Proposed Executive Order Entitled "Federal Regulation"

Proposed Executive Order Entitled “Federal Regulation”

[The follow ing m em orandum , prepared by the Office o f Legal Counsel pursuant to its
responsibility under Executive O rder N o. 11,030 for approving all executive orders and
presidential proclam ations for form and legality, analyzes the provisions o f a proposed
executive order im posing certain procedural and substantive requirem ents on executive
agencies in connection w ith their rulem aking functions. It concludes that the o rd e r’s
provisions for presidential oversight o f the adm inistrative process are generally within
the President’s constitutional authority, and that they do not displace functions vested
by law in particular agencies. It also concludes that the o rd e r’s requirem ent that
agencies reconsider final rules w hich have not yet becom e effective m ay in certain
circum stances trigger the notice and com m ent provisions o f the A dm inistrative P roce­
dure Act.]

February 13, 1981

M EM ORANDUM

The attached proposed executive order was prepared by the Office
of Management and Budget (OMB) in consultation with this Office, and
has been forwarded for the consideration o f this Department as to form
and legality by the Office of Management and Budget with the
approval of its Director. The proposed order is designed to reduce
regulatory burdens, to provide for presidential oversight of the adminis­
trative process, and to ensure well reasoned regulations. The order sets
forth a number of requirements that Executive Branch agencies must
adhere to in exercising their statutory rulemaking authority. We con­
clude that the order is acceptable as to form and legality.*
The order has the following major provisions. Agencies must take
action only if the potential benefits outweigh the social costs; attempt to
maximize social benefits; choose the least costly alternative in selecting
among regulatory objectives; and set priorities with the aim of maximiz­
ing net benefits. All of these requirements must be followed “to the
extent permitted by law.” The order would require agencies to prepare
for each “major rule” a Regulatory Impact Analysis (RIA) setting forth
a description of the potential costs and benefits of the proposed rule, a
determination of its potential net benefits, and a description o f alterna­
tive approaches that might substantially achieve regulatory goals at a
lower cost. Agencies would be required to determine that any proposed

• N o t e : Executive O rder N o 12,291, entitled “ Federal Regulation,” was signed b y the President on
February 17, 1981, 3 C.F.R. 127 (1982 ed.). Ed.

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regulation is within statutory authority and that the factual conclusions
upon which the rule is based are substantially supported by the record
viewed as a whole. The Director o f the Office of Management and
Budget and the Presidential Task Force on Regulatory Relief would be
given authority, inter alia, to designate proposed or existing rules as
m ajor rules, to prepare uniform standards for measuring costs and
benefits, to consult with the agencies concerning preparation of RIAs,
to state approval or disapproval of RIA s and rules on the administra­
tive record, to require agencies to respond to these views (and to defer
rulemaking while so consulting), and to establish schedules for review
and possible revision of existing major rules. The order would require
agencies to defer rules that are pending on the date of its issuance,
including rules that have been issued as final rules but are not yet
legally effective, and to reconsider them under the order. By its terms,
the order would create no substantive or procedural rights enforceable
by a party against the United States o r its representatives, although the
R IA would become part of the administrative record for judicial
review o f final rules.
I. Legal Authority: In General

The President’s authority to issue the proposed executive order de­
rives from his constitutional power to “take Care that the Laws be
faithfully executed.” U.S. Const., Art. II, § 3. It is well established that
this provision authorizes the President, as head of the Executive
Branch, to “supervise and guide” executive officers in “their construc­
tion of the statutes under which they act in order to secure that unitary
and uniform execution o f the laws w hich Article II of the Constitution
evidently contemplated in vesting general executive power in the Presi­
dent alone.” Myers v. United States, 272 U.S. 52, 135 (1926).1
The supervisory authority recognized in Myers is based on the dis­
tinctive constitutional role of the President. The “take care” clause
charges the President w ith the function of coordinating the execution
of many statutes simultaneously: “Unlike an administrative commission
confined to the enforcement of the statute under which it was cre­
ated . . . the President is a constitutional officer charged with taking
care that a ‘mass of legislation’ be executed,” Youngstown Sheet & Tube
Co. v. Sawyer, 343 U.S. 579, 702 (1952) (Vinson, C.J., dissenting).
M oreover, because the President is the only elected official who has a
national constituency, he is uniquely situated to design and execute a
uniform method for undertaking regulatory initiatives that responds to

