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Regulation and Public Interests

Regulation and Public Interests: The Possibility of Good Regulatory Government

Steven P. Croley
Copyright Date: 2008
Pages: 392
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  • Book Info
    Regulation and Public Interests
    Book Description:

    Not since the 1960s have U.S. politicians, Republican or Democrat, campaigned on platforms defending big government, much less the use of regulation to help solve social ills. And since the late 1970s, "deregulation" has become perhaps the most ubiquitous political catchword of all. This book takes on the critics of government regulation. Providing the first major alternative to conventional arguments grounded in public choice theory, it demonstrates that regulatory government can, and on important occasions does, advance general interests.

    Unlike previous accounts,Regulation and Public Intereststakes agencies' decision-making rules rather than legislative incentives as a central determinant of regulatory outcomes. Drawing from both political science and law, Steven Croley argues that such rules, together with agencies' larger decision-making environments, enhance agency autonomy. Agency personnel inclined to undertake regulatory initiatives that generate large but diffuse benefits (while imposing smaller but more concentrated costs) can use decision-making rules to develop socially beneficial regulations even over the objections of Congress and influential interest groups. This book thus provides a qualified defense of regulatory government. Its illustrative case studies include the development of tobacco rulemaking by the Food and Drug Administration, ozone and particulate matter rules by the Environmental Protection Agency, the Forest Service's "roadless" policy for national forests, and regulatory initiatives by the Securities and Exchange Commission and the Federal Trade Commission.

    eISBN: 978-1-4008-2814-2
    Subjects: Law

Table of Contents

  1. Front Matter
    (pp. i-vi)
  2. Table of Contents
    (pp. vii-viii)
  3. Acknowledgments
    (pp. ix-xii)
  4. Introduction An Uneasy Commitment to Regulatory Government
    (pp. 1-6)

    In the United States today, mainstream attitudes toward the modern regulatory state are well captured by the joke Woody Allen tells about overhearing a lunch room conversation between two complaining inhabitants of a retirement home:

    “The food here is so terrible.”

    “Yeah, and always such small portions.”

    On the one hand, the regulatory state—“big government,” “the bureaucracy,” “Washington”—is a target of endless criticism. Social commentators, politicians, and academicians routinely rail against the regulatory system. Calls to “downsize” government, reduce “regulatory red tape,” and promote “free enterprise” are perennial, as certain as death and taxes.

    In part, this phenomenon...


    • Chapter One The Basic Project
      (pp. 9-13)

      Critiques of regulatory government are as old as government regulation itself. And by now, confidence in public regulatory institutions—in the modern administrative state—is widely dismissed as idealistic. No doubt this is true partly as a result of the power of familiar critiques. Often, regulatory bodies certainly do appear to cater to the powerful, the well-funded, and especially the organized. As will be detailed shortly, this general dynamic is widely taken to be a consequence of the basic “rules” of modern politics, and not without justification. The combination of elected legislators who require economic resources to maintain their positions,...

    • Chapter Two The Cynical View of Regulation
      (pp. 14-25)

      Just what is the cynical view of regulation a cynical view of? It is, in short, a view of the legal work-product of the administrative state. It is not, for example, principally a theory of legislation, even though (as will be seen below) students of regulation focus unduly on legislators and legislative incentives. For as observed above, the innumerable activities of everyday life are deeply affected by the legal work-product of federal administrative agencies, the “fourth branch” of government. From the food and water citizens ingest to the air they breathe, every aspect of modern life is thoroughly shaped by...

    • Chapter Three Is Regulatory Capture Inevitable?
      (pp. 26-52)

      While not all students of regulation see socially beneficial regulation as an unlikely proposition, the bleak picture presented in chapter 2 has proven enormously influential. This account holds sway over much scholarly discourse about public law institutions generally, and regulatory bodies in particular. Even those who approach regulation indirectly—from the perspective of other legal fields or even other disciplines—often seem osmotically influenced by the public choice theory’s conclusions. Thus, for example, contributors to such diverse fields as tax and constitutional law regularly invoke the public choice picture in the course of analyzing or explaining particular regulatory phenomena. While...

    • Chapter Four Alternative Visions of Regulatory Government
      (pp. 53-76)

      Counterpunching is easy. Providing a robust alternative to the public choice theory is not. Indeed, even the most thoughtful critics of the public choice theory have offered no viable theory comparable in sophistication or scope. To date, there is no thoroughgoing alternative theoretical framework for understanding, much less predicting, regulatory outcomes.

