Newspaper article Roll Call

The Rise of the Regulator | Commentary

Newspaper article Roll Call

The Rise of the Regulator | Commentary

Article excerpt

By Patrick Forrest

This month, the Supreme Court unanimously missed an opportunity to check the rising regulatory state. Its decision in Perez v. Mortgage Bankers Association marks the culmination of a long journey in American jurisprudence to transfer immense influence to federal regulators. Undoubtedly, Congress has been complicit in this handover by producing vague laws that leave the door open to a bounty of agency interpretations. However, until now, the Supreme Court stood as the only safeguard against this tide of legislative laziness and federal overreach. This judicial abdication marks the rise of the regulator.

So long as a regulator does not stray beyond the broadest parameters of congressional statutes, courts are now likely to rule that the statute intends whatever the regulator says it does. The result is a vast expansion of the administrative state. Regulators can magnify their influence by writing general substantive rules and then issue interpretive rules, changeable at will, wholly outside of public comment and review.

The decision gives federal agencies authority to step up reinterpretations of their own regulations through unreviewable administrative action. This means an agency can change a significant policy without even publishing it on its website. This is something regulators have already begun in practice without providing the public notice and ability to comment.

One important example was found in a letter of interpretation last year sent to the United Steelworkers union. In the letter, the Occupational Safety and Health Administration stated that, during inspections of nonunion workplaces, union officials or community organizers can accompany OSHA agents. Previously, OSHA consistently interpreted this regulation to limit labor union participation in an inspection only where such a union was certified or recognized as representing the employees under procedures established by the National Labor Relations Board. Not only does this rule change threaten to disrupt OSHA's primary mission by embroiling the agency in organization and community disputes, but it also unfairly changes the rules for employers without giving them proper notice the rules have been changed.

The Supreme Court's decision in Perez puts a judicial stamp of approval on this type of regulatory uncertainty. Granted, the problem is largely of Congress' making.

The implications for the private sector will be profound as businesses will now be required to comply with unknown or uncertain rules that can change abruptly without notice. Clearly this is a catch-22 for the industry. A business, even in good faith, that attempts to comply with the law can now be penalized for violating an administrative interpretation when the governing statute does not explicitly provide safe-harbor liability protection. …

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