Over two decades after then-Professor Elena Kagan published her seminal article Presidential Administration,1 presidential involvement in agency action has increased so much that it might now be best described as presidential domination.2 The Supreme Court confirmed in Franklin v. Massachusetts3 that the central statute governing agency action, the Administrative Procedure Act4 (APA), does not apply to the President.5 But as the President assumes greater authority over agency activity, informally through White House oversight6 and formally through presidential directives,7 disentangling presidential action from agency action has become increasingly difficult. Lower courts also disagree on the contours of the President’s APA exemption under Franklin.8 Recently, in Nebraska v. Su,9 the Ninth Circuit held that a Department of Labor (DOL) rule implementing an executive order (EO) by President Biden was both reviewable under the APA and arbitrary and capricious. While the majority’s holding significantly cabins Franklin, the dissent’s rebuttal risks hollowing out the APA. The court could have balanced the principles of Franklin and the APA by applying Franklin to President Biden’s exercise of presidential statutory authority while subjecting delegated DOL decisions to arbitrary and capricious review. The case exhibits tensions between a strong view of executive power and congressional and judicial limitations on administrative agencies, which come to a head in the presidential domination era.
The Federal Property and Administrative Services Act10 (FPASA) vests the President with authority to procure property and services for the federal government.11 Pursuant to that power, President Biden issued an EO setting a nationwide hourly minimum wage of $15 for federal contractors beginning on January 30, 2022.12 He directed DOL to implement the order and define “relevant terms” and “exclusions.”13 After a notice and comment period, DOL issued its final rule.14 Five states sought to enjoin or vacate the new policy, but the U.S. District Court for the District of Arizona granted the government’s motion to dismiss.15 As pertinent here, Judge Tuchi found that the EO fell squarely under the President’s Franklin exception and was not reviewable under the APA.16 He further concluded that Franklin covered DOL’s final rule “to the extent it implements decisions made by the President pursuant to his delegated authority under the FPASA.”17 Four states appealed, claiming that the EO and rule violated FPASA and the major questions doctrine and that the rule violated the APA.18
The Ninth Circuit reversed in part, vacated in part, and remanded.19 Writing for the divided panel, Judge Nelson20 first held that the “minimum wage mandate” exceeded President Biden’s and DOL’s statutory authority under FPASA.21 He found that FPASA’s purpose statement22 is not an independently “operative provision” of the statute.23 Otherwise, FPASA would confer “unfettered authority [to] the President . . . to implement any procurement policy . . . so long as it has some relation to [FPASA’s statutory purposes of] economy and efficiency.”24 Judge Nelson rejected the government’s argument that three other statutory provisions authorized the mandate.25 Next, the court held that the major questions doctrine, which advises courts to “hesitate” before approving “extraordinary” executive assertions of power, did not apply.26 Since the EO followed a history of Presidents setting federal contractor minimum wage rules under FPASA,27 it was neither “unheralded” nor a “transformative expansion” of authority under a “long-extant, but rarely used, statute.”28
Finally, the Court held that DOL’s implementing rule was subject to the APA and violated its bar on “arbitrary” or “capricious” agency decisionmaking.29 Judge Nelson rejected the argument that Franklin exempted the DOL rule from arbitrary and capricious review.30 He began with the text. Since “the APA’s language is plain . . . apply[ing] to any ‘final agency action,’” it indiscriminately covers agency rulemaking, including rules that implement presidential directives.31 Surveying precedent, he concluded that caselaw supported APA review of regulations implementing presidential directives.32 Judge Nelson rejected the district court’s concern that agencies would be put in the “untenable position”33 of choosing between presidential commands and APA requirements, both because such “policy justifications cannot supersede statutory text,” and because this view “ignores the dynamic reality of executive branch policy development,” in which a “back-and-forth debate” between the President and agencies during rulemaking may actually serve the APA’s goal of “reasoned and informed policymaking.”34 As a result, the panel concluded that DOL acted arbitrarily and capriciously in “fail[ing] to consider alternatives” to the $15 minimum wage mandate.35 Accordingly, the court “vacate[d] the rule under the APA.”36
