b'Proposed Executive Order Entitled \xe2\x80\x9cFederal Regulation\xe2\x80\x9d\n[The follow ing m em orandum , prepared by the Office o f Legal Counsel pursuant to its\nresponsibility under Executive O rder N o. 11,030 for approving all executive orders and\npresidential proclam ations for form and legality, analyzes the provisions o f a proposed\nexecutive order im posing certain procedural and substantive requirem ents on executive\nagencies in connection w ith their rulem aking functions. It concludes that the o rd e r\xe2\x80\x99s\nprovisions for presidential oversight o f the adm inistrative process are generally within\nthe President\xe2\x80\x99s constitutional authority, and that they do not displace functions vested\nby law in particular agencies. It also concludes that the o rd e r\xe2\x80\x99s requirem ent that\nagencies reconsider final rules w hich have not yet becom e effective m ay in certain\ncircum stances trigger the notice and com m ent provisions o f the A dm inistrative P roce\xc2\xad\ndure Act.]\n\nFebruary 13, 1981\nM EM ORANDUM\nThe attached proposed executive order was prepared by the Office\nof Management and Budget (OMB) in consultation with this Office, and\nhas been forwarded for the consideration o f this Department as to form\nand legality by the Office of Management and Budget with the\napproval of its Director. The proposed order is designed to reduce\nregulatory burdens, to provide for presidential oversight of the adminis\xc2\xad\ntrative process, and to ensure well reasoned regulations. The order sets\nforth a number of requirements that Executive Branch agencies must\nadhere to in exercising their statutory rulemaking authority. We con\xc2\xad\nclude that the order is acceptable as to form and legality.*\nThe order has the following major provisions. Agencies must take\naction only if the potential benefits outweigh the social costs; attempt to\nmaximize social benefits; choose the least costly alternative in selecting\namong regulatory objectives; and set priorities with the aim of maximiz\xc2\xad\ning net benefits. All of these requirements must be followed \xe2\x80\x9cto the\nextent permitted by law.\xe2\x80\x9d The order would require agencies to prepare\nfor each \xe2\x80\x9cmajor rule\xe2\x80\x9d a Regulatory Impact Analysis (RIA) setting forth\na description of the potential costs and benefits of the proposed rule, a\ndetermination of its potential net benefits, and a description o f alterna\xc2\xad\ntive approaches that might substantially achieve regulatory goals at a\nlower cost. Agencies would be required to determine that any proposed\n\xe2\x80\xa2 N o t e : Executive O rder N o 12,291, entitled \xe2\x80\x9c Federal Regulation,\xe2\x80\x9d was signed b y the President on\nFebruary 17, 1981, 3 C.F.R. 127 (1982 ed.). Ed.\n\n59\n\n\x0cregulation is within statutory authority and that the factual conclusions\nupon which the rule is based are substantially supported by the record\nviewed as a whole. The Director o f the Office of Management and\nBudget and the Presidential Task Force on Regulatory Relief would be\ngiven authority, inter alia, to designate proposed or existing rules as\nm ajor rules, to prepare uniform standards for measuring costs and\nbenefits, to consult with the agencies concerning preparation of RIAs,\nto state approval or disapproval of RIA s and rules on the administra\xc2\xad\ntive record, to require agencies to respond to these views (and to defer\nrulemaking while so consulting), and to establish schedules for review\nand possible revision of existing major rules. The order would require\nagencies to defer rules that are pending on the date of its issuance,\nincluding rules that have been issued as final rules but are not yet\nlegally effective, and to reconsider them under the order. By its terms,\nthe order would create no substantive or procedural rights enforceable\nby a party against the United States o r its representatives, although the\nR IA would become part of the administrative record for judicial\nreview o f final rules.