May 25, 2016

Federal Regulatory Policy in 2016: Would Madison Approve?

In its 11th hour, the Obama Administration is busy concluding many important policy initiatives by issuing regulations that have the full force and effect of law. For example, the Labor Department’s recent overtime pay rule mandates overtime pay for millions of people working more than 40 hours per week. The Food and Drug Administration’s new food labeling rule requires reporting of added sugars - in grams and as a percent of daily values. The Environmental Protection Agency’s pending Phase II heavy-duty truck rule would establish energy efficiency standards for heavy-duty trucks; it follows the 2015 Clean Power Plan, which limits carbon emissions from coal-fired power plants. These and other regulations are based on interpretations of preexisting statutory authority that push against or beyond expressed Congressional intent.  

To supporters of strong executive leadership, such regulations represent practical, decisive actions necessary to achieve sensible policy goals like environmental protection in the face of a dysfunctional Congress. Supporters claim that complexities of risk management in the modern world require Congress to delegate many policy decisions to government agencies because Congress lacks the necessary scientific and technical expertise. They also argue that several executive orders impose structure on regulatory decision-making. Specifically, multiple executive orders require that agencies use the best available science, conduct an economic analysis of the benefits and costs of regulations, and regulate only after making a reasoned determination that the benefits justify the costs.   

Critics of federal regulations, on the other hand, allege that many of these same actions represent regulatory overreach - power grabs that lack legitimacy because they go beyond what Congress expressly authorized, and that courts should therefore strike down. They lament court decisions to defer to agencies’ interpretations of vague statutory language. They contend that the executive orders are honored only when convenient and are generally unenforceable. They add that federal agencies’ economic analyses are generally not subject to any independent outside review and therefore lack impartiality. Finally, some critics argue that regulatory overreach may threaten James Madison’s vision of constitutional checks and balances and the bedrock principle of separation of powers.

The critics’ viewpoints may have special importance this year, because the election may result in a new President especially interested in strong executive decision-making, and a divided Congress.

Uncertainty about the identity of the next President and which party will control Congress is already affecting the federal regulatory system. Federal agencies must send rules to the Federal Register for final publication before Inauguration Day. After inauguration, the next President, following historical precedent, will likely freeze publication of any draft final rules until appointed officials in the new administration have reviewed and approved them. In addition, federal agencies are likely rushing to complete final regulations for publication prior to the upcoming national political conventions. Historically, White House officials are hesitant to approve final rules after these conventions for fear of creating controversy during an election campaign. The final window for the Obama Administration to issue regulations—between Election Day and the following Presidential Inauguration - is both short and may also be marked by recusals or departures of officials seeking new employment.

The surge of final regulations in the twilight of the Obama Administration will interest many public policy professionals. These rules represent the Administration’s final efforts to help solve various public policy problems. Also important, however, are effects that these rules may have on Congressional or judicial actions to circumscribe authority of federal agencies to issue regulations in the future.

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*Professor Randall Lutter will teach a course on federal regulatory policy in the fall of 2016.  

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