Taming the fourth branch of government

Kathleen Hartnett White Senior Fellow, Texas Public Policy Foundation
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Don’t be misled by President Obama’s recent masquerade as a champion of regulatory reform. The expansive authority of the executive agencies has long been the preferred policy-making instrument of the liberal elite.

In late August, the president hailed the completion of his agencies’ plans to reduce regulatory burdens pursuant to his executive order of last January. The White House claims that the plans will save as much as $10 billion over the next five years. The claimed savings, however, are trivial compared to the costs of even one or two rules among the multitude in the EPA’s ongoing regulatory spree. The president’s much-ballyhooed request on September 2 that the EPA indefinitely delay the already long-delayed adoption of a new federal standard for ozone, similarly, offers no relief from the regulatory shackles. If EPA finalized the ozone standard today, the regulatory costs of this rule would not be incurred for three or four years.

The federal regulatory state has been out of control for decades. Executive and independent agencies operate beyond the effective control of the three constitutional branches of government. Presidents of both parties have been surprised by the intractability of the federal agencies. The courts are hesitant to restrain agency action based in valid federal law. And over the last 70 years, Congress has been of two minds — periodically interested in checking some regulatory excesses but continuously enacting laws that delegate key policy decisions to the agencies.

The administrative beast and its regulatory progeny are staggering in scope. In the 1950s, the Federal Register contained about 11,000 pages. By contrast, the Federal Register for 2010 contained over 80,000 pages. Federal agencies have adopted over 3,500 new regulations each of the last three years. According to the “Unified Agenda of Federal Regulatory Actions,” 4,257 new regulations are now in the pipeline. The Code of Federal Regulation has 165,000 pages.

The good news is that this Congress, with sparse but growing bipartisan support, is trying to restrain the regulatory leviathan. Many of the new bills aimed at regulatory reform appropriately target EPA’s current regulatory binge, which accounts for $23.2 billion of the $26.5 billion in estimated costs of major federal regulations finalized in 2010, according to the Congressional Budget Office. And note that most of the new EPA rules are discretionary or the result of friendly judicial settlements with environmental groups — unlike the hundreds of new rules mandated by Dodd-Frank and Obamacare.

Most of the bills would amend the Administrative Procedures Act to require a more comprehensive analysis of economic impacts in the rulemaking process to cover jobs, energy prices, electric reliability, industry sectors, regional economies, consumers, small business and U.S. global competitiveness. Several of the bills require a macroeconomic analysis of the impacts of more than a dozen EPA rules coming into effect in the next 2-3 years, a group of rules commonly known as “the EPA train wreck.”

The bills can’t emphasize jobs enough. The extent of EPA’s oblivion to real-world impacts like job loss has caught the attention of Congress, as pathetically brought to light at a hearing of the House Energy and Commerce Committee last April. When Representative Cory Gardner asked EPA Assistant Administrator Mathy Stanislaus how jobs were affected by a rule carrying compliance costs of $43-$80 billion, Stanislaus was tongue-tied. After repeatedly choked responses to the same question, Stanislaus mumbled to the effect that EPA likes jobs, but jobs are not its job. Meet the career bureaucrats who make decisions of national consequence.

Exclusively focused on the EPA train wreck, the TRAIN Act would establish an interagency, cabinet-level committee, chaired by the secretary of commerce, to prepare a “Cumulative Analysis of Regulations that Impact Energy and Manufacturing,” with a preliminary report due in January 2012. TRAIN wisely tasks the comptroller general with conducting the analyses instead of EPA. Bureaucracies are masters of subterfuge and creative accounting when measuring the negative impacts and benefits of their regulatory creations.

The report required by TRAIN would force Congress and the executive branch to confront the magnitude of cumulative economic impacts wrought by the EPA’s current rules. The TRAIN Act, however, does not provide authority to quash regulations, a limitation likely necessary to build bipartisan support. The bill passed the House Energy and Commerce Committee, 33-13, in July.

