Old statutes, new problems.

• Author: Freeman, Jody
• Position: Introduction through II. Policymaking in the Absence of Congress B. Managing Changing Electricity Markets Under the Federal Power Act 1. Congressional Participation in the Early Stages of Restructuring, p. 1-47

Introduction I. Congressional "Dysfunction" A. Congressional (Un)Responsiveness B. Legislative Action and Gridlock II. Policymaking in the Absence Of Congress A. EPA's Application of the Clean Air Act to Climate Change 1. The "Tailpipe Rule" 2. The "Tailoring Rule" 3. Greenhouse Gas Standards for New Power Plants 4. Greenhouse Gas Standards for Existing Power Plants 5. Bad Fit, EPA, and the Courts B. Managing Changing Electricity Markets Under the Federal Power Act 1. Congressional Participation in the Early Stages of Restructuring 2. Adapting the "Just and Reasonable" Standard to Market Rates 3. Adapting the Transmission Grid to New Market Realities 4. Adapting the Federal Power Act to Clean Energy Goals 5. Bad Fit, FERC, and the Courts III. Implications of Congressional Dysfunction for Regulatory Policymaking A. The New Strategic Environment for Agencies B. Judicial Review in an Era of Congressional Dysfunction C. Democratic Accountability Concerns Conclusion Appendix: Gridlock and Polarization Models of Gridlock Pivotal Politics Party Politics Polarization in Congress Conclusion Introduction

Congress is more ideologically polarized now than at any time in the modern regulatory era, (1) which makes legislation ever harder to pass. (2) One of the consequences of this congressional dysfunction is a reduced probability that Congress will update regulatory legislation in response to significant new economic, scientific, or technological developments. This predicament, we argue here, has important implications for the federal agencies charged with implementing statutes over time and for courts adjudicating challenges to agency statutory implementation. (3)

We explain how federal agencies coping with new regulatory challenges often encounter problems of "fit" with older statutes, which require them to make delicate legal and political judgments in the face of congressional silence. And we show how, following the Goldilocks principle, agencies seek to get this process just right by balancing the perceived need for regulatory innovation with a concern about potential overreach.

Agencies, we claim, do not simply "go for broke" when wrestling with problems of fit. Instead they proceed strategically, cognizant of the preferences of their political overseers and the risk of being overturned in the courts. Sometimes agencies interpret their enabling legislation so as to expand their jurisdiction; other times, agencies manage problems of fit by intentionally shrinking their jurisdiction, proceeding incrementally, and engaging in deliberate restraint. (4) Our examples show that agencies can be persistent, flexible, bold, cautious, expert, political, and, above all, strategic. The examples also suggest that even--and perhaps especially--when adapting old statutes to new problems, agencies are surprisingly accountable, not just to the President, but also to Congress, the courts, and the public.

There is a significant literature on statutory "obsolescence," dating to the 1920s, on which we hope to build, in which prominent jurists, such as Roscoe Pound, Justice Cardozo, and Judge Calabresi, lamented "static law" and expounded on the need to update regularly both common law and statutes. (5) This literature has historically focused on the role of the judge in statutory interpretation; the central debate has been over the extent to which judges should feel free to declare law obsolete and fill in the gaps themselves. Judge Calabresi's seminal work on outdated statutes, which spawned considerable commentary, (6) was unambiguously negative about the prospect of agencies filling those gaps; he was skeptical that agency officials are adequately trained or sufficiently independent to assess legal principles and make accurate findings of obsolescence. More recently, however, legal scholars have recognized that the agencies entrusted by Congress with statutory implementation may in fact be the most appropriate "statutory updaters" in our separation of powers system, because they are more nimble than Congress, more accountable than courts, and more expert than both in responding to changing conditions. (7) The discussion about statutory obsolescence overlaps naturally with the vast literature on statutory interpretation; both lead inexorably to debates over the merits of different interpretive methodologies and the normative justification for more or less deferential judicial review.

