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Preparing for Regulatory Litigation in the Biden Administration (National Law Journal)

Donald F. McGahn II, leader of Jones Day’s Government Regulation Practice, and Brett A. Shumate, a partner in the same practice, explain how businesses and trade associations should prepare for regulatory litigation in the Biden era.

Businesses and trade associations should be prepared for regulatory litigation in the Biden administration.

Given the closely divided government in Washington, D.C., the new administration will continue to rely on executive authority—executive orders, agency regulations, and subregulatory guidance—to begin enacting its policy agenda and reverse the outgoing administration's policies.

Indeed, with President Joe Biden's repeal of President Donald Trump's executive orders concerning federal regulation, the new administration promises a return to subregulatory guidance and other rules issued outside the formal regulatory process.

With the new administration promising a renewed regulatory focus on private industry, businesses and trade associations should use these five strategies for regulatory litigation going forward:

  1. Intervene to defend the merits of midnight regulations adopted by the outgoing administration.

Outgoing administrations often try to publish new regulations before the new president is inaugurated. This year was no different, and many of these "midnight" regulations were designed to benefit businesses and certain industries.

Many expect the Biden administration will try to reverse these midnight regulations or choose not to defend them if they are challenged in court. For a new administration, allowing a court to enjoin a predecessor's policy is easier than exercising political will to reverse the policy through the regulatory process.

Businesses and their trade associations should consider intervening to defend the merits of the outgoing administration's midnight regulations in court.

Intervening in these cases challenging the merits of the last administration's midnight regulations may allow businesses and their trade associations to step in to defend the merits of these regulations if the Biden administration chooses not to defend them in court. For example, several states intervened to defend the Affordable Care Act when the last administration did not defend the law in court.

  1. Brace for expansive uses of executive authority.

The Biden administration is expected to continue the trend of presidents using executive authority to bypass a gridlocked Congress. With a closely divided Senate, executive action will again take center stage.

The president's use of his emergency authorities is one area to watch. Just as Trump used his emergency authorities to further his immigration agenda, Biden may do the same to advance his climate and environmental agenda.

Biden may also use public health authorities to combat the spread of COVID-19, as the CDC did with its nationwide eviction moratorium. The Defense Production Act, National Emergencies Act, and International Emergency Economic Powers Act are other laws that Biden may invoke to bring about structural changes in multiple areas.

Given the limited caselaw regarding the president's emergency powers, all of these actions will be ripe for judicial review.

  1. Watch for procedural missteps.

New administrations try to implement their policies and reverse their predecessor's as quickly as possible. The Biden administration will be no different.

The desire to act quickly often causes agencies to make procedural missteps. Agencies try to avoid the Administrative Procedure Act's notice-and-comment rulemaking process because it can be lengthy and burdensome.

But there are consequences for procedural missteps. For example, courts routinely found procedural problems with the Trump administration's attempts to reverse Obama administration policies.

Businesses and their trade associations should be on the lookout for these missteps. For example, agencies often seek to regulate industries through subregulatory guidance documents and other legal rules issued outside the formal regulatory process. The new administration may also try to delay the effective dates of Trump administration midnight regulations without following the right procedural steps.

These missteps are all grounds for challenging new policies for procedural irregularities.

  1. Demand that policy reversals be explained.

New administrations must not only follow procedural requirements to implement new policies, they must also provide good reasons for reversing existing policies.

The U.S. Supreme Court has been clear that agencies must provide a reasoned explanation when they reverse existing policies. This includes taking into account the interests of individuals and businesses that have relied on existing policies. Courts blocked many of the Trump administration's efforts to reverse Obama administration policies for failing to take these reliance interests into account.

Using this blueprint, businesses and trade associations should force the Biden administration to provide good reasons for reversing course and consider how private industry has relied upon Trump administration policies.

  1. Strike fast.

If regulatory litigation becomes necessary, businesses and trade associations should remember speed matters.

The government is a slow moving goliath that does not react quickly. Filing a lightning quick lawsuit—and seeking expedited relief, if appropriate—will often catch the government on its heels.

This is especially true at the beginning of a new administration, as political appointees are still being hired and important positions remain unfilled. In early 2017, for example, the Trump administration faced a flood of emergency litigation across the country involving the President’s travel restrictions.

As the Biden administration implements new policies without political appointees in place to defend them in court, the new administration could be unprepared to deal with the challenges.  

By keeping these strategies in mind, businesses and trade associations will be prepared to challenge Biden administration policies impacting their industries.

Reprinted with permission from the National Law Journal, Jan. 28, 2021. © 2021 ALM Media Properties, LLC.

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