Alone among the proposed measures, the REINS Act offers a game-changing means of restoring congressional control and accountability to the federal regulatory scheme. The REINS Act simply requires that any major rule produced by the executive agencies “shall have no force or effect unless a joint resolution [of approval] is enacted into law.” As a matter of constitutional principle, agencies, of course, have no power to act as part of a co-equal, fourth branch of government beyond the control of Congress. As the Supreme Court explained in Bowen v. Georgetown U. (1988), “It is axiomatic that an administrative agency’s power to promulgate legislative regulation is limited to the authority delegated by Congress.”

If an agency can do only “what Congress has said it can do,” then Congress should always be able to reclaim or modify the regulatory authority that Congress itself has delegated. The REINS Act is carefully constructed to pass constitutional muster and to avoid the ineffectiveness of previous statutes like the Congressional Review Act. The House Republican leadership included the REINS Act in the GOP’s “Pledge to America” and plans to move the bill this fall.

Over the last century, Congress has increasingly relied on broad delegations of regulatory authority to the unelected “experts” at federal agencies. Statutes regularly direct agencies to adopt rules under open-ended policy rubrics such as “in the public interest,” “as far as is practicable” and to “protect public health.”

Such sweeping grants of lawmaking authority run throughout the major environmental laws and allow EPA to adopt regulation beyond or at odds with the will of Congress. Under 40-year-old statues, EPA keeps finding discretionary latitude to expand regulatory scope and to tighten standards, but on the basis of weaker science and with fewer, if even measurable, benefits.

The judicial system, for the most part, has not helped set the constitutional balance aright. According to Justice Antonin Scalia, the Supreme Court has “almost never felt qualified to second-guess Congress regarding the permissible degree of policy judgment that can be left to those executing or applying the law.”

Critics claim the REINS Act creates an unconstitutional “legislative veto.” But in contrast to the legislative veto struck down by the Supreme Court in INS v. Chadha (1983), the REINS Act requires passage of the resolution of consent in both houses of Congress with presentment to the president for signature or veto. And the REINS Act does not impinge on the executive branch’s authority to execute the law because it only concerns agency rulemaking pursuant to delegations of legislative authority.

The power to execute laws is the power to administer and enforce — an authority distinct from an agency’s authority to promulgate and adopt legal rules. REINS does, however, increase the intended constitutional tension between the legislative and executive branches of federal power and just might support greater judicial willingness to restrain agencies acting outside statutory limits.

The construction of the fourth branch of government has been a bipartisan project. For a century, the administrative state has steadily grown while congressional control over regulation has receded. As Steven Hayward notes in “The Age of Reagan: The Fall of the Old Liberal Order: 1964-1980,” the progressive ideologues of Woodrow Wilson’s era, bent on solving complex problems with specialized expertise, laid the intellectual foundation of the regulatory state. Expansion of the federal apparatus under the New Deal was largely a civil engineering project. LBJ’s Great Society fueled growth of government as a social engineering project. Under Richard Nixon, to whom the greatest growth of the federal regulatory edifice can be attributed, the administrative state took on economic engineering and continues unabated. Under the Nixon administration, eight independent regulatory agencies and eight new executive branch agencies were created. President Nixon created EPA by a bare-bones executive order.

In the last several decades, Congress has done little to keep agencies from operating outside the reach of our tripartite constitutional system. Given the broad latitude Congress has in delegating legislative powers, it is Congress — not the courts — that has the power to check the regulatory state. These questions are no longer the esoteric interest of constitutional scholars but have been articulated by the grassroots constitutional movement known as the tea party. Procedural reform of the rulemaking process can help. Enactment of the REINS Act and strategic amendment of key statutory delegations of legislative authority could restore the Constitution’s guarantees of representation and accountability in the making of our laws.

Kathleen Hartnett White is a distinguished senior fellow and director of the Armstrong Center for Energy and the Environment at the Texas Public Policy Foundation. She was chairman of the Texas Commission on Environmental Quality from 2002 to 2008.