Why the REINS Act Is Unconstitutional

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By Bill Funk, Center for Progressive Reform

The so-called Regulations from the Executive In Need of Scrutiny Act (REINS Act) has already passed the House this year, as it did in previous sessions. The current version, which amends the Congressional Review Act (CRA), differs somewhat from previous versions but still suffers from a fatal flaw – it is unconstitutional.

The current REINS Act has three parts. One part essentially reflects the recent Executive Order on Reducing Regulation and Controlling Regulatory Costs, except that the REINS Act only requires repeal of one regulation for each regulation adopted, rather than the E.O.’s two-for-one requirement. Another part of the REINS Act continues the CRA, but only for non-major rules. The final part, the part that is unconstitutional, provides that no “major rule” – defined as a “significant regulatory action” requiring a cost/benefit analysis under Executive Order 12866 – shall take effect until Congress “approves” it by joint resolution. Like the CRA, the approval mechanism is fast-tracked to avoid filibusters and full-fledged debate.

First, it is important to make clear what the REINS Act does not do, but which, if it did, would be constitutional, even if extremely bad policy. The REINS Act does not divest agencies of the statutory authority to issue any major rule, and it does not direct them to propose what would have been a major rule to Congress for possible enactment as a statute. Such a law would be constitutional because agencies do not possess any authority to issue rules that affect the public except as authorized or required by Congress. Consequently, Congress clearly has the constitutional power to limit what rules an agency can adopt. Moreover, Congress could, instead of having agencies issue rules with significant effects on the economy, itself adopt legislation in their place. But, again, this is not what the REINS Act does.

Instead, the REINS Act leaves agency authority to adopt major rules intact, but it delays the effect of those rules unless and until Congress approves them by a joint resolution. After congressional approval and signature by the president, the rule is still a “rule,” not legislation. The REINS Act states that approval of a rule “shall not be interpreted to serve as a grant or modification of statutory authority by Congress for the promulgation of a rule, shall not extinguish or affect any claim, whether substantive or procedural, against any alleged defect in a rule.” Proposed 5 U.S.C. § 805(c).

In other words, the REINS Act makes clear that, even though the rule has been approved by both houses of Congress and signed by the president, it is still a rule adopted under the statutory authority granted by Congress for the promulgation of the rule in the first place. It is not a law passed by Congress. Indeed, the REINS Act specifically provides that courts may still invalidate the rule because of substantive or procedural errors made by the agency.

Is this constitutional? The answer is no. Some have noted that the effect of the REINS Act is identical to a one-house veto, which is clearly unconstitutional under INS v. Chadha, 462 U.S. 919 (1983). That is, under the REINS Act, if either house of Congress fails to pass a resolution of approval, then the major rule will not go into effect. Thus, either house can in essence veto the rule. But this is not the fault of the REINS Act. In Chadha, the problem was that a suspension of deportation was changed by reason of a single house of Congress, but, as the Court stated, Congress cannot effect legal change without bicameralism and presentment. At least with the REINS Act, the legal change – from the rule not being in effect to being in effect – is accomplished through a joint resolution – bicameralism and presentment. No, that’s not the problem.

The problem is the opposite side of the coin from Chadha. In Chadha, the Court said that the Constitution required bicameralism and presentment in order to effect legal change, but what the Court was also saying is that when Congress effects change through bicameralism and presentment, it creates a law – a statute. The legislative powers are vested in Congress, and when Congress acts through bicameralism and presentment, it exercises those legislative powers by creating law. But under the REINS Act, Congress does not create law; it “approves” a rule that does not become a law passed by Congress. It is still subject to judicial review under the REINS Act for substantive or procedural errors made by the agency, which would be impossible if the “approval” by Congress made it a law adopted by Congress. Moreover, the rule is still a rule subject to amendment or repeal by the agency, which also would be impossible if the “approval” made the rule a law passed by Congress.

Professor Jonathan Siegel has made a valiant attempt at defending the constitutionality of an earlier, but substantively identical, REINS Act bill. See Jonathan Siegel, The REINS Act and the Struggle to Control Agency Rulemaking, 16 N.Y.U. J. Legis. & Pub. Pol’y 131 (2013). He recognized that congressional approval of a rule under the Act would not create law, and that rules would remain rules, not legislation, after approval. Nevertheless, he believed there was authority for such congressional approval of agency action. However, none of the cases he cites bear any resemblance to the congressional approval in the REINS Act.

