Page 87. Add the following new subsection after the Note on Nondelegation and Statutory Interpretation.

5A. The Major Questions Doctrine

Page 89. Add the following after the second full paragraph.

     The apparent flat bar on delegation of substantive rulemaking authority to private entities was illustrated and reconfirmed by two recent cases involving the Horseracing Integrity and Safety Act of 2020. 15 U.S.C. §§ 3051-60. The Act created the Horseracing Safety and Health Authority -- a “private, independent, self-regulatory, nonprofit corporation” – and authorized it to write rules to protect the health and safety of racehorses and jockeys. The FTC could advise on and “approve” those rules but could not dictate their content. The Fifth Circuit found this arrangement unconstitutional because it gave “a private entity the last word” on the content of federal law. National Horsemen’s Benevolent & Protective Association v. Black, 53 F.4th 869 (5th Cir. 2022). In response, Congress amended the statute to give the FTC authority to “abrogate, add to, and modify the rules of the Authority.” 15 U.S.C. § 3503(e). The Sixth Circuit then upheld the amended statute. Relying in part on the FTC’s ability to oversee and reverse the Authority’s enforcement decisions (which had existed under the original statute), it emphasized that the FTC now had full power over the underlying substantive rules. The “amended text gives the FTC ultimate discretion over the content of the rules that govern the horseracing industry and the Horseracing Authority’s implementation of those rules. . . . That makes the FTC the primary rule-maker, and leaves the Authority as the secondary, the inferior, the subordinate one.” This arrangement was consistent with the separation of powers. It also ensured accountability:

Before the amendment, . . . the Authority, a private entity beyond public control, alone was responsible for the exercise of government power in this area. Not so anymore. With its new ability to have “the final word on the substance of the rules,” the FTC bears ultimate responsibility. The People may rightly blame or praise the FTC for how adroitly (or, let’s hope not, ineptly) it “ensure[s] the fair administration of the Authority” and advances “the purposes of [the] Act.” 15 U.S.C. § 3053(e) (as amended).

     When the Fifth Circuit considered the amended statute, it agreed with the Sixth Circuit that the amendment solved the substantive problem; rulemaking authority now lay with the agency. But the statute still violated “the private nondelegation doctrine.” The problem was not a delegation of legislative authority but a delegation of executive authority. The Horsemen’s Authority has “[t]he power to launch an investigation, to search for evidence, to sanction, to sue—all quintessentially executive functions.” The fact that the FTC can review sanctions imposed by the private body does not solve the problem, because there is no guarantee that any given case will in fact be reviewed by the FTC. National Horsemen’s Benevolent & Protective Association v. Black, 107 F.4th 415 (5th Cir. 2024).

Page 101. Add the following before section c.

     On June 14, 2023 the House of Representatives passed the REINS Act, H.R. 277, by a vote of 221-210. One Democrat (Jared Golden of Maine) voted for the bill; no Republican voted against it; one member of each party did not vote. The bill’s chances in the Senate seem, as in years past, negligible.

Pages 101-102. Add the following to the paragraph following the indented material.

     In October 2022, a panel of the Fifth Circuit held that the CFPB’s funding arrangement violates the Appropriations Clause. Community Financial Servs. Ass’n of Am. v. CFPB, 51 F.4th 616 (5th Cir. 2022). The court stated that the Appropriations Clause “does more than reinforce Congress's power over fiscal matters; it affirmatively obligates Congress to use that authority ‘to maintain the boundaries between the branches and preserve individual liberty from the encroachments of executive power.’ ” By giving the Bureau a “self-actualizing, perpetual funding mechanism,” the court concluded, Congress had abdicated this responsibility. Yes, Congress enacted the law authorizing the Bureau's funding, but a “law alone does not suffice—an appropriation is required.”

The Supreme Court reversed. CFPB v. Community Financial Servs. Ass’n of Am., 144 S. Ct. 1474 (2024). Writing for the Court, Justice Thomas laid out the text, examined contemporary dictionaries, discussed arrangements in England in the 16th-18th centuries and the pre-Revolution American colonies, and studied the appropriations made by the First Congress. There emerged a straightforward principle: the Constitution requires “an appropriation made by law,” which means Congress need “only identify a source of public funds and authorize the expenditure of those funds for designated purposes.” It had done so here.

