the Trump administration on September 25 claiming that three new rules for enforcing the Endangered Species Act (ESA) are “arbitrary-and-capricious.”
Trump administration officials say that the new rules reduce the regulatory burden of the ESA and increase agency transparency. Opponents argue that the changes limit the authority of agencies to respond to perceived problems.
The Administrative Procedure Act instructs courts reviewing agency actions to invalidate any that they find to be “arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law.”
The coalition filed suit in the United States District Court for the Northern District of California. The states joined in the lawsuit are California, Massachusetts, Maryland, Colorado, Connecticut, Illinois, Michigan, Nevada, New Jersey, New Mexico, New York, North Carolina, Oregon, Pennsylvania, Rhode Island, Vermont, and Washington.
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Texas officials admit to violating court order

What’s the story? Bryan Collier, executive director of the Texas Department of Criminal Justice (TDCJ), admitted in federal court on September 10 that the agency violated a settlement agreement requiring the placement of some inmates in air conditioned housing.
A group of inmates in the William Pack prison sued the department in 2014 for keeping them in housing where temperatures routinely exceeded 100 degrees. Seventy-five Texas prisons do not have air conditioning in inmate housing.
The state agreed last year to install air conditioning in the Pack prison and to keep the inmates involved in the lawsuit in air conditioned housing even if transferred to other facilities.
But inmates subject to the settlement filed a lawsuit on August 30 asserting that the state had repeatedly violated the court order and attempted to conceal its wrongful actions.
Collier testified that the agency had failed to adhere to the order and that officials were working to achieve compliance.
Ellison gave TDCJ officials 21 days to file a written briefing before determining sanctions against department officials.
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Artificial intelligence and agency transparency

A new paper by Michèle Finck, “Automated Decision-Making and Administrative Law,” examines the growing role of artificial intelligence (AI) in administrative law and its potentially negative consequences for transparency. Finck notes that AI tools, such as algorithms and predictive analytics, have been harnessed by administrative agencies to improve operations. However, she argues that the potential for AI to replace human decision making poses challenges for agency transparency. Finck concludes that AI systems can conceal both intentional and unintentional biases, make it difficult for citizens to contest outcomes, and pose security concerns for agencies.

The following excerpt from Finck’s paper highlights potential AI consequences for agency transparency:

“The resulting lack of transparency may prevent citizens from publicly challenging alleged rule violations in the courts, which, in effect, prevents aggrieved citizens from obtaining a legal remedy. Such circumstances are, of course, problematic from the perspective of the citizen but also from the perspective of the overall system of public accountability as those breaching legal principles are no longer held responsible, and the role of judicial review, which also serves as a dynamic feedback loop for lawmakers, is furthermore undermined.
“The transparency gap as a matter of fact risks breaching established administrative law principles in many jurisdictions. In the United States, concerns have been voiced regarding the compatibility of computational learning with constitutional due process guarantees. Here, administrative agencies are required to provide adequate procedural safeguards when taking certain decisions, including securing respect for the right to be heard.22 ADM, however, raises the question of how related procedural guarantees, such as an aggrieved party’s right to cross-examination, could be guaranteed.”
Click here to read the full paper.

Regulatory Tally

Federal Register

  • The Federal Register in September reached 51,936 pages. The number of pages at the end of each September during the Obama administration (2009-2016) averaged 59,770 pages.
  • The September Federal Register included 159 proposed rules and 276 final rules. These included new hour regulations for truck drivers, a defense procurement agreement with Australia, and revised safety standards for infant bath seats, among others.
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Office of Information and Regulatory Affairs (OIRA)

OIRA’s September regulatory review activity included:
  • Review of 42 significant regulatory actions. Between 2009-2016, the Obama administration reviewed an average of 45 significant regulatory actions each September.
  • Approved three proposed rules without changes.
  • Recommended changes to 35 proposed rules.
  • Agencies improperly submitted two rules.
  • Agencies withdrew two rules from the review process.
  • As of October 1, 2019, the OIRA website listed 129 regulatory actions under review.
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Federal district judges issue injunctions blocking public charge rule

Three federal district judges in New York, California, and Washington issued temporary injunctions on October 11 blocking the Trump administration’s public charge rule from taking effect on October 15. A fourth federal judge in Chicago issued a similar injunction on October 14.
 
