The Checks and Balances Letter: September 2018
From Ballotpedia
The Checks and Balances Letter delivers news and information from Ballotpedia’s Administrative State Project, including pivotal actions at the federal and state levels related to the separation of powers, due process and the rule of law.
This edition:
We report on the impact at the Securities and Exchange Commission and on other federal agencies of the U.S. Supreme Court’s notable ruling on administrative law judges (Lucia v. SEC). At the SEC, the commission has lifted a stay on ALJ proceedings that was issued following the high court’s June decision, and will allow nearly 200 respondents to opt for rehearings with a different ALJ. Meanwhile, the American Bar Association issued a model code of conduct for state ALJs.
We also examine a district court ruling that blocks some provisions of President Trump’s civil service executive orders, another ruling forcing broader disclosure of donors to nonprofit groups, and the wholesale regulatory review underway in Arkansas.
The Checks and Balances Letter
In Washington
SEC allows nearly 200 respondents to opt for rehearing under different ALJ
- What's the story? The Securities and Exchange Commission (SEC) on August 22, 2018, lifted its stay on ALJ hearings and ordered that respondents in all pending and appealed cases be given the option of a new hearing before a different ALJ.
- The commission’s order allowing rehearings is to ward off litigation on cases that may have been heard by improperly appointed ALJs.
- The commission issued the stay on all ALJ proceedings after the court ruled in Lucia v. SEC that the agency's ALJs are “officers of the United State” and thus subject to the Appointments Clause. As such, only those appointed by the president, Congress or the commission--and not those hired by SEC staff--were properly appointed to hear cases. The commission retroactively ratified all ALJ appointments pursuant to the Appointments Clause in November 2017, but issued the stay as a safeguard pending the outcome of the Lucia case.
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Federal appeals court invalidates appointments of mining agency’s ALJs
- What's the story? In light of Lucia v. SEC, a three-judge panel of the United States Court of Appeals for the 6th Circuit on July 31, 2018, invalidated the decision of an ALJ of the Federal Mine Safety and Health Review Commission (FMSHRC) because she was improperly appointed. The panel held that the ALJ should have been appointed by the commission, and not the agency’s chief ALJ (as had been the commission practice).
- The decision was issued in the case of Jones Brothers, Inc. v. Secretary of Labor, in which a Tennessee construction firm challenged a fine imposed by the mining agency for violating safety requirements. The appeals court panel vacated the fine imposed on the company “because [the ALJ] was not appointed by the President, a court of law, or the head of a department, as the Constitution demands.” The court remanded the case to the agency for a new hearing before a properly appointed ALJ.
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NLRB rules that agency ALJs were properly appointed
- What's the story? The National Labor Relations Board (NLRB) on August 6 rejected a packaging company’s bid to dismiss an unfair labor practice complaint by claiming that the agency ALJs were improperly appointed.
- Westrock Services Inc. argued that the board lacked authority to ratify ALJ appointments and claimed that only the heads of cabinet-level agencies and the departments held that authority under the Appointments Clause.
- The commission denied the company’s motion, responding that they collectively function as the department head of agency for the purposes of the Appointment Clause. They cited Lucia v. SEC as well as Free Enterprise Fund v. Public Company Accounting Oversight Board, which held that SEC commissioners constituted a department head for the purposes of the Appointments Clause.
- Westrock can appeal the decision in federal court.
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Federal district judge strikes down Trump reforms of civil service system
- What's the story? Judge Ketanji Brown Jackson of the United States District Court for the District of Columbia struck down several provisions of President Trump’s three executive orders on civil service reform in a ruling on August 25.
- Brown Jackson held that the blocked provisions conflict with federal law, including new limits on the time allotted for union activity during work hours compensated by taxpayers; a reduction in the time that poor-performing employees are given to demonstrate improvement; and curtailment of workplace issues subject to collective bargaining.
- As a candidate, Trump pledged to overhaul a civil service he said was rife with waste, fraud and abuse. The executive orders were issued in May.
- Three lawsuits to block the reforms were filed by the American Federation of Government Employees, the National Treasury Employees Union, and a coalition of 13 smaller public sector unions. The unions claimed that the executive orders violated collective bargaining provisions of the Civil Service Reform Act, and prevented unions from performing their statutory duties. (Brown Jackson consolidated the lawsuits in June 2018.)
- The Department of Justice has not announced whether it will appeal the ruling. A spokesman stated on August 25 that the judge’s decision was under review.
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FEC donor disclosure exemptions overturned
- What's the story? Judge Beryl Howell of the United States District Court for the District of Columbia overturned donor disclosure exemptions granted three decades ago to some nonprofit groups by the Federal Elections Commission (FEC).
- The exemptions allowed some 501(c) nonprofit groups to withhold the names of donors who did not direct contributions to specific advertisements. Howell ruled that the exemptions violated federal statute. She also ruled that the FEC was not entitled to Chevron deference because the relevant statutes were unambiguous about donor disclosure requirements.