Justice Alito’s dissent, joined by Justice Gorsuch, fought originalist fire with originalist fire. Justice Alito did emphasize the unusual nature of the CFPB’s arrangement and bemoaned how unconstrained and powerful it made the agency, but for the most part he too did not make it past the early 18th century. He spent more time in England and less in the Colonies than did Thomas. Interestingly, he also objected to Thomas’s “consulting a few old dictionaries,” because he deemed “appropriation” to be a legal term of art that should be given its technical meaning. That meaning “demands legislative control over the source and disposition of the money used to finance Government operations and projects.” The Court’s test “has the virtue of clarity” but allowed Congress to blatantly circumvent the Constitution.

Justice Kagan, joined by Justices Sotomayor, Kavanaugh, and Barrett, joined the majority opinion but wrote separately to point out that the Court’s result was supported not just by founding era practices but by everything that had happened since. “‘Long settled and established practice’ may have ‘great weight’ in interpreting constitutional provisions about the operation of government. And here just such a tradition supports everything the Court says about the Appropriations Clause’s meaning. The founding-era practice that the Court relates became the 19th-century practice, which became the 20th-century practice, which became today's. For over 200 years now, Congress has exercised broad discretion in crafting appropriations.”

Justice Jackson also joined the majority opinion but wrote separately to urge judicial caution. “The principle of separation of powers manifested in the Constitution's text applies with just as much force to the Judiciary as it does to Congress and the Executive,” and without a clear warrant in the Constitution the Court should leave Congress’s decisions about how to structure the operations of the federal government alone.

Page 102, 3rd line after the indented material.

Erratum: substitute “Seila Law” for “Lucia”

Page 102. Add at the end of the penultimate paragraph.

     After being included for several multiple appropriations measures, the bar on SEC rulemaking disappeared from the FY2022 bill, with both Houses of Congress and the Presidency in Democratic hands. The next year it was back, notwithstanding Democratic control. See Consolidated Appropriations Act of 2022, Pub. L. No. 117-103, Division E, § 633. But in 2024 it was gone again.

Page 123, regarding last bullet point.

     The casebook gives the example of legislation specifically designed to allow the reappointment of Robert Mueller as head of the FBI even though he was statutorily disqualified. A more recent example occurred in 2021. President Biden’s choice for Secretary of Defense, Lloyd Austin, was ineligible for the post because of a statutory prohibition on serving as Secretary of Defense within 7 years of relief from active duty in the armed forces. Congress obligingly passed a law (the very first law of the 117th Congress) making a very narrow exception to allow Austin’s appointment.

Page 142. Add the following to note 4.

The 5th and 9th Circuits have reached opposite conclusions on this question. See the entry under chapter 6 for page 678. The Supreme Court granted cert on this issue in the 5th Circuit case but affirmed on other grounds. See SEC v. Jarkesy, reproduced below in the Update to pages 212-14.

Page 144. Add the following to the carryover paragraph.

In a recent decision, a D.C. Circuit panel was wholly unmoved by the argument that a statute providing that “the term of each member” of the ACUS Council “is 3 years” implicitly limited the president’s removal power. See Severino v. Biden, 71 F.4th 1038 (D.C. Cir. 2023). Relying on a strong presumption of at-will removal, the need for a clear congressional command to the contrary, dicta in Myers, and an explicit if ancient Supreme Court precedent, Parsons v. U.S., 167 U.S. 213 (1897), it read “term” to impose a ceiling, not a floor. “A defined term of office, standing alone, does not curtail the President’s removal power during the office-holder’s service.”

Page 155. Add the following to note 2.

