Agency Rulemaking and Political Transitions

Anne Joseph O'Connell - University of California, Berkeley, Law School

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Even before President Obama took to the dance floor on the night of his inauguration, his then-Chief of Staff, Rahm Emanuel, had already fired off a memorandum to the heads of federal agencies instructing them not to start or finish any regulations without approval of the new Administration.  Emanuel also requested that agency leaders “[c]onsider extending for 60 days the effective date of regulations that have been published in the Federal Register but not yet taken effect.”1  In short, the memorandum was an immediate and powerful assertion of control over regulatory policy by the new Administration.

Weeks earlier, agencies under President George W. Bush rolled out “midnight” regulations.  The Bureau of Land Management, for instance, finalized a rule that it had proposed just four months earlier to permit drilling for oil shale on federal land in western states.  The Environmental Protection Agency issued a regulation, initiated the previous year, to expand how much hazardous waste could be burned outside of incineration limits.  These and dozens of other midnight regulations were unveiled despite an express command in May 2008 from Bush’s Chief of Staff Joshua Bolton that directed executive agencies to finish regulations by November 1 of that year unless there were “extraordinary circumstances.”2

This regulatory pattern—crack-of-dawn response to midnight regulation—has played out in all recent White House transitions, including those in which the incoming and departing presidents hailed from the same political party.  This crack-of-dawn response to midnight regulation manifests itself in congressional transitions as well.  Specifically, the 1994 election accompanied a noticeable jump in regulatory completions before the new Republican majorities took control and a marked increase in withdrawals of incomplete regulations after the transition, though the 2006 election was not accompanied by similar spikes in regulatory activity.

In this Essay, I examine agency rulemaking during the periods surrounding political transitions.  Using a new comprehensive database on agency rules constructed from the Unified Agenda of Federal Regulatory and Deregulatory Actions that covers the period from 1983 to 2010,3 I describe key stages of the rulemaking process—initiations, completions, and withdrawals—over time.  In addition, I analyze the connection between political transitions, both presidential and congressional, and the duration of completed rulemakings.  Not all rulemakings are completed, however, so I also examine the relationship between transitions and whether proposed rulemakings are withdrawn.  Finally, I consider the strategic implications for outgoing and incoming administrations.

The actual initiation of rulemaking is poorly understood as an empirical matter.  Before an agency publicly issues an NPRM, much internal deliberation and even White House review (if the agency is not an independent regulatory commission) occurs.  Because the timing of agency deliberation prior to White House review is not publicly visible, though, almost all empirical work on the rulemaking process measures the start from the publication of the NPRM.  My Essay is no different in that regard.

The issuance of NPRMs from 1983 to 2009 suggests two possible patterns.  First, many agencies are slow to initiate rulemakings in the first year of an administration.  Cabinet departments and executive agencies—institutions presumably under more presidential control than independent regulatory commissions—generally issue fewer NPRMs in a president’s first year than in other (though not all) years.  Second, there are also midnight initiations of rules before control of the White House shifts, particularly by one-term presidents.

Presidential transitions are also not the only form of political transition relevant to rulemaking.  Control of Congress is also an important factor in agency decision-making.  There was a spike in NPRMs from cabinet departments and executive agencies in 1994, before Congress shifted from Democratic to Republican control; another jump occurred in 2006, just before Congress changed from Republican to Democratic control.

Unlike the amorphous commencement of the rulemaking process, at least in its non-public form, the enactment of a rule is easier to identify.  Each agency publishes its final rules or actions in the Federal Register to take effect usually thirty or sixty days later and reports those dates in the Unified Agenda. 

As with initiations of the rulemaking process, as marked by the issuance of an NPRM, agencies do not churn out final actions at a steady rate.  There seem to be fewer completions in the first year of an administration, compared to other years of that administration, for all types of agencies.  By contrast, there seem to be more completions by cabinet departments in the final year of an administration as compared to previous years.  In addition, there seems to be a rush to complete rules before a change in control of Congress: for example, President Clinton’s cabinet departments, as a group, completed considerably more regulatory actions in 1994, before Republicans took over in Congress, than in his final year.

In most studies of rulemaking, analysts look only at completed rulemakings.  Some examine the time it takes from the initiation to completion.  Others consider what changes are made between the start and end of the process.  But agencies will start some rulemakings that they will decide later not to complete.  Such withdrawals are supposed to be reported to the Unified Agenda as part of an agency’s annual regulatory plan.

