Agency Oversight as "Whac-a-Mole": The Challenge of Restricting Agency Use of Nonlegislative Rules

By Shapiro, Stuart | Harvard Journal of Law & Public Policy, Spring 2014 | Go to article overview

Agency Oversight as "Whac-a-Mole": The Challenge of Restricting Agency Use of Nonlegislative Rules


Shapiro, Stuart, Harvard Journal of Law & Public Policy


INTRODUCTION

When agencies want to compel private entities to act, they face a complex array of choices. The Administrative Procedure Act (APA) gives agencies a series of options for pursuing their preferred policy. (1) At one extreme is the possibility of formal rulemaking. Formal rulemaking, requiring a quasi-judicial proceeding, is rarely used by agencies. It is extremely burdensome for them and, after a period of initial experimentation with the approach, agencies have largely abandoned it altogether. (2)

At the other extreme, agencies can choose not to make policy with any general pronouncements, but rather to rely on case-by-case enforcement actions to implement their preferences. Although these actions are judicially reviewable, the cost for the regulated party to seek redress is significant, and agency penalties often withstand judicial scrutiny. Professor Todd Rakoff, however, cites three reasons why agencies moved toward more general approaches in the 1960s. (3) First, ensuring a consistent enforcement approach is costly for agency management. Second, case-by-case enforcement produces laws that are often vague and contradictory. Finally, as the age of the most far-reaching regulatory statutes dawned, agencies were confronted with policy problems that lent themselves particularly well to more general approaches. (4)

The most well-known of these approaches is informal rulemaking, as described in section 553 of the APA. (5) Informal rulemaking, or "regulation," (6) as it is more commonly known, allows agencies to set policies that apply to vast swaths of the economy to protect public health, govern financial transactions, or decrease the likelihood of a terrorist attack. Although on occasion courts do overturn agency regulations, in general they are deferential to agencies' interpretations of the laws that they are charged with implementing. (7)

Because of its ability to make far-reaching policies and often withstand judicial review, informal rulemaking proliferated. This growth in turn led to a reaction from those who oppose regulation, either on ideological grounds, or because regulation typically places burdens on industry. (8) Beginning in the late 1970s, Congress and the President began requiring regulatory agencies to undertake procedures significantly beyond those required in the APA when they pursued informal rulemaking. Agencies were required to analyze the impact of their regulations on small businesses, (9) measure the information-collection burden their regulations would impose, (10) and conduct Regulatory Impact Analyses of their more significant regulatory efforts. (11) The requirements imposed on agencies engaged in informal rulemaking have continued to increase over the past several decades, and courts have insisted that some of those requirements, such as notice-and-comment, must be strictly followed. (12)

The growing complexity of the informal rulemaking process led some scholars to predict that agencies would begin to turn away from it as a means of setting policy. (13) Professor Thomas McGarity and others have argued that the burden of issuing regulations (which they describe as the "ossification of rulemaking") (14) would eventually push agencies to resort to less formal methods, known in the APA as interpretative rules and general policy statements (15) and, more generally, as guidance documents and enforcement manuals (collectively, "nonlegislative rules"). (16) Although there is scant evidence that agencies have abandoned informal rulemaking, (17) there are an abundance of agency actions that rely on these less formal means. (18)

Proposals to restrict agency usage of "guidance documents" and other similar policy instruments have been discussed for decades. An executive order even implemented one such proposal (albeit briefly) in 2007. (19) The Regulatory Accountability Act, (20) a piece of legislation currently pending in Congress, would echo many of the requirements of that executive order. …

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