In Kaufmann v. Kijakazi, 32 F.4th 843 (9th Cir. 2022), the court held that for-cause protection for the SSA Commissioner violated the separation of powers, finding the case indistinguishable from Seila Law and Collins v. Yellen given “a single Commissioner whose term extends longer than the President's, the immense scope of the agency's programs, the Commissioner's broad power to affect beneficiaries and the public fisc, and the [agency's] largely unparalleled structure” (quoting the OLC opinion).


Page 155. Add the following to note 6.

Speculation regarding the demise of Humphrey’s Executor continues to grow. Until recently, attention was focused on Consumer’s Research v. Consumer Product Safety Commission, 94 F.4th 342 (5th Cir. 2024). Grudgingly acknowledging that Humphrey’s Executor, in some form, has not been overruled by the Supreme Court, a 2-1 panel rejected a challenge to the CPSC commissioners removal protections. A cert petition followed, presenting this question: “Whether the for-cause restriction on the President’s authority to remove Commissioners of the Consumer Product Safety Commission violates the separation of powers.” The petition was supported by 11 separate amicus briefs and was relisted twice. However, the Court denied cert, without recorded dissent, on October 21, 2024. The tea leaves are hard to read, for, as the SG stressed in her opposition, the case had meaningful standing issues.

The issue will, of course, recur. One pending petition is Leachco, Inc. v. CPSC, 103 F.4th 478 (10th Cir. 2024), cert. pending, No. 24-156. Like Consumer’s Research, the petitioner argues that for-cause removal is constitutional only when the relevant agency exercises no executive authority. It also invites the Court to overrule Humphrey’s Executor outright. The petitioner is represented by the Pacific Legal Foundation; the brief in opposition is due November 14, 2024.

Page 167. Replace subsection (f) with the following, as per Executive Order 14094, Modernizing Regulatory Review, 88 Fed. Reg. 21879 (2023).

(f) ‘‘Significant regulatory action’’ means any regulatory action that is likely to result in a rule that may:

(1) have an annual effect on the economy of $200 million or more (adjusted every 3 years by the Administrator of OIRA for changes in gross domestic product); or adversely affect in a material way the economy, a sector of the economy, productivity, competition, jobs, the environment, public health or safety, or State, local, territorial, or tribal governments or communities;

(2) create a serious inconsistency or otherwise interfere with an action taken or planned by another agency;

(3) materially alter the budgetary impact of entitlements, grants, user fees, or loan programs or the rights and obligations of recipients thereof; or

(4) raise legal or policy issues for which centralized review would meaningfully further the President’s priorities or the principles set forth in this Executive order, as specifically authorized in a timely manner by the Administrator of OIRA in each case.

Page 175. Add the following to the last paragraph of Note 2.

As directed by Executive Order 14094, Modernizing Regulatory Review (Apr. 6, 2023), and after taking public comment, OIRA issued a revised Circular A-4 in November 2023. At 93 pages, the new version is almost twice the length of its predecessor. Key changes include:

• Lowering the default discount rate from 3% to 2%, and 1.1% for effects in the more distant future.

• Eliminating the requirement of performing a separate analysis using a 7% discount rate in order to account for effects on investment and for aggregate risk. Agencies should still take those into consideration, but not through a blanket, one-size-fits-all 7% discount rate.

• Providing more detailed guidance on the consideration of distributional impacts. This includes the possibility of conducting a quantitative distributional analysis. This would consist of an income-weighted analysis that takes account of the fact that a given dollar’s worth of harm or benefit has a greater impact (positive or negative) on a poor person than a wealthy one (“the income elasticity of marginal utility”). (For more on distributional impacts, see the update attached to page 189.)

• Placing greater weight on extra-territorial impacts. Where the 2003 Circular instructed agencies to focus on a proposal’s costs and benefits for those within the borders of the United States, the new version stresses that impacts on non-citizens outside the U.S. may still be relevant, even if the focus is on U.S. citizens and residents. The new circular stops well short of instructing agencies to weight impacts outside the U.S. equally with those inside the U.S.

• Ensuring that non-monetized benefits are not ignored. The 2003 Circular, like EOs 12866 and 13563, had cautioned agencies to take nonmonetized benefits seriously. The 2023 version makes stronger statements to that effect. In an effort to help focus attention on non-monetized benefits it advises agencies to include a summary table of all important non-monetized effects and a brief description of why they are important.

