Improving regulatory accountability: lessons from the past and prospects for the future.

Author:Dudley, Susan E.
Position:Symposium: Executive Discretion and the Administrative State
 
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ABSTRACT

This Article examines efforts by the three branches of federal government to oversee regulatory policy and procedures. It begins with a review of efforts over the last century to establish appropriate checks and balances on regulations issued by the executive branch and then evaluates current regulatory reforms that would hold the executive branch, the legislative branch, and the judicial branch more accountable for regulations and their outcomes.

CONTENTS INTRODUCTION I. EVOLUTION OF EXECUTIVE DISCRETION REGARDING REGULATORY POLICY AND PRACTICE IN THE UNITED STATES A. Early Regulatory Agencies and the Delegation of Legislative Authority B. Procedural Reform and the Administrative Procedure Act C. Removal of Economic Regulation D. Growth in Health, Safety, and Environmental Regulation E. Executive Controls on Regulation F. Congressional Efforts at Regulatory Reform II. EXECUTIVE BRANCH OVERSIGHT OF REGULATION A. President Obama's Initiatives B. 113th Congress Proposals for Executive Branch Controls. 1. Enhanced Regulatory Impact Analysis 2. Amendments to the APA 3. Subject Significant Guidance Documents to Regulatory Review and Notice Requirements 4. Incentives to Reexamine Existing Regulations III. LEGISLATIVE BRANCH OVERSIGHT OF REGULATION A. The REINS Act B. Create a Congressional Regulatory Oversight Body IV. JUDICIAL BRANCH OVERSIGHT OF REGULATION A. Changes to the Standard by Which Courts Review Regulations B. Judicial Review of Regulatory Impact Analysis C. Judicial Review of Statutory Requirements CONCLUSION INTRODUCTION

In the more than 125 years since Congress created the first regulatory body, (1) the number of regulatory agencies and the scope and reach of the regulations they issue has increased significantly. In 2014, there were more than seventy federal agencies, employing almost 300,000 people to write and implement regulation. (2) Every year federal agencies issue tens of thousands of new regulations, (3) which now occupy more than 175,000 pages of regulatory code. (4) For over a century, concerns over the accountability of what some have called the "fourth branch of government" have led all three branches of government to take steps to exercise checks and balances on the development and enforcement of regulations. (5)

This Article examines efforts by the three branches of federal government to oversee regulatory policy and procedures. It begins with a review of efforts over the last century to establish appropriate checks and balances on regulations issued by the executive branch and then evaluates current regulatory reforms that would hold the executive branch, the legislative branch, and the judicial branch more accountable for regulations and their outcomes.

  1. EVOLUTION OF EXECUTIVE DISCRETION REGARDING REGULATORY POLICY AND PRACTICE IN THE UNITED STATES

    We begin with a review of the evolution of regulatory policy in the United States, from the establishment of the first regulatory agencies in the late nineteenth century, to the passage of the Administrative Procedure Act (APA) of 1946, (6) to the economic deregulation of the 1970s and '80s, to the growth in health, safety, and environmental regulations since then, which has led to increased emphasis on executive branch oversight, congressional reforms, and judicial review.

    1. Early Regulatory Agencies and the Delegation of Legislative Authority

      Congress established the Interstate Commerce Commission (ICC), the first regulatory agency, in 1887 to regulate railroad rates. (7) The ICC was an independent, bipartisan commission of seven members, which reached decisions through an adjudicatory approach. Over the next several decades, this model served as the basis for subsequent regulatory commissions, including the Federal Trade Commission (FTC) (1914), the Water Power Commission (1920) (later the Federal Power Commission), and the Federal Radio Commission (1927) (later the Federal Communications Commission (or FCC)); Congress also created other agencies to regulate commercial and financial systems, including the Federal Reserve Board (1913), the Tariff Commission (1916), the Packers and Stockyards Administration (1916), and the Commodities Exchange Authority (1922). (8) Most of these early agencies were established as independent regulatory commissions outside executive departments (9) and were structured to be more independent of presidential control. (10) Their members could only be dismissed for good cause ("inefficiency, neglect of duty, or malfeasance in office") (11) in contrast to political appointees in executive departments, who serve "at the pleasure of the president" (12) and can be fired for any reason.

