State of Emergency: Carl Schmitt Meets the Doc Fix

More and more frequently (I’d heard or read someplace) federal agencies issue regulations without public notice and comment. They may do so (1) when Congress has required or authorized the procedure or (2) the rule falls under one of the Administrative Procedure Act’s exemptions from generally applicable (informal) rulemaking requirements. Among them is an alarmingly broad “good cause” exemption, which permits the suspension of ordinary process requirements “when the agency for good cause finds […] that notice and public procedure thereon are impracticable, unnecessary, or contrary to the public interest.” APA Sec. 553(b)(3)(B). (There are a few legal wrinkles, but none are relevant here.) Adrian Vermeule has tagged this provision as one of many legal “grey holes” that swallow the rule of law. That sounds plausible: Notice and comment is the legal process we impose on agencies as the price of delegated lawmaking authority. The good cause exemption looks like (and has been widely understood as) as “emergency” exemption. In times of crisis, government will take liberties with it and courts will “dial down” their review.

Is that happening?  I wouldn’t dignify my preliminary inquiries to date with the word “research,” but a quick look suggests a pattern that’s quite at odds with my expectations and with the picture of a “Schmittian” emergency state.

Some Empirics

A December 2012 GAO Report analyzes federal rules issued without notice and comment between 2003 and 2010. The frequency is indeed quite high: about 35 percent of major rules (with a price tag of $100 million-plus) and around 44 percent of nonmajor rules were issued without full notice and comment. (The number are estimates: what with over 30,000 rules over the time frame, GAO relied on samples. For major rules from 2007 on forward, GAO has a full count.) The report contains an inventory of 123 major rules issued sans notice and comment, along with the issuing agency, the exception cited, and a brief description of the rule. Startling (to me) highlights:

  • The report covers the post-9/11 period and the immediate response to the financial crisis. But “emergency”—claimed or real—is not where the action is or has been. The Department of Homeland Security issued all of six rules without notice and comment. The financial crisis produced about a dozen such rules, most from the Federal Reserve.
  • Notice-and-comment-less rules do not come, by and large, from regulatory agencies as conventionally understood—the FCC, FDA, NHTSA, OSHA, FTC, or SEC. Apparently, not one such major rule came from the EPA.
  • So where does this stuff come from? Over sixty percent come from HHS (47 rules, plus several “joint” rulemakings) and the Department of Agriculture (25 rules). Next in line (if I’ve counted correctly) is the Department of Education (7 major rules). Of course, these agencies have important regulatory functions. But that’s not the venue in which they proceed without or with a sharply curtailed process. Rather, it’s to implement the Tobacco Transition Payment program ($6.7 billion for quota holders, plus $2.9 billion under the American Jobs Creation Act of 2004). It’s to dish out billions for one crop disaster or support program after another. To implement student loan and grants programs ($976 million here, $448 million there.) Above all, it’s to ramp up Medicare reimbursement rates for physicians ($49.6 billion), outpatient services ($2.2 billion per year), inpatient services ($130 million), outpatients again ($4.6 billion), inpatients again ($120 million), skilled nursing facilities ($542 million), and so on ad infinitum or at least up to the ACA, which makes its first appearance on the list with the creation (in 2010) of a $5 billion high-risk insurance pool. In the vast majority of cases, the “good cause” of the good cause exception is to shovel money out the door.

Is There A Problem?

You bet there is: it appears that our fine system of government lacks the capacity to run its gargantuan spending programs in anything resembling an orderly, timely fashion. You don’t have to study “good cause” exemptions to reach that conclusion. For example, when the Obama administration attempted to “stimulate” the economy through infrastructure spending, it quickly discovered that there were no “shovel-ready” projects anywhere in America. For another example, consider a program that comes close to “emergency” spending: FEMA disaster relief. “Disaster” declarations, which are prompted by state officials’ requests, have exploded over time, to (now) 100 per annum—not on account of global warming, but because the program operates on a “No State Left Behind” principle.  And because every time Katrina, Katie, Kittie, Cindy, or Sandie come to visit, the supposedly impecunious Congress enacts the late Robert Palmer’s Simply Irresistible (How can it be permissible? She compromised my principles…. She’s so fine, there’s no telling where the money went.) Indeed there isn’t, the GAO has found in countless reports—e.g., in 2006:

FEMA’s reported obligations are overstated and expenditures are understated. The federal government also does not have a governmentwide framework or mechanisms in place to collect and consolidate information from the individual federal agencies that received emergency supplemental appropriations for hurricane relief and recovery efforts and report on this information. About $88 billion has been appropriated to 23 different federal agencies through four emergency supplemental appropriations acts; however, no one agency or central collection point exists to compile and report on how these funds are being spent. 

If there’s a larger lesson here, I suppose it’s that it isn’t easy to build a Schmittian emergency state with Americans: they’ll turn it into a racket. Put differently: the indiscriminate, wasteful showering of funds is not a problem of the administrative state.  “Doc fixes,” student loans, and sugar subsidies aren’t the stuff of low-level tyranny, and full-scale notice and comment wouldn’t improve their efficiency or operation. The problem here is the stupid, reckless use of the power of the purse. That’s different from the problem of the administrative state, properly understood: the exercise of the royal “prerogative” to make binding rules for private conduct, without a legal warrant.

Two Quick Final Notes

To be clear: my point is not that APA exemptions (good cause, or the yet-more problematic exemption for “interpretative” rules) can’t be abused for purposes of evading legal strictures. They can be and have been, and I still expect that propensity to increase; more in later posts. My chief purpose here is simply to gain a bit of conceptual clarity about the “administrative state,” a term that’s bandied about too promiscuously for my taste.

The Robert Palmer link is the best version I know of. And yes, the guy in suit and tie on the drums is the E Street Band’s Max Weinberg.