Coherence in the Executive

I can only applaud the excellent “to do list” in Adam White’s Liberty Forum essay, even as I scan the absentee ballot that I received in September wondering whether any of the leading candidates would have the good sense to give the list the attention it deserves. But we are giving advice here, not forecasting the future, and so we persevere in the face of obvious obstacles to progress.

The first item on the White List—rescinding President Obama’s worst regulatory excesses—should be front and center in the earliest days of the new administration. I would suggest making a distinction between those actions that were simply terrible policy decisions, deserving to be undone by the usual rulemaking procedures, and those that were improperly adopted by unilateral executive lawmaking. The latter should simply be revoked; neither the new President nor the courts should use any principle of stare decisis to grant them quarter. Thus the Obama  pseudo-treaties (“Executive Agreements”), such as the Paris agreement on greenhouse gases, can be repudiated with dispatch—either by executive fiat (“Live by the pen, die by the pen”), or perhaps by submitting them to the Senate as President Obama should have done.

The Clean Power Plan presents a special case. President Obama has already exempted two states from having to comply: Alaska, because he wanted to use it as a backdrop to market the plan, and Hawaii, probably because he wants to retire there. The official reason for the exemptions was “lack of information,” an excuse that might apply to any state. Notwithstanding Adam’s wise admonition (six on the White List) to be less capricious in waiving laws, the new President could immediately cure the substantial legal defects of the Clean Power Plan, now being weighed by the DC Circuit Court of Appeals en banc, by making it clear that the Alaska-Hawaii opt-out is available to any state that wants it.

Coherence Is the New Energy

Rather than go through each of the items on Adam’s list, however, I want to expand upon a theme he introduces in his opening. He is right that energy in the executive per se is not the problem; indeed I believe it must be a major part of the solution. The new President will inherit a vast and inscrutable administrative state—the fourth branch—and will need all the energy that she or he can muster in order to take effective charge of it.

The other branches certainly need to take some responsibility. We should be loudly urging Congress to be less profligate in delegating its powers, and the courts to be less deferential in their review of administrative decisions. We should also applaud the states that defend their sovereignty from encroachment by the federal bureaucracy; it is deeply troubling that the federal Supremacy Clause can be invoked to subordinate 50 elected state legislatures to the whims of some administrative official whom none of us can name.

Dealing with the modern administrative state, though, requires something else that only the executive can provide.  Call it coherence.

By coherence in the executive I mean something distinct from (though related to) the legal doctrine of the Unitary Executive. (I also mean something other than integrity in the executive—which is rightly emphasized as number 8 on the White List.) Coherence is an aspect of faithful execution of the laws; it denotes an administrative consistency, not just across time and place, but also across hundreds of different regulatory programs busily pursuing inconsistent aims.  Acting at cross-purposes without supervision, or simply acting in ignorance of each other, the agents of the administrative state can easily wreak havoc on the economy. Borrowing from John Marshall (and Daniel Webster before him), we could say that an unlimited power to regulate involves, necessarily, the power to destroy.

James Madison anticipated the problem in Federalist 62:

It will be of little avail to the people, that the laws are made by men of their own choice, if the laws be so voluminous that they cannot be read, or so incoherent that they cannot be understood . . . or undergo such incessant changes that no man, who knows what the law is today, can guess what it will be tomorrow.

In that excerpt Madison was explaining the need for the Senate, but the point applies more broadly. In a recent Tenth Circuit decision, Judge Neil Gorsuch cited that passage in reference, not to the legislature, but to law-making by an administrative agency:

But what if the problem is even worse than that? What happens if we reach the point where even these legislating agencies don’t know what their own “law” is? That’s the problem we confront in this case.

Atomistic competition in a market economy is marvelous. Atomistic administration of regulation is cacophonous, chaotic, cumulatively stifling, arbitrary and capricious in the whole if not in the parts, and ultimately unsustainable.

In federal programs that work by spending appropriated funds, there is an annual budget process in which the President and the Congress can at least pretend to be making decisions, and in any event the budgets that emerge from the process will be binding. For programs with broad regulatory authority, however, the ability to exact resources from the economy is widely dispersed and effectively unconstrained.

