Again we have substantial facts about regulatory law and practice, but mixed with vicious hatred for Progressive regulations, and plans to undo thousands of them.
Project 2025 Private Training Video: Federal Regulatory Process
In this video, David Burton discusses how the federal government’s regulatory process works and the role of the Office of Information and Regulatory Affairs.
Burton is a senior fellow in economic policy at the Heritage Foundation.
ProPublica
Economic bushwah, that is. Heritage promotes a misch-masch of Milton Friedman, Ronald Reagan, and Project 2025 hooey.
David R. Burton is Senior Fellow in Economic Policy in the Thomas A. Roe Institute for Economic Policy Studies at The Heritage Foundation. He focuses on securities regulation, tax policy, business law, entrepreneurship, administrative law, financial privacy, the U.S. Department of Commerce, corporate welfare, international investment, international information sharing, the U.S. economic relationship with China, and climate-related financial risk.
He says the Biden climate policies will increase costs, in defiance of physics and real economics, and that they are generally illegal.
Previously, Burton was General Counsel at the National Small Business Association; a partner in the Argus Group; Vice President, Finance, and General Counsel for New England Machinery; and manager of the U.S. Chamber of Commerce’s Tax Policy Center. He holds a JD from the University of Maryland School of Law and a BA in Economics from the University of Chicago.
Friedman’s disciples, Los Chicago Boys, went on a worldwide rampage of coups, terror, and economic destruction. See
Economics Books: The Shock Doctrine, Part 1: Chile
Economics Book: The Shock Doctrine, Part 2: Since Chile
22. DEPARTMENT OF THE TREASURY
William L. Walton, Stephen Moore, and David R. Burton
27. FINANCIAL REGULATORY AGENCIES
SECURITIES AND EXCHANGE COMMISSION AND RELATED AGENCIES
David R. Burton
Project 2025
Reforming the Securities and Exchange Commission
Transcript
0:17
My name is David Burton. I senior fellow in economic policy at the Heritage Foundation.
0:24
This course is called How to Promulgate a Rule.
1:23
[Text overlay] The Conservative Movement presents
[Presidential quotations, mostly from inaugural addresses]
[Reagan] This every 4-year ceremony we accept as normal is nothing less than a miracle.
…that will never happen again if we have anything to say about it.
[Trump] In America we understand that a nation is only living as long as it is striving.
[JFK] Only a few generations have been granted the role of defending freedom in its hour of maximum danger.
[FDR] This great nation will endure as it has endured, will revive and will prosper.
Because of the New Deal.
[Reagan] Whether we go forward together with courage, or turn back to policies that weakened our economy, diminished our leadership in the world, America's future will be in your hands.
[Music]
1:31
The course is meant for any political appointee in an Executive branch policy making role.
1:36
The course is a guide to learning the skills necessary to actually win Executive branch conservative policy victories, victories in the real world, given the political and legal environment in which we are actually in.
1:43
Now allow me some introductory remarks before I get into the substance of the course.
1:50
Many people I suspect will find the material in this course to be boring, tedious even.
2:01
But let me be frank if you don't learn the material in this course you'll make mistakes that are likely to cripple your substantive policy agenda.
2:07
Thus if you want to be effective you must learn this material.
2:13
To meaningfully advance the conservative agenda you must learn this material. This is no exaggeration.
2:21
One of the reasons the administrative state is so out of control is that conservative appointees usually do not know this material, don't hit the ground running, take years to actually start making a difference, and are routinely thwarted by the Federal bureaucracy.
2:35
We simply cannot afford for that to happen this time around.
2:43
Make no mistake Progressives understand this material and they use it to relentlessly and aggressively advance their agenda.
2:50
We must do the same and be good at it.
2:58
The Left is malevolent but they're definitely not lazy or uninformed about government processes.
3:04
Winning will take tedious and hard work but win we must.
Unless a court strikes down a rule which is rare under current deference doctrines that I'll discuss later there are only two ways to undo a rule.
3:11
It takes either an Act of Congress or a rule.
3:17
The Budget Reconciliation process offers reasonable prospects for conservative legislative victories on tax or budget matters with a simple conservative majority and not all Republicans remember unfortunately are particularly conservative.
3:30
So we need a conservative majority otherwise we are unlikely to have a super majority in the Senate able to overcome a filibuster on important matters.
👆👆😂😂👆👆
3:36
Major legislative victories on non-reconciliation matters are possible but they will be difficult and take Presidential leadership and a President can only pick so many fights, although I'll discuss ways to achieve regulatory victories via legislation in Congress.
3:56
Most conservative policy progress in the next administration on non-reconciliation matters is probably going to come via rule makings in the Executive branch.
4:04
This represents a genuine opportunity to transform government in a positive way.
4:15
But to accomplish this political appointees need to learn this material.
4:21
A rule must be done according to the rules of rule making if it is to survive judicial review.