\nI. Legal Authority: In General\nThe President\xe2\x80\x99s authority to issue the proposed executive order de\xc2\xad\nrives from his constitutional power to \xe2\x80\x9ctake Care that the Laws be\nfaithfully executed.\xe2\x80\x9d U.S. Const., Art. II, \xc2\xa7 3. It is well established that\nthis provision authorizes the President, as head of the Executive\nBranch, to \xe2\x80\x9csupervise and guide\xe2\x80\x9d executive officers in \xe2\x80\x9ctheir construc\xc2\xad\ntion of the statutes under which they act in order to secure that unitary\nand uniform execution o f the laws w hich Article II of the Constitution\nevidently contemplated in vesting general executive power in the Presi\xc2\xad\ndent alone.\xe2\x80\x9d Myers v. United States, 272 U.S. 52, 135 (1926).1\nThe supervisory authority recognized in Myers is based on the dis\xc2\xad\ntinctive constitutional role of the President. The \xe2\x80\x9ctake care\xe2\x80\x9d clause\ncharges the President w ith the function of coordinating the execution\nof many statutes simultaneously: \xe2\x80\x9cUnlike an administrative commission\nconfined to the enforcement of the statute under which it was cre\xc2\xad\nated . . . the President is a constitutional officer charged with taking\ncare that a \xe2\x80\x98mass of legislation\xe2\x80\x99 be executed,\xe2\x80\x9d Youngstown Sheet & Tube\nCo. v. Sawyer, 343 U.S. 579, 702 (1952) (Vinson, C.J., dissenting).\nM oreover, because the President is the only elected official who has a\nnational constituency, he is uniquely situated to design and execute a\nuniform method for undertaking regulatory initiatives that responds to\n*In Buckley v Valeo, 424 U.S. 1, 140-41 (1976), the Supreme Court held that any \xe2\x80\x9csignificant\ngovernm ental duty exercised pursuant to a public law \xe2\x80\x9d must be performed by an \xe2\x80\x9cOfficer of the\nUnited States,\'1 appointed by the President or the Head of a Department pursuant to Article II, \xc2\xa7 2,\nclause 2. W e believe that this holding recognizes the importance of preserving the President\xe2\x80\x99s\nsupervisory powers over those exercising statutory duties, subject o f course to the power of Congress\nto confine presidential supervision by appropriate legislation. See also n.7, infra.\n\n60\n\n\x0cthe will of the public as a whole.2 In fulfillment of the President\xe2\x80\x99s\nconstitutional responsibility, the proposed order promotes a coordinated\nsystem o f regulation, ensuring a measure o f uniformity in the interpreta\xc2\xad\ntion and execution of a number o f diverse statutes. If no such guidance\nwere permitted, confusion and inconsistency could result as agencies\ninterpreted open-ended statutes in differing ways.\nNevertheless, it is clear that the President\xe2\x80\x99s exercise of supervisory\npowers must conform to legislation enacted by Congress.3 In issuing\ndirectives to govern the Executive Branch, the President may not, as a\ngeneral proposition, require or permit agencies to transgress boundaries\nset by Congress. Youngstown Sheet & Tube Co. v. Sawyer, 343 U.S. 579\n(1952). It is with these basic precepts in mind that the proposed order\nmust be approached.\nWe believe that an inquiry into congressional intent in enacting\nstatutes delegating rulemaking authority will usually support the legal\xc2\xad\nity of presidential supervision of rulemaking by executive agencies.\nWhen Congress delegates legislative power to executive agencies, it is\naware that those agencies perform their functions subject to presidential\nsupervision on matters of both substance and procedure. This is not to\nsay that Congress never intends in a specific case to restrict presidential\nsupervision o f an executive agency; but it should not be presumed to\nhave done so whenever it delegates rulemaking power directly to a\nsubordinate executive official rather than the President. Indeed, after\nMyers it is unclear to what extent Congress may insulate executive\nagencies from presidential