Judge Nelson separately concurred, concluding that the major questions doctrine applies to statutes delegating authority to the President.37 He rejected the argument that the President’s enhanced political accountability warrants exempting him from the canon and maintained that “[b]road legislative delegations” to any member of the executive branch “are inherently suspect.”38
Judge Sanchez dissented.39 He found President Biden’s EO consistent with past presidential invocations of FPASA.40 He urged the adoption of a test from other circuits that permits presidential orders so long as there is “a nexus to [FPASA’s] stated goals of improving efficiency and economy in federal procurement,”41 which he found the EO satisfied.42 Finally, he disputed the panel’s APA holding, arguing that “an agency does not act ‘arbitrarily and capriciously’ by implementing a binding presidential directive.”43 He argued that DOL correctly “decline[d] to consider alternatives it could not modify because those choices would have contravened the President’s clear directive, and the President is the head and embodiment of the Executive Branch.”44
The court’s decision that President Biden’s EO exceeded his FPASA authority made headlines45 and created a circuit split over what FPASA allows.46 But an interesting and underdiscussed aspect of the Ninth Circuit’s opinion is its holding that agencies must consider alternatives to a binding presidential directive in order to survive arbitrary and capricious review.47 This case highlights three types of presidential directives: (1) The President exercises his statutorily delegated powers to set policy but requests agency implementation, as President Biden did when setting the wage rate and timing in this case; (2) the President subdelegates some of his statutory authority to an agency, as President Biden did by requesting that DOL consider definitions and exclusions; or (3) the President commands an agency to exercise its congressionally delegated statutory powers in a certain way, which did not occur in Su but loomed in the background of the court’s analysis.48 Balancing the competing logics of Franklin and the APA, the panel could have applied Franklin to President Biden’s type one exercise of presidential statutory authority under FPASA as implemented by DOL, while still subjecting type two discretionary DOL decisions to APA review.49 Yet this case also foreshadows the ways Franklin and the APA may be increasingly hard to reconcile given the rise in concurrent congressional delegations to both the President and agencies as well as the increasing prominence of the unitary executive theory.
In the APA, “agency” is defined as “each authority of the government of the United States,” excepting Congress, courts, and the governments of U.S. territories and D.C. — there is no mention of the President.50 As a result, in Franklin, the Supreme Court concluded that given “the separation of powers and the unique constitutional position of the President, . . . textual silence [was] not enough to subject the President[’s]” actions to APA review absent an “express statement by Congress.”51
The majority’s approach, applying the APA to DOL’s implementation of President Biden’s decision, threatens to render Franklin meaningless in a world where Presidents frequently exercise their authority by prescribing agency action. By faulting DOL for not considering alternatives to the President’s directive, essentially asking DOL to consider rewriting a presidential order,52 the Ninth Circuit de facto subjected the President’s decision to APA review, despite Franklin’s de jure bar on doing so. The holding was particularly striking given that, as in type one, the President exercised his congressionally delegated FPASA power and merely tasked DOL with implementation. In his survey of Franklin caselaw, William Powell calls this “[t]he ‘last act’ approach,” which only applies Franklin to cases “in which the President herself takes the final action,” providing a backdoor to APA review when the agency is the last actor.53 Meanwhile, other courts, employing what Powell calls “the ‘presidential nature’ approach,” read Franklin more broadly.54 Following Franklin’s reasoning about the President’s unique constitutional role, this line of cases exempts from APA review any “presidential action”: a “discretionary . . . exercise of authority committed to the President by the Constitution or by Congress.”55 Here, the Ninth Circuit panel effectively reviewed the President’s assertion of his FPASA authority under Congress’s framework for agency decisionmaking, undermining Franklin’s clear statement canon. The court’s approach would substantially limit Franklin’s application; Presidents often must enlist agency help to execute their statutorily delegated authority.56 Frequently, Presidents issue “nonlegally binding orders” to “prompt subsequent executive branch action that [has] legal effect.”57
