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Bring Back Institutional Jealousy

Christopher DeMuth has identified the primary ailment afflicting administrative law today: the absentee Congress. Two stories from the Wall Street Journal on the day I write (August 10, 2015) tell the tale.

Page One has an article, “Industry, States Set to Fight EPA Rules,” describing planned legal challenges by a number states and interest groups against the Environmental Protection Agency’s power plant emissions rule. And the lead item in the business section announces itself with a banner headline across five columns: “FTC to Spell Out Unfairness Rules.” Here, one learns of the current dispute among Federal Trade Commissioners on the meaning of “unfair methods of competition” as that term is used in the agency’s century-old authorizing act.

The striking feature of both articles is that, while the U.S. Congress possesses unquestioned legislative authority to resolve these important national policy questions, it chooses to remain at best a heckler from the sidelines.

Regarding the clean-air rule, lawmakers decided a long time ago that the issue was too complicated or too risky politically for a legislative fix. So for more than a decade, they sat back and watched while lawyers for the agency and adversely affected parties waged war, in and out of the courts—and never mind that the core legal controversy first arose because of ambiguities in the Clean Air Act amendments that Congress passed in 1990. As the latest challenge to the EPA’s rule moves through the courts, Congress is once again sitting back while unelected bureaucrats and judges decide the metes and bounds of public policy dealing with climate change.

A similar passivity tends to seize Congress when it comes to the FTC. Attempting to define what it means by “unfairness” is so hard compared to looking on as agency officials and private attorneys hammer things out in rulemaking proceedings or in court. And what holds true for clean-air standards and trade-regulation rules, alas, also holds for dozens of other important policy questions, whether it is immigration, health care reform, or the regulation of financial institutions (to name only three significant areas on which Congress has been largely AWOL).

The latest agenda item on Congress’s regulatory avoidance scheme is something called the Affirmatively Furthering Fair Housing (AFFH) rule. The Department of Housing and Urban Development’s goal is achieving greater economic and racial diversity in America’s suburbs. Toward this laudable end the department proposes a radical means, the AFFH, which would effectively vest the federal government with local zoning powers. Many other examples could be adduced to show that Congress has essentially taken itself out of the policy-making game, choosing instead to delegate the larger part of tough policy decisions to administrative agencies.

It was not always so. There was a time when Congress jealously guarded its legislative powers. Shortly after President Kennedy nominated Newton Minow to be Federal Communications Commission Chairman in 1961, the nominee paid a courtesy call upon House Speaker Sam Rayburn (D-Tex.) The meeting, in Minnow’s accounting, was cordial but brief, and as the pair walked toward the door, the Speaker put his arm on Minnow’s shoulder, saying “I think you’ll do fine, young man. Just remember one thing: You belong to us.”

Rayburn was typical of legislators who experienced at first-hand the great wave of regulatory construction during the New Deal era. They generally supported the idea that the federal government was going to be involved in many more activities than ever before, and they understood that this change would necessarily entail a good deal of legislative delegation to administrative agencies. But precisely for that reason, they sought to keep a eye on the recipients of their newly delegated authority.

The disposition pithily captured by Rayburn’s remark to Minnow was widely shared on Capitol Hill for many years, and still held fairly wide sway among older legislators when I served as a counsel in the Senate in the early 1970s. To be sure, it was animated in no small part by plain old political self-interest: lawmakers feared that agencies, left to their own devices, might step on the toes of favored voter constituencies. But that self-regarding instinct was also the occasion for constitutional instruction. It is precisely what James Madison had in mind when he argued that separation of powers would help to limit the size and arbitrariness of government by connecting the interest of the man to the constitutional rights of the place. Institutional jealousy, he hoped, would prompt Congress to keep a sharp eye on executive aggrandizement.

On DeMuth’s accounting—which generally comports with my own experience—the Madisonian instinct has declined precipitously during the past 40 years as the scope and reach of the administrative state has expanded. DeMuth correctly identifies two major events that radically altered the old Rayburnesque order.

