Academic journal article American University Law Review

Improving Regulatory Analysis at Independent Agencies

Academic journal article American University Law Review

Improving Regulatory Analysis at Independent Agencies

Article excerpt

Introduction

Over the last fifteen years, a group of seventeen major independent agencies-including the Federal Communications Commission (FCC) and the Securities and Exchange Commission (SEC)-collectively issued nearly 5000 federal regulations.1 Yet not one of these rules has been subject to the usual legislative or presidential requirements for regulatory analysis that executive branch agencies must follow when developing new rules.2 The Unfunded Mandates Reform Act (UMRĄ) and Executive Order 12,866 exempt independent agencies from the normal requirements for regulatory impact analysis.3 Perhaps not surprisingly then, over forty percent of major regulations from independent agencies reportedly lack any information on the anticipated costs or benefits of these new rules.4

To be sure, all agencies could improve their analysis of regulations, but regulatory scholars and commentators have raised particular concern in recent years about weak or insufficient analysis at independent regulatory agencies.5 The emergence of such concern seemed to coincide with much more active and consequential regulatory agendas at a number of major independent agencies during the Obama Administration, as illustrated by the FCC's 2015 adoption of an "Open Internet" regulation6 and the SEC's and the Commodity Futures Trading Commission's (CFTC) promulgation of major new regulations under the 2010 Dodd-Frank financial reform legislation.7 Litigants, as well as some judges and commentators, have criticized independent regulators for failing to produce adequate analysis before adopting new regulations, with courts remanding some agencies' rules for further analysis.8

Much concern to date has focused on prospective regulatory analysis, which takes place before agencies adopt new regulations, informing decision makers about whether to proceed with new rules or how to design them. But another type of analysis matters too: retrospective analysis, which takes place after an agency promulgates a rule and seeks to measure its impacts. Retrospective and prospective analysis are interrelated. Prospective analysis clarifies the goals of a new regulation and identifies expected outcomes; this in turn informs the subsequent process of retrospective analysis by identifying benchmarks against which the regulation's actual effects can be assessed.9 Conversely, when retrospective analysis shows how well a regulation has (or has not) worked, it informs future prospective analysis about whether to retain or modify that regulation, as well as how to design other regulations.10 Both types of analysis-prospective and retrospective-are essential ingredients for smart decision making about how to deliver high-quality regulatory outcomes.11 Although litigation and scholarly work has so far focused most attention on the adequacy of prospective analysis at independent agencies,12 no reason exists to think that these same agencies are doing any better than other agencies when it comes to evaluating their rules after the fact.

The purpose of this Article is to gauge what we know about how independent agencies are performing both types of analysis and to offer steps that Congress might take to encourage improvements in both kinds of analysis at such agencies. In this Article, I have in mind primarily the agencies that Congress has stipulated to be independent in its definition of the term in the Paperwork Reduction Act,13 but I recognize that what constitutes an independent agency can itself be open to discussion.14 Agency independence has long been understood in terms of structural features related to the appointment of agency heads-for-cause removal restrictions, fixed terms, and, with multi-member agencies, bipartisan distribution requirements.15 Agencies with these features have generally been considered independent, while those lacking them are instead considered executive agencies, operating under the closer oversight of the White House. More recently, though, some scholars have properly recognized structural independence as more of a matter of degree, rather than as a binary characteristic. …

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