Part II—The Role of Congress

Under traditional principal-agent conceptions of the administrative state, Congress is responsible for making policy decisions (legislating) and agencies are then responsible for filling in the details and carrying out Congress’s intent (administering).  With the decline of the nondelegation doctrine, that neat distinction has become hopelessly outdated.  When Congress provides directives as sweeping as calling upon agencies to regulate in the “public interest,” it is fairly clear that agencies are setting policy, a point the Supreme Court has essentially acknowledged.

But Congress need not speak this expansively. It can, and often does, provide much greater specificity in its statutory directives.  In a 2018 paper (law review version available at 70 Admin. L. Rev. 873 (2018)), we look at a variety of different statutory formulations directing agencies to prepare and then make use of some form of economic analysis when preparing rules.  These range from the very specific (e.g., directing agencies to account for enumerated economic benefits and costs) to the very general (directing agencies to “consider” the costs of their rules).

Our econometric analysis finds that the more specific directives produce much higher-quality RIAs.  A statutory requirement that the agency consider specific enumerated benefits and costs is positively correlated with better analysis of alternatives, benefits, and costs. It is also positively correlated with the extent to which the agency explained the role of the analysis and the role of net benefits in its decisions.

On the other hand, a more general statutory requirement that the agency consider benefits and costs is positively correlated only with better analysis of alternatives and the extent to which the agency explained the role of the analysis and the role of net benefits in its decisions. A statutory requirement that the agency consider economic feasibility is negatively correlated with analysis of the systemic problem and positively correlated only with analysis of costs.

Statutory directives that point agencies away from economic analysis also seem to have the results one would expect. A statutory requirement that the agency consider technological feasibility is negatively correlated with analysis of alternatives, analysis of costs, and the agency’s explanation of the role of net benefits in its decisions. A prohibition on considering costs is negatively correlated with analysis of costs and the extent to which the agency explained the role of economics or the role of net benefits in its decisions.

Thus, it appears that statutory directives intended to encourage or discourage economic analysis of regulations do indeed have the intended effects. The effect is stronger, however, when the statute is more explicit and specific about the types of benefits and costs the agency is supposed to consider.

Another strategy for improving agencies’ economic analysis is to assign a role to the federal courts in reviewing certain aspects of agencies’ economic factfinding when issuing regulations.  We explore this approach in the next installment.

For part 1 of this series, see here. For part 3 of this series, see here.

Reeve Bull is Research Director of the Administrative Conference of the United States. The views expressed in this essay are those of the author and do not necessarily represent the views of the Administrative Conference. Jerry Ellig is a Research Professor at George Washington University’s Regulatory Studies Center.