The Checks and Balances Letter delivers monthly 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 since the last edition.
This edition:
In this month’s edition of Checks and Balances, we review the following federal news stories:
- Two Supreme Court decisions: one dismissing a challenge to Food and Drug Administration (FDA) abortion pill regulations, and one striking down a U.S. Bureau of Alcohol, Tobacco, Firearms and Explosives (ATF) rule banning bump stocks.
- President Joe Biden’s (D) veto of a Congressional Review Act (CRA) resolution seeking to nullify Securities and Exchange Commission (SEC) guidance on crypto assets.
- A record number of significant final rules issued by the Biden administration.
- The introduction of the REPUBLIC Act in Congress, which proposes requiring congressional review of presidential emergency powers.
At the state level, we take a look at:
- Virginia Gov. Glenn Youngkin’s (R) decision to end the state’s participation in California’s electric vehicle mandate.
- The Oklahoma House of Representatives’ decision to send proposed education rules to the governor for approval.
We also highlight recent commentary from reporter Bill Flook on the right-to-remove concept and its potential impact on SEC enforcement proceedings. We wrap up with our Regulatory Tally, which features information about the 138 proposed rules and 305 final rules added to the Federal Register in May and OIRA’s regulatory review activity.
In Washington
SCOTUS dismisses challenge to FDA’s abortion pill regulations, strikes down bump stock ban
What’s the story?
The U.S. Supreme Court issued opinions recently in two cases related to agency regulatory actions and statutory authority.
The justices unanimously held on June 13 that the plaintiffs in Food and Drug Administration v. Alliance for Hippocratic Medicine lacked standing to challenge the Food and Drug Administration’s (FDA) approved use regulations for mifepristone—a drug used for abortions. Justice Brett Kavanaugh wrote in the majority opinion, “The plaintiffs have sincere legal, moral, ideological, and policy objections to elective abortion and to FDA’s relaxed regulation of mifepristone. But under Article III of the Constitution, those kinds of objections alone do not establish a justiciable case or controversy in federal court. Here, the plaintiffs have failed to demonstrate that FDA’s relaxed regulatory requirements likely would cause them to suffer an injury in fact. For that reason, the federal courts are the wrong forum for addressing the plaintiffs’ concerns about FDA’s actions.”
In Garland v. Cargill, the justices ruled 6-3 on June 14 to strike down a U.S. Bureau of Alcohol, Tobacco, Firearms and Explosives (ATF) rule banning bump stocks. Justice Clarence Thomas argued in the majority opinion that the ATF exceeded its statutory authority by issuing the 2018 ban because “a semiautomatic rifle equipped with a bump stock is not a ‘machinegun’ because it cannot fire more than one shot ‘by a single function of the trigger.’ And, even if it could, it would not do so ‘automatically.’” Justice Sonia Sotomayor, joined by Justices Elena Kagan and Ketanji Brown Jackson, argued in a dissenting opinion, “[The court] casts aside Congress’s definition of ‘machinegun’ and seizes upon one that is inconsistent with the ordinary meaning of the statutory text and unsupported by context or purpose. When I see a bird that walks like a duck, swims like a duck, and quacks like a duck, I call that bird a duck.”
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Biden vetoes CRA resolution aimed at blocking SEC crypto asset guidance
What’s the story?
President Joe Biden (D) on May 31 vetoed a Congressional Review Act (CRA) resolution that aimed to nullify Securities and Exchange Commission (SEC) guidance establishing accounting standards for financial firms with crypto assets. The resolution previously passed the House of Representatives 228-182 on May 8 and the Senate 60-38 on May 16.
The SEC published Staff Accounting Bulletin 121 on March 31, 2022, aiming to provide “interpretive guidance for entities to consider when they have obligations to safeguard crypto-assets held for their platform users,” according to the bulletin. The SEC described the bulletin as guidance—government agency documents that are non-binding and advise parties about rules, laws, and procedures. The Government Accountability Office (GAO) ruled on October 31, 2023, that the guidance met the definition of a rule as outlined in the Administrative Procedure Act and was subject to review under the CRA.