Yet while this literature has identified the problem of static statutes, it has not fully explored the implications for agencies and courts in an era of unprecedented congressional paralysis. Indeed, because of its historical origins and the limitations of available institutional reforms, congressional paralysis is likely to be enduring. (8) The challenge of managing statutes over time is profoundly important in a period of rapid change and limited congressional productivity. When agencies charged with a regulatory mission fail to address new policy problems that arguably fall within their core domain, society might be deprived of important gains--public health, safety, environmental benefits, consumer protection, and market efficiencies--which may be hard to recapture later. Yet if agencies exceed their legal authority when addressing new problems, they realize our worst fears about bureaucracy run amok. (9)

This is of course the central challenge posed by the modern administrative state: how to balance the pragmatic need for administrative flexibility with respect for the rule of law and democratic values. Our point is simply that typical statutory obsolescence made worse by atypical congressional dysfunction puts tremendous pressure on agencies to do something to address new problems, making that central challenge all the more acute.

We focus on examples from environmental law and energy law, the regulatory domains we know best. Congress has not passed a major environmental statute in nearly a quarter-century, nor has it produced more than incremental reforms to federal energy legislation during that time, despite dramatic technological, economic, and social changes in these fields that would seem to demand a legislative response. There are notable instances in other fields, such as telecommunications (10) and food and drug regulation, (11) where agencies have been left for relatively long periods to adapt existing law to new challenges, leading to problems of fit between an older statute and contemporary reality. (12) The same might be said for financial regulation, which has failed to keep pace with market innovation, leaving the responsible regulatory agencies scrambling to adapt old tools to new problems. (13) Thus, the lessons learned about the consequences of congressional dysfunction in the environment and energy domains may apply more generally to policymaking in other fast-moving fields where Congress fails to "modernize" statutes on a regular basis.

This Article proceeds as follows. In Part II, we describe how Congress's capacity to enact legislation has diminished over time. Drawing on theoretical and empirical work by political scientists, we illustrate why congressional gridlock has reached levels unseen in the last fifty years. Briefly stated, Congress's ability to cobble together legislative majorities has traditionally been a function of its ideological heterogeneity. For the last two decades, parties have been at once more ideologically homogenous and farther apart ideologically than at any time in the modern regulatory era, making legislative action more difficult and leaving agencies to deal with new policy problems using old and aging statutory mandates.

In Part III, we provide two detailed examples of how federal agencies have responded to problems of bad fit by adapting existing laws to new challenges: the Environmental Protection Agency's (EPA) implementation of the Clean Air Act (CAA) (14) to address climate change and the Federal Energy Regulatory Commission's (FERC) implementation of the Federal Power Act (FPA) (15) to modernize electricity policy. The two examples are not identical. EPA's authority under the CAA has remained literally unchanged for over twenty years, while Congress has modified FERC's authority over electric power in targeted ways over that time. Still, they illustrate a common problem. In both policy domains, the responsible federal agencies have had to wrestle with the rise of important new problems requiring attention, but in neither domain has Congress spoken decisively and comprehensively about the central pressing issues.

In Part IV, we discuss the implications of this dynamic for the institutions in our separation of powers scheme: the President, Congress, the courts, and the agencies. It stands to reason that if Congress is unable to speak via legislation, agencies face a reduced likelihood that their decisions will be overridden. To the extent that agencies do the President's bidding, congressional weakness can also enhance presidential influence over policy. Of course, the courts become relatively more important too, since they will decide whether an agency may follow the course it has chosen.

Put most plainly, congressional dysfunction invites agencies and courts to do the work of updating statutes. We argue that agencies are better suited than courts to do that updating work and that the case for deferring to agencies in that task is stronger than ever with Congress largely absent from the policymaking process. Indeed, because the agency is the legally designated custodian of the statute (so designated by the enacting Congress), the agency has the superior claim to interpret the statute's application to new problems during periods of congressional quiescence. Persistent congressional gridlock also means that agency policy initiatives that do survive judicial review could prove to be quite durable. Once an agency charts a new policy course, and the regulated community begins to...