The People be Damned

We instinctively equate participatory democracy first and foremost with voting. We elect politicians to represent our interests, and that is the extent of our political participation. But there is actually a much more participatory avenue all Americans have access to, at least with respect to the federal government. We don’t just have to vote for a person and hope that she will fight for our interests; we can directly influence government actions that affect our daily lives. Unfortunately, few members of the general public know about this participation opportunity, and even if they do, it can be daunting and inscrutable.

For those familiar with administrative law, you know that I am talking about the federal rulemaking process. When a federal agency with rulemaking powers decides to promulgate a significant new regulation, the public almost always has the opportunity to comment on the proposed regulation before it becomes law. Federal agencies are required to make proposals publically available. And, by law, agencies must respond to comments that contain new information, a new perspective, responses to specific questions that the agency posed in its “notice of proposed rulemaking” (NPRM), and different ideas on how the agency might accomplish the goals Congress instructed it to accomplish.

Unfortunately, this process of participation has traditionally been dominated by large corporations and special interest groups with the time, skill, and money to navigate the lengthy and complicated NPRMs. The Internet has created an unprecedented opportunity to shift the balance of power in this process to the broader public, but efforts in so-called Rulemaking 2.0 (using Web 2.0 in rulemaking) are still in their infancy.

Nevertheless, before Rulemaking 2.0 projects have the opportunity to break this system open to broader public participation, new legislation passed early last month (December 2nd) in the House and pending in the Senate promises to cut rulemaking off at the knees. The House bill, with the innocuous sounding name the Regulatory Accountability Act (RAA), passed with bipartisan support and its sister legislation pending in the Senate also enjoys support from both Republicans and Democrats. Like much of administrative law, the bill addresses seemingly bland topics like “cost-benefit analysis” and “advanced notice of proposed rulemaking.” As numerous law professors and practitioners, good-government advocates, and others have warned, however, if this bill becomes law, it will single-handedly end federal regulatory action as we know it. This may sound like a boon for those who generally oppose federal regulations, but for those of us who value, for example, clean air and water, flight safety that includes respect for travelers, and food that is actually what the label on the package says it is, the RAA is seriously dangerous.

Others have written extensively about the perils of this bill (including in an open letter from 42 administrative law professors and practitioners to the House Judiciary Committee, to which Cornell’s own Professor Cynthia Farina was a signatory), so I will only give you some important highlights of what the RAA would do. The ostensible goal of the bill is to curb the burdens that regulations place on businesses and the economy and to ensure that federal agencies are adequately considering alternatives and costs before proceeding with new regulations. This sounds well and good, but the procedural mechanisms that the RAA uses to implement these policy goals are burdensome to the point of almost being outright bans on agencies either promulgating new regulations or, ironically, repealing old ones.

For one, the bill would require agencies to produce much broader and more onerous cost-benefit analyses for proposed regulations. These would include the “direct, indirect, and cumulative costs and benefits and estimated impacts on jobs, economic growth, innovation, and economic competitiveness” notwithstanding any other provision of law. (H.R. 3010 Sec. 3(b)(6)(A)). This last part is especially important because many substantive regulatory statutes specifically prohibit cost considerations in implementing regulations. Why is this language so damning for the rulemaking process? One dirty secret in current agencies’ cost-benefit analyses is that the numbers agencies produce to satisfy the numerous Executive Orders and Office of Management and Budget memos that require cost-benefit analyses for most rulemakings already are so massaged and ephemeral so as to barely be significant.

For example: How is an agency supposed to accurately calculate the economic benefit of the 13 minutes of time an airline passenger may save from easier access to an airport kiosk 5 years from now, the moment when the first person could actually receive the specified benefit from the rule? Answer: it can’t, no one can. This problem will explode exponentially if agencies have to consider a proposed regulation’s impact on the entire economy.

In writing about the RAA, one blogger has had this to say about predicting regulatory impacts on the economy as a whole: “The science of economics can’t make those predictions with any modicum of accuracy; our economic system is infinitely complicated with millions of variables. Passing a law that requires science or economics to do things it can’t do, doesn’t make them possible; it purposely throws a monkey wrench into the system to stop the regulatory system.”

The RAA also would give broad and ill-defined powers to the Office of Information and Regulatory Affairs (OIRA) by codifying many existing Executive Orders (such as E.O. 12866) and OIRA Guidance Memos into statutory law. Additionally, OIRA would gain broader control of independent regulatory agencies, such as the Federal Election Commission, which are meant to remain beyond the political control of the executive branch as much as possible. The RAA could significantly undercut this apolitical purpose because of the wide discretion it gives to OIRA to determine how to implement the proposed new requirements.

Finally, the RAA would greatly expand interlocutory judicial review of agency action. Regulated entities would be able to go to court at nearly every stage in the rulemaking process. Notice that I only said ‘regulated entities,’ not everyone, such as those who may be benefited by a regulation. Furthermore, federal courts would have to give much less deference than they currently do to agency determinations under judicial precedent such as Chevron v. NRDC.

The RAA would make a great many other changes to the regulatory process (over 60 new procedural and analytical requirements according to the open letter to the House Committee on the Judiciary mentioned above). The major take-away, I think, is that this bill would petrify, not just ossify, the rulemaking process. And it would codify efforts on the part of Justice Scalia and some other federal judges to make the process of rulemaking all about the regulated entities, leaving the beneficiaries of regulation—you and me and anyone else who enjoys clean air and safe air travel—largely on the sidelines.

Instead of making rulemaking more open and accessible to the public, the RAA would impose more complexity and opacity on the process. You don’t have to look far to see how agencies whose budgets are already stretched thin will be loath to take any but the easiest and least controversial actions, even if new regulations are required by law. This is especially troubling now because two of the major reforms of the past few years, the Patient Protection and Affordable Care Act and the Dodd-Frank Wall Street Reform and Consumer Protection Act, require a number of agencies to promulgate hundreds of implementing regulations. These critical regulations, ranging from how health insurers can define “medical expenses” for meeting the requirement that 80% of premium income must be used for patients’ medical expenses and not overhead, profit, etc. to the types and amount of capital that a bank must have on hand (the so-called Volcker Rule), may never make it into law. HHS released a final rule covering the 80% “medical loss ratio” requirement on December 7th 2011, but the RAA would almost certainly make enforcing this rule a procedural nightmare for the agency. The scary thing is, with bipartisan support and election-year political climate, the RAA may slip into law with barely more than a whimper of opposition.

Josiah B. Heidt is the 2011-2012 Open Government Fellow for the

Cornell eRulemaking Initiative at Cornell Law School