Publius Squared: The Regulatory State, Congress, and Democracy

As many people should know, Obsidian Wings is often a bastion of worthwhile discussion and debate combined with unapologetic opinion in the sea of hackery and straw men that is the political blogosphere.  Over the last several days, the site’s most prolific blogger, as well as an expert on communications law and a passionate advocate of net neutrality, Publius (known in real-life as law professor John Blevins) was kind enough to indulge me (who once likewise blogged using a derivation of Publius as a pseudonym) in an exchange of e-mails on the interplay between regulation, legislation, and democratic accountability, and what the FCC’s recent actions on net neutrality say about it.  For the sake of the readers’ sanity, I should note upfront that the questions get significantly shorter and more focused as the interview wears on, and Publius may deserve sainthood for his ability to respond to the first question at all.

Mark: One aspect of American policy that tends to get little attention in our public discourse is that of administrative law, rulemaking, and adjudication, not to mention even more discretionary issues such as enforcement priorities.  Yet, at least on the federal level, this is quite often where the real “action” is.  With some notable exceptions, it seems (to me, at least) that it is physically impossible for government agencies to uniformly enforce all of the laws and regulations on the books, almost no matter how many resources we give to those agencies. Meanwhile, rulemaking procedures are often immune from the kind of democratic accountability that theoretically exists in the legislative branches – they are uniquely low-visibility, often – though certainly not always – attracting the input only of the most interested players with the biggest budgets.  Even where rulemaking succeeds in overcoming these more basic regulatory capture concerns, the resulting regulations are still inevitably of the one-size-fits-all variety, such that the largest players often wind up increasing their comparative advantage over small players, even where it was the malfeasance of the large players that created the impetus for the rule in the first place.  Additionally, the wide grant of quasi-legislative powers and enforcement discretion to administrative authorities has seemingly given Congress the ability to duck responsibility for its own action or inaction by allowing it to blame agency bureaucrats and appointees for various problems.  For example, we often hear GOP politicians argue quite plausibly against gun control legislation on the grounds that it is only necessary to enforce existing gun laws; meanwhile, to take another issue near and dear to my heart, Democratic politicians avoid responsibility for the nasty effects of the Consumer Product Safety Improvement Act by claiming that those effects are the result of an improper interpretation by the CPSC.

Yet, the authority of administrative agencies is not without its benefits – Chevron deference exists for a reason, after all.  Agencies are more able to adjust to facts on the ground and have more topic-specific expertise; in short, they are in a far better position than Congress to determine how to implement the vision embodied in legislation as circumstances change.
So my questions for you are: 1. What role, if any, has the growth of administrative law played in the expansion of executive power, as well as the rise of the “unitary executive” theory? 2.  Do the benefits of our existing emphasis on agency rulemaking outweigh the harms?  3.  Finally, what, if anything can/should be done to reform our system of administrative law to make it more democratically accountable and less-susceptible to regulatory capture.?
Publius: I’m not sure I’m qualified to speak knowledgeably about your first question, but I’ll try to address the next two questions.

First, I do think the benefits of a strong administrative state outweigh the harms.  My vision of the administrative state isn’t quite as bleak as what you described, though I certainly share some of your frustrations and skepticism.

In general, I think problems with the regulatory state often reflect external problems.  For instance, if wealth and power are concentrated, then those disparities in political power will be reflected in rulemakings.  If, by contrast, there is less concentration, then rulemaking will benefit from more adverse, competing “vectors.”

Similarly, if one of our political parties views regulatory action essentially as a means to enrich industry, then that too will be reflected in the ultimate rulemaking and adjudications.  But that’s a problem with the intellectual state of the political party more than with the administrative state.

Finally, if the broad public isn’t organized and engaged (particularly at an institutional level), that too will be reflected.

But it doesn’t have to be that way.  Indeed, I think the FCC’s recent actions on open networks and net neutrality show the promise of administrative action, and undermines public choice skepticism (a topic we’ve discussed before).

First, the proposals show that you don’t necessarily need powerful rich industry groups to make change happen.  Open networks are the result of lobbying by underfunded, idealistic public interest organizations like Free Press.  The bigger content companies like Google aren’t doing much heavy lifting.  And I think, frankly, that Democratic policymakers are more attentive to policy at this point in history.

