My Latest: Sticky Regulations (A Benefit of Ossification?)

by Aaron Nielson — Monday, Apr. 10, 2017@Aaron_L_Nielson

I’m pleased to announce that my latest article, Sticky Regulations, has been posted to SSRN. It will be published next year in The University of Chicago Law Review. If you are interested, I’m going to present it on April 21st at the Rethinking Due Process Public Policy Conference hosted by the Center for the Study of the Administrative State. This is still a very (very) early draft; I appreciate thoughts.

Scholars regularly bemoan the “ossification” of notice-and-comment rulemaking. Many fret that despite their benefits, regulatory procedures may harm the public by delaying change. To this I say: Not so fast! Ossification may have an upside: the ability for agencies to create what I dub “sticky regulations.” A sticky regulation is a rule that cannot be undone or amended quickly. Stickiness can be valuable to agencies pursuing long-term policy goals. If regulated parties, for instance, know that agency-created incentives cannot be changed at the snap of a finger, they are much more likely to invest in innovations that the agency seeks to encourage. Agencies, in other words, need a credible commitment mechanism to induce cooperation — some mechanism to reassure regulated parties that the scheme will be stable. Why can’t ossification act as that commitment mechanism? Hence, the notion that procedural safeguards (which I generally favor) impose too many costs on agencies may be too simplistic. Those very procedures, after all, sometimes may help — not hurt — agencies and the public.

Here is the abstract, which I think sums up the project pretty well:

Administrative law is often said to present a dilemma. On one hand, all three branches of the federal government have crafted procedures to facilitate public participation in the regulatory process and to ensure that the benefits of regulations outweigh their costs. But on the other hand, such procedures have a price — they delay administrative action and sometimes thwart it altogether. In fact, marching under the banner of “ossification,” an entire literature has formed around the idea that there are too many procedures and that administrative law should be transformed to speed up the regulatory process.

Ossification, however, has an overlooked, pro-regulatory benefit: It allows agencies to promulgate “Sticky Regulations,” i.e., rules that cannot be changed quickly. And sticky regulations can be quite valuable, especially when one recalls that agencies seek not only to regulate things as they now exist but also to encourage the emergence of a future that does not yet exist. Regulators are often hard pressed to achieve long-term policy goals absent private investment in innovation — and private investment is enhanced by regulatory stability. Agencies thus can be benefited by their ability to reassure private parties that the regulatory landscape will not be upended before long-term investments can be recouped. Hence the counterintuitive upside of ossification: The very fact that regulatory change is hard creates the stickiness that helps agencies regulate into the future. This is not to say that ossification is always a boon for agencies or that all procedures are cost-justified. It is to say, however, that once the value of sticky regulations is accounted for, the widely held belief that a dilemma exists between robust procedures and agency flexibility must be rejected as too simplistic.

Like I said, this is still an early draft and I’m sure I will update it. As always, I welcome comments.

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About Aaron Nielson

Professor Nielson is an associate professor at Brigham Young University Law School, where he teaches and writes in the areas of administrative law, civil procedure, federal courts, and antitrust. He currently co-chairs the Rulemaking Committee of the American Bar Association’s Section of Administrative Law & Regulatory Practice. Previously he chaired the Section's Antitrust & Trade Regulation Committee. Before joining the academy, Professor Nielson was a partner in the Washington, D.C. office of Kirkland & Ellis LLP (where he remains of counsel). He also has served as a law clerk to Justice Samuel A. Alito, Jr. of the U.S. Supreme Court, Judge Janice Rogers Brown of the U.S. Court of Appeals for the D.C. Circuit, and Judge Jerry E. Smith of the U.S. Court of Appeals for the Fifth Circuit. Follow him on Twitter @Aaron_L_Nielson.

Cite As: Author Name, Title, Yale J. on Reg.: Notice & Comment (date), URL.

One thought on “My Latest: Sticky Regulations (A Benefit of Ossification?)

  1. Drew

    If an agency cannot change a regulation without extraordinary effort, is it still valid? If the published rules of procedure cannot change a regulation, then it seems to usurp legislative power, and violate the “rules of procedure” APA requirement. I would think there may also be a due process issue if an interested party petitions for repeal of a regulation that cannot be repealed in the normal course of things.

    I’m not sure I see the benefit of “sticky” regs. Seems like it has all the downsides of legislation without the flexibility of regulation.

    Reply

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