Presidential Regulation

Abstract

This Article documents and analyzes the rise of a new mode of economic governance: presidential regulation. Today, the president regularly bypasses not only Congress but the executive branch’s own administrative agencies and directly imposes sweeping new economic regulations. President Biden, for instance, created new regulatory regimes governing producers of artificial intelligence technologies, companies that trade in or hold the personal information of U.S. citizens, and companies that can increase the production of energy efficient equipment and technology. During his first term, President Trump regulated the kinds of technologies that U.S. telecommunications companies can buy and sell, placed restrictions on the electrical equipment that the bulk power system uses, and adopted expansive policies aimed at getting U.S. companies to move their supply chains back into the United States. Most recently, on February 1, President Trump issued proclamations imposing a 25% tax on imports from Mexico and Canada and a 10% tax on imports from China—the United States’ three largest trading partners.

Presidential regulation has three core features. First, it is an exercise of presidential power. While the administrative law paradigm has Congress delegating power to federal agencies, Congress also delegates powers directly to the president, often in very expansive terms. These delegated authorities—along with the president’s own constitutional authority, especially over foreign affairs, national security, and emergencies—form the legal basis for presidential regulation. Second, there is considerably less judicial review of presidential regulation, as opposed to agency regulation, both because the president can often rely on independent constitutional authority unavailable to agencies and because courts are more deferential to the president than agencies in reviewing the exercise of delegated authority. Finally, presidential regulation has fewer transaction costs, in terms of internal executive branch procedures, both because the president is not subject to the Administrative Procedures Act (APA) and because the president can cut through the normal inter-agency process. Presidential regulation thus differs significantly from ordinary agency regulation and from “presidential administration,” in which the president directs agencies as to how they should use their authorities.
 
Modern presidential regulation did not emerge fully formed in the Trump and Biden Administrations. The precursors of modern presidential regulation go back to the early Republic, and presidential regulation has been used intermittently throughout American history. But after describing this history, we argue that presidential regulation has recently emerged as a distinctive mode of economic governance—and will likely expand—due to four dynamics. First, political polarization has created gridlock in Congress, shifting primary responsibility for regulation to the executive branch. Second, the rise of expansive presidential power theories on both the political right and left have elevated the importance of the president within administrative law. Third, the Roberts Court’s administrative law revolution has made ordinary presidential administration less attractive precisely because ambitious agency action struggles to survive judicial review. And finally, foreign affairs exceptionalism—the extraordinary deference courts accord presidents when they act on foreign affairs—combined with the blurry boundary between foreign and domestic matters allows presidents to avoid stringent judicial oversight when they regulate the U.S. economy using their own foreign affairs, national security, and emergency powers. The result is an emergent regulatory process that is less transparent, less accountable, and more unstable than either legislation or ordinary administrative law. But because of increased scrutiny over agency actions, presidential regulation is also thriving—and likely to become even more prominent in the years to come.

JEL Classification: K10, K23, K33