      One interesting challenge is posed by Gary Becker, who aims to vindicate the pluralist theory which the public choice account explicitly seeks to replace.¹ Like advocates of the public choice theory, Becker assumes that organized interest groups compete with one another to obtain favorable regulation. In his model, however,...


    • Chapter Five Opening the Black Box: Regulatory Decisionmaking in Legal Context
      (pp. 81-101)

      Agencies regulate. But exactly what forms does agency regulation take? Technically speaking, agencies do not produce “regulations,” but rather “rules” and “orders.” “Rules” are the result of agency rulemaking processes; “orders,” of agency adjudication processes. Rules, orders, and the processes that generate them are defined and prescribed by the Administrative Procedure Act of 1946 (APA), codified in Title 5 of the U.S. Code. The APA thus serves as agencies’ decisionmaking template, applicable wherever Congress has not otherwise provided, and supplemented at times by other procedural statutes, presidential orders, and agencies’ own procedural decisions.

      The APA does not itself authorize agencies...

    • Chapter Six Regulatory Government as Administrative Government
      (pp. 102-117)

      The preceding chapter’s tour of administrative procedure and its sketch of the relationships between agencies and the other branches of government highlight the mechanics and institutional environment of agency decisionmaking. In contrast to reductive models of regulation according to which agencies simply do Congress’s bidding and answer special interest groups’ demands, a more complex picture of agency action begins to emerge. What remains to be demonstrated, however, is the sheer scope of administrative regulation. How often do agencies—as opposed to Congress—regulate, and in which of the above procedural ways, and with what regulatory significance? That agencies possess substantial...

    • Chapter Seven Participation in Administrative Decisionmaking
      (pp. 118-133)

      But who’s behind the wheel? Having considered the specific procedures of regulatory decisionmaking and the frequencies with which those processes are used, an important question remains concerning thesubjectsof regulatory decisionmaking. In addition to agency personnel, who exactly participates in regulatory decisionmaking?

      Examining the opportunities for participation that the regulatory decisionmaking processes afford provides clues about likely patterns of participation. For example, any party can participate in the ordinary rulemaking processes. As section 553 states: “After notice required by the section, the agencyshall give interested personsan opportunity to participate in the rulemaking through submission of written data,...

    • Chapter Eight The Administrative-Process Approach Expanded: A More Developed Picture
      (pp. 134-156)

      In the light of closer consideration of how agencies regulate, with what possible motivations, in what institutional environment, and with whose participation—and especially given deeper understanding of the procedural channels of regulatory decisionmaking—it is now possible to develop further the claims of the administrative process theory of regulation introduced in chapter 4, in part by calling legislative dominance into further question.

      In partial contrast to decisionmaking by legislators, the processes of regulatory decisionmaking by administrative agencies promote the consideration of the arguments and information supplied by a range of interests, even though typically those interests are not equally...


    • [PART III Introduction]
      (pp. 157-162)

      So grant this much: However uneven interest group pressures on Congress may be, and however often legislators may seek to use their powers over agencies to generate regulatory policies that favor narrow congressional constituencies, it is still plausible that administrative decisionmakers nevertheless often pursue regulatory policies designed to serve broad interests. It is plausible that agency regulators are motivated to do so as a result of their own commitments to the common good, which might after all account for why they became regulators in the first place. It is similarly plausible that agencies’ decisionmaking procedures promote agency autonomy because they...

    • Chapter Nine The Environmental Protection Agency’s Ozone and Particulate Matter Rules
      (pp. 163-179)

      In one of the most significant environmental regulatory initiatives in decades,¹ the U.S. Environmental Protection Agency in July 1997 issued final rules under the Clean Air Act tightening restrictions on ozone (03)and particulate matter (PM).² The EPA’s rules—one rule for ozone and one for particulate matter, issued simultaneously—constituted a revision to the agency’s National Ambient Air Quality Standards (NAAQS), which establish maximum levels for listed pollutants.³ Sections 108 and 109 of the Clean Air Act require the EPA to identify air pollutants that threaten human health and welfare, and to specify maximum allowable levels of those pollutants.⁴ The...

    • Chapter Ten The Food and Drug Administration’s Tobacco Initiative
      (pp. 180-195)

      Exhibit two:

      In August 1996, the federal Food and Drug Administration took what can only be described as an astonishing step, issuing a rule regulating cigarettes and smokeless tobacco products.¹ The FDA’s rule, some 219Federal Registerpages long, regulated tobacco comprehensively. It governed the advertising, sales, and distribution of cigarettes and smokeless tobacco products. The tobacco rule constituted the FDA’s most ambitious rulemaking initiative ever, one that responded to a problem of enormous social and economic proportions.