4:26
Most of this course is about the rules governing rule making.
OK. It’s the rest of it that worries me.
4:34
Now there are Federal employees that view their job in the traditional manner as helping political appointees implement the agenda of the elected President.
4:41
These employees are now a distinct minority. Much of the bureaucracy is committed to the Progressive agenda.
Right, there he goes.
4:48
They will resist, slow walk, and stonewall those trying to implement a conservative agenda.
4:53
In managing the bureaucracy you will need to try to identify those who will actually do their jobs and avail yourselves of their skills.
5:00
But you will need to constantly push and control and you'll also need to have the knowledge and skills to circumvent those in the bureaucracy, a majority, who will actively seek to impede the implementation of a conservative agenda.
5:11
You must have the knowledge to draft proposed rules and final rules and the corresponding releases with a minimum of bureaucratic assistance.
5:22
The Federal government is not the private sector.
5:28
Federal employees have their own agenda and are extremely difficult to fire.
5:34
In most Agencies workers are more likely to die at their desks than they are to be successfully terminated.
5:41
Moreover terminating an employee even for rank insubordination or incompetence is a lengthy, time-consuming process.
5:46
Under current rules it usually is simply not worth the time involved.
5:51
Your time is better spent furthering the conservative policy agenda.
5:56
As an aside you should read chapter 3 in Project 2025’s Mandate for Leadership, The Conservative Promise.
6:03
The chapter is entitled Central Personnel Agencies: Managing the Bureaucracy.
It begins
From the very first Mandate for Leadership, the “personnel is policy” theme has been the fundamental principle guiding the government’s personnel management. As the U.S. Constitution makes clear, the President’s appointment, direction, and removal authorities are the central elements of his executive power. In implementing that power, the people and the President deserve the most talented and responsible workforce possible.
But Heritage and Project 2025 are instead recruiting tens of thousands of apparatchiks whose primary qualification is unquestioning loyalty.
Now you cannot expect the bureaucrat to simply do as you ask. In most cases it will not or if it does it will do so at an incredibly glacial pace.
6:16
It is of incredible importance that an incoming conservative administration addresses this problem for senior Federal workers with a role in policy.
6:27
It must adopt something akin to the Trump administration's Schedule F almost immediately or otherwise make senior Federal officials employees at will.
6:39
Schedule F was adopted in the waning days of the Trump administration, never implemented, and revoked on the third day of the Biden administration.
Thanks, Joe.
6:47
Senior Federal officials should not be able to ignore the American people
For a very limited value of “American people”.
and elected officials and if they overtly or clandestinely are insubordinate they should be forced to find employment in the wilds of the private sector.
OK, you’ve contradicted yourself there.
6:59
This will be highly controversial and will be fiercely resisted by Progressive politicians, government unions, and the bureaucracy.
And most of everybody else.
7:13
But until that happens and the bureaucracy is forced to become more responsive to appointees of the elected President, reality requires that you have the skills and the knowledge to proceed despite the bureaucracy and not with its assistance.
7:25
Our job as conservatives is harder than that of Progressives because the Federal bureaucracy has generally become an arm of the Progressive Movement.
Oh, eeeevil Progressive Movement!
7:39
Learning the material in this course is a necessary prerequisite to success if success is defined is actually taming the administrative State, actually rolling back the regulatory tsunami of the Biden and Obama administrations, and proactively implementing conservative policies.
7:56
Complaining about the administrative state or the Deep State on TV or on op-eds accomplishes little.
8:04
We have to do the hard work.
8:11
Lastly, unless you learn this material you will be able to implement only a fraction of your agenda, because many of the rules that you do get out the door will not survive judicial review.
8:17
They'll be struck down in a courtroom, and make no mistake any important rule will be litigated.
8:25
The Left has plenty of lawyers, the—and plenty of sympathetic judges, and you cannot afford to needlessly give them successful avenues of attack.
8:32
The history of the past century has seen each Liberal or Progressive administration come in and substantially or dramatically increase the regulatory burden on the American people and alter our society in increasingly Progressive ways using the heavy hand of the Federal government.
8:48
Republicans typically reverse a very small proportion of the rules that the predecessor administration has put in place.
8:54
Thus the size scope and intrusiveness of the administrative state has been steadily increasing. The administrative state has also become a vital weapon in the Left's effort to remake this country.
9:08
The only marked exception to this ratchet effect was the Reagan administration in the 1980s.
9:14
The process has accelerated quite dramatically in the 21st century and the Biden administration is simply unprecedented in terms of the cost, scope, and number of rules it is finalized or proposed.
9:28
A quick look at the most recent unified agenda of regulatory and deregulatory actions demonstrates that there is no end in sight.
Now we can put the polemics aside for a bit and talk about the actual rule making process.
9:38
Now on to the fun part of this course. Just kidding.
9:45
Before we get into the details let me address the basic structure of the rule making process.