On the other hand, the dissent’s overbroad position may make APA review toothless in cases where an agency acts according to a presidential command. Judge Sanchez did not apply Franklin but argued that an agency never acts “‘arbitrarily and capriciously’ by implementing a binding presidential directive.”58 This stance is not without precedent; in Sherley v. Sebelius,59 the D.C. Circuit held that the National Institutes of Health (NIH) did not have to consider alternatives to a presidential directive to survive arbitrary and capricious review because “under the direction of the executive branch, [NIH] must implement the President’s policy directives to the extent permitted by law.”60 That logic allows the President to circumvent arbitrariness review by fiat in type three cases, even though Congress statutorily delegated decisionmaking to agency heads and expected this review to apply. Such was the case in Sherley, where the EO pertained to appropriations powers Congress had conferred upon the agency head.61 Similarly, the Su dissent does not stake its analysis on the fact that FPASA delegates authority to the President, and Judge Sanchez’s unequivocal language suggests that he would approach type three directives similarly to Sherley.62 The reasoning of both cases enables the President to “indemnify every agency action by issuing an executive order telling the agency how to use its [congressionally delegated] discretion.”63 Of course, neither Sherley nor the dissent would exempt type two subdelegated agency exercises of discretion from standard arbitrariness review.64 But any decision specified in a presidential directive would be exempt — which may, as the Su panel feared, “shockingly allow Presidents to insulate any desired rulemaking from judicial review with the single stroke of an executive pen.”65 It would essentially nullify one of the APA’s major safeguards every time the President orders agency action.
Thus, while the Ninth Circuit’s holding neglects Franklin’s separation of powers rationale in type one circumstances where the President exercises his own statutory authority, the dissent’s analysis may severely diminish the APA’s potency in type three fact patterns where the agency was Congress’s intended decisionmaker. In its petition for en banc review, the Government urged the Ninth Circuit to distinguish between congressional statutes conferring power on the President versus on an agency in the court’s APA analysis.66 Neither the majority nor the dissent considered the object of Congress’s delegation, but this may have been a promising way to balance the principles of Franklin with fidelity to the APA.67 Powell suggests a two-step formulation in which courts first look to Congress’s choice of delegee, as the Government suggested, and next, to who actually exercises the statutorily delegated discretion.68 For type one directives, where the President exercises presidential statutory authority, Franklin should apply, but the APA should otherwise govern in type two and three scenarios, where the President or the statute delegates discretion to the agency. Such an approach preserves Franklin’s attention to the President’s unique constitutional role. Yet it also preserves robust APA review when the agency is the primary decisionmaker, ensuring the requisite procedural and judicial safeguards constrain administrative discretion.
Applying this approach to the case would be fairly straightforward. Since President Biden invoked his FPASA authority to choose a $15 minimum wage, DOL need not consider alternatives to survive an APA challenge.69 The agency would not be in the impractical position of choosing whether to follow the EO’s mandate or satisfy the APA. By contrast, the APA would apply to discretionary decisions that President Biden left to DOL’s expert judgment with the benefit of notice and comment, like the definition of “contractor” or potential exceptions.70 As the agency had latitude, these considerations should not be exempt from arbitrariness review merely because they were prompted by an EO.
While the implementation of this framework is straightforward in this case, it will not always be so easy to navigate the tension between Franklin and the APA in the era of presidential domination. An analysis looks more complicated with the rise of “[m]ixed [d]elegations”: concurrent congressional delegations to both the President and agencies.71 And scholars have increasingly argued under the unitary executive theory that the Constitution affords the President unconstrained directive authority over agencies.72 If these trends continue, the tension between presidential prerogatives and the governing principles of the APA will grow. The stakes of resolving that tension have been raised as Presidents increasingly exert control over agencies to accomplish core parts of their policy agendas. The Supreme Court has not spoken on the issue since Franklin,73 nor has Congress clarified whether or how it wants courts to review presidential actions. In the interim, courts must balance the guidance of Franklin with the principles of the APA in the increasingly complex world of administrative law.