First, all of the cases he cites involve legislative ratification after the fact of agency (or municipal) action as to which there was some question about the agency’s or municipality’s authority. Some of these cases involve state legislative action ratifying action by a state agency or municipality, which is irrelevant to the constitutional issue under the REINS Act. Most of the federal cases Siegel cites involve ratification of a discrete action, such as congressional ratification of taking title to the Panama Canal Zone if there had been any question whether the treaty with Panama had had that effect. See Wilson v. Shaw, 204 U.S. 24 (1907). The other federal cases involve ratification of an agency’s authority to take certain types of action. For example, in Mainstream Marketing Services, Inc. v. F.T.C., 358 F.3d 1228 (10th Cir. 2004), a telemarketing company challenged the Federal Trade Commission’s authority to create a national do-not-call registry. The court, applying Chevron deference to the ambiguous language of the Telemarketing and Consumer Fraud and Abuse Prevention Act of 1994, held that the FTC did have such authority. But, the court went on, “even if some doubt once existed, Congress erased it through subsequent legislation” – The National Do-Not-Call Registry Act, whose purpose was to “ratify the authority of the Federal Trade Commission to establish a do-not-call registry.”

Second, and most importantly, in each of the cases cited by Professor Siegel, the legislation explicitly or by necessary implication created statutory law, law which could only be changed by another statute. Although the focus of much of the legislation was a specific agency action whose authority was questioned, the solution was to ratify the agency’s authority. That authority, therefore, could no longer be questioned. The REINS Act, however, “approves” the agency rule yet explicitly provides that courts may still question the agency’s statutory authority.

Professor Siegel recognizes that “major rules approved by Congress under the REINS Act would have the peculiar feature that, although specifically approved by Congress, they could . . .  be changed by agencies without congressional approval.” Of course, this is entirely inconsistent with the elementary rule that agencies cannot modify statutes. Professor Siegel, however, sees no problem, because he analogizes it to the relatively common practice (although he believes it to be unusual) where Congress creates particular legal requirements but at the same time (or thereafter) explicitly authorizes the president or an agency to add to or subtract from those requirements upon making certain findings.

Professor Siegel gives as an example the Controlled Substances Act, which contains certain schedules of controlled substances but also explicitly authorizes the Attorney General to add or remove substances from those schedules if he makes certain findings. This is nothing new, and nothing like the REINS Act. For example, one might as well have used as an example the Act of June 13, 1798, which suspended commercial relations between the United States and France, but which explicitly authorized the president to discontinue the prohibition upon his making certain findings. In Field v. Clark, 143 U.S. 649 (1892), the Supreme Court listed the many similar acts adopted since 1798, with the understatement that such was “not an entirely new feature in the legislation of Congress.” But the REINS Act bears no resemblance to this common-place and constitutional delegation of legislative powers to the executive. There is no delegation, explicit or implicit, to the agency whose rule has been “approved” to change that “approved” rule, nor any standard upon which the “approval” may be abrogated. The REINS Act cannot be made to fit within this doctrine.

The REINS Act is novel. There has been nothing like it, unless one wants to cite Chadha. As such, it comes already with warning flags. As the Supreme Court said in Free Enterprise Fund v. PCAOB, 561 U.S. 477, 505 (2010), quoting Judge Kavanaugh of the D.C. Circuit, “Perhaps the most telling indication of the severe constitutional problem . . . is the lack of historical precedent. [No one] has located any historical analogues for this novel structure.” The same can be said for the REINS Act.

In short, in the REINS Act, Congress wants to have its cake and eat it too. It wants to be able to approve agency action without authorizing that action; it wants to pass a statute that does not have the effect of a statute. It wants to have the effect of a one-house veto under the guise of bicameralism and presentment but without the effect that bicameralism and presentment necessarily creates – statutory law that can only be changed by another statute. By attempting to deny statutory effect to a joint resolution, Congress is deviating from the requirements of the Constitution.

Originally posted here.

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