The Administrative State

Image

Paul Ray

Former Administrator of the Office of Information and Regulatory Affairs, Office of Management & Budget

Paul Ray leads The Heritage Foundation’s work on regulatory and economic policy as director of the Thomas A. Roe Institute for Economic Policy Studies.

Ray brings to the role wide experience at the highest levels of government and private practice, including service as the Administrator of the Office of Information and Regulatory Affairs—the federal “regulations czar”—within the White House’s Office of Management and Budget, to which position he was confirmed by the U.S. Senate in January 2020. As Administrator, Ray supervised the review of hundreds of regulations and led federal efforts on regulatory reform.

Laws vs Regulations

  • Laws are enacted by Congress
  • Regulations are issued by agencies
  • Guidance is issued by agencies but does not carry penalties for violation
    • Guidance is agency advice
    • Regulated parties often want to stay on their regulator’s good site, so they follow agency guidance

What is an Agency?

  • An agency is an arm of the Federal Executive Branch - the branch headed by the President

Non-Regulatory Agency Activities

  • Enforce the law
  • Adjudicate cases
  • Make loans and grants
  • Conduct scientific research
  • Manage public buildings and land
  • Carry out foreign relations
  • Conduct espionage
  • Anything else you can think of

Overview of Agencies & Commissions

  • There are 19 cabinet-level agencies
    • These tend to have tens or hundreds of thousands of employees
  • There are many sub cabinet-level agencies. They include:
    • Securities and exchange commission (SEC)
    • Federal Communications Commission (FCC)
  • The president appoints agency heads with the advice and consent of the Senate
    • Cabinet secretaries can be fired at the President’s discretion
    • Many heads of commissions are protected by statute

Regulatory Authority

  • An agency’s regulatory authority comes from and is limited by Congress
  • Regulatory decisions can come from the agency or from the White House
    • It is likely to come from the agency if the regulation is run of the mill
    • It is likely to come from the White House if the regulation is high profile or implicates one of the President’s policy priorities or campaign promises

Why Regulators Regulate

  • They see a problem they think they can fix
    • What counts as a “problem” in need of fixing may be viewed differently by the agency than by the individuals living and working under a newly imposed regulation
    • Because agency staff often have different interests and perspectives from the people they regulate, they may, even with the best intentions, issue regulations that are not best for the people

Factionalism

  • Factionalism is the use of government power to favor some citizens at the expense of others
    • Factionalism was one of the primary concerns of Founders like James madison
    • Factionalism leads to tyranny by rendering some citizens mere instruments for the good of others
    • The legislative process is designed to tame factionalism

The Problem with the Administrative State

  • “[Under bureaucracy, men] become mere cogs in a machine that carry out the decisions of others rather than deliberating and deciding for themselves. They are thus excluded from an important aspect of human thriving.”

Problems of the federal regulatory system

  • It allows rulemaking by agency staff who do not share the interests and perspectives of those who must live under their rules
  • It allows the president to engage in factionalism, pitting Americans against each other
  • It forecloses opportunities for Americans to thrive by contributing their initiative and practical wisdom to building up their communities.

Solutions to the problem

  • Officials should be sure to adopt the perspective of the people when regulating
  • Officials should hew carefully to the law when issuing regulations
  • Officials should ask whether the substance of the document they intend to issue is regulatory (does it tell the public what they must or must not do)?
    • If yes, then issue a regulation NOT agency guidance
  • It is absolutely essential that each and every regulation serve the interests of the American people as a whole
  • Within the bounds of the law, executive appointees must carry out the decisions of the President about regulatory policy