- As a result, some 501(c) groups must identify donors who contribute more than $200 annually, whether or not they specify a purpose for the funds. The FEC must issue new regulations within 45 days of the ruling.
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In the States
ABA adopts model code of conduct for state ALJs
- What's the story? The American Bar Association (ABA) on August 7 adopted a model code of conduct for state ALJs. Like their federal counterparts, state ALJs preside over hearings involving regulatory enforcement.
- The code is intended to protect the integrity and independence of state ALJs. Since state ALJs operate within the executive branch rather than the judicial branch, they function outside of judicial branch codes of conduct. According to the ABA, state ALJs are vulnerable to interference from executive branch officials, which could threaten their impartiality.
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Should states or the federal government regulate marijuana?
- What's the story? A majority of respondents in a recent Morning Consult survey prefer that states, not the federal government, regulate marijuana.
- The survey found that 56 percent of the 2,022 adults surveyed prefer state regulation compared to 26 percent that prefer federal regulation. The proponents of state regulations constituted a majority of voters across parties—61 percent of Democratic respondents, 58 percent of Republican respondents, and 51 percent of independent respondents.
- To date, nine states and the District of Columbia have legalized recreational marijuana. Thirty states and the District of Columbia have legalized medical marijuana.
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Arkansas lawmakers conducting broad regulatory review
- What's the story? The Arkansas House of Representatives reviewed regulations from more than 100 state agencies in committee hearings from August 27 through September 6.
- The review was required under Act 781 (the so-called Housecleaning Act), which was signed into law in April 2017. The law required agency directors to inventory every rule and to eliminate all regulations that were outdated and served no useful purpose. Agencies were further required to provide legal justification for enforcing current regulations.
Agencies presented their reports before various House committees. Each committee must then recommend actions to the state’s legislative council, which is slated to vote on the recommendations before year’s end.
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What’s the status of Trump’s civil service reforms?
- As noted above, Judge Ketanji Brown Jackson of the United States District Court for the District of Columbia struck down some elements of President Trump's executive orders on civil service reform. Brown Jackson ruled that the blocked provisions conflict with federal laws governing collective bargaining.
- Below, we take stock of what remains of the president’s reforms as a result of the ruling:
E.O. 13836: Developing Efficient, Effective, and Cost-Reducing Approaches to Federal Sector Collective Bargaining
- What is it? The order directs agencies to finalize negotiations within one year; requires agencies to make union contracts available online; and creates an Interagency Labor Relations Working Group to facilitate communication among agencies engaged in collective bargaining.
- What was blocked? Time limits for some collective bargaining; requirements that negotiations are conducted through written proposals; prohibitions against collective bargaining on “the numbers, types, and grades of employees or positions assigned to any organizational subdivision, work project, or tour of duty, or on the technology, methods, and means of performing work.”
- What remains? Guidelines to prevent bargaining over matters covered by other agreements; the release of collective bargaining agreements to the public; and creation of the Interagency Labor Relations Working Group.
E.O. 13837: Ensuring Transparency, Accountability, and Efficiency in Taxpayer Funded Union Time Use
- What is it? An order was intended to minimize taxpayer costs associated with collective bargaining.
- What was blocked? Sections directing agencies to negotiate for no more than one hour of union time during work hours; preparation of grievances, and requiring employees to obtain written permission from their agency before using union time.
- What remains? Reporting and monitoring requirements for agencies to track the use of union time.
E.O. 13839: Promoting Accountability and Streamlining Removal Procedures Consistent with Merit System Principles
- What is it? The order was intended to streamline the discipline and dismissal procedures for poor-performing employees. The order also presented principles, management tactics, and reporting procedures for addressing employee accountability.
- What was blocked? Directives to exclude disputes over employee removals from some grievance procedures, limits on the time allowed poor-performing employees to demonstrate improvement.
- What remains? General accountability principles; provisions for data collection on adverse employee actions; a prohibition on removing information about an employee’s adverse actions from employee record as a condition of resolving a complaint; and a prohibition against agencies reaching collective bargaining agreements that limit agency discretion to address poor-performing employees.
Regulatory Tally
Federal Register
- The Federal Register in August increased by 7,394 pages, bringing the year-to-date total to 44,814 pages. Between 2009-2016, the year-to-date total at the end of August averaged 53,208 pages.
- The Federal Register included 183 proposed rules and 306 final rules during August 2018. The regulations covered a variety of topics, including endangered plant species, duck hunting, and changes to the Federal Communication Commission’s (FCC) Emergency Alert System.
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Office of Information and Regulatory Affairs (OIRA)
- OIRA’s recent regulatory review activity includes:
- Review of 35 significant regulatory actions. Between 2009-2016, the Obama administration reviewed an average of 43 significant regulatory actions each August.
- Approval of five rules without change, and recommended changes to 28 proposed rules.
- Review of 224 significant rules since January, compared to 151 significant rules during the same period in 2017.
- As of September 1, 2018, OIRA’s website listed 84 regulatory actions under review.
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Footnotes
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