The Department of Homeland Security (DHS) and the U.S. Citizenship and Immigration Services (USCIS) announced the final version of the new public charge rule on August 12. The rule changes how the federal government screens immigrants who might become dependent on government services, or “public charges.” Agencies may deny immigrants a visa or a green card under the rule if they have used food stamps, Medicaid, housing subsidies, or other public benefits.
 
The rule amends a guidance document issued in 1999 stipulating that only public cash assistance or long-term institutionalization at government expense qualified as evidence that an immigrant was at risk of being a public charge and could be denied legal status. The new rule expands the factors agencies may consider when deciding those cases.
 
Twenty-one states, the District of Columbia, New York City, the Cook County government, and immigrant aid organizations formed coalitions that filed four separate lawsuits aiming to prevent the implementation of the rule.
 
The judges—Judge George Daniels of the United States District Court for the Southern District of New York, Judge Phyllis Hamilton of the United States District Court for the Northern District of California, Judge Rosanna Malouf Peterson of the United States District Court for the Eastern District of Washington, and Judge Gary Feinerman of the United States District Court for the Northern District of Illinois—argued that the rule was arbitrary and capricious under the Administrative Procedure Act, failed to consider potential costs to state and local governments, and constituted an unsupported congressional delegation of authority to DHS, among other claims.
 
The White House and USCIS Acting Director Ken Cuccinelli issued separate statements on October 11 expressing disappointment with the decisions. “An objective judiciary will see that this rule lies squarely within long-held existing law,” Cuccinelli stated.
 
 


SCOTUS hears oral arguments in Appointments Clause challenge

The United States Supreme Court heard oral arguments in Financial Oversight and Management Board for Puerto Rico v. Aurelius Investment LLC, a case arguing that the appointment of members to the Financial Oversight and Management Board for Puerto Rico violated the Appointments Clause of the U.S. Constitution.
 
The Appointments Clause provides the president with the authority to appoint officers of the United States, subject to confirmation by the U.S. Senate. These positions include ambassadors, heads of Cabinet-level departments, and federal judges. Congress vests the authority to appoint inferior officers, such as federal attorneys and administrative law judges, in the president, the courts, or heads of departments.
 
Congress created the Financial Oversight and Management Board in 2016 and authorized the board to begin debt adjustment proceedings on behalf of the Puerto Rico government. The seven-member board is made up of one member chosen at the president’s discretion and six other members selected by the president from a list compiled by members of Congress. The appointees selected from the congressional list are not subject to Senate confirmation.
 
Aurelius Investment LLC and the Unión de Trabajadores de la Industria Eléctrica y Riego challenged the board’s authority in federal district court, arguing the board members’ appointments were not in compliance with the Appointments Clause. Aurelius and the union claimed that the board members are “Officers of the United States” who must all be nominated by the president and confirmed by the Senate. The board argued that its activities are primarily local in nature and, therefore, its members do not qualify as “Officers of the United States.”
 
The court’s decision in the case could determine whether certain territorial officers can also be classified as federal officers for purposes of the Appointments Clause.
 


Federal Register weekly update; first week since January without significant regulatory actions

The Federal Register is a daily journal of federal government activity that includes presidential documents, proposed and final rules, and public notices. It is a common measure of an administration’s regulatory activity.
 
During the week of October 7 to October 11, the Federal Register increased by 1,714 pages, bringing the year-to-date total to 55,016 pages. The week’s Federal Register featured a total of 631 documents, including 507 notices, seven presidential documents, 49 proposed rules, and 68 final rules.
 
No proposed or final rules were deemed significant under E.O. 12866—meaning that they may have large impacts on the economy, environment, public health, or state or local governments. Significant actions may also conflict with presidential priorities or other agency rules.
 
During the same week in 2018, the number of pages in the Federal Register increased by 1,340 pages for a year-to-date total of 51,814 pages. As of October 11, the 2019 total led the 2018 total by 3,202 pages.
 
The Trump administration has added an average of 1,342 pages to the Federal Register each week in 2019 as of October 11. Over the course of 2018, the Trump administration added an average of 1,301 pages to the Federal Register each week. During the Obama administration, the Federal Register increased by an average of 1,658 pages per week.
 
According to government data, the Federal Register hit an all-time high of 95,894 pages in 2016.
 
Ballotpedia maintains page counts and other information about the Federal Register as part of its Administrative State Project. The project is a neutral, nonpartisan encyclopedic resource that defines and analyzes the administrative state, including its philosophical origins, legal and judicial precedents, and scholarly examinations of its consequences. The project also monitors and reports on measures of federal government activity.
 