      The effects of smoking present one of the biggest public health issues of our time. The basic facts are now well known:...

    • Chapter Eleven The Forest Service’s Roadless Policy for National Forests
      (pp. 196-212)

      In its most ambitious regulatory initiative in modern times—an initiative variously called “one of the most significant conservation efforts in United States history,”¹ “the most significant land conservation initiative in nearly a century,”² and an “epic initiative”³—the U.S. Forest Service in January 2001 issued its final “roadless rule.”⁴ The effect of the roadless rule was to limit substantially road construction in over 55 million acres of designated national forests. The affected area constituted almost one-third of the 194 million total acres of national forest land. The Forest Service’s rule both reflected and further perpetuated an intense national debate...

    • Chapter Twelve Socially Beneficial Administrative Decisionmaking: Additional Evidence
      (pp. 213-236)

      The previous three chapters document several ambitious regulatory initiatives that advanced public interests by generating substantial net benefits, broadly distributed, over the strong opposition of concentrated and organized interests. What such cases suggest about the limits of the public choice theory of regulation, and what they illustrate about the relevance of the administrative process, will be considered shortly.

      Getting there, however, requires anticipating one objection to the direction of the general argument: Perhaps the examples just narrated constitute exceptions that prove the rule. That is, if regulatory initiatives like those presented above are few and infrequent, then perhaps one can...


    • [PART IV Introduction]
      (pp. 237-240)

      To take stock: Part 1 of this study called into theoretical question the power of the dominant public choice theory of regulation, the main conclusion of which is that agencies deliver socially undesirable regulation to politically powerful interest groups. Part 1 argued that, considered on its own conceptual terms, that theory seems in several ways imprecise, and in other ways precise but question-begging. Part 1 speculated that some of its nevertheless enduring influence may owe to the lack of any satisfying alternative theory. Part 1 then sketched an alternative “administrative process theory of regulation.” The administrative process account emphasizes the...

    • Chapter Thirteen The Public Choice Theory Revisited
      (pp. 241-257)

      The regulatory initiatives presented in part 3 contravene the public choice theory’s process expectations. The point is subtle but important, subtle because on the one hand a core defect of the public choice theory is exactly that it elides the processes of regulatory decisionmaking—so how can the theory have process expectations?—and yet important because the theory nevertheless implies regulatory processes consonant with its substantive regulatory predictions—for agencies can deliver the kinds of regulatory outcomes the theory predictsonly ifthey possess procedural tools appropriate for that task. Put differently, while the public choice theory is not very...

    • Chapter Fourteen The Promise of an Administrative-Process Orientation
      (pp. 258-283)

      The case studies of part 3 not only cast further doubt upon the strength of the public choice theory of regulation. They also vindicate the administrative process theory. Specifically, the studied cases illustrate how administrative decisionmaking procedures can promote agency autonomy and authority, and how autonomous agencies can undertake socially desirable regulation. They also show that administrative regulators are sometimes motivated to advance public interests, and how they might do so even over the objections of interest groups and legislators, especially when they secure the political or legal support of another institution of government.

      First, the administrative process theory’s “agency...

    • Chapter Fifteen Regulatory Rents, Regulatory Failures, and Other Objections
      (pp. 284-303)

      What objections might be raised against the conclusions of the last two chapters? Several seem likely, some defending the public choice theory and others attacking the administrative process theory offered in its place. In fairness, some likely objections are not wholly without merit. The remainder of this analysis considers likely objections and, notwithstanding the important differences between the public-choice and the administrative-process accounts of regulation, considers the extent to which they might be partially connected.

      One possible objection to the critical assessment of public choice theory offered above holds that the assessment attacks a straw theory. According to this objection,...

  9. Conclusion The Regulatory State and Social Welfare
    (pp. 304-306)

    On the occasion of vetoing the Walter-Logan Bill,¹ Congress’s alternative to what later became the Administrative Procedure Act of 1946, President Franklin D. Roosevelt stated:

    Wherever a continuing series of controversies exist between a powerful and concentrated interest on one side and a diversified mass of individuals, each of whose separate interests may be small, on the other side, the only means of obtaining equality before the law has been to place the controversy in an administrative tribunal.²

    Too strong. Yet there is an element of truth in Roosevelt’s claim, and it is that element which this study has sought...

  10. Notes
    (pp. 307-364)
  11. Index
    (pp. 365-379)