REINS Act — A Response to Noah Sachs

Last month, University of Richmond law professor Noah Sachs published an article in The New Republic criticizing the proposed REINS Act, which would require Congressional approval before any major regulation could take effect. As with many attacks on the REINS Act, Sachs’ article misrepresents the legislation to make its case. As there is a hearing on the bill today, I thought I’d address some of the arguments he makes.  In case some find this to be redundant with my prior posts on the subject (1, 2, 3), the bulk of this post is below the fold.

Let’s take it from the top. Professor Sachs begins his article with a question:

Imagine if the board of a Fortune 500 company required the company’s vice presidents to obtain board approval before implementing any decision. Now imagine that the board is highly polarized and its members are at each other’s throats. A recipe for corporate gridlock, right?

Of course it does. And if this were analogous to what the REINS Act proposes, it would be a bad idea. But it’s not. Imagine instead if the board of a Fortune 500 company required the company’s vice presidents to obtain board approval before implementing the two or three percent of decisions that are most important and potentially costly. That’s not so crazy, is it?  We would expect a board to take an interest in such major decisions and not simply delegate them to underlings or agents.  That is all the REINS Act would do.  The approval requirement only applies to “major rules,” which are those rules expected to cost over $100 million annually and represent less than five percent of the federal regulations promulgated in any given year.

Sachs continues:

Since the Progressive era, U.S. administrative law has operated from the premise that agency action should be somewhat insulated from political pressure and horse trading. The REINS Act would mark a radical abandonment of that goal, an attempt to correct an oversight problem that doesn’t even exist. It would deliver a body blow to the already-sluggish agency rulemaking process by politicizing it and entangling it in the congressional morass. And, over the long term, it would do serious damage to American health and prosperity—stopping agencies from promulgating important rules that, among other things, would help prevent bank failures, ensure the safety of the food we eat, and control toxic pollution in the air we breathe.

This paragraph contains numerous misleading or outdated premises. The Progressive era ideal of administrative law was that experts should be insulated from political pressure because this would free them to arrive at the objective “right” answer to any given policy problem. This idea has long been discredited. Sachs argues that “agency decisions . . ., ideally, should be data-driven technical judgments,” but I don’t think he means it (and I suspect it would come as a surprise to his colleagues at the Center for Progressive Reform).  Indeed, it is one of the ideas many progressives are rightly critical of cost-benefit analysis. Regulations cannot be made on expertise alone, as regulatory measures inevitably involve the adoption of value judgments that are inherently subjective and inevitably political – as they should be.  Whether to allow a one-in-a-million or one-in-eight-hundred-thousand risk and how to punish irresponsible industries are not “technical” decisions but policy choices, and no level of technical expertise ensure the “right” answer is reached.

As for what the REINS Act would do, it would not introduce any more horse trading than already occurs in the regulatory process, but it would force it into the open. The Act is careful to eliminate the opportunity for Congressional interference in the details of rules. All it asks is that Congress confirm that an agency action is consistent with current Congressional intent. Nor would the Act subject regulations to the “congressional morass” because the Act prevents interest group factions from bottling up resolutions of approval in committee or using any of the other legislative tricks that can hold up legislation.

But would the Act “stop[] agencies from promulgating important rules”? Only if one believes that such rules are unpopular, that corporate power is so extensive that it can control a majority in either house, and that “important rules” could only ever be adopted by attenuating political accountability for such regulatory decisions. Sachs may believe this, I do not.  Indeed, as David Schoenbrod’s publications on delegation have shown, Congressional delegation to regulatory agencies is often about serving corporate interests by delegating authority to captured agencies or insulating regulatory decisions from public view.  It’s much harder for a member of Congress to be a corporate lackey if he has to do it in public view.

Sachs argues the Act is unnecessary because the regulatory state is not “out of control.” For evidence he cites OMB estimates that the benefits of federal regulations outweigh their costs. This may be so, but it is irrelevant. That a government analysis concludes that given rule is net beneficial does not, by itself, mean that it is good policy.  Regulations commandeer private resources, forcing them to be allocated to one purpose or another. Sometimes this is necessary or wise, but a simple cost-benefit analysis alone does not demonstrate this fact, nor can such studies show that one regulatory approach was superior to available alternatives. We cannot afford every net beneficial idea, any more than the federal government or a private firm can afford to make every investment that is expected to yield a positive return. Moreover, cost-benefit analyses are notoriously manipulable and imprecise, as progressives like to remind us, and they cannot account for normative concerns, such as the distribution or other impact of rules.

Sachs raises the specter that the REINS Act would enable a single house to silently veto a new regulation by simply failing to act. It is true that the REINS Act requires Congress to pass a joint resolution of approval within 70 legislative days, but the Act also prevents either house from refusing to Act within that time period. Resolutions are automatically introduced upon a major rule’s completion and automatically discharged from committee to the floor. Such resolutions are privileged motions and debate is limited. So it is true that one house would have “veto” power, but that veto would have to be exercised with a majority vote.

Comparing the process for approving REINS Act resolutions with enacting traditional legislation, appropriations bills, or even judicial nominations, as Sachs does, is highly misleading, as the traditional means of legislative delay are available in all these instances, but not under the REINS Act. Even were each house of Congress to debate the maximum two hours of floor debate to every major rule, a year’s worth of major rules could be considered in a few weeks. In reality, however, many major rules would be expedited, much like many judicial nominations are once they (finally) reach the floor. Many major rules are uncontroversial or overwhelmingly popular and, as such, are unlikely to be delayed.
Despite all this, Sachs argues the “likely” results of the REINS Act would be “devastating” – again based on the assumption that a majority of either house would not support necessary rules.

Sachs also fears the bases upon which members of Congress would base their votes:

unlike a federal agency, which will always have to publicly justify its decisions with scientific and economic data, Congress could use the REINS Act to kill rules on virtually any premise it wanted—and do so behind closed doors or without much substantive debate. Politics, not sound policy, could rule the day.

The claim that Congress could kill a rule “behind closed doors” is simply false, as the REINS Act forces resolutions to the floor, and an up-or-down vote in the body of the whole is far more open and transparent than the typical regulatory agency proceeding. But could Congress kill a regulation on “any premise it wanted”? Yes, and this is how it should be. The EPA’s scientific analysis may help quantify the relative cancer risk posed by differing contaminant levels in drinking water, but it can’t tell us which level is the “right” one. In short, it can’t definitively answer how “safe” is “safe enough,” or what level of safety is justified by what level of cost. Again, this is a policy judgment for which those who authorize such regulations – the Congress – should be responsible and accountable.

I don’t disagree with all of Sachs’ piece.  In noting that Congress is the ultimate source of all regulatory power, Sachs implicitly acknowledges that most constitutional objections to the REINS Act are without foundation.   Although I disagree with his analysis, it is to Sachs’ credit that he focuses his efforts on questions of policy, and does not erect faux concerns about the law’s constitutionality.

The ultimate effect of the REINS Act will not be to ensure more or less regulation — it would apply to a future President’s major deregulatory initiatives as well — but to ensure a closer fit between popular preferences and federal regulatory measures.  The more one reads of REINS Act critics, this seems to be what they are actually afraid of.