Second, the FCC’s actions show the importance of political mobilization and organization-creation.  In many instances, rich industry groups get their way simply because they’re the only people in the room providing information to policymakers.  In a sense, policymakers often read the brief from only one party.

With the rise of public interest and watchdog organizations, policymakers have more sources of information.  The process, therefore, isn’t hopelessly corrupt — it’s just that a lack of organization is depriving policymakers from hearing other voices.  Legislative and regulatory staffers are busy, and it’s an enormous benefit to receive useful information wherever they can get it.

Mark: I think you’re correct that the FCC’s actions in the Comcast case at the very least demonstrate a wonderful example of public choice and regulatory capture concerns being overcome, and it will certainly be interesting to see where the FCC rules finish up when it is all said and done.  I know that you’ve expressed a strong preference for formal rulemaking rather than proceeding by adjudication, and I’d like to focus a bit on the distinction between the two for purposes of regulatory capture/public choice concerns.  Regulatory adjudication is certainly not immune to these types of concerns, yet I wonder if it may provide a better approach to rulemaking on average in that it may permit broader public interests a greater opportunity to rally around demonstrable instances of malfeasance and thereby become more passionately involved; moreover, it seems more flexible in that it can respond to problems as they arise and in the context in which they arise rather than attempting to predict the context in which future problems may arise.  By contrast, proceeding by formal rulemaking seems on some level more prone to public choice/regulatory capture concerns because there often is no immediate event for broad-based interests to focus on.  Even where there is a galvanizing event, public interest groups often seem likely to win pyrrhic victories because they are too broad-based to understand how the intricate details of the rulemaking will affect the relevant industry.
So why should we favor rulemaking to adjudication, and, more importantly, how do broad-based interest groups reach and maintain the level of involvement with the regulatory process that is necessary to safeguard against regulatory capture on relatively obscure issues with large effects, whether minute details of highly-publicized rulemaking or any elements of poorly publicized rulemaking?
Publius: I’ve probably been unclear, but I don’t favor rulemaking over adjudication in the abstract.  I do, however, prefer rulemaking in this particular context, for reasons I’ll explain.

First, I’m not sure it’s possible to say — ex ante — that we should always favor one form of regulatory action over the other.  Each has its own strengths and weaknesses, and so it really depends on the context.  Adjudication has the benefit of flexibility (as you note), but it also provides less clarity for industry.

In the Comcast/open networks proceeding, I’m happy for any FCC action.  But if I had to choose between the two, I’d prefer rulemaking for several reasons.  First, rulemaking offers a stronger and clearer message.  Second, rulemaking will be harder for a future Republican administration to reverse.  Third, the ongoing threat of adjudication assumes we can detect misbehavior as it arises.  I’m not sure that’s a safe assumption.  Comcast, after all, only got caught because they happened to block the uploads of an extremely sophisticated network engineer who happened to home suffering from an illness, as I recall.

In addition, the risks of rulemaking are less of a concern here.  Remember that this isn’t some newfangled untested regulation.  Openness and neutrality have been the historical norms — and they’ve been an enormous economic and social success.

Accordingly, there’s much less risk that the FCC’s actions will thwart business in unforeseen ways.  The bigger risk is that granting network providers impunity to block would thwart the Internet in unforeseen ways.

Mark: I apologize for the misunderstanding.  Assuming for the moment that the FCC will ultimately implement the types of rules that net neutrality advocates prefer such that we can ultimately say that regulatory capture/public choice concerns were appropriately overcome, what kinds of lessons will we be able to draw from this going forward in other arenas?  In other words, assuming that net neutrality advocates are ultimately successful here, to what will we be able to attribute that success?
Publius: Boy, this is the million dollar question.  I wish I had better answers.

To start, though, I think presidential support is important.  One good thing about a national executive is that it’s less susceptible to capture by any one interest group.  For this reason, getting commitments from presidential candidates early in the campaign process is huge.  Without the Obama administration’s strong support, this never would have happened.

Second, political activism and engagement matters.  David Simon is one of my favorite people, but the open networks debate has proven him wrong — politics can bring about meaningful change.  It’s hard work, but new organization building and activism can create good results.

Third, Congress can also limit capture by writing better legislation (at least to the extent you think Congress is less susceptible to capture than agencies).  One problem with the 1996 Telecom Act, for instance, was that Congress left too many decisions in the hands of the agency.  I’d prefer to see Congress provide more detail in many areas to prevent lobbyists from filling in the gaps — that’s why I’m ok with a 1,000 page health care bill.

