How independent are government agencies? OMB's move on 'major' rules may tell us

The departure of Homeland Security Secretary Kristjen Nielsen thrust the issue of vacancies back into the spotlight this week. This comes with worries that acting officials lack the influence needed to achieve their mission. Acting officials at the Office of Management and Budget (OMB) yesterday served up a fresh test of this concern.

In the most significant regulatory policy change since President TrumpDonald John TrumpTrump calls Sri Lankan prime minister following church bombings Ex-Trump lawyer: Mueller knew Trump had to call investigation a 'witch hunt' for 'political reasons' The biggest challenge from the Mueller Report depends on the vigilance of everyone MORE’s two-for-one deregulatory order, Acting OMB Director Russell T. Vought recently issued a memo that will either have far-reaching effects on the U.S. regulatory system…or not.

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The memo adds up to more White House oversight of agencies. While it might seem obvious that all agencies are accountable to the president, scholars have debated for decades how to account for the different types of independent agencies that Congress has created over the years.

Most agency officials serve at the pleasure of the president, but if an agency head cannot be fired without “cause,” that is a strong marker of agency independence. When the president tries to control such an agency, and it balks, the president cannot fire its head unless he has a good reason — and policy disagreement does not suffice. This principle comes from a Supreme Court case that dates back to 1935.

This principle was long established when Congress enacted the Congressional Review Act of 1996 (CRA). The CRA made headlines right after Trump took office because Congress used it to overturn more than a dozen rules. In the prior 21 years, Congress had only used it once. That same year, the U.S. Government Accountability Office (GAO) opined, in response to Congressional inquiries, that the CRA’s definition of “rule” applied to certain guidance documents as well as regulations. This was a bombshell because it meant agencies failure to jump through the CRA’s procedural hoops placed heaps of government directives in limbo.

In addition, the Senate Parliamentarian treated GAO’s response as starting the CRA clock, and allowed disapproval motions to proceed on guidance documents from several years earlier. The CRA usually has a shorter window of time in which Congress can act.

This administration is wringing even more out of the CRA. In addition to allowing Congress to disapprove rules, it also directs the Office of Information and Regulatory Affairs (OIRA) to determine whether an agency’s rule is “major.” This designation has real world consequences: If a rule is major it cannot go into effect fewer than 60 days after it is issued, absent special circumstances.

The new OMB memo has three main components:

First, it embraces the GAO opinion that subjects a broad swath of documents to the CRA’s requirements. It is not clear that GAO’s opinion on this matter is legally binding, but OMB’s support makes it more likely that this broad interpretation will take root. This casts a long shadow over already-issued guidance documents and will set off a fresh scramble to determine their status.

Second, it spells out the information that agencies have to provide OIRA to make its determination as to whether a rule or guidance is major. On its face this is reasonable, because OIRA needs to make an informed determination and most agencies are used to providing information to OIRA on rules’ estimated impacts because they’ve been required to do so for decades. But agencies do not generally provide this kind of information for guidance documents, and this is where the memo starts to show its teeth. Further, there’s a set of agencies — the independent regulatory agencies — that have been exempt from sending this information to OIRA for rules or guidance documents, but this memo directs them to do so for the first time.

Third, the memo directs agencies not to publish or otherwise release rules or guidance prior to OIRA’s designation. This threatens to disrupt the flow for independent regulatory agencies in particular, which might not have the information on hand. It also sets OMB and the agencies up for conflict, at a time when both OMB and OIRA are operating under acting heads.

If an independent regulatory agency refuses to provide this information, and moves instead to publish its rule or issue its guidance prior to OIRA’s determination, what happens next? If the president moves to fire the agency head, would that run afoul of the prohibition against removal without cause?

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Overall, this is a very ambitious interpretation of the CRA. It comes loaded with risk. In chess, a “gambit” is as an opening move where a player risks or sacrifices for longer-term gain. (It comes from the old Italian word “gambetto,” which means “to trip up.”) It’s too soon to see if this gambit will pay off or if OMB will trip up in the execution, either because its acting officials cannot follow through, or if courts or Congress conclude it has overreached.

If the agencies are able to rebuff OMB, the gambit will expose a profound weakness in the White House. If the agencies fall in line, the result could be a more accurate accounting of the economic effects of rules and guidance, with the opportunity for more informed action by Congress and the public.

Bridget C.E. Dooling is a research professor at the George Washington University Regulatory Studies Center. She served as a deputy chief, analyst and attorney in the Office of Information and Regulatory Affairs at OMB from 2007 to 2018. Follow her on Twitter at @BridgetDooling.