As Michael Greve and Chris DeMuth have documented, regulatory agencies increasingly use their powers to collect unappropriated funds for their own use. Most of the cost of regulation, though, remains hidden from view. For example, motorists are compelled by EPA rules to pay higher prices at the pump for fuel containing alcohol, which then costs them even more by degrading fuel economy and engine durability. The same rules burden the rest of us by raising food prices, and by damaging air and water quality. Their only benefit is the money that accrues to the ethanol lobby; but even that is illusory, since rent-seeking runs rampant in regulatory agencies, and tends to devour the private gains that the contestants sought to extract.

Given the scope and magnitude of law-making powers that have been delegated to the regulatory agencies, and all of the political forces that seek to capture and exploit those powers, supervision by a single authority, the President, is essential.

Staffing in the Executive Office of the President

What the new President needs to understand, and instill into his or her appointees, is that their primary domestic task will be to restrain the administrative state. It is a beast with an insatiable appetite, and a will—many wills—of its own. Regardless of the President’s own enthusiasm for regulation, it will necessarily fall significantly short of the sum of the enthusiasms of the multitude of regulators themselves.

Understanding the necessity of restraint will be especially important when staffing the Executive Office of the President. Appointees elsewhere will often share the sense of mission and the perspective of their agencies, and the confirmation process that they go through only reinforces the tendency. They will quickly become immersed in their agency’s culture and its client community, and will likely view their task as being effective advocates for that constituency. It is the distinct task of the White House staff, and its various councils, to moderate the effects of that advocacy.

Note that this will not come naturally. Staff whose prior experience is with political campaigns, or in congressional offices, will likely perceive their roles as serving as the President’s personal liaison to various constituencies. But those constituencies, through the Congress as well as directly through the agencies, are already pulling the administration in countless different directions. The White House staff must counteract that centrifugal force, and supply the centripetal force that pulls things together into a coherent administration of the laws.

Let me hasten to add that pulling things together does not mean coming up with a short list of State-of-the-Union themes or “signature initiatives” for everyone to work on. Granted, such exercises can be important, because the President has limited time and attention, and needs to set a manageable agenda; but, as chief executive, he or she must also supervise the administrative state that has an agenda of its own. A thousand decisions will bubble up, driven by statutory and judicial deadlines, consent agreements, factual findings of various sorts, petitions and applications from the public, and unpredictable external events. These decisions will form a large part of the administration’s record, and they must be managed.

The OIRAnians

As Adam notes, the Office of Information and Regulatory Affairs (within the OMB, within the Executive Office of the President) provides the primary mechanism by which the President is able to exercise day-to-day supervision of the administrative state. The OIRA Administrator is subject to Senate confirmation, and previous appointees have generally been individuals with a judicial temperament, bringing objectivity and credibility to the job, as well as expertise in the law and economics of regulation. (Full disclosure: I am married to one.)  The permanent career staff at OIRA, like their counterparts in the budget office, are reliable guides to the complex corridors of the bureaucracy.

In addition to reviewing major regulations, OIRA oversees the production of the federal government’s Unified Agenda and Regulatory Plan (see number two on the White List), gives guidance on writing Regulatory Impact Analyses, and manages the process of interagency review (number three). OIRA also interprets the President’s executive orders as they apply to regulation. Regardless of the identity of the new President, I would recommend retaining the existing Executive Order 12866, Regulatory Planning and Review. It was signed by President Clinton in 1993, and its continuing durability is likely to be more beneficial than any tinkering with the text would be.

Adam is right about the importance of strengthening OIRA, but I would downplay his suggestion (in number three) that this would involve more robust public input. Providing adequate public notice, collecting public comment, and building a reviewable rulemaking record are tasks for the relevant agency. The role of OIRA is to enable the President to manage the administrative state, not to serve as a conduit for the public. For similar reasons, the new President should be skeptical of calls, in the name of transparency, for all communications between OIRA and the regulatory agencies to be docketed. An agency’s final action must be supported by the rulemaking record, which is a product of both external communications with the public and internal deliberations within the executive branch. Agencies cannot be permitted to position the Executive Office of the President as an “outsider” in the rulemaking process; constitutionally, the President is the ultimate “insider.”