U.S. Representative Mike Flood (R-Neb.) and U.S. Senator Cynthia Lummis (R-Wyo.) on February 1, 2024, filed companion CRA resolutions in Congress disapproving the SEC accounting bulletin. Flood argued in a press release, “The SEC issued SAB 121 without conferring with prudential regulators despite the accounting standard’s effects on financial institutions’ treatment of custodial assets, and the SEC issued SAB 121 without going through the notice-and-comment process. In the face of overreach by a regulator, it is the role of Congress to serve as a check.”
In his veto message, Biden argued in part, “This reversal of the considered judgment of SEC staff in this way risks undercutting the SEC’s broader authorities regarding accounting practices.”
The latest action was Biden’s eleventh veto of a CRA resolution during his administration.
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Biden administration issues highest number of section 3(f)(1) significant rules since Reagan
What’s the story?
Federal agencies issued thirty-four section 3(f)(1) significant rules, formerly known as economically significant rules, in April—higher than any month since the Reagan administration, according to The George Washington University Regulatory Studies Center (GW RSC). A section 3(f)(1) significant rule refers to a regulatory action with an estimated annual economic impact of $200 million or more.
The Biden administration issued 32 other significant rules in April, bringing the total count of significant final rules to 66—more than any other month under the Biden administration.
Scholars from the GW RSC argue that the recent increase in regulatory actions is due to the Congressional Review Act’s (CRA) lookback period. The CRA authorizes Congress to review rulemaking activities by federal agencies and pass joint resolutions of disapproval to overturn a rule and block agencies from creating similar rules in the future. The lookback period refers to a period of time at the beginning of a new presidential administration in which rules published within the last 60 legislative days of the previous administration are eligible for consideration under the act.
Zhoudan Xie, a senior policy analyst for GW RSC, wrote, “If there is a presidential transition next year, the lookback period gives the incoming president and Congress a unique opportunity to overturn rules issued by the current administration. … Clearly, agencies are rushing to finalize rules with the early deadline in mind.” Xie wrote that the exact dates for the lookback period are uncertain and that the “estimate ranges from as early as May 22, 2024 to the beginning of August.”
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REPUBLIC Act introduced in Senate
What’s the story?
Senator Rand Paul (R-Ky.) on May 21 introduced the Reforming Emergency Powers to Uphold the Balances and Limitations Inherent in the Constitution (REPUBLIC) Act, which would require Congress to review presidential uses of emergency powers.
Senator Paul argued in a press release that the act “reins in the blank check of power presidents write themselves in the name of self-declared emergencies. … It does all this while preserving the president’s authority to act immediately to defend our nation in a real emergency.”
The bill was referred to the Committee on Homeland Security and Governmental Affairs on May 21 for consideration.
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In the states
Virginia governor ends California electric vehicle mandate participation
What’s the story?
Virginia Gov. Glenn Youngkin (R) announced on June 5 that the state would no longer participate in California’s electric vehicle (EV) mandate.
Former Gov. Ralph Northam (D) signed legislation in 2021 that authorized the Virginia State Air Pollution Control Board to adopt California’s Advanced Clean Cars I regulations. States have to follow air pollution regulations outlined in the federal Clean Air Act (CAA) but can request waivers to enforce stricter standards. California’s EV mandate, which establishes more protective standards than federal regulations, was enforced in 16 states and Washington, D.C. as of June 2024.
Youngkin said in a press release, “Virginia is declaring independence — this time from a misguided electric vehicle mandate imposed by unelected leaders nearly 3,000 miles away from the commonwealth. … The idea that government should tell people what kind of car they can or can’t purchase is fundamentally wrong.”