supervision. Congress is also aware of the\ncomparative insulation given to the independent regulatory agencies,\nand it has delegated rulemaking authority to such agencies when it has\nsought to minimize presidential interference. By contrast, the heads of\nnon-independent agencies hold their positions at the pleasure of the\nPresident, who may remove them from office for any reason. It would\nbe anomalous to attribute to Congress an intention to immunize from\npresidential supervision those who are, by force of Article II, subject to\nremoval when their performance in exercising their statutory duties\ndispleases the President.\nO f course, the fact that the President has both constitutional and\nimplied statutory authority to supervise decisionmaking by executive\nagencies does not delimit the extent of permissible supervision. It does\nsuggest, however, that supervision is more readily justified when it does\nnot purport wholly to displace, but only to guide and limit, discretion\nwhich Congress has allocated to a particular subordinate official. A\nwholesale displacement might be held inconsistent with the statute\nvesting authority in the relevant official. See Myers v. United States, 272\n%See Bruff, Presidential Power and Administrative Rulemaking, 88 Yale L.J. 451, 461-62 (1979).\n* In certain circumstances, statutes could invade or intrude impermissibly upon the President\xe2\x80\x99s\n"inherent\xe2\x80\x9d powers, but that issue does not arise here.\n\n61\n\n\x0cU.S. at 135: \xe2\x80\x9cO f course there may be duties so peculiarly and specifi\xc2\xad\ncally committed to the discretion of a particular officer as to raise a\nquestion w hether the President may overrule or revise the officer\xe2\x80\x99s\ninterpretation of his statutory duty in a particular instance.\xe2\x80\x9d This sug\xc2\xad\ngestion is based on the view that Congress may constitutionally con\xc2\xad\nclude that some statutory responsibilities should be carried out by\nparticular officers without the President\xe2\x80\x99s revision, because such offi\xc2\xad\ncers head agencies having the technical expertise, and institutional com\xc2\xad\npetence that Congress intended the ultimate decisionmaker to possess.4\nUnder this analysis, of course, lesser incursions on administrative discre\xc2\xad\ntion are easier to support than greater ones. This Office has often taken\nthe position that the President may consult w ith those having statutory\ndecisionmaking responsibilities, and may require them to consider statu\xc2\xad\ntorily relevant matters that he deems appropriate, as long as the Presi\xc2\xad\ndent does not divest the officer o f ultimate statutory authority.5 Of\ncourse, the President has the authority to inform an appointee that he\nwill be discharged if he fails to base his decisions on policies the\nPresident seeks to implement.6\nT he order would impose requirements that are both procedural and\nsubstantive in nature. Procedurally, it would direct agencies to prepare\nan R IA assessing the costs and benefits of m ajor rules. We discern no\nplausible legal objection to this requirement, which like most proce\xc2\xad\ndural requisites is at m ost an indirect constraint on the exercise of\nstatutory discretion. At least as a general rule, the President\xe2\x80\x99s authority\no f \xe2\x80\x9csupervision] in his administrative control,\xe2\x80\x9d Myers v. United States,\n272 U.S. at 135, permits him to require the agencies to follow proce\xc2\xad\ndures that are designed both to promote \xe2\x80\x9cunitary and uniform execu\xc2\xad\ntion o f the laws\xe2\x80\x9d and to aid the President in carrying out his constitu\xc2\xad\ntional duty to propose legislation. See U.S. Const., Art. II, \xc2\xa7 3. We\nbelieve that a requirement that the agencies perform a cost-benefit\nanalysis meets these criteria. Further, the President\xe2\x80\x99s constitutional right\nto consult with officials in the Executive Branch permits him to require\nthem to inform him of the costs and benefits o f proposed action.7 In our\nview, a requirement that rulemaking authorities prepare an RIA is the\nleast that Myers must mean with respect to the President\xe2\x80\x99s authority to\n\xe2\x80\x9csupervise and guide\xe2\x80\x9d executive officials.