Agencies tend to stop rulemakings, as they issue NPRMs and final actions, at an inconsistent rate.  There are particular spikes in withdrawal activity.  First, the parallel of midnight regulations before presidential transitions are the crack-of-dawn actions by new administrations.  For the two-term presidencies completely captured by the data (Presidents Clinton and George W. Bush), cabinet departments withdrew significantly more regulations in the first term than in the second term.  The high was reached in Clinton’s third year (383 withdrawals) and in Bush’s second year (433 withdrawals).  In the first year of every new administration in the data, withdrawals by both cabinet departments and executive agencies increased at least slightly from the last year of the outgoing president.

Second, just as some agencies rush to finish rulemakings before congressional control shifts, they also withdraw a considerable number of proposed rulemakings following a congressional transition.  Cabinet departments withdrew the second highest number of regulatory actions in 1995, just after the Republicans seized control of both houses of Congress in 1994, than in any other year covered by the database.  Executive agencies also canceled more regulatory processes in 1995 than in any other year included in the database; the IRS led with the highest number of withdrawals in that year.  On the other hand, there seemed to be no increase in withdrawals in 2007, following Democrats’ seizure of both houses of Congress.

Although the descriptive information above on rulemaking initiations, completions, and withdrawals suggests explanations for changes in each type of regulatory action, it does not systematically explore these explanations.  I therefore also try to look more rigorously at the rulemaking process by separately examining its duration and analyzing withdrawal decisions.  Starting first with duration, the 16,826 rulemakings in the database that started with an NPRM between the start of President Reagan’s Administration and the end of President George W. Bush’s Administration, and ended with a final rule or action took, on average, 462.79 days, or nearly 1.3 years, to complete.  Breaking them down by type of agency, on average, cabinet departments spent 456.54 days; executive agencies took 531.75 days; and independent agencies used 409.79 days.

There are different types of rulemakings: regulations that face statutory judicial deadlines, and regulations that do not.  Regulations facing statutory or judicial deadlines are done more quickly than others. On average, the duration of rulemakings with a deadline was 441.93 days; by contrast, the duration of rulemakings without a deadline was 496.3 days, a difference of about two months.  Significant rulemakings take longer—596 days to complete, on average—whereas non-significant rulemakings took 482.6 days on average: a difference of close to four months.  Liberal agencies, as defined by Joshua Clinton and David Lewis,4 took 577.57 days, whereas conservative agencies took 377.4 days.  Neutral agencies were in the middle, using, on average, 451.63 days to complete a rulemaking from the date of the NPRM.  But significant rulemakings are approximately twice as likely to be conducted by liberal agencies as conservative agencies (in the database used here).

Of central interest to the Essay are political transitions.  Rulemakings during which a presidential transition occurred after the NPRM was issued took, on average, nearly three times as long to complete as those rulemakings that started and ended during a single administration (989.31 versus 355.43 days).  Similarly, rulemakings that had a major shift in Congress after the NPRM about two and a half times as long to finish (1021.58 versus 403.14 days) as rulemakings that were completed during a period in which no major shift in congressional control occurred.  These comparisons are, however, problematic.  The longer a rulemaking takes to complete, the more likely it is to have undergone a political transition, just in terms of the passage of time.

The best way to deal with this problem to analyze the duration of the rulemaking process in a model where transitions can be treated as time-varying covariates as needed. I estimate a Cox proportional hazards model for the approximately 12,225 completed rulemakings that were started between Presidents Reagan and George W. Bush and that were reported in the fall 1988 or later edition of the Agenda when deadlines were more reliably recorded and that have information for the explanatory variables.  This model basically estimates the rate at which rulemaking ends after time t given that the rulemaking process has been in progress until time t.  The main question then becomes whether a particular explanatory variable is linked to an increase in this rate (called the hazard rate), which is the same question as whether the variable is correlated with a shortening of the duration of the rulemaking process.

As applied here, the dependent variable in the Cox model is the time it takes rulemakings to yield a final rule or action from the issuance of the NPRM.  Because uncompleted rulemakings could produce a final action or could end in a withdrawal, these censored observations (i.e., where the final outcome is not recorded) are not included.  With respect to presidential transitions, the model includes a covariate for the time remaining in the president’s term in which the NPRM was issued.  It also includes a time-varying discrete covariate to indicate the period of the rulemaking process that fell in the midnight quarter (November to January, roughly from the election that changes White House control to inauguration of the next president).  Other explanatory variables are included as well.  As expected, the hazard rate increases in midnight quarters and in rulemakings with deadlines, thus, shortening durations, and decreases when the NPRM is issued during divided government, thereby lengthening durations.

I also try to systematically explore the connection between political transitions and withdrawals of proposed rules.  I use a parsimonious probit model, which is a common regression model that uses a maximum likelihood procedure to estimate a binary response, to analyze all rulemakings reported in the Unified Agenda between the fall 1988 and spring 2010 editions that started with an NPRM and that ended either in a completed final action or withdrawal.  The binary outcome—final action or withdrawal—is therefore the dependent variable in the model.