Additional reading:
 
Click here to find yearly information about additions to the Federal Register from 1936 to 2016:


Trump issues executive order aimed at controlling agency spending

President Donald Trump (R) issued an executive order on October 10 that aims to ensure that federal administrative agencies “consider the costs of their administrative actions, take steps to offset those costs, and curtail costly administrative actions,” according to the order.
 
The executive order targets a federal budgeting mechanism known as administrative pay-as-you-go (PAYGO), which was implemented through an Office of Management and Budget (OMB) memo in 2005. Administrative PAYGO requires agencies that propose discretionary increases in mandatory spending (i.e. not required by statute) to also include one or more proposals to reduce mandatory spending.
 
The Trump administration claims that some applications of administrative PAYGO have actually resulted in higher mandatory spending. The executive order aims to restore the principle of administrative PAYGO by requiring agencies to submit administrative PAYGO proposals to the OMB director for review.
 
Trump issued the executive order on the heels of two other executive orders targeting administrative practices. The two other executive orders aim to prohibit the creation of binding rules through agency guidance documents and curb what the Trump administration refers to as administrative abuses by requiring agencies to provide fair notice of regulations, respectively.
 


Trump executive order prohibits agencies from creating binding rules through guidance documents

President Donald Trump (R) issued a pair of executive orders on October 9 that aim to limit the use of guidance documents by federal administrative agencies and end what the order refers to as administrative abuses by requiring agencies to provide fair notice of regulations.
 
Agency guidance documents are not legally binding, but rather seek to provide the public with clarification about how agencies interpret and administer regulations. The Administrative Conference of the United States (ACUS) concluded in a 1992 report, however, that agency officials sometimes use guidance documents in ways that give them the same authority as legally binding rules.
 
The first of the two executive orders requires that agencies “treat guidance documents as non-binding both in law and in practice … take public input into account when appropriate in formulating guidance documents, and make guidance documents readily available to the public.” The order clarifies that agencies can only issue binding regulations through the rulemaking process or case-by-case adjudication. The order also instructs agencies to make a searchable index of all guidance documents publicly available on their websites.
 
The second executive order aims to curb what the order refers to as administrative abuses by prohibiting agencies from enforcing rules without first providing advance notice to the public. The order also calls on agencies to provide members of the public with opinion letters when they reach out to agencies for information about how to comply with regulations.
 
Russ Vought, acting administrator of the Office of Management and Budget (OMB), supported the executive orders in a statement, arguing that the “executive orders give this administration the tools to defend Americans’ freedom and liberty against off-the-book regulations and prevent unfair penalties from being levied on American families and businesses by rogue agencies.”
 
Lisa Zarlenga, a former tax legislative counsel at the Treasury Department, expressed concern about the executive orders in an interview with _Bloomberg Law_, noting that individuals frequently rely on agency guidance when completing tax forms. She added, however, that taxpayers have occasionally claimed that the Internal Revenue Service (IRS) issued what she called stealth regulation through informal guidance documents.


Federal Register weekly update; highest weekly total of final rules so far in 2019

The Federal Register is a daily journal of federal government activity that includes presidential documents, proposed and final rules, and public notices. It is a common measure of an administration’s regulatory activity.
 
During the week of September 30 to October 4, the number of pages in the Federal Register increased by 1,938 pages, bringing the year-to-date total to 53,302 pages. The week’s Federal Register featured a total of 671 documents, including 501 notices, 13 presidential documents, 60 proposed rules, and 97 final rules.
 
Two proposed rules and seven final rules were deemed significant under E.O. 12866—meaning that they may have large impacts on the economy, environment, public health, or state or local governments. Significant actions may also conflict with presidential priorities or other agency rules.
 
During the same week in 2018, the number of pages in the Federal Register increased by 1,210 pages for a year-to-date total of 50,474 pages. As of October 4, the 2019 total led the 2018 total by 2,828 pages.
 
The Trump administration has added an average of 1,333 pages to the Federal Register each week in 2019 as of October 4. Over the course of 2018, the Trump administration added an average of 1,301 pages to the Federal Register each week. During the Obama administration, the Federal Register increased by an average of 1,658 pages per week.
 
According to government data, the Federal Register hit an all-time high of 95,894 pages in 2016.
 