\n4 Cf. H. Friendly, T he Federal Administrative Agencies: T he Need for Better Definition of Standards 10-11 (1962) (discussing concept of \xe2\x80\x98\xe2\x80\x98agency expertise\xe2\x80\x9d as reason for delegation of power to\nparticular agencies). T he Myers C ourt reaffirmed, however, that even such officers may be dismissed\nat the pleasure o f the President. 272 U.S. at 135.\n* See generally, 1 Op. O.L.C. 75 (1977) {Proposals Regarding an Independent Attorney General)\', 1 Op.\nO.L.C. 228 (1977) (Role o f the Solicitor General).\n\xe2\x80\xa2See note 4, supra.\n7See U.S. Const., Art. II, \xc2\xa7 2 (President may \xe2\x80\x9crequire the Opinion, in writing, of the principal\nOfficer in each of the executive Departments, upon any Subject relating to the Duties of their\nrespective Offices\xe2\x80\x9d).\n\n62\n\n\x0cSubstantively, the order would require agencies to exercise their dis\xc2\xad\ncretion, within statutory limits, in accordance with the principles of\ncost-benefit analysis. More complex legal questions are raised by this\nrequirement. Some statutes may prohibit agencies from basing a regula\xc2\xad\ntory decision on an assessment of the costs and benefits of the proposed\naction. See, e.g., EPA v. National Crushed Stone A ss\xe2\x80\x99n, \xe2\x80\x98449 U.S. 64\n(1980). The order, however, expressly recognizes this possibility by\nrequiring agency adherence to principles of cost-benefit analysis only\n\xe2\x80\x9cto the extent permitted by law.\xe2\x80\x9d The issue is thus whether, when costbenefit analysis is a statutorily authorized basis for decision, the Presi\xc2\xad\ndent may require executive agencies to be guided by principles of costbenefit analysis even when an agency, acting without presidential guid\xc2\xad\nance, might choose not to do so. We believe that such a requirement is\npermissible. First, there can be little doubt that, when a statute does not\nexpressly or implicitly preclude it, an agency may take into account the\ncosts and benefits of proposed action. Such a calculus would simply\nrepresent a logical method of assessing whether regulatory action au\xc2\xad\nthorized by statute would be desirable and, if so, what form that action\nshould take. In our view, federal courts reviewing such actions would\nbe unlikely to conclude that an assessment of costs and benefits was an\nimpermissible basis for regulatory decisions.\nSecond, the requirement would not exceed the President\xe2\x80\x99s powers of\n\xe2\x80\x9csupervision.\xe2\x80\x9d It leaves a considerable amount of decisionmaking dis\xc2\xad\ncretion to the agency. Under the proposed order, the agency head, and\nnot the President, would be required to calculate potential costs and\nbenefits and to determine whether the benefits justify the costs. The\nagency would thus retain considerable latitude in determining whether\nregulatory action is justified and what form such action should take.\nThe limited requirements of the proposed order should not be regarded\nas inconsistent with a legislative decision to place the basic authority to\nimplement a statute in a particular agency. Any other conclusion would\ncreate a possible collision with constitutional principles, recognized in\nMyers, with respect to the President\xe2\x80\x99s authority as head of the Execu\xc2\xad\ntive Branch.\nWe believe that the President would not exceed any limitations on\nhis authority by authorizing the Task Force and the OMB Director to\nsupervise agency rulemaking as the order would provide. The order\ndoes not empower the Director or the Task Force to displace the\nrelevant agencies in discharging their statutory functions or in assessing\nand weighing the costs and benefits of proposed actions.8 The function\n8 The Paperwork Reduction Act of 1980, Pub. L. No. 96-511, 94 Stat. 2812, provides some implied\nstatutory support for the Order by giving OMB a direct role tn coordinating agency regulations that\nimpose paperwork burdens on the public. With respect to non-independent agencies the Act gives the\nD irector authority to disapprove \xe2\x80\x9c unreasonable\xe2\x80\x9d agency collection of information requests. 