Page 185. Add the following to note 23.

The need for attention to distributional impacts was re-emphasized by President Biden’s Executive Order on Modernizing Regulatory Review:

     Sec. 3. Improving Regulatory Analysis. (a) Regulatory analysis should facilitate agency efforts to develop regulations that serve the public interest, advance statutory objectives, and are consistent with Executive Order 12866, Executive Order 13563, and the Presidential Memorandum of January 20, 2021 (Modernizing Regulatory Review). Regulatory analysis, as practicable and appropriate, shall recognize distributive impacts and equity, to the extent permitted by law.

   (b) Within 1 year of the date of this order, the Director of the Office of Management and Budget, through the Administrator of OIRA and in consultation with the Chair of the Council of Economic Advisers and representatives of relevant agencies, shall issue revisions to the Office of Management and Budget’s Circular A-4 of September 17, 2003 (Regulatory Analysis), in order to implement the policy set forth in subsection (a) of this section.

We discuss some of the brass tacks in the update attached to page 189 below.

Page 186. Add the following to the second full paragraph.

Not surprisingly, there is an enormous literature, much of it highly technical, that addresses this question. We summarize the central issues in the pages that follow. This is something of a moving target, not just because the field develops but because, as mentioned just above, OIRA recently updated its basic instruction manual for Cost-Benefit Analysis, Circular A-4. For an overview of the basic principles, comments on the 2023 changes, and suggestions about the work that remains, see Cass R. Sunstein, The Economic Constitution of the United States, 38 J. Economic Perspectives 25 (Spring 2024).

Page 189. Add the following to Note 4.

    As noted above (update to page 175), many of the most important changes found in the 2023 revision to Circular A-4 concern distributional effects. The prior version devoted only two paragraphs to the topic. Its basic admonition was this: “Your regulatory analysis should provide a separate description of distributional effects (i.e., how both benefits and costs are distributed among sub-populations of particular concern) so that decision makers can properly consider them along with the effects on economic efficiency.” In contrast, the new version devotes six single-spaced pages to distributional effects. It makes two key changes in particular.

First, it supplies extensive guidance on the preparation of a “distributional analysis.” The purpose is “to estimate the likely effects of the regulation on those in the groups being analyzed. This analysis involves estimation of the benefits, costs, and net benefits expected for each of these groups, if such data are available.” OIRA emphasizes the desirability of quantitative rather than qualitative measures in such an analysis. A distributional analysis is not mandatory for every action; not every action has varying costs and benefits. But there is a strong indication that it should be performed whenever it “is practical, appropriate, consistent with law, and will produce relevant and useful information in a specific context.” The Circular is explicit that distributional interests “may lead an agency to select a regulatory alternative with lower monetized net benefits over another with higher monetized net benefits because of the difference in how those net benefits are distributed in each alternative.”

     Second, the new Circular endorses the idea of “distributional weights” mentioned in the casebook:

In traditional benefit-cost analysis, the sum of the net benefits across society equals the aggregate net benefits of the regulation. Any approach to estimating aggregate net benefits uses distributional weights. An analysis that sums dollar-denominated net benefits across all individuals to measure aggregate net benefits—as the traditional approach generally does— adopts weights such that a dollar is equal in value for each person, regardless of income (or other economic status).

Agencies may choose to conduct a benefit-cost analysis that applies weights to the benefits and costs accruing to different groups in order to account for the diminishing marginal utility of goods when aggregating those benefits and costs. Diminishing marginal utility means that an additional unit of a good is more valuable to a person (in welfare terms) if they have fewer total goods than if they have more total goods. Weights of this type are most commonly applied in the context of variation in net benefits by income, consumption, or other measures of economic status. . . .

Note that the characteristics of the parties who bear the costs of a regulation, not only the characteristics of the parties who experience the benefits, can greatly influence the estimate of net benefits when such weights are used. . . .

