L'État, c'est moi

L'État, c'est moi is what came into my mind when I read the Executive Order on Ensuring Accountability for All Agencies issued by the President today. The executive order is not only the most complete and direct enshrinement of the unitary executive theory we've yet seen from the administration, but it also marks the end of independent regulatory agencies. And coming from a President with a distinct taste for Louis XIV gilt, well, you can understand why my mind wandered to the lord of Versailles. 

Historically, going back to the Reagan administration, EO 12866 required all executive agencies to submit major regulatory actions like rule makings to the Office of Management and Budget for review. But EO 12866 and its successors always exempted independent regulatory agencies like the CFTC, FTC, FDIC, Federal Reserve Board, NCUA, OCC, and SEC. The thinking (I believe) was that if the President did not have unfettered removal power over the heads of those agencies, he also did not have the power to control what rules they issued:  the greater includes the lesser. 

Well, no longer. According to this ukase, all executive agencies (including the Federal Reserve Board when acting as bank regulator) are under the thumb of OMB. It's all done in the name of accountability, and who could be against accountability, right? Of course, accountability takes many forms, and Congress, in its wisdom did not create all agencies the same nor did it place all of them under the direct control of the President. And the Presidential control claimed here is not just approval over proposed rule makings. It is also about budgetary control. The EO provides that the OMB Director shall: 

consult with independent regulatory agency chairmen and adjust such agencies’ apportionments by activity, function, project, or object, as necessary and appropriate, to advance the President’s policies and priorities.  Such adjustments to apportionments may prohibit independent regulatory agencies from expending appropriations on particular activities, functions, projects, or objects, so long as such restrictions are consistent with law. 

In other words, the White House will be telling independent agencies how to spend their money. If the White House thinks that the FTC is spending too much on antitrust enforcement, it can tell it to stop doing so and shift the money elsewhere (subject to the Anti-Impoundment Act, which will itself surely be in for a legal challenge). (I think the bank regulators are actually safe here, as their budgets are not subject to appropriations...) 

And then there's this. One of the EO's more incredible provisions is that:

The President and the Attorney General, subject to the President’s supervision and control, shall provide authoritative interpretations of law for the executive branch.  The President and the Attorney General’s opinions on questions of law are controlling on all employees in the conduct of their official duties.  No employee of the executive branch acting in their official capacity may advance an interpretation of the law as the position of the United States that contravenes the President or the Attorney General’s opinion on a matter of law, including but not limited to the issuance of regulations, guidance, and positions advanced in litigation, unless authorized to do so by the President or in writing by the Attorney General. 

Does this apply to administrative law judges, who are executive branch employees? Are they allowed to have independent interpretations of law? What about the heads of federal regulatory agencies when acting in an adjudicative function? (E.g., appeals from the CFPB's ALJ go to the CFPB Director.) And what does this means for attorneys at federal regulatory agencies? Does "opinions" here mean only written, published opinions, or just whatever the President's opinion happens to be? As seems to be the modus operandi of this administration, this EO was released before it was fully-baked. If an ad law amateur like me is spotting possible issues....

Update 12/19:  How could I have forgotten this one:  the EO exempts the Federal Reserve Board, but only when it is not acting as a bank supervisor (meaning that its payment systems operations and its participation in the Federal Open Markets Committee is exempted). That's a very nice and neat conceptual siloing of the FRB's activities, but isn't so neat in real life:  bank regulation is part of monetary policy. So while the White House won't be able to direct the sale and purchase of Treasuries and other securities by the Fed, it will have substantial ability to direct bank regulatory policy, including putting pressure on (dare I say "threatening"?) banks to open the credit spigot to heat up the economy.

There's a good reason that bank regulatory policy has long been hived off in independent regulatory agencies: the temptation of pushing easy credit would be difficult for any administration to avoid, but that's a recipe for greater volatility in the economy. Not only is it unclear that a boom/bust cycle is better for the economy overall in the long term, but the busts are particularly hard on those who cannot readily diversify their economic exposure, like workers who get laid off.