9:52
In general the Administrative Procedure Act or APA requires an Agency to publish in the Federal Register a notice of proposed rule making this is often called the proposing release or the NPRM. [Notice of Proposed Rulemaking]
9:59
The Agency must then receive comments from the public and address those comments in the document releasing the final rule.
10:07
Among other things the proposing release must contain the following 10 things:
- A summary of the proposed rule
- Information about how to provide comments on the proposed rule
- The date by which the comments are due, or in other words the comment period
- The statutory authority for the proposed rule
- An explanation of the rule and the reasons for the proposed rule
- An initial regulatory flexibility analysis
- A discussion of the likely impact of the proposed rule on small entities
- If the rule requires the provision of information to the government by the public an initial Paperwork Reduction Act analysis
- An Office of Management and Budget Circular A-4 compliant cost-benefit analysis and other OM required material, and then
- The actual proposed amendment to the Code of Federal Regulations or CFR.
11:15
Probably the best source of information regarding the detailed requirements for drafting either an NPRM or final rule is the Document Drafting Handbook prepared by the Office of the Federal Register, all 238 pages of it.
11:27
The Administrative Conference of the United States, a government Agency, has a lot of detailed information that can help address specific questions relating to the rule making process.
11:41
Most of this sounds harder than it is but it is time-consuming, requires significant attention to detail, and must be done correctly to accomplish your objective.
11:48
It's not optional.
11:55
Once the public comments are in you must evaluate and respond to those public comments in the final rule.
12:01
By final rule here I mean not just the revised CFR language but the entire release containing the final rule.
12:06
Among other things the final rule must contain the following 10 things
- A summary of the final rule
- The statutory authority for the final rule
- An explanation of the final rule and the reasons for the rule
- A discussion of the comments by made by various commentators and the reasons why the Agency accepted or rejected those comments. This discussion need not address each commentator individually by name but it needs to address the issues raised by the commentators or it may endanger the rule when it is subject to judicial review
- A final regulatory flexibility analysis has to be included
- A discussion of the likely impact of the final rule on small entities
- If the rule requires the provision of information to the government by the public a final paperwork reduction analysis has to be included
- And an OMB Circular A-4 compliant cost benefit analysis and other OMB required material has to be in there as well
- The actual final amendment to the CFR also has to be in there. It's usually at the very end of the final rule release
- Lastly it has to have an effective date of the final rule.
13:25
It should be noted that generally a final rule cannot adopt a provision if the proposing release did not clearly provide notice to the public that the Agency was considering whether to adopt it.
13:32
The courts have developed a so-called logical outgrowth test.
13:37
In other words the final rule must be a logical outgrowth of the proposed rule.
13:46
If it is not the court will probably decide that adequate notice was not provided to the public and strike down the rule.
13:53
This is rare but it does happen and a judicial doctrine such as this is necessary to prevent Agencies from effectively evading the APA notice and comment requirements.
So that’s a rule that Burton agrees with.
14:00
If you do decide that you want to substantially change your approach it may be advisable to issue a revised NPRM and reopen the proposed rule for comments.
14:07
At the very least you should consult in-house counsel.
14:13
Also consider that going forward with an approach that may result in a court invalidating a rule may be fatal because litigation can take years.
You may be out of office by the time the case is decided and your successor may be less committed to the rule or from the other party and simply opposed to it.
14:31
I should also note that in certain instances particularly if the Agency is entering into a new field or the rule making is heavily dependent on empirical data the proposed rule stage may be proceeded by an Advanced Notice Of Proposed Rule Making, an ANPRM, or a Request For Information or RFI.
14:56
These are designed to elicit data or ideas from the public prior to the issuance of a proposed rule and it makes it much less likely that you will need a dramatically change direction and issue a second NPRM and reopen the proposed rule for comment.
Now back to the propaganda.
15:10
I estimate for the next administration to get the US back to the level of regulation at the beginning of the Obama administration hardly a regulatory Nirvana it will have to promulgate about 800 major rules.
Don’t get me started on abuse of Buddhist language.
15:35
That is nearly one per business day for the entire duration of the administration and because most political appointees will not be confirmed by the Senate until many months after the inauguration day and because as I will discuss later of the Congressional Review Act the time period in which this work must be done is actually much more truncated.
15:54
Agencies only have the authority granted to them by Congress.
15:59
Unfortunately Congress has generally provided sweeping authority to most Agencies.
16:05
There are however limits.
16:11
Any rule making must point to a statute that grants the Agency the authority to promulgate the rule in question.
16:17
In some cases the grant of authority is breathtakingly broad in other cases it's more circumscribed.
16:24
You need to become familiar with the relevant statutory language in the Agency or Agencies where you hope to work.
16:31
Any rule that you choose to promulgate must fall within the statutory authority granted by Congress.