44 U.S.C.\n\xc2\xa7 3504<hX5)(C). TTie A ct does not authorize him, however, to disapprove the accompanying rule itself\ninsofar as the tw o are separable. See 44 U.S.C. \xc2\xa7 3518(e); S. Rep No. 930, 96th Cong., 2d Sess. 56\n(1980)\n\n63\n\n\x0co f the Task Force and the D irector of the Office of Management and\nBudget would be supervisory in nature. It would include such tasks as\nthe supplementation of factual data, the development and implementa\xc2\xad\ntion o f uniform systems o f methodology, the identification of incorrect\nstatements o f fact, and the placement in the administrative record of a\nstatement disapproving agency conclusions that do not appear to con\xc2\xad\nform to the principles expressed in the President\xe2\x80\x99s order. Procedurally,\nthe D irector and the Task Force would be authorized to require an\nagency to defer rulemaking while it responded to their views concern\xc2\xad\ning proposed agency action. This pow er of consultation would not,\nhow ever, include authority to reject an agency\xe2\x80\x99s ultimate judgment,\ndelegated to it by law, that potential benefits outweigh costs, that\npriorities under the statute compel a particular course o f action, or that\nadequate information is available to justify regulation. As to these\nmatters, the role o f the D irector and the Task Force is advisory and\nconsultative. T he limited power o f supervision embodied in the pro\xc2\xad\nposed order is, therefore, consistent with the President\xe2\x80\x99s recognized\npowers to supervise the Executive Branch without displacing functions\nplaced by law in particular agencies.\nII. Suspension off Proposed and Final Regulations\nThe order requires executive agencies (1) to suspend the effective\ndate o f rules that have been issued as final rules, but have not become\nlegally effective; and (2) to reconsider rules that are proposed but have\nnot yet been made final. A fter suspension o f final rules, agencies must\nreconsider all such rules in accordance with the order. These require\xc2\xad\nments are imposed only \xe2\x80\x9cto the extent permitted by law\xe2\x80\x9d and are thus\ninapplicable when a judicial o r statutory deadline requires prompt\naction. M oreover, agencies must, in complying with these directives,\nadhere to the requirements o f the Administrative Procedure Act\n(APA ), 5 U.S.C. \xc2\xa7\xc2\xa7 551-706, and all other laws.\nF or rules that have not yet been made final, the APA imposes no\nspecial procedural requirements. Agencies need not follow the notice\nand comment procedures of 5 U.S.C. \xc2\xa7 553, for nothing in that provi\xc2\xad\nsion requires an agency to allow a period for comment on a decision to\ndelay final adoption o f a proposed rule. The agency\xe2\x80\x99s decision may,\nhow ever, be subject to judicial review, and the agency may have to\nfurnish a reasoned explanation for that decision. See A SG Indus, v.\nConsumer Prod. Safety C om m \xe2\x80\x99n, 593 F.2d 1323, 1335 (D.C. Cir. 1979);\nAction fo r Children\'s Television v. FCC, 564 F.2d 458, 478-79 (D.C. Cir.\n1977). The explanation here\xe2\x80\x94that the agency needs time to prepare an\nR IA required by executive order\xe2\x80\x94is, we believe, sufficient.\nT he second category of regulations covered by the executive order\nraises somewhat different legal issues. Under 5 U.S.C. \xc2\xa7 553(b), notice\nand comment procedures must be followed for \xe2\x80\x9crule making\xe2\x80\x9d unless\n64\n\n\x0c\xe2\x80\x9cthe agency for good cause finds (and incorporates the finding and a\nbrief statement of reasons therefor in the rules issued) that notice and\npublic procedure thereon are impracticable, unnecessary, or contrary to\nthe public interest.