Mark: With respect to that third point, you use the example of the 1996 Telecom Act, but another example I mentioned earlier is last year’s Consumer Product Safety Improvement Act, which mixed some fairly detailed standards with some very vague instructions for enforcement and implementation of those standards.  When it became clear that the detailed standards would cause severe harm to innocent small businesses, Congress’ response was to shift blame for those problems to the CPSC’s regulations, even though the CPSC’s hands were tied on the aspects of the law that are doing the most damage.  Do you think that Congress uses the regulatory state as a way of deflecting responsibility for unintended consequences while taking credit for passing feel-good legislation?  More importantly, what kind of oversight role should citizens demand Congress play?
Publius: I’m afraid I can’t speak knowledgeably on the law you describe.  I would say, though, they use it sometimes as a way to avoid responsibility altogether.  You see a similar dynamic at times with Congress’s relationship to the courts.  It’s easy to complain about rulings when you know you don’t have to be one making the decision.

I actually would prefer to see more oversight of the administrative state by the public.  I wish people (including me) were more informed about administrative actions, and their impact.  Congress certainly has an important role to play – I don’t mean to diminish its responsibilities.  But “Congressional oversight” often consists of getting a Senator to sign his or her name to an industry-drafted letter complaining about something.  And Congressional oversight will always vary depending on what party is in charge.

Public interest groups and grassroots activism, by contrast, don’t change after the election.  People can do more good than you might think simply by drawing public and media attention to a given decision.  Administrative officials are fairly risk-averse, and public criticism really can influence their decisions.

For instance, it’s been public pressure and private litigation that has forced changes in our detention policy.  Congress has been (and remains) horrible on the issue.

Mark: One final question.  Why do you think it is that culturally we seem so unwilling to focus on the administrative state, not only as a source of problems, but also as a potential source of solutions?  While we certainly make the President into something of an omnipotent official, it often seems like we view him more as a legislator-in-chief than as the sole elected official with responsibility for the administration of government.  Rarely, if ever, does a Presidential candidate seek to win votes based on how he will administer the government and institute rulemaking, but instead Presidential campaigns seem to focus primarily on legislative agendas combined with, of course, foreign policy.
Publius: I’m not sure I know why, but I agree it’s a big problem.  I think part of the problem is that elections are treated as wrestling matches or horse races between two individuals.  In reality, it’s a choice about which party will control the entire administrative state.  Personally, that reality is what makes it hard for me to support any Republican candidate for president, no matter how centrist or reasonable the individual may be.

Another problem is simply that the public doesn’t know much about the administrative state.  Much of it is complex and nontransparent, even to lawyers.  Indeed, today’s law schools are part of the problem.  The first-year curriculum doesn’t teach you anything about the administrative state, and students aren’t generally required to take “admin law” for either the law school or the bar.  Personally, I think admin law should be a required first-year class (or at least required before you graduate).

But thanks so much for the interview — I’ve enjoyed it, and I very much enjoy reading the blog.  Gotta get rid of that pesky libertarianism, but we’ll work on that.  :)

Mark: Thank you for taking the time to answer my questions and – perhaps more importantly – to indulge my interest in the obscure, amorphous, and vague!
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5 thoughts on “Publius Squared: The Regulatory State, Congress, and Democracy

  1. Great interesting interview. I would stood out the most was the point that people focus to much on electing one president/CEO/ National Daddy to guide and enlighten us as opposed to the reality of we are hiring a big bunch of people to run things for a while.

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    • Thanks, greg! I’ve got a follow-up post set to go up tonight that goes into that issue in a lot more depth, and more importantly proposes a somewhat unexpected partial solution to the problem of regulatory capture. You will be surprised to learn that it does not at all involve a proposal to just give up and deregulate everything.

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  2. Good interview. I think publius is right on most of what he says, but his misses the simple fact that it’s not easy to get information on issues that are less prominent in the news, and most people are busy enough without spending hours trying to get informed on it. I agree with his answer to the first question that regulatory capture doesn’t have to be the norm, and that concentrations of wealth combined with a political party whose raison d’etre is to favour corporations are a big part of the reason why it is common. If economic power was more equal, it wouldn’t be nearly as easy for large corporations to game the system.

    Also, you really need to work on making your writing simpler.

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