16:36
Typically this will not be a problem for conservatives but you need to think through any potential issues particularly for proactive rule makings as I will discuss later in more detail.
16:46
Under current Supreme Court cases, notably the 1984 case Chevron versus Natural Resources Defense Council, courts lean over backwards to permit Agencies to get their way.
16:53
This is starting to change.
17:00
In 2022 in West Virginia versus EPA the Supreme Court held that the Major Question Doctrine requires that a clear statutory statement is necessary for a court to conclude that Congress intended to delegate regulatory authority to an Agency with respect to major questions.
17:14
During this Supreme Court term LOPER BRIGHT ENTERPRISES ET AL. v. RAIMONDO,
SECRETARY OF COMMERCE, ET AL., the court will decide whether to reverse or modify Chevron itself.
Yes, they tossed it out.
17:33
This case will be decided before the next administration takes office.
17:47
The Administrative Procedure Act enacted in 1946 provides the basic outline of how rule making is done.
17:54
It also governs administrative hearing and other procedural matters which we will not address here.
17:59
Agencies promulgated 3585 rules in 2022 80 of which were deemed major rules.
18:12
A major rule is defined generally as one that is resulted in or is likely to result in
- An annual effect on the economy of $100 million or more.
- A major increase in costs or prices for consumers; individual industries; Federal, state, or local government Agencies or geographic regions or.
- Three, significantly adverse effects on competition, employment, investment, productivity, or innovation, or on the ability of the United States based enterprises to compete with foreign based enterprises in domestic and export markets.
18:44
2167 rules were promulgated during the first eight months of this year and more to come.
18:50
So what is a rule?
18:57
The APA defines a rule and relevant part as “the whole or a part of an Agency statement of general or particular applicability and future effect designed to implement interpret or prescribe law or policy or describing the organization procedure or practice requirements of an Agency.”
19:41
That's a broad definition but increasingly Agencies have sought to evade the APA notice and comment requirement by issuing so-called guidance documents.
19:52
Courts have largely let them get away with this.
20:00
In principle guidance documents do not have the force of law on like a rule. In practice however they do since they inform the Agency's enforcement posture.
20:05
Few regulated entities take guidance documents casually since ignoring them often results in being on the receiving end of an enforcement action.
20:10
The Trump administration tried to police the use of guidance documents as a means to evade the APA when it issued Executive Order 13891 on October 9th 2019.
20:29
That order required each Agency to post all guidance documents to a single searchable index website and subjected guidance documents to various requirements including notably cost benefit analysis.
20:36
This in turn resulted in an OMB memorandum M-2020-02 a few weeks later on October 31st to implement the Executive order.
20:51
The Biden administration revoked Executive order 13891 on its first day, so Agencies are now free to return to their previous practices under Section 553 of the APA interpretive rules.
21:09
General statements of policy or rules of Agency organization procedure or practice are exempt from the notice and comment requirements of the APA.
21:15
So that raises the question, what is an interpretive rule?
21:23
That's a good and difficult question.
21:29
The courts are all over the map using different standards and different analysis.
21:35
At least one court has said notice and comment is required if the rule creates new rights and duties.
21:41
Others have asked whether the rule imposes a binding Norm.
21:47
If so then it is subject to the notice and comment requirements.
21:52
Others have used a four-part legal effect test.
21:57
Others have asked whether the rule is truly interpretive or clarifying as opposed to making a “substantive change”.
22:03
There are related cases about what is and is not a general policy statement but in general if the statement is deemed non-binding a court probably will not impose a notice and comment requirement.
22:11
This is also related to the guidance document question discussed a few minutes ago and various administrations have tried to impose various requirements on different types of interpretive rules and guidance documents.
22:29
Finally the potentially evolving Supreme Court Chevron Deference Doctrine will have an impact on all of this.
22:35
If the Loper Bright Enterprises v. Raimondo case circumscribes deference then courts will be less willing to accept at face value the Agency's designation of a rule as interpretive.
22:46
Now what should you as a potential political appointee make of all this?
22:54
My recommendation is this: If the proposed rule matters a lot to you don't try to circumvent the notice and comment requirements by deeming the rule interpretive.
23:06
Obviously the notice and comment requirements impose costs and consume limited time but failing to run that Gauntlet gives opponents one more angle of attack as they seek to overturn the rule in court.
23:14
Moreover doing so will also make it that much harder for a future Progressive administration to reverse the rule.
23:25
I would also strongly urge that you seek advice from in-house Counsel provided that they're genuine administrative law experts and seek advice from administrative law experts in the conservative policy Community.
24:03
While on the subject of guidance documents let me mention one more important thing, because they are not rules.
They are much easier to get rid of than rules. They can simply be withdrawn by an incoming administration.
24:11
Easy Come Easy Go.
24:17
And in the vast majority of cases Biden administration guidance should be withdrawn.
24:23
Those monitoring a given Agency should be preparing a running list of guidance documents issued during the Biden years and evaluate those documents.
