Irrelevant oversight: 'presidential administration' from the standpoint of arbitrary and capricious review.

• Author: Rathbun, Daniel P.

The president is now regularly and heavily involved in the decisionmaking processes of administrative agencies. What began in the mid-twentieth century as macro-level oversight has evolved, since the Reagan Administration, into controlling case-level influence. Scholars have hotly debated the legality of this shift and have compellingly demonstrated the need to ensure that agencies remain accountable and that their decisions remain nonarbitrary in the face of presidential involvement. However, as this Note demonstrates, the existing scholarship has not provided an adequate solution to these twin problems.

This Note provides a novel and effective solution to the accountability and arbitrariness problems of presidential involvement by re-examining the doctrine of arbitrary and capricious review. Contrary to contemporary practice, this Note argues that while arbitrary and capricious review is never directly applicable to the president's actions, it is always applicable to agency decisions that the president has influenced. B introduces a bifurcated framework for applying arbitrary and capricious review based on an initial determination of whether Congress has delegated directive authority to the president or the agency. It then demonstrates that arbitrary and capricious review is a better solution to the accountability and arbitrariness problems of presidential involvement than other suggestions in the existing literature.

TABLE OF CONTENTS INTRODUCTION I. THE ORIGINS AND STRUCTURE OF PRESIDENTIAL INVOLVEMENT A. The Birth of the Administrative Agency and the Predominance of Informal Rulemaking B. The Rise and Expansion of Presidential Involvement 1. Historical Models of the Administrative State 2. The Expansion of Presidential Involvement II. THE CONTEMPORARY CRITIQUE OF PRESIDENTIAL INVOLVEMENT AND THE INADEQUACY OF PREVIOUSLY ADVOCATED SOLUTIONS A. The Accountability Critique of Presidential Involvement B. The Arbitrariness Critique of Presidential Involvement C. The Inadequacy of Previously Suggested Solutions III. ARBITRARY AND CAPRICIOUS REVIEW AS A MEANS OF LIMITING PRESIDENTIAL ADMINISTRATION A. A Model for the Application of Arbitrary and Capricious Review in Situations of Presidential Involvement 1. Where the Agency Holds Directive Authority 2. Where the President Holds Directive Authority B. Overcoming Obstacles to the Application of Arbitrary and Capricious Review in Situations of Presidential Involvement C. Arbitrary and Capricious Review as a Solution to the Accountability and Arbitrariness Critiques of Presidential Involvement CONCLUSION INTRODUCTION

The intensification of presidential involvement in agency decision making is one of the most pronounced developments in the past half-century of American administrative law. What began in the mid-twentieth century as macro-level oversight has morphed, since the Reagan Administration, into controlling, case-level influence. (1) Scholars have recognized the magnitude of this transition, and the debate over its legality is now long standing. Some laud the stabilizing tendencies of intensive presidential involvement and justify it by reference to constitutional language. (2) Others condemn it as unconstitutional overreaching and decry its disruptive policy implications. (3) While the debate rages on, however, "Presidential Administration" has become a fact of life. (4)

Accepting this, most contemporary scholars have focused on defining the necessary limitations on presidential involvement and elucidating the best means of effectuating them. (5) These scholars have compellingly articulated the need to ensure that agency decisions remain accountable (6) and nonarbitrary (7) in the face of presidential involvement. Their proposed solutions have spanned the map, meanwhile, and have drawn as heavily from the Framers' intent as from contemporary statutes and case law. (8) But these scholars have given short shrift to what is perhaps the most obvious and practical means of ensuring accountability and nonarbitrariness: the doctrine of arbitrary and capricious review, which requires agencies to base their decisions upon relevant factors. (9) While arbitrary and capricious review is never directly applicable to the president's actions, (10) it is always applicable to agency decisions--including those that the president has influenced. (11) Scholars have failed to recognize the full implications of this point, (12) and the judiciary has shown undue reluctance to apply arbitrary and capricious review in cases of presidential involvement. (13) Asa result, the limits on presidential involvement remain both ambiguous and insufficient. (14)

