Apr 20, 2016 - 9:00am

Explainer: The New Regulatory State and How Laws Are Really Made

Former Senior Vice President, Environment, Technology & Regulatory Affairs

Editor's note: U.S. Chamber Senior Vice President of Environment, Technology, & Regulatory Affairs William Kovacs will testify Wednesday before the Senate Committee on Homeland Security and Governmental Affairs at a hearing titled, “The Administrative State: An Examination of Federal Rulemaking.” The hearing will examine the administrative rulemaking process, the economic impact of final regulations, and specific rulemakings. Kovacs’ testimony will focus on the EPA’s Waters of the United States rule.

Almost everyone is aware that we now live under a massive and enormously complex system of federal regulations that governs literally every aspect of our lives -- from the way we get medical care or even the food we eat, from the design of our cars to where and how we can build anything, whether it be a pond or a new power plant. How did we get to this place?

Under the checks and balances built into the U.S. Constitution, it is supposed to take a great deal of effort to enact new laws. For a bill to become law, it has to pass the House of Representatives and the Senate, and the differences in the two bills must be reconciled by both chambers before being sent to the president for approval or veto. This is an enormously time-consuming process that requires knowledge of the subject matter; a willingness to persuade and be persuaded; and an ability to withstand criticism, falsehoods and attacks while collecting enough support to transform an idea into law.

By contrast, a regulatory agency can relatively easily issue regulations that are, in effect, the laws of the United States. Violations of agency laws have the same and many times greater consequences than violating the laws passed by Congress since the agency is fact-finder, prosecutor and sometimes even the judge. Agencies are essentially free to enact their laws with few restraints and little need for compromise. An agency merely needs to publish a proposed regulation (proposed law), let the public comment on its proposal and then impose the new regulation. It is just that simple — and it occurs around 4,000 times a year, year after year. It has been this way for well over 50 years. Today we live under 200,000 of these laws issued by agencies. And some of these agency-imposed laws have a national impact, such as the Clean Power Plan, which regulates the type of energy that can be used in the respective states; net neutrality, which converted Internet companies into public utilities; and the revised jurisdictional definition of waters of the United States (WOTUS), which allows a few agencies to act as national zoning boards.

How did a group of unelected and mostly unknown people running federal agencies accumulate such massive power that can be exercised almost at a whim? Well, the easiest explanation is to look at the above cartoon, which clearly illustrates how our law making system works. But if you want more of an explanation, read on.

In 1946, Congress enacted into law the Administrative Procedure Act (APA) to guide agencies on how to restrain themselves in their lawmaking activities. The APA is considered the Bill of Rights of the American people in the modern administrative state. The goal of the APA was to ensure transparency in the regulatory process, allow meaningful public involvement, and to ensure the agency implements the intent of Congress. The federal courts were empowered to act with independent judgment when reviewing agency regulations to ensure agencies acted within the limits placed on them by Congress.

So much for good intentions. Over time, Congress passed vague and broad laws requiring agencies to “fill in the many blanks” left by Congress. As the agencies filled in the blanks, it became easier for Congress to have the agency fill in more and more blanks. After all, why not let the agency take the heat for difficult decisions concerning the environment, labor, banking, the Internet or medicine. By the time Congress realized that agencies were being too aggressive and needed to be held accountable, it was near impossible to restrain them in a divided government. Moreover, by this time, the courts came to view the agencies as the “experts” in developing their regulations (“laws”) and granted tremendous “deference” to decisions.

Now the situation is that an agency makes the law, the courts grant deference to agency decisions, and a divided Congress is unable to regain its legislative powers from the agencies or restrain an agency’s power to issue more and more regulations.

So answers the riddle of how agencies can enact so many laws easier than Congress. And the moral of the story is that if we are to remain a nation of laws, our laws must be made by those elected to make them; the agencies must implement the intent of Congress rather than the intent of the agency; and the courts must independently review agency laws to ensure they achieve congressional intent rather than the desires of the “experts.”

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About the Author

About the Author

Former Senior Vice President, Environment, Technology & Regulatory Affairs

Kovacs is the former Senior Vice President for the Environment, Technology & Regulatory Affairs at the U.S. Chamber of Commerce.