      During this period, courts interpreted the separation of powers implicit in Articles I--III of the U.S. Constitution as prohibiting the delegation of legislative powers to the executive. Early cases held that limited delegation was permissible as long as the executive branch was merely "filling] up the details." (13) "That Congress cannot delegate legislative power to the President is a principle universally recognized as vital to the integrity and maintenance of the system of government ordained by the Constitution." (14)

      By 1928, however, the Supreme Court softened its strict interpretation of the nondelegation doctrine in a decision that found that a congressional delegation of power was constitutional because the statute included an "intelligible principle" to guide executive action. (15)

      In the 1930s, President Franklin Delano Roosevelt's New Deal brought an increase in the number of government regulatory agencies, including the Food and Drug Administration (FDA) (1931), the Federal Home Loan Bank Board (1932), the Federal Deposit Insurance Corporation (FDIC) (1933), the Commodity Credit Corporation (1933), the Farm Credit Administration (1933), the Securities and Exchange Commission (SEC) (1934), and the National Labor Relations Board (NLRB) (1935). (16) The jurisdiction of other agencies, including the ICC, the FCC, and the FDA, expanded during this period. (17) The Fair Labor Standards Act of 1938 (18) created a new agency, now called the Employment Standards Administration, in the Department of Labor (DOL). (19)

      The sweeping powers of these new regulatory agencies led to concerns over the constitutionality of congressional delegation to a "fourth branch" of government. (20) In 1935, the Supreme Court weighed in with a ruling that the National Industrial Recovery Act (NIRA) (21) was unconstitutional because it provided the President (and private industry associations) "virtually unfettered" decision-making power. (22)

    2. Procedural Reform and the Administrative Procedure Act

      Concern that agency "power was not sufficiently safeguarded and sometimes was put to arbitrary and biased use" (23) led both Congress and the Executive Branch to conduct extensive reviews of agency conduct. (24) Years of debate culminated in the passage of the Administrative Procedure Act (APA) in 1946.

      According to one researcher, the APA reflected a "fierce compromise":

      The battle over the APA helped to resolve the conflict between bureaucratic efficiency and the rule of law, and permitted the continued growth of government regulation. The APA expressed the nation's decision to permit extensive government, but to avoid dictatorship and central planning. (25) The APA established procedures an agency must follow to promulgate binding rules and regulations within the area delegated to it by statute. As long as executive branch agencies act within the rulemaking authority delegated to them by Congress, and follow the procedures in the APA, recent courts have not found it unconstitutional for them to write and enforce regulations. (26)

      While some constitutional scholars still debate the question of delegation, (27) recent Supreme Court cases have not overturned legislation or regulation on nondelegation grounds. In 1989, the Supreme Court opined:

      In our increasingly complex society, replete with ever changing and more technical problems, Congress simply cannot do its job absent an ability to delegate power under broad general directives. (28) Congress has supplemented the APA through legislation tailored to specific programs and passed government-wide procedural laws (e.g., the Freedom of Information Act of 1966, (29) and the Government in the Sunshine Act of 1976 (30)). (31) However, the APA has guided executive branch rulemaking without significant amendment for more than sixtyfive years and is one of the most important pieces of legislation ever enacted. (32)

    3. Removal of Economic Regulation

      The regulatory agencies formed during the New Deal and earlier generally issued "economic regulations." That is, they regulated a broad array of activities within particular industries using economic controls such as price ceilings or floors, quantity restrictions, and service parameters. (33) Economic regulation is often justified by concerns of "market power" or "natural monopoly"--where a market can be served at lowest cost with a single supplier. (34)

      Though established as independent commissions to avoid political influence, (35) observers began to be concerned that these agencies were "captured" by the industries they regulated. By the early 1970s, scholarship in the fields of economics, antitrust, and law generally supported the idea that regulation of private sector prices, entry, and exit tended to keep prices higher than necessary, to the benefit of regulated industries, and at the expense of consumers. (36) Policy entrepreneurs in the Ford, Carter, and Reagan Administrations, in Congress, and at think tanks were able to link this knowledge to the problem of inflation by showing that eliminating economic regulations and fostering competition would lead to reduced prices. (37) Bipartisan efforts across all three branches of government eventually led to the abolition of whole agencies such as the Civil Aeronautics Board and the ICC...

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