\xe2\x80\x9d 5 U.S.C. \xc2\xa7 553(b)(3)(B). Under 5 U.S.C. \xc2\xa7551(5),\nthe term \xe2\x80\x9crule making\xe2\x80\x9d is defined as \xe2\x80\x9cagency process for formulating,\namending, or repealing a rule.\xe2\x80\x9d The initial question, then, is whether an\nagency\xe2\x80\x99s decision to \xe2\x80\x9csuspend\xe2\x80\x9d a final but not effective rule is \xe2\x80\x9crule\nmaking\xe2\x80\x9d which triggers the procedural safeguards of \xc2\xa7 553.\nIn a recent memorandum, this Office concluded that a 60-day suspen\xc2\xad\nsion of the effective date of a final rule should not, in general, be\nregarded as rulemaking within the meaning of the A PA .9 We based our\nconclusion on \xe2\x80\x9cthe clear congressional intent to give agencies discretion\nto extend the effective date provision beyond 30 days\xe2\x80\x9d and the absence\nof statutory language or history suggesting \xe2\x80\x9cthat a delay in effective\ndate is the sort of agency action that Congress intended to include\nwithin the procedural requirements of \xc2\xa7 553(b).\xe2\x80\x9d Nevertheless, we be\xc2\xad\nlieve that a short-term suspension of the effectiveness of a final rule is\nnot the equivalent of an indefinite suspension coupled with a process\ndesigned to review the basis for the rule, with a view to establishing a\nnew rule. Although the former seems fairly characterized as a mere\nextension of an effective date under \xc2\xa7 553(d), the latter should probably\nbe characterized as \xe2\x80\x9cagency process for formulating, amending, or\nrepealing a rule\xe2\x80\x9d for purposes pf \xc2\xa7 553(b).\nThe difference between these two measures for purposes of \xc2\xa7 553\nbecomes clear upon examination of the sequence of events that is\nexpected to take place under each of them. Under the President\xe2\x80\x99s\nMemorandum o f January 29, 1981, 46 Fed. Reg. 11227 (1981), \xe2\x80\x9cPost\xc2\xad\nponement of Pending Regulations,\xe2\x80\x9d agencies are to defer the effective\ndates of final rules for 60 days in order to review them. The completion\nof that review will point to either of two dispositions. The rule might\nbe allowed to take effect as published in final form, or it might be\nwithdrawn for some proposed change. The first disposition would re\xc2\xad\nquire no new procedures. The second disposition would surely contem\xc2\xad\nplate an amendment or repeal of the earlier rule subject to \xc2\xa7 553\xe2\x80\x99s\npublic procedures, but the earlier deferral of the rule\xe2\x80\x99s effective date\nwould remain just th at.10\n9 Memorandum Opinion of January 28, 1981, for Honorable David Stockman, Director, Office of\nManagement and Budget, from Larry L. Simms, Acting Assistant Attorney General, Office of Legal\nCounsel. [Note: T he January 28, 1981, memorandum opinion (Presidential Memorandum Delaying\nProposed and Pending Regulations) appears in this volume at p. 55, supra. Ed.]\n10 Admittedly, one o f the purposes of the 30-day effective date provision is to allow agencies to\ncorrect errors or oversights in final regulations. See Final Report o f the Attorney General\'s Committee on\nAdministrative Procedure, Administrative Procedure in Government Agencies, S Doc. No. 8, 77th C o n g ,\n1st Sess., 114-15 (1941); Sannon v. United States, 460 F Supp. 458, 467 (S D Fla. 1978) This purpose,\nhowever, does not suggest that agencies may make corrections, let alone withdraw rules, during the\nperiod between a rule\xe2\x80\x99s publication and its effective date without offering public procedures or\nshowing good cause for dispensing with them. Proposed corrections\xe2\x80\x94or even repeals\xe2\x80\x94would of\ncourse be amendments for purposes of \xc2\xa7 553(b)\n\n65\n\n\x0cU nder the proposed order, the situation is analogous to the second\npossible disposition under the President\xe2\x80\x99s Memorandum. The order, by\nrequiring careful cost-benefit analysis o f rules through the RIA process,\nwould contemplate notices of proposed rulemaking on