24:29
Those that need to be withdrawn should be identified now and the new conservative administration should simply withdraw them within a week.
24:35
Then new alternative guidance can be issued preferably actual rules implementing a conservative policy agenda will soon follow.
25:02
The APA imposes no statutory minimum common period.
25:07
A comment period shorter than 30 days however is almost unheard of.
60 or 90 days is more normal especially for complex or controversial rules.
25:13
The Biden administration however has been criticized for its excessively short comment periods.
25:18
The APA does require that final rules be published 30 days prior to their effective date.
25:23
The APA requires a concise general statement of a Rule's basis and purpose.
25:31
Concise is in the eyes of the beholder but most such statements in proposing releases and final rules are not particularly concise and there's a reason for this.
25:43
It's judicial review.
25:49
The Agency needs to show that its rule has a basis in law and in fact to survive judicial review particularly the arbitrary and capricious standard.
25:56
So you will need to put significant effort into explaining why your proposed rule makes sense from a legal policy and economics perspective.
26:04
The APA requires the Agency to provide notice and receive comments with respect to legislative or substantive rules.
26:10
In your final rule, you need to address the issue raised by these comments.
26:15
You do not need to accept the recommendations made in the comments.
26:20
You do not need to address each comment separately.
26:28
You do need to address legit legitimate issues and concerns raised by the comments in the final release and explain why you accept or reject the point made in the comment.
26:33
Otherwise you risk a court determining that your actions were arbitrary and capricious.
26:39
This process can be tedious and time-consuming but it is absolutely necessary.
26:46
Comments are part of the formal regulatory record or docket and may be referred to by litigant.
26:53
In fact they usually are.
27:33
Agencies sometimes issue what are called interim final rules or temporary rules.
27:39
These rules are sometimes colloquially called emergency rules.
27:44
Such rules take effect immediately but then a comment period is open.
27:50
The APA permits this if the Agency for “good cause” finds, and incorporates the finding in a brief statement of reasons therefore and the rules issued, that notice and public procedure thereon are impractical, unnecessary, or contact contrary to the public interest end quote.
28:07
The Agency must consider post-effective date public comments and in principle should modify the rule in light of those comments and will then adopt a final rule.
28:18
These rules are subject to judicial review like any other final rules but of course the issue of whether or not there was actual good cause is also at issue.
28:24
As to the issue of whether good cause is shown in general courts will let this happen if the Agency is responding to something beyond its control rather than just trying to accelerate the regulatory process for political reasons.
28:46
For your information part of Project 2025 called Pillar IV or the 180-day Playbook is developing potential rule makings for the next conservative administration.
These permeate the entire text, affecting almost every Agency of the US government.
In Pillar IV—the Playbook—we are forming agency teams and drafting transition plans to move out upon the President’s utterance of “so help me God.”
Project 2025 Abolish, Eliminate, End, Outlaw, Remove, Shut Down, Privatize...
28:53
You should be aware of the work being done with respect to the Agency or Agencies where you hope to work.
29:05
Moreover this effort needs your participation.
29:13
A document called the Unified Agenda of Regulatory and Deregulatory Actions is one that you should become familiar with.
29:19
Most of it is required by the Regulatory Flexibility Act but some of the requirements are a function of Executive order 12866 as amended.
29:25
It can be accessed at www.Reginfo.gov and once you're there, click on the Unified Agenda and Regulatory Plan.
29:38
You can sort by Agency and determine and determine what rules they're working on including rules that have yet to be proposed.
29:50
This will enable you to track what the Biden administration is doing in the regulatory space and what it plans to do.
29:57
But you also need to become familiar with this because you will be required to provide similar information once you're in office.
30:05
This is a joint effort of the Office of Information Regulatory Affairs at OMB, called OIRA, and the Regulatory Information Service Center at the GSA.
OM and its Office of Information and Regulatory Analysis or OIRA plays a crucial role in a regulatory process.
30:16
The administrator of OIRA is often called by the media the regulatory Czar.
30:29
OIRA’S website is whitehouse.gov/OMB/information-regulatory-affairs.
30:41
You need to spend some time there.
30:48
OIRA is a very small Agency too small actually it has a staff of about 50.
30:56
A conservative administration should increase its Staffing levels considerably.
50 people are not enough to adequately police the regulatory actions of the entire Federal government.
31:03
OIRA is one of the few government Agencies that limits the regulatory ambitions of other Agencies.
31:08
There are a few others like the SBA's Office of Advocacy but OIRA is by far the most important.
31:14
The two most important things it does, at least in my opinion, is enforce the Paperwork Reduction Act and Executive Order 12866 as augmented by OM Circular A-4.
31:34
OIRA reviews draft of proposed and final regulations and in my judgment working with OIRA closely will generally make your rule makings better.