*In Buckley v Valeo, 424 U.S. 1, 140-41 (1976), the Supreme Court held that any “significant
governm ental duty exercised pursuant to a public law ” must be performed by an “Officer of the
United States,'1 appointed by the President or the Head of a Department pursuant to Article II, § 2,
clause 2. W e believe that this holding recognizes the importance of preserving the President’s
supervisory powers over those exercising statutory duties, subject o f course to the power of Congress
to confine presidential supervision by appropriate legislation. See also n.7, infra.

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the will of the public as a whole.2 In fulfillment of the President’s
constitutional responsibility, the proposed order promotes a coordinated
system o f regulation, ensuring a measure o f uniformity in the interpreta­
tion and execution of a number o f diverse statutes. If no such guidance
were permitted, confusion and inconsistency could result as agencies
interpreted open-ended statutes in differing ways.
Nevertheless, it is clear that the President’s exercise of supervisory
powers must conform to legislation enacted by Congress.3 In issuing
directives to govern the Executive Branch, the President may not, as a
general proposition, require or permit agencies to transgress boundaries
set by Congress. Youngstown Sheet & Tube Co. v. Sawyer, 343 U.S. 579
(1952). It is with these basic precepts in mind that the proposed order
must be approached.
We believe that an inquiry into congressional intent in enacting
statutes delegating rulemaking authority will usually support the legal­
ity of presidential supervision of rulemaking by executive agencies.
When Congress delegates legislative power to executive agencies, it is
aware that those agencies perform their functions subject to presidential
supervision on matters of both substance and procedure. This is not to
say that Congress never intends in a specific case to restrict presidential
supervision o f an executive agency; but it should not be presumed to
have done so whenever it delegates rulemaking power directly to a
subordinate executive official rather than the President. Indeed, after
Myers it is unclear to what extent Congress may insulate executive
agencies from presidential supervision. Congress is also aware of the
comparative insulation given to the independent regulatory agencies,
and it has delegated rulemaking authority to such agencies when it has
sought to minimize presidential interference. By contrast, the heads of
non-independent agencies hold their positions at the pleasure of the
President, who may remove them from office for any reason. It would
be anomalous to attribute to Congress an intention to immunize from
presidential supervision those who are, by force of Article II, subject to
removal when their performance in exercising their statutory duties
displeases the President.
O f course, the fact that the President has both constitutional and
implied statutory authority to supervise decisionmaking by executive
agencies does not delimit the extent of permissible supervision. It does
suggest, however, that supervision is more readily justified when it does
not purport wholly to displace, but only to guide and limit, discretion
which Congress has allocated to a particular subordinate official. A
wholesale displacement might be held inconsistent with the statute
vesting authority in the relevant official. See Myers v. United States, 272

%See Bruff, Presidential Power and Administrative Rulemaking, 88 Yale L.J. 451, 461-62 (1979).
* In certain circumstances, statutes could invade or intrude impermissibly upon the President’s
"inherent” powers, but that issue does not arise here.

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U.S. at 135: “O f course there may be duties so peculiarly and specifi­
cally committed to the discretion of a particular officer as to raise a
question w hether the President may overrule or revise the officer’s
interpretation of his statutory duty in a particular instance.” This sug­
gestion is based on the view that Congress may constitutionally con­
clude that some statutory responsibilities should be carried out by
particular officers without the President’s revision, because such offi­
cers head agencies having the technical expertise, and institutional com­
petence that Congress intended the ultimate decisionmaker to possess.4
Under this analysis, of course, lesser incursions on administrative discre­
tion are easier to support than greater ones. This Office has often taken
the position that the President may consult w ith those having statutory
decisionmaking responsibilities, and may require them to consider statu­
torily relevant matters that he deems appropriate, as long as the Presi­
dent does not divest the officer o f ultimate statutory authority.5 Of
course, the President has the authority to inform an appointee that he
will be discharged if he fails to base his decisions on policies the
President seeks to implement.6
T he order would impose requirements that are both procedural and
substantive in nature. Procedurally, it would direct agencies to prepare
an R IA assessing the costs and benefits of m ajor rules. We discern no
plausible legal objection to this requirement, which like most proce­
dural requisites is at m ost an indirect constraint on the exercise of
statutory discretion. At least as a general rule, the President’s authority
o f “supervision] in his administrative control,” Myers v. United States,
272 U.S. at 135, permits him to require the agencies to follow proce­
dures that are designed both to promote “unitary and uniform execu­
tion o f the laws” and to aid the President in carrying out his constitu­
tional duty to propose legislation. See U.S. Const., Art. II, § 3. We
believe that a requirement that the agencies perform a cost-benefit
analysis meets these criteria. Further, the President’s constitutional right
to consult with officials in the Executive Branch permits him to require
them to inform him of the costs and benefits o f proposed action.7 In our
view, a requirement that rulemaking authorities prepare an RIA is the
least that Myers must mean with respect to the President’s authority to
“supervise and guide” executive officials.