This Note argues that arbitrary and capricious review can be easily and appropriately applied to agency decisions, even in cases of presidential involvement; that courts are not currently applying it as fully or as broadly as they should; and that, if meaningfully applied, such review would best address the accountability and arbitrariness concerns of contemporary scholars. Part I examines the origins and structure of presidential involvement in agency decision making and describes the administrative context in which it takes place. Part II outlines the contemporary debate over presidential involvement, breaking the debate into critiques based on accountability and arbitrariness, and shows why previously suggested solutions to these critiques are insufficient to address the problems they raise. Part III concludes by applying arbitrary and capricious review to develop a novel and effective solution to the accountability and arbitrariness critiques of presidential involvement.

1. THE ORIGINS AND STRUCTURE OF PRESIDENTIAL INVOLVEMENT

   The president's involvement in agency decision making is enabled, shaped, and limited by the characteristics of agencies themselves. This Part aims to situate the intensification of presidential involvement in relevant administrative context. Section I.A describes the birth and development of the administrative state. It explains how informal rulemaking became the predominant form of agency decision making and hence the focal point of presidential involvement. It also shows how courts expanded on the procedural requirements for informal rulemaking and how these requirements provided the foundation for modern arbitrary and capricious review. Section I.B explores the historical evolution of the administrative state, explaining the emergence and intensification of presidential involvement as a logical outgrowth from earlier administrative models but an imperfect means of correcting their deficiencies.

   1. The Birth of the Administrative Agency and the Predominance of Informal Rulemaking

      Though now taken for granted as a necessary and large part of the federal government, administrative agencies are in fact a relatively recent phenomenon. (15) In the 1930s and 1940s, the government's recognition of new social and economic rights and assumption of new positive duties led to a large increase in government work. (16) Congress in turn delegated much of this work to newly created agencies. (17) The popularity of the initial New Deal agencies would wane in the ensuing years. (18) However, once the Supreme Court had assuaged the separation-of-powers concerns that attended its initial emergence, the burgeoning administrative state had a green light for development. (19) And develop it did. Today, more than two million people work in administrative agencies, regulating everything from labor relations to environmental policy. (20) The work of the federal government is, in a very real sense, the work of agencies.

      The work of agencies has also largely assumed a common form--informal rulemaking (21)--which today serves as the focal point of presidential involvement. Passed in 1946 as an attempt to rein in administrative discretion, the Administrative Procedure Act ("APA") establishes the procedural framework that agencies must abide by in exercising their quasi-legislative and quasi-judicial authority. (22) It delineates four categories of agency decision making: formal rulemaking, informal rulemaking, formal adjudication, and informal adjudication. (23) The requirements of formal decision making are relatively demanding. They impose record keeping and evidentiary standards akin to those that would accompany a trial or the passage of legislation. (24) The requirements of informal decision making, by contrast, are decidedly minimal. (25) In grappling with the APA's procedural constraints, agencies naturally incline toward the efficiency and autonomy of informal decision making. Most gravitate toward informal rulemaking in particular, since agencies can evade the need to adjudicate individual cases through the development of generally applicable rules. (26) Courts have historically deferred to agencies' preferences in this regard. They permit broad discretion in the choice between rulemaking and adjudication, (27) allow the use of rules to preclude case-by-case adjudication, (28) and only require formal procedures in rare, well-defined circumstances. (29) The predominance of informal rulemaking dictates that presidential involvement usually takes place against this decision-making backdrop.

      While courts have historically deferred to agencies' preference for informal rulemaking, they have nevertheless expanded on the APA-specified procedures for informal rulemaking to provide more elaborate requirements and, consequently, a more coherent framework for presidential involvement. By the terms of section 553 of the APA, agencies need only provide interested parties with notice and an opportunity to comment on their proposed rules and issue "concise general statement[s]" of the reasons motivating their final rules. (30) There is no explicit requirement that they provide rational explanations or keep anything resembling a traditional record* Beginning in the 1970s, however, courts used aggressive statutory interpretation...