31:39
OIRA also coordinates a retrospective review of Regulation under Executive Order 13610.
31:45
It oversees the implementation of government-wide policies in the areas of information policy, privacy, and statistical policy.
31:50
OIRA also coordinates Agency implementation of the Information Quality Act and the implementation of SBREFA, the Small Business Regulatory Enforcement and Fairness Act.
32:15
Executive order 12866 was originally adopted by President Clinton.
32:22
It has been amended several times most recently by President Biden's Executive order 14094.
32:28
The Biden Executive order among other things increases the threshold of a quote significant regulatory action to $200 million from $100 million, requires that the regulatory analysis recognize distributive impacts and equity, and takes various steps regarding the promotion of inclusive regulatory policy.
32:51
OM Circular A-4 lays out in detail how cost-benefit analysis should be done and other regulatory requirements.
32:58
Needless to say the Biden administration has proposed amending Circular A-4 in a manner that will let far more regulations pass muster.
33:14
For example it would reduce discount rates for assessing future costs and benefits from 3-7% to 1.7%.
33:22
The fact that 30-year treasury Securities effectively risk-free currently yield over 4% apparently does doesn't matter.
33:27
It mandates more emphasis on distributional effects and requires the treatment of different people's cost and benefits differently.
33:33
Affluent people's cost for example will be weighted less than low-income people's cost for example on a Declining Marginal Utility of Income Theory.
33:51
An incoming conservative administration will presumably revoke Executive Order 14094 and revise OMB Circular A-4 to something more like what it looked like prior to the Biden administration.
33:57
Hopefully this will happen with alacrity.
34:03
OIRA review only applies to significant regulatory actions as defined in the Executive Order.
34:09
There are both monetary and non-monetary standards.
34:14
What you need to know is that you must ensure that your Agency complies with these rules as revised.
Compliance is not optional.
34:19
OIRA has the authority to return a rule to an Agency for non-compliance.
34:25
Moreover poor cost-benefit analysis is a common reason why courts invalidate rules.
34:54
In most cases where an Agency is proposing to require the public to produce information to the government the 1980 Paperwork Reduction Act requires that Agencies obtain an OM control number, produce burden hour estimates, and ultimately to get OIRA clearance under the Paperwork Reduction Act or PRA, if an Agency is going to institute a new information collection requirement, it must place a notice in the Federal Register separate from and before the proposed rule and seek public comment, and then later provide notice that OIRA clearance has been requested by the Agency.
35:31
Then it must get OIRA clearance.
35:37
All this is prior to releasing a proposed rule.
35:44
It would be my estimate that this process typically adds about 6 months to the overall rule making process but it only applies to a rule that requires the public to provide information to the government.
36:05
The Regulatory Flexibility Act or RFA was enacted in 1980 the statute has been amended several times since then.
36:11
The RFA requires an Agency to do an Initial Regulatory Flexibility Analysis or IRFA in its proposed rule in response to comments and any changes in the rule.
36:25
A Final Regulatory Flexibility Analysis is also required in the release of the final rule.
36:32
Agencies must assess the effects of the regulations on small entities which the RFA IRFA defines to include small businesses, small governmental jurisdictions, and small not-for-profit organizations.
36:44
The Agency must estimate the number of small entities affected by the proposed and final rule.
36:55
It requires the Agency to specific and publicly addressed regulatory comments by the SBA'S Office of Advocacy.
37:04
IRFA’s are also required to contain a description of any significant alternatives to the proposed rule which accomplish the stated objectives of the proposed rule and which minimize any significant economic impact of the proposed rule on small entities.
37:15
Further the Agency must discuss different types of flexibilities that could be included in the rule including the establishment of differing compliance or reporting requirements or differing timetables that take into account the resources available to small entities.
37:37
It also has to consider an exemption from coverage of the rule or any part of it for such small entities.
37:43
The RFA imposes a whole series of other obligations that are more tangentially related to the regulatory process such as mandate small entity compliance guides and the establishment of Small Business Review Panels.
38:14
The Unfunded Mandates Reform Act of 1995 is designed to address Federal legislation or regulation that imposes an enforceable duty on state, local, or tribal government, whether that involves costs or impedes their ability to collect revenue without a corresponding funding mechanism from the Federal government.
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An Agency that may impose such costs must provide a variety of information including an estimate of the cost being imposed in both the proposing release and in the final rule.
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The Federal Register has been with us since 1936.
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As I have discussed all notices proposed rules and final rules must be published in the Federal Register.
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These documents have to be drafted in compliance with the rules promulgated by the Office of the Federal Register.
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The Document Drafting Handbook published by the Office of the Federal Register lays out the details.
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First published in 1938, the 50 title Code of Federal Regulations or CFR is the codification of regulations promulgated by the Executive Departments and other Agencies of the Federal government.
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Almost any rule that you promulgate will involve an amendment or addition to the Code of Federal Regulations.