Agencies should not treat estimates using weights that account for diminishing marginal utility as primary if they are less informative about the welfare effects of the regulation than traditionally-weighted estimates (sometimes, albeit inaccurately, referred to as “unweighted” estimates). [Y]ou should also present traditionally-weighted estimates when conducting an analysis using weights that account for diminishing marginal utility, and present the distribution of monetized net benefits for each analyzed group in undiscounted dollars.

Scholarly reactions to the endorsement of distributional weights have been mixed though generally positive. Compare, e.g., Comment of Mary Sullivan, Visiting Scholar, GW Regulatory Studies Center (opposed) with Comment of Professor Matthew Adler, Duke Law School (in favor). A strong endorsement is Kyle McKenney, Updating Circular A-4: How Adding Income Weighting to Decades-Old Guidance Could Make Government Regulations More Rational and Equitable, NYU J. Leg. Pub. Pol. (November 2023).

Page 195, 1st paragraph after the Klain memorandum.

       We must qualify the statement in text that the standard practice of a new administration withdrawing all rules that have been sent to the OFR but not yet published in the Federal Register is “legally uncontroversial.” In Humane Society of the U.S. v. Dep’t of Agriculture, 41 F.4th 564 (D.C. Cir. 2022), a divided panel held that a final rule is final, so cannot be withdrawn without a new round of notice and comment, as soon as the OFR makes it available for public inspection. (By statute, this occurs prior to publication; in practice, there is usually a lag of a few days.) The court left open the possibility that if the agency posts the final rule to its own website before the OFR makes it publicly available, then that is the moment the rule is final.

The Humane Society case involved a Department of Agriculture rule designed to protect show horses from abuse. The Department published a Notice of Proposed Rulemaking in July of 2016. With the unusual speed that the last year of an administration can induce, it had a final rule ready to go by January 2017. On January 11, it posted the final rule on its website along with a press release announcing that it had “announced a final rule” that “will be publish[ed] in the Federal Register in the coming days.” It then sent the final rule to the OFR, which made it available for public inspection on January 19. It was planning to publish the rule in the January 24 Federal Register. On January 20, immediately after the inauguration of Donald Trump, Chief of Staff Reince Priebus issued the standard “regulatory freeze” memo.  On January 23, the Department withdrew the rule from publication; it thereafter took no further action on the rulemaking.

The Humane Society challenged the withdrawal. The District Court dismissed the complaint, holding that a rule only becomes final upon publication in the Federal Register.  In an opinion by Judge Tatel, joined by Judge Millet, the D.C. Circuit reversed, holding that the “regulatory point of no return” is when OFR makes the rule available for public inspection. In large measure, the court relied on the specifics of the Federal Register Act. Under that Act, making a rule available for public inspection is “sufficient to give notice of the contents” and makes the document valid against a person even without actual knowledge. 44 U.S.C. § 1507. The Federal Register Act also distinguishes between the “promulgation” of a rule and its “publication,” indicating that the first can precede the second. suggesting issuance can come before publication. And it is the “day and hour” of public inspection that must be recorded by OFR. Id. § 1503. Judge Tatel also relied on Attorney General opinions concluding that a regulation is valid as soon as it has been made available for public inspection. And, he noted, the government has enforced unpublished rules against individuals who had actual notice, which could only have occurred if the rule had legal effect before publication.

Judge Rao, in dissent, relied on the APA rather than the Federal Register Act, arguing that it makes publication the decisive event. A “person may not in any manner be required to resort to, or adversely affected by, a matter required to be published in the Federal Register and not so published.” 5 U.S.C. § 552(a)(1). The APA also requires publication at least 30 days before a substantive rule’s effective date (subject to certain exceptions). Id. § 553(d). Moreover, publication is understood to be the date that a rule is “final agency action” and the judicial review clock starts running.

The Humane Society contended that the rule was final once the Department of Agriculture had posted it on its own website. The majority declined to address this argument. Does it have merit?

Pages 212-214. Replace the material beginning with “In Granfinanciera” to the end of Part 2 with the following:

Replacement material concerning the 7th Amendment (including SEC v. Jarkesy).