Opponents of the decision argued the legislature decided to join California’s air standards, and the governor did not have the authority to change the policy. State Senate Majority Leader Scott Surovell (D) argued, “The law says that we shall join the California Air standard. … [Youngkin] just simply doesn’t have the legal authority to say that we can get out whenever we feel like. This is not how democracy works,” according to Courthouse News Service.
Virginia’s shift from the California EV mandate to the federal regulations will be effective at the end of 2024.
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Oklahoma House of Representatives opts not to vote on proposed education rules, sends rules to governor for approval
What’s the story?
The Oklahoma House of Representatives opted not to vote on a set of education rules before the end of the 2024 legislative session, sending the rules to Gov. Kevin Stitt (R) for approval. The rules previously passed the House Administrative Rules Committee 7-3 on May 14.
Superintendent of Education Ryan Walters (R) proposed a set of 20 education rules that would:
- tie test scores to accreditation status;
- require public schools to develop voluntary prayer policies;
- ban spending on diversity, equity, and inclusion programs;
Oklahoma state law authorizes the legislature to approve administrative rules promulgated by state agencies before they take effect. The legislature has the authority to approve, reject, or send the rules directly to the governor for approval. After the education rules passed the House Administrative Rules Committee, the Oklahoma House of Representatives sent the rules to the governor for approval instead of voting.
State Representative Charles McCall (R) said the Republican majority in the state House of Representatives decided internally not to vote on the rules after they passed out of committee. He said, “[W]ith respect to the rules for the state Department of Education, those will go into effect as the (Oklahoma State Board of Education) passed them,” according to The Duncan Banner.
State Representative Melissa Provenzano (D) argued against the decision not to vote on the bills. Provenzano said, “This shirks the responsibility of the Oklahoma Legislature,” according to The Duncan Banner.
The governor had yet to approve or reject the rules as of June 18, 2024.
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SEC enforcement proceedings and right-to-remove
In a recent post for Thomson Reuters, reporter Bill Flook wrote about the right-to-remove concept, which would allow those subject to Securities and Exchange Commission (SEC) enforcement proceedings to move their cases to a federal court. Flook says proponents of the concept argue that it could resolve constitutional questions about agency enforcement proceedings, such as the questions brought up in the pending Supreme Court case SEC v. Jarkesy:
Under the right-to-remove regime envisioned by Walker and Zaring, a respondent notified by the SEC of possible civil penalties would be able to, within a set time limit, file with the commission a notice to remove to federal court. The SEC would then either stay or dismiss the proceedings and file a district court complaint. While ultimately up to the commission or Congress, they suggest a time limit to seek that venue change that runs ‘between when the SEC issues notice of potential civil penalties and the date of the hearing on those penalties.’ Otherwise, the two sides move forward in a consent-based adjudication.
A Democrat-led Senate has so far stood as a significant obstacle to passing right-to-remove legislation, having shown no appetite for reviving the JOBS Act 4.0 package or the standalone version of the Administrative Enforcement Fairness Act. In a March 2023 written statement for an SEC Investor Advisory Committee (IAC) panel, Faith Anderson, chief of Registration and Regulatory Affairs in the Securities Division of the Washington Department of Financial Institutions, attached a North American Securities Administrators Association (NASAA) report warning the bill would ‘invariably slow the SEC enforcement process, add to the caseload of an already overburdened federal judiciary, and drive up taxpayer costs,’ as well as potentially preclude the commission from obtaining relief such as certain industry bars.
Want to go deeper?
- Click here to read the full text of “Right to Remove: SEC Administrative Enforcement Opt-out Gets Fresh Look as Supreme Court Ruling Looms” by Bill Flook
Regulatory tally
Federal Register
Office of Information and Regulatory Affairs (OIRA)
OIRA’s May regulatory review activity included the following actions:
- Review of 15 significant regulatory actions.
- Three rules approved without changes; recommended changes to ten proposed rules; one rule withdrawn from the review process; one rule subject to a statutory or judicial deadline.
- As of June 3, 2024, OIRA’s website listed 114 regulatory actions under review.
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