The first was the arrival of the new social regulation of the 1960s and 1970s, which differed not only in degree but in kind from most of the New Deal regulation. In basically a dozen years’ time, more new regulatory programs were created than had existed during the preceding century and a half.  Whereas the older modes of regulation dealt with fairly discrete and narrow segments of economic life (for example, banking, housing, or  securities), the newer regulation cut much more widely and deeply into the lives of citizens (in such areas as housing, civil rights, schools, employment, consumer products, and the environment). This not only created a much larger and more unwieldy federal establishment; it threatened to intrude upon the lives and liberties of citizens far more than anything the nation had known in the past.

Wiser heads can determine cause and effect, but DeMuth correctly notes that this regulatory explosion coincided with another factor: changes in Congress’ internal rules governing its structure and operations. The long and short of it is that, beginning in the early 1970s, the power of committee chairmen was significantly curtailed while the number of subcommittees multiplied. Dispersing power within the legislature no doubt fulfilled the egalitarian aspirations of junior members and others who had chafed under the older, more centralized system, but it also had the effect of weakening Congress collectively in its dealings with the executive branch, while encouraging individual members to confuse individual political entrepreneurism with effective legislative power to control agencies and policy.

These changes have radically altered how legislators think of themselves and the role of Congress within our constitutional separation of powers. When vast areas of policy-making having been transferred to regulatory agencies, members are no longer instructed in the art, or moderated by the difficulty, of deliberative democracy. Achieving legislative consensus is indeed a messy and difficult thing to do, and even harder to do well, which is why Woodrow Wilson and his fellow Progressives had so little patience for it. Their solution to the messy difficulty of democracy was to establish the rule of ostensibly neutral “experts” whose minds would be unsullied by the deals, delays, or compromises that are the hallmark of democratic politics.

Congress, as I say, used to be more alert to what was going on in the executive branch and the independent agencies. Lawmakers were wary of the presumed expertise of “experts” and suspicious of their ostensible neutrality.  But no more, for the reasons articulated in DeMuth’s essay. A newer breed has come to dominate Congress, which now sees its self-interest less in legislating than in delegating legislative authority to departments and agencies. Such members console themselves with the thought, which is only sometimes true, that if a particular agency steps on a favored constituency’s toes, they can always intervene, while collecting campaign contributions from lobbyists benefiting from that intervention.

But regulation-writers have long since learned how to mollify just enough legislators without undermining their most cherished regulatory powers. They know that buying off this or that legislator can be done relatively safely most of the time without endangering the presumption of their administrative expertise. In this, regulatory agencies have been greatly aided by the Chevron Rule, which allows them great leeway in interpreting their congressional mandates.

So much for the pathology that DeMuth articulates so well. What about his recommended cures? At the outset, it is good to remind ourselves what is at stake. The problem is not only that the administrative state is unwieldy, inefficient, and expensive; it is also increasingly arbitrary and capricious. Part of the difficulty arises from the sheer number of subjects it now purports to address. No doubt the denizens of our schools of public administration will disagree, but in truth, the supply of human intelligence is insufficient to comprehend much less resolve the range of problems with which government now arrogantly assumes it can deal expertly.

The merest glance at the regulatory schemes authorized by the Affordable Care Act or Dodd-Frank should confirm the point without further argument. Such faith in the capacity of expertise would be touching were it not so dangerous. F.A. Hayek called it “the fatal conceit,” and he was right.

What this means as a practical matter is that, as the inadequacies of regulatory schemes become apparent, ever more Draconian actions must be taken to sustain the original schemes. This is abundantly apparent under the still-unfolding regulatory drama authorized by the Affordable Care Act. Even experts can scarcely keep track of the number of postponements, exemptions, regulatory redefinitions, and deadline alterations that have already been deemed necessary to sustain life in an administrative monster that threatens to strangle itself at every turn. The ACA alone contemplates multiple hundreds of rulemakings, as does Dodd-Frank. It is virtually impossible that every rulemaking will actually take place.