the preliminary\nR IA and a reexamination o f the rule at the appropriate time. The issue\nto be decided at the time the rule is suspended indefinitely for the\norder\xe2\x80\x99s process to take place is whether the rule, which has already\nbeen promulgated in final form, should be allowed to have interim\neffect while it is under review by the agency. We believe that this\ndecision is one of \xe2\x80\x9cformulating, amending, o r repealing a rule\xe2\x80\x9d that\nrequires either notice and comment procedures or good cause for dis\xc2\xad\npensing with them under \xc2\xa7 553(b). Admittedly, the difference between a\nshort deferral o f the effectiveness of a rule and an indefinite suspension\nfor reexamination is in part one of degree. But there is also a difference\nin kind: once a decision to begin the process of amending a rule is\nmade, there is no longer a plausible argument that a rule that was to\ntake effect is merely to be delayed for a brief period.\nN otice and comment procedures on the issue of the interim effective\xc2\xad\nness of a rule that is due to undergo reexamination under the order\nshould take the following form. The agency should defer the rule\xe2\x80\x99s\neffective date for a period sufficient to allow a short time for notice and\ncomment, an opportunity for the agency to consider the comments and\ndecide the issue o f interim effectiveness, and an interval before the rule\ntakes effect sufficient to meet the purposes of \xc2\xa7 553(d).\nIn deciding on the interim effectiveness o f final rules subject to the\norder\xe2\x80\x99s procedures, the final question is whether and under what cir\xc2\xad\ncumstances agencies will have good cause to dispense with notice and\ncomment procedures. Public procedures on interim effectiveness might\nbe \xe2\x80\x9cunnecessary, impracticable, or contrary to the public interest,\xe2\x80\x9d\nwhere the question whether there should be any rule at all was fully\nventilated in the rule\xe2\x80\x99s comment process, or where it is clear that\ninterim effect could impose substantial but short-term compliance costs.\nO n the other hand, notice and comment might be needed where the\nrule\xe2\x80\x99s proponents had advanced substantial arguments for its early effec\xc2\xad\ntiveness, and where compliance costs are not likely to be wasted.\nSuch arguments must, o f course, be assessed on a case-by-case basis.\nIf the available record indicates that the costs of the rule at issue are\nnot substantial and that the failure to allow the rule to become effective\nmay itself be controversial, the likelihood that a court will require\nnotice and public comment increases. The procedural requirements of\nthe A P A will, therefore, vary with the size and immediacy o f the\nburdens imposed by the rule and the need for public comment on a\ndecision to withdraw a final but not effective rule.\n66\n\n\x0cIII. Regulatory Review by Agency Heads\nSection 4 of the proposed order would require agency heads to make\nexpress determinations that regulations they issue are authorized by law\nand are supported by the materials in the rulemaking record. These\nrequirements are meant to assure agency compliance with existing legal\nprinciples that rules must be authorized by law, and that they should be\nadequately supported by a factual basis. Accordingly, we find no legal\ndifficulty with them. In particular, they do not purport to change\ngenerally applicable statutory standards for judicial review o f agency\naction, see 5 U.S.C. \xc2\xa7 706, and could not have such an effect. They also\ndo not purport to alter any specially applicable standards, such as those\nconcerning the evidentiary standard that must be met to uphold a given\nrule, appearing in statutes governing a particular agency.\nOn the other hand, the section would add the significantly new\nprocedural requirements that agency heads expressly determine that the\nlegal and factual requisites for a rule have been met. The first require\xc2\xad\nment reflects the principle, central to administrative law, that agency\naction must be guided by the \xe2\x80\x9csupremacy o f law.