Conducting a Large Orchestra

Sometimes a special effort is needed to coordinate regulatory decisions across multiple agencies. In the early 1980s, the first products of recombinant-DNA technology began to emerge from the laboratory to be incorporated into commercial products. At the request of OIRA, the White House Office of Science and Technology Policy formed a committee that included the National Science Foundation, the National Institutes of Health, the Food and Drug Administration, the Agriculture Department, and the Environmental Protection Agency. In 1986 they jointly issued a coordinated framework to guide their regulatory efforts. Legal challenges failed, as judges generally found nothing unlawful about interagency coordination: “The Coordinated Framework for Regulation of Biotechnology was developed by an interagency group in an attempt to provide the agencies with a consistent blueprint in an area of overlapping jurisdiction and little legislative guidance.”

As a result of this coordinated effort, biotechnology blossomed in the United States, where it enjoyed regulatory clarity, but languished in Europe, which took a more ad hoc approach to its regulation. In 2015, in response to technical advances in the field, President Obama announced a review of the coordinated framework. Last month that review produced a draft update to the framework and a forward-looking strategy that generally affirms the basic approach developed in 1986.

Such efforts by the President to coordinate regulatory policy across multiple agencies are clearly appropriate. In financial regulation, the Treasury Department serves the coordination function by operating the Financial Stability Oversight Council. The council is authorized by statute—it has to be, given the independence of some of the financial regulators (see the White List’s number four). Another example is the Social Cost of Carbon (SCC), developed by a committee chaired by the President’s Council of Economic Advisers. While there is much to criticize in the way the SCC was calculated and in its application in various regulatory contexts, there is no question that efforts to reduce carbon emissions need to be coordinated across the dozens of agencies that claim to be doing something about the climate.

Presidential Reorganization Authority

Regardless of its level of energy, there is only so much that the executive can/should do alone.  Restoring the rule of law will require engagement with Congress, but in taking that route a President will encounter all the usual obstacles, so forward motion will occur very slowly if at all. One possible solution is for the President to request fast-track reorganization authority, a mechanism similar to trade negotiation authority.

Presidential authority to reorganize the federal government has a history going back to President Hoover and has been used dozens of times, but I don’t believe it has ever been used in its modern fast-track form. Typically Congress would pass a bill granting the President the authority to reorganize the government, but would attach some form of legislative veto to prevent abuses.  When the Supreme Court found the legislative veto unconstitutional in 1983, Congress instead granted President Reagan authority to submit reorganization plans as privileged fast-track legislation. This authority expired in 1984 and has not been renewed, despite President Obama’s prominent request in 2012.

Because it would go through a complete legislative enactment, a presidential reorganization plan in its modern fast-track form could be used to make substantive changes to the law, in addition to structural changes to the organization chart. So, for example, such a plan could move the new Consumer Financial Protection Bureau from the Federal Reserve to the Treasury, and change its powers, its budgetary authority, and its independence (recently curtailed by the DC Circuit). A reorganization plan could restore the Federal Trade Commission’s jurisdiction over broadband communications, and in the process effectively reverse the Federal Communications Commission’s ill-advised net-neutrality decision. Or a reorganization plan could restore the control over CAFÉ standards for automobiles traditionally enjoyed by the Department of Transportation, reversing the Environmental Protection Agency’s takeover of this program in the name of climate change.

A reorganization plan would have no guarantee of success, but it would at least present the issues fairly for a clean vote in Congress, and would subsequently have far less litigation risk by virtue of that vote.

Others have suggested the creation of mechanism similar to the Base Realignment and Closure process. Such a BRAC-like Regulatory Improvement Commission would guide a fast-track legislative process for cleaning up old regulations. While this proposal has some merit, it seems to me unlikely that an independent commission of this sort would ever achieve the kind of political mandate that would be needed to drive substantial regulatory reforms to completion.

Conclusion

Like Adam White, I recognize that recommendations for fundamental reforms can sound naïve. Whoever takes the oath of office on January 20 will not be some Platonic philosopher king.  Nonetheless, restoring the rule of law is indeed a generational task. And only the chief executive is in a position to bring coherence to the administrative state that we inherit.

 

Brian Mannix

Brian Mannix is a research professor in the Regulatory Studies Center at George Washington University. From 2005 to 2009 he served as the Environmental Protection Agency's Associate Administrator for Policy, Economics, and Innovation; earlier he served as Deputy Secretary of Natural Resources for the Commonwealth of Virginia. From 1987 to 1989, Mr. Mannix was managing editor of Regulation magazine at the American Enterprise Institute.

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