Ballotpedia maintains page counts and other information about the Federal Register as part of its Administrative State Project. The project is a neutral, nonpartisan encyclopedic resource that defines and analyzes the administrative state, including its philosophical origins, legal and judicial precedents, and scholarly examinations of its consequences. The project also monitors and reports on measures of federal government activity.
 
Additional reading:


Federal agencies allowed to implement Trump’s civil service executive orders

Federal agencies can fully implement President Donald Trump’s (R) three civil service executive orders after the United States Court of Appeals for the District of Columbia Circuit on Wednesday lifted an injunction that had blocked the implementation of provisions concerning the use of union official time.
 
President Trump issued the civil service executive orders (E.O. 13837, E.O. 13836, and E.O.13839) in May 2018. The orders include proposals aimed at facilitating the removal of poor-performing federal employees and streamlining collective bargaining procedures. Union groups, including the American Federation of Government Employees, the National Treasury Employees Union, and 13 smaller unions, filed suit to prevent the orders from taking effect.
 
Judge Ketanji Brown Jackson of the United States District Court for the District of Columbia issued an injunction in August 2018 blocking Trump administration officials from implementing nine provisions of the executive orders that she claimed unlawfully restricted the use of union official time. A three-judge panel of the United States Court of Appeals for the District of Columbia Circuit reversed Jackson’s ruling in July, holding that the lower court did not have jurisdiction and that the plaintiffs should have brought their case before the Federal Labor Relations Authority (FLRA) as required by the Federal Service Labor-Management Relations Statute (FSLMRS).
 
The plaintiffs requested a rehearing en banc before the full D.C. Circuit in August, but the court denied the request on September 25 without providing a rationale for its decision. The court lifted the injunction one week later.
 
Additional reading:


OIRA reviewed 42 significant regulatory actions in September 2019

In September 2019, the White House Office of Information and Regulatory Affairs (OIRA) reviewed 42 significant regulatory actions issued by federal agencies. The agency approved three rules without changes and approved the intent of 35 rules while recommending changes to their content. Agencies withdrew two rules from the review process. Two other rules were improperly submitted by agencies.
 
OIRA reviewed 21 significant regulatory actions in September 2018—21 fewer rules than the 42 significant regulatory actions reviewed by the agency in September 2019. During the Obama administration from 2009-2016, OIRA reviewed an average of 45 significant regulatory actions each September.
 
OIRA has reviewed a total of 326 significant rules so far in 2019. The agency reviewed a total of 355 significant rules in 2018 and 237 significant rules in 2017.
 
As of October 1, 2019, OIRA’s website listed 129 regulatory actions under review.
 
OIRA is responsible for reviewing and coordinating what it deems to be all significant regulatory actions made by federal agencies, with the exception of independent federal agencies. Significant regulatory actions include agency rules that have had or may have a large impact on the economy, environment, public health, or state and local governments and communities. These regulatory actions may also conflict with other regulations or with the priorities of the president.
 


Federal Register weekly update; 2019 year-to-date page total leads 2018 by more than 2,000 pages

The Federal Register is a daily journal of federal government activity that includes presidential documents, proposed and final rules, and public notices. It is a common measure of an administration’s regulatory activity.
 
During the week of September 23 to September 27, the number of pages in the Federal Register increased by 1,730 pages, bringing the year-to-date total to 51,364 pages. The week’s Federal Register featured a total of 543 documents, including 421 notices, two presidential documents, 47 proposed rules, and 73 final rules.
 
Three proposed rules and three final rules were deemed significant under E.O. 12866—meaning that they may have large impacts on the economy, environment, public health, or state or local governments. Significant actions may also conflict with presidential priorities or other agency rules.
 
During the same week in 2018, the number of pages in the Federal Register increased by 1,064 pages for a year-to-date total of 49,264 pages. As of September 27, the 2019 total led the 2018 total by 2,100 pages.
 
The Trump administration has added an average of 1,317 pages to the Federal Register each week in 2019 as of September 27. Over the course of 2018, the Trump administration added an average of 1,301 pages to the Federal Register each week. During the Obama administration, the Federal Register increased by an average of 1,658 pages per week.
 
According to government data, the Federal Register hit an all-time high of 95,894 pages in 2016.
 
Ballotpedia maintains page counts and other information about the Federal Register as part of its Administrative State Project. The project is a neutral, nonpartisan encyclopedic resource that defines and analyzes the administrative state, including its philosophical origins, legal and judicial precedents, and scholarly examinations of its consequences. The project also monitors and reports on measures of federal government activity.
 


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