\xe2\x80\x9d St. Joseph Stock\nYards Co. v. United States, 298 U.S. 38, 84 (1936) (Brandeis, J.). This\nprinciple protects against excess of power and abusive exercise of\npower by administrators. See Final Report o f the Attorney General\'s\nCommittee on Administrative Procedure, Administrative Procedure in Gov\xc2\xad\nernment Agencies, S. Doc. No. 8, 77th Cong., 1st Sess. 76 (1941). The\n\nrequirement that agency heads determine that a rule has \xe2\x80\x9csubstantial\nsupport\xe2\x80\x9d in the materials before the agency means that a rule\xe2\x80\x99s neces\xc2\xad\nsary factual basis must be found to exist. This second requirement\nshould not be confused with a \xe2\x80\x9csubstantial evidence\xe2\x80\x9d standard of judi\xc2\xad\ncial review, which could be imposed only by statute. It embodies\nRecommendation 74-4 (subpart 3) of the Administrative Conference of\nthe United States, 1 CFR \xc2\xa7 305.74.4, which urges that for a rule to be\nconsidered rational, it should be adequately grounded in a factual basis.\nThis requirement is consistent with the approach of courts that have\ncarefully reviewed agency action under the \xe2\x80\x9carbitrary\xe2\x80\x9d and \xe2\x80\x9ccapri\xc2\xad\ncious\xe2\x80\x9d standard of the Administrative Procedure Act, 5 U.S.C. \xc2\xa7 706\n(2)(A). See, e.g., Ethyl Corp. v. EPA, 541 F.2d 1 (D.C. Cir.) (en banc),\ncert, denied, 426 U.S. 941 (1976).\n\nIV. Judicial Review\nThe order states that it is not intended to create any rights or benefits\nenforceable by a party to litigation against the United States, its agen\xc2\xad\ncies, or any other person. At the same time, it provides that determina\xc2\xad\ntions of costs and benefits, and the RIA itself, are meant to form part of\nthe agency record for purposes of judicial review. The effect of this\nprovision is to preclude direct judicial review of an agency\xe2\x80\x99s compli\xc2\xad\n67\n\n\x0cance with the order. The provision makes clear the President\xe2\x80\x99s intention\nnot to create private rights, an intention that should be controlling here.\nSee Independent Meat Packers Ass\xe2\x80\x99n v. Butz, 526 F.2d 228 (8th Cir.\n1975), cert, denied, 424 U.S. 966 (1976) (no judicial enforcement of\nexecutive order requiring consideration of inflationary impact of regula\xc2\xad\ntions, in part because such order had not been issued pursuant to\ndelegation from Congress); Legal A id Soc\'y o f Alameda County v. Bren\xc2\xad\nnan, 608 F.2d 1319 (9th Cir. 1979) (judicial review available of compli\xc2\xad\nance with an executive order that had been ratified by Congress). Even\nw ithout the provision, compliance with the order would probably be\nimmunized from review because the order has not been promulgated\npursuant to a specific grant of authority from Congress to the President\nand thus lacks the \xe2\x80\x9cforce and effect of law\xe2\x80\x9d concerning private parties.\nSee Independent Meat Packers A ss\xe2\x80\x99n v. Butz, 526 F.2d 228; National\nRenderers A ss\xe2\x80\x99n v. EPA, 541 F.2d 1281, 1291-92 (8th Cir. 1976); Hiatt\nGrain & Feed, Inc. v. Bergland, 446 F. Supp. 457, 501-02 (D. Kan.\n1978). The bar on judicial review o f agency compliance with the order\ndoes not, of course, prohibit a court from hearing a constitutional or\nstatutory attack on the legality of the order itself or of agency action\ntaken pursuant to its requirements.\nBecause the regulatory impact analysis that will be required by the\norder will become part o f the agency record for judicial review, courts\nmay consider the RIA in determining whether an agency\xe2\x80\x99s action under\nreview is consistent with the governing statutes. This, of course, is true\nof all matters appearing in the rulemaking record.\n\nV. Conclusion\nThe proposed executive order is acceptable as to form and legality.\nL\n\narry\n\nL.\n\nS im m s\n\nActing Assistant Attorney General\nOffice o f Legal Counsel\n\n68\n\n\x0c'