4 Cf. H. Friendly, T he Federal Administrative Agencies: T he Need for Better Definition of Stand-
ards 10-11 (1962) (discussing concept of ‘‘agency expertise” as reason for delegation of power to
particular agencies). T he Myers C ourt reaffirmed, however, that even such officers may be dismissed
at the pleasure o f the President. 272 U.S. at 135.
* See generally, 1 Op. O.L.C. 75 (1977) {Proposals Regarding an Independent Attorney General)', 1 Op.
O.L.C. 228 (1977) (Role o f the Solicitor General).
•See note 4, supra.
7See U.S. Const., Art. II, § 2 (President may “require the Opinion, in writing, of the principal
Officer in each of the executive Departments, upon any Subject relating to the Duties of their
respective Offices”).

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 Substantively, the order would require agencies to exercise their dis­
cretion, within statutory limits, in accordance with the principles of
cost-benefit analysis. More complex legal questions are raised by this
requirement. Some statutes may prohibit agencies from basing a regula­
tory decision on an assessment of the costs and benefits of the proposed
action. See, e.g., EPA v. National Crushed Stone A ss’n, ‘449 U.S. 64
(1980). The order, however, expressly recognizes this possibility by
requiring agency adherence to principles of cost-benefit analysis only
“to the extent permitted by law.” The issue is thus whether, when cost-
benefit analysis is a statutorily authorized basis for decision, the Presi­
dent may require executive agencies to be guided by principles of cost-
benefit analysis even when an agency, acting without presidential guid­
ance, might choose not to do so. We believe that such a requirement is
permissible. First, there can be little doubt that, when a statute does not
expressly or implicitly preclude it, an agency may take into account the
costs and benefits of proposed action. Such a calculus would simply
represent a logical method of assessing whether regulatory action au­
thorized by statute would be desirable and, if so, what form that action
should take. In our view, federal courts reviewing such actions would
be unlikely to conclude that an assessment of costs and benefits was an
impermissible basis for regulatory decisions.
Second, the requirement would not exceed the President’s powers of
“supervision.” It leaves a considerable amount of decisionmaking dis­
cretion to the agency. Under the proposed order, the agency head, and
not the President, would be required to calculate potential costs and
benefits and to determine whether the benefits justify the costs. The
agency would thus retain considerable latitude in determining whether
regulatory action is justified and what form such action should take.
The limited requirements of the proposed order should not be regarded
as inconsistent with a legislative decision to place the basic authority to
implement a statute in a particular agency. Any other conclusion would
create a possible collision with constitutional principles, recognized in
Myers, with respect to the President’s authority as head of the Execu­
tive Branch.
We believe that the President would not exceed any limitations on
his authority by authorizing the Task Force and the OMB Director to
supervise agency rulemaking as the order would provide. The order
does not empower the Director or the Task Force to displace the
relevant agencies in discharging their statutory functions or in assessing
and weighing the costs and benefits of proposed actions.8 The function

8 The Paperwork Reduction Act of 1980, Pub. L. No. 96-511, 94 Stat. 2812, provides some implied
statutory support for the Order by giving OMB a direct role tn coordinating agency regulations that
impose paperwork burdens on the public. With respect to non-independent agencies the Act gives the
D irector authority to disapprove “ unreasonable” agency collection of information requests. 44 U.S.C.
§ 3504