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The CFR is also published by the Office of the Federal Register.
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The online version is updated on a rolling basis and is available at ecfr.gov.
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You will need to check any Agency specific regulatory requirements for the Agency where you hope to work, as I will discuss in a minute.
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These are typically imposed by Congress but some may be imposed by an Agency's own rules and procedures.
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The Congressional Review Act was adopted as part of the Small Business Regulatory Enforcement Fairness Act in 1996.
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It allows Congress in the form of a Joint Resolution of Disapproval to consider legislation to overturn rules.
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The disapproval resolution cannot be filibustered in the Senate.
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If a CRA Joint Resolution of Disapproval is approved by both Houses of Congress and signed by the President or if Congress successfully overrides a Presidential veto the rule at issue cannot go into effect or continue in effect, with three fairly narrow exceptions.
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It adopts the APA definition of a rule.
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The CRA requires Agencies to submit their rules to both houses of the Congress and the Government Accountability Office or GAO before they may take effect.
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Now there is a clock on CRA disapproval resolutions.
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The disapproval resolution must be introduced in the period beginning on the date which the Agency gave notice to Congress and ending 60 days thereafter, excluding days either House of Congress, the House or the Senate is adjourned for more than 3 days.
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If a rule submitted to Congress fewer than 60 working days before it adjourns its final session i.e adjourns sine die a new period for Congressional review becomes available in the incoming Congress.
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The disapproval resolution must use specific language although it's simple, to wit that Congress disapproves the rules submitted by name of Agency relating to the name of rule and such rules shall have no force or effect.
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That's that's it. The CRA has been used successfully about 20 times.
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It usually is used by an incoming Congress and a new President to reverse so-called midnight regulations by previous administration of the other party.
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There are two morals to this story.
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First, make sure that your rule is submitted to Congress and the GAO as required so that the CRA clock starts running.
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Some Agencies have actually blown this in the past.
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Second, try to get your rule out more than 60 legislative days before Congress adjourns sine die if a new administration might take office, so that the disapproval resolution clock will have expired.
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Determining the date for the 60-day clock can be a bit challenging since you don't necessarily know what Congress's calendar in its second session will look like ahead of time.
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Appropriations bills or riders are regularly used to affect the regulatory process.
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They usually take the form of “no funds are appropriated or otherwise made available by law shall be used to dot dot dot”.
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The dot dot dot would be filled in with the rule that you're trying to affect.
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Congress uses this very often to stop regulations that it wants to to put an end to, uh and it works but it needs to be included in each annual Appropriations Bill to remain in effect.
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You need to also be aware of any such appropriations riders relating to your Agency that are in effect.
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In principle an appropriations bill could require that funds be used to develop, propose, and finalize the regulation but I am unaware of that actually being done via the Appropriations process.
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Rule making mandates and non Appropriations bills are quite common.
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They usually impose unrealistic deadlines and Agencies routinely blow through the deadlines but eventually they get the job done, sometimes years late.
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The speed with which the Agency addresses the rule making mandate from Congress is of course related to to whether those running the Agency support the proposed rule making.
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These requirements very substantially as to the substantive specificity of the rule making requirement.
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Sometimes they just impose a requirement that the Agency promulgated a rule about some issue.
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Sometimes they're quite specific about what the Agency must do down to the paragraph that needs to be added or deleted.
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Rule making moratoriums are much less common but they happen.
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I've gotten them done in the past myself.
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You need to be familiar with any rule making requirements or or prohibitions imposed by statute for your Agency.
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Lawsuits challenging important rule makings are virtually inevitable.
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You should expect that any rule you promulgate will be challenged in a courtroom and draft your rule the proposing release and the final release assuming that will happen.
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You need to dot your procedural i’s and cross your regulatory process t's.
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If you don't then all of your work will be for nought.
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Chevron deference to some extent previously is about courts providing deference to Agencies with respect to statutory interpretation.
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As the court put it “if the statute is silent or ambiguous with respect to the specific issue the question for the court is whether the Agency's answer is based on a permissible construction of the statute.”
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Not best construction, not the most logical construction, not the construction most consistent with demonstRated Congressional intention, but a permissible construction.
As I mentioned the LOPER BRIGHT ENTERPRISES ET AL. v. RAIMONDO,
SECRETARY OF COMMERCE, ET AL case before The Supreme Court this term may revisit this.
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For now the standard effectively is whether the government's lawyer can string together a rational argument for the Agency position.
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If so they win.
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So called Auer or Seminole Rock defense is even more problematic at least to me.
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Auer is a 1997 Supreme Court case and Seminole Rock & Sand Co. is a 1945 Supreme Court case.
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Those cases stand for the proposition that courts will show deference to an Agency's interpretation of its own rule unless it is plainly erroneous or inconsistent with the regulation.
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Now this provides a tremendous incentive for Agencies to write bad rules with massive ambiguity in the rules language so that the Agency retains the maximum amount of discretion going forward.