It is possible, though not very likely, that regulatory schemes of this complexity would ever be enacted directly by Congress. The nature of deliberative democracy is such that almost every enactment produced by a relatively open legislative process will be more reasonable and stable than one conjured by administrative experts freed from the pull and tug of Madisonian factional interests.

So the first task in the effort to curb the worst vices of administrative arbitrariness is to get Congress back into the lawmaking game. This will not be easy given the bad habits ingrained over the past 40 years. DeMuth is almost certainly correct that the place to start is restoring the power to tax and spend to Congress, its rightful home. This, in turn, should be closely allied with the effort to wean Congress of its habit of legislating with stopgap Continuing Resolution, thus re-imposing the fiscal discipline that comes with the enactment of separate appropriations bills. Some good progress has already been made along these lines, and reform efforts like those of Paul Ryan (R-Wis.) should be encouraged and applauded. A legislature that is indifferent to the institutional devices by which it governs the power of the purse is a legislature unworthy of the name.

More broadly, while proposals such as the Regulations from the Executive in Need of Scrutiny (REINS) Act—which would require Congress to specifically approve regulations having a major impact—are certainly desirable, I think they are unlikely of passage in the near term. Administrative delegation a la the ACA and Dodd-Frank (or a host of other laws) exists precisely because Congress wishes to avoid biting controversial policy bullets. It seems politically improbable that a Congress so disposed would suddenly reverse course by having detailed policy debates on major rules.

But here is an interim first step in that direction that might be feasible. Suppose leading committee chairmen, in cooperation with the leadership in both Houses (actually one House would do) were to decide that policy X (and all the accumulated legislation necessary to its implementation) should be reevaluated from top to bottom? The relevant committee (or committees) would make reassessment of that policy the object of special attention during a particular session of Congress, proposing such legislative changes as experience may suggest may be necessary or useful. The trick here, I think, is to limit the reevaluation to one, or at most two, policy areas in any given congressional session.

A second suggestion would be to start with smaller, more manageable policy areas rather than taking on something so broad or politically vexatious as, say, climate change. The salient here is to retrain senators and representatives in the arts of legislating, to make them better understand the trade-offs they now so blithely fob off onto agencies. By carefully targeting policy areas for reconsideration, Congress might, over a period of years, actually enjoy making policy again—and by so doing acquire the confidence to target more difficult areas in the future.

This proposal dovetails nicely with DeMuth’s suggestion, which I heartily endorse, of having Congress beef up its own administrative, policy, and legal expertise. It has already done so in one area, with the establishment of the Congressional Budget Office, whose expertise is widely respected. Might not the same thing be done across a wide range of other important policy subjects besides budgeting? As long as the complexity of modern legislation necessarily requires delegation to experts, Congress should in the first instance ask its own experts to evaluate the policy landscape and make recommendations for change.

There is no reason in principal why Congress could not institutionalize a number of congressional bureaucracies that would study and report back to the relevant legislative committees. So armed, these committees need not depend exclusively, as they do now, on the executive branch’s agents. This step alone would go a long way toward restoring Congress as an essential counterbalance under the separation of powers.

In conjunction with these endeavors, Congress should consider amending the Administrative Procedure Act of 1946 by specifically limiting the occasions when informal rulemaking is permissible, and re-imposing formal rulemaking for major rules.  There are a number of proposals in this vein already being discussed. Congress should pick the best version and enact it—if for no other reason than to send a shot across the bow of regulators, letting them know that Congress wishes to reassert intelligent controls over the regulatory process.

Well, that is an agenda of sorts, is it not? It ought to be enough to get the more thoughtful officers of the Article I branch back in the business of thinking and acting like a real legislature.

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