Out of 15,510 such rulemakings, 1603—more than ten percent—ended in withdrawals.  The model includes two primary explanatory variables to capture presidential and congressional transitions.  The presidential change variable marks all rulemaking processes that started under one administration and resulted in a complete rule or withdrawal under a different administration.  The congressional change variable targets only the big (i.e., dual-chamber) congressional shifts, in 1995 and 2007, and captures regulatory actions that commenced before one of those shifts and that ended (one way or the other) afterward.

I expect that NPRMs are more likely to end in withdrawal if control of the White House or both houses of Congress changes after rulemaking has begun.  The model also includes several other explanatory variables, including whether the rulemaking process had any kind of deadline imposed on it.  I also expect that a process with a deadline is more likely to be completed than to be withdrawn as the deadline indicates that Congress or the courts care more about that regulatory process than one without a deadline, all else being equal.   As predicted, rulemakings that go through a presidential or congressional transition are 14% or 15%, respectively, more likely to end in withdrawal, instead of completion.   By contrast, rulemakings with a statutory or judicial deadline are 4% less likely to end in withdrawal.

The idea that political transitions shape the agency rulemaking process is not a new one.  There has been, however, scant empirical evaluation of such transitions for the initiation and completion of rules, particularly across several administrations and broken down over a range of agencies.  In addition, there has been almost no analysis of the withdrawal of proposed rules after political transitions, particularly after congressional transitions.  The Essay helps to fill, in part, both those gaps.

Traditionally, after noting particular empirical realities, legal scholarship turns to considering the implications of these realities for doctrine and to suggesting proposals for reform.  I largely abandon this traditional turn.  Rather, I conclude my Essay with something a bit less common: I suggest effective strategies for outgoing and incoming presidents, assuming that these presidents care about advancing their policy preferences.  The strategies for outgoing presidents are simple.  Most critically, outgoing presidents can make their policies harder to overturn.  First, they can finish the rules they propose.  A rule promulgated by prior notice and comment can generally be rescinded only by notice and comment procedures.  A rule that has been proposed but not finished can be withdrawn without notice and comment.  Such withdrawals are not easily reviewable by courts.

Second, outgoing presidents can finish rules early enough that they become effective before they leave office.  If a rule has been enacted but has not yet taken effect, it can often be suspended, at least for brief periods, during which time, a new administration can work more easily to rescind it.  In many ways, President George W. Bush was extremely successful in performing these strategies at the end of his Administration.  His Chief of Staff set deadlines for the completion of rules that, if followed, ensured that the rules would take effect before Bush left office.

The strategies for incoming presidents are more complex.  First, new presidents can undo undesirable regulatory actions of the previous administration.  As all recent presidents have done, they can order agencies to withdraw final rules sent to the Federal Register in the final days of an outgoing administration or require permission from the new administration before sending any new rules for publication.  To comply with existing law and court orders as well as to permit truly necessary action, exceptions should be made for statutory and judicial deadlines and for measures necessary for public health and safety.  New presidents can also order agencies to suspend—for a limited period—the effective dates of final regulations that have not taken effect and to offer a short defense for each suspension.  During the suspension period, the new administration can assess whether the rule should be implemented, modified, or rescinded.  The suspension of a rule’s effective date does raise some legal issues.  The suspension often counts as a final agency action, and thus is typically reviewable in court under the APA if the challenger has standing to sue.  Limiting the suspension to anywhere from ninety to one hundred twenty days, during which time an agency can then engage in notice and comment procedures to undo the rule, and providing a short explanation for the suspension will make judicial deference more likely, however.  President Obama’s Administration engaged in such a careful suspension process.

New presidents can also coordinate with the Justice Department to settle lawsuits over specific midnight regulations so that new agency leaders can revise those rules.  Practically speaking, a judicial decision striking down a rule often has a similar effect to an agency repealing a regulation through the rulemaking process.  If individuals or groups harmed by a midnight regulation challenge its substance or its rulemaking process in federal court, new agency leaders can agree not to enforce that regulation and to start proceedings to rescind or modify it.

Finally, the White House and Congress can use the Congressional Review Act (CRA), which establishes a fast-track legislative process, to repeal undesirable midnight regulations that have already taken effect.  Like a court striking down a rule, congressional invalidation of a rule under the Act can substitute for the lengthy process of rescinding a regulation by notice and comment.  The Act sets somewhat technical limits on the use of its fast-track procedure, which depend on when the House of Representatives and the Senate adjourn their annual sessions and on how many days they meet before adjournment.  According to the Congressional Research Service, only final rules submitted to Congress after May 14, 2008 could have been repealed by the new Congress under the Act.  Thus, the CRA provides a way to challenge some rules issued under the previous administration that have already taken effect, making its reach more extensive than the technique of suspending effective dates discussed previously.