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It also means that regulated entities or Persons get the least amount of guidance about what the law actually requires of them and in fact moderate Agencies routinely write bad opaque rules with massive ambiguity built in.
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A 2019 case Kisor v. Wilkie muddles the matters considerably.
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The existing Auer and Seminole Rock standards were seemingly modified but the court did not explicitly overrule them.
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Dissenting justices, now probably in a majority, were willing to overturn Auer and Seminole Rock.
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This area of the law is in flux.
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Stay tuned.
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With all of that as background there are five major causes for rules being invalidated by courts.
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First, they may be found to be arbitrary capricious or an abuse of discretion.
This happens but it's not common.
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Second, they may be found to be contrary to constitutional right power privilege or immunity.
This is rare.
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Third, they may be found to be an excessive statutory jurisdiction or authority.
This happens, but the frequency is a function of which Agency and which grant of authority.
West Virginia versus EPA makes this more likely.
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Fourth, a rule may be found to be unsupported by substantial evidence.
This happens but it's rare.
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Fifth, they may be found to have been promulgated in violation of some procedural requirement.
This happens, and I would judge that the most common is the non-compliance with cost benefit analysis requirements, but that may just be a function of the Agencies that I follow and work with, rather than an accurate overall assessment.
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There's a whole body of complex case law here and it's stated the different doctrines are in flux, but given time constraints I'll leave it at that.
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The important thing is that you, in your proposing release and in the final release you fortify your rule making as much as possible against these attacks.
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I have 10 recommendations for what you need to do to be an effective policy maker a policy maker that will actually move the conservative agenda substantially forward forward.
First, download and completely read three or four proposed rules and three or four final rules put out by the Agency or Agencies where you hope to work.
Just reading these will give you a strong sense of what will be required.
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Pick some that are complex and long and pick some that are simple and shorter.
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None are probably genuinely short.
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Second, download and read a few proposed rules and final rules from other Agencies.
Different Agencies do things differently and you should not be locked into doing things the way the Agency bureaucracy where you hope to work has always done it.
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Proposed and final rules can be found on Agency websites, on regulations.gov, and in the Federal Register at Federalregister.gov.
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Third, download and read the section of the unified agenda on of regulatory and deregulatory actions at OM that describes the regulatory agenda of the Agency or Agencies where you hope to hold office.
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This will serve two purposes.
First you will see what the Agency is working on, much of which will need to be stopped, and you will see what you'll need to put together at the beginning of the next administration.
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Fourth, read the following five statutes:
• The Administrative Procedure Act
• The Regulatory Flexibility Act
• The Paperwork Reduction Act
• The Unfunded Mandates Act
• and the Congressional Review Act.
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Fifth, read Executive order 12866 as amended and since the Biden administration is amending it unfavorably you might want to read the previous version and also look at OM Circular A-4.
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Be aware that the Biden administration is about to amend OM Circular A-4 to to facilitate their regulatory agenda and the next conservative administration will need to revise it and you'll have to comply with the revised version.
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Six, download and read the sections in the office of the Federal Register’s Document Drafting Handbook relating to proposed rules and final rules.
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Seven, read the parts of the US Code that relate to the bureaucratic structure of the Agency or Agencies where you hope to work and the grant of authority to that Agency where you hope to work.
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This of course will be different for each Agency.
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Eight, become familiar with the statutes that govern the general regulatory structure that applies to those whom your Agency regulates.
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In some cases this is relatively simple in others it is a complex morass.
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If you're a lawyer you presumably know how to do this.
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If you are however for example an economist or a business person then you need to become familiar with the law.
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If you don't understand the basic law governing your area then it'll be very difficult for you to be effective.
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Nine read chapter 3 in Project 2025’s Mandate for Leadership, The Conservative Promise.
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That chapter is entitled Central Personnel Agencies Managing the Bureaucracy.
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And 10 read the relevant chapters in Mandate for Leadership relating to the Agency or Agencies where you hope to work.
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Although this was a coalition effort and sometimes reflects differences within the conservative movement this book will be very helpful to you as you develop prior authorities and a regulatory agenda.
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And then read as much as you can by the Heritage Foundation and other conservative or pro-market think tanks or organizations in the substantive field where you hope to work.
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Become a genuine policy expert now, not on the job.
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You have two years to prepare.
Now nominally down to four months, apart from the fact that Donald Trump’s chances of winning in Roevember shrink every day.
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If you do these 10 things and watch this video again you will be way ahead of where the typical conservative personal political appointee is.
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Do these things now so you're not learning on the job.
To be effective, you cannot waste massive amounts of time with on the job training.
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Instead be prepared to do the job from day one, and once again learning the material described in this course is simply not optional if you want to be effective.
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I hope you found this course to be of value. I appreciate you taking the time to watch it.
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Thanks again.