Incoming presidents can also formulate a new regulatory agenda.  Although incoming presidents may want to repeal certain midnight regulations enacted by their predecessors, they focus entirely on such efforts at their peril.  Reacting to another president’s regulatory or deregulatory agenda is not equivalent to establishing one’s own agenda.  They also can direct or pressure agency heads to immediately establish new rulemaking objectives, consistent with their policy priorities.  The rulemaking process is not short. This suggestion presumes that there are new agency leaders in place to oversee the rulemaking process.  For example, the Obama Administration still had only 64.4% of Senate-confirmed executive agency positions filled after one year.  Vacancies in top agency positions may help to explain why new administrations generally have started fewer, not more, rulemakings in the first year than in later years.

Once regulatory priorities are established, the White House (and Congress) can work with executive agency leaders to issue NPRMs and final rules swiftly.  The Office of Management and Budget must approve major NPRMs (and final rules) from cabinet departments and executive agencies before they can be published.  To get NPRMs issued more quickly, OIRA could establish a separate, faster review track for rulemaking proposals connected to important regulatory priorities of the administration.  OIRA also could work more actively with agencies prior to the official review stage so that the review process goes more smoothly, or it could prompt slower-acting agencies to promulgate proposals.

Finally, in order to increase efficiency in the regulatory (or deregulatory) process, the White House (and Congress) can work with agency leaders to determine which priorities can be achieved without prior notice and comment procedures.  In some cases, the president may be able to issue an executive order in place of a regulation.  In other cases, agencies may be able to enact regulations without prior opportunity for comment as direct final rules or interim final rules.  Such devices do, however, generate more litigation risks than traditional rulemaking, as injured parties often can challenge the agency’s choice to forgo prior notice and comment.

In sum, there is a range of actions outgoing and incoming administrations can take to improve their ability to advance particular policy preferences through regulation.  To be clear, the Essay does not take a stance on whether any of these actions is desirable, as a matter of social welfare or in terms of democratic legitimacy.  Rather, in some rough sense, the Essay provides political advice; by acknowledging the realities of political transitions on regulatory actions, it contemplates politically feasible and politically attractive responses.

Acknowledgments

Anne Joseph O’Connell is a Professor of Law at the UC Berkley School of Law.

Copyright © 2011 Northwestern University School of Law.

This Legal Workshop Piece is based on the following:  Anne Joseph O’Connell, Agency Rulemaking and Political Transitions, 105 NW. U. L. REV. __ (forthcoming 2011).

  1. Memorandum for the Heads of Executive Departments and Agencies, 74 Fed. Reg. 4435, 4435 (Jan. 26, 2009).
  2. Memorandum from Joshua B. Bolton, Chief of Staff, White House, to the Heads of Executive Departments and Agencies and the Administrator of the Office of Information and Regulatory Affairs, May 9, 2008, available at http://graphics8.nytimes.com/packages/pdf/washington/COS%20Memo%205.9.08.pdf.
  3. The Agenda collects agency reports on rulemaking activity.  Although these reports do not contain all the information present in Federal Register notices in rulemakings (for instance, the number of comments received in a notice of final rulemaking), they do contain many important components of the rulemaking.  Most critically, they provide dates of important actions in the rulemaking process: when any NPRMs were issued, when any comment periods opened, when any comment periods closed, when any final rule was issued, when any NPRM was withdrawn (i.e., not completed), when any interim rule was issued, when any statutory or judicial deadlines expire, and similar dates.  They also note certain characteristics of the substance of the rulemaking: the abstract of the rule, the effects of the rule on state, local, or tribal interests, the significance or mundaneness of the rule, the priority of the rule, and the designation of the rule as “major” under the Congressional Review Act, if applicable.  The Unified Agenda’s scope of rules is comparable to the GAO’s Federal Rules Database, though they are not identical.  In addition, the Unified Agenda contains most, but not all rules published in the Federal Register.
  4. Joshua Clinton and David Lewis have developed a typology of agency ideology from expert surveys; this typology provides an ideological measure on a conservative to liberal scale of an agency, irrespective of time period.  Using this typology, thirty-seven of the forty-seven agencies in the Unified Agenda database can be coded as liberal, neutral, or conservative.  Joshua D. Clinton & David E. Lewis, Expert Opinion, Agency Characteristics, and Agency Preferences, 16 POL. ANALYSIS 3, 17–19 (2008).  If the confidence interval of the agency’s score included 0, the agency was coded as neutral.  This typology has weaknesses.  Most troubling is that ideology, derived from expert surveys, does not vary by party or administration.  In other words, an agency has the same ideological label regardless of whether members of the Republican or Democratic Party currently staff its top ranks.

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