We need a bespoke approach to independent agency regulations

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The Supreme Court’s decision in Seila Law v. Consumer Financial Protection Bureau, holding that the president may readily fire the head of that agency, is the latest salvo in a long-running battle over what it means to be an “independent” agency. How much independence do these agencies have, and from whom? It is astonishing that we don’t yet have a straight answer. An unintended consequence of this legal limbo is two U.S. regulatory systems: one that is required to conduct rigorous analysis of proposed regulations using tools like cost-benefit analysis, and one that isn’t. Now that Seila Law casts a long shadow over agency independence, it’s time to reconsider.

When Congress creates a new independent agency, they give it a mix of features designed to insulate its decision-makers from different types of political oversight. This might include limits on the president’s ability to remove an agency head, the ability to negotiate its budget directly with Congress, the flexibility to litigate on its own without the Justice Department, and more.

In 2013, legal scholars Kirti Datla and Richard Revesz revealed that there is no single feature that all independent agencies possess, not even the removal protections at issue in Seila Law. They argue that independence should be viewed on a continuum rather than as a “constitutional force field” that can withstand all oversight. In 2015, political scientist Jennifer Selin mapped 50 features of independence, finding a wide range of agency designs, including independent features in agencies that are not considered “independent,” like the Federal Aviation Administration. In short, lawyers and political scientists who study this issue have found that agency independence is a “fluid and slippery thing” that is “unstable as a legal category.”

We should be cautious, then, about any policies that hinge on whether an agency is “independent” or not. Modern scholarship has revealed that this binary approach is outmoded and risks extending too much or too little independence to an agency. Instead, we should take each agency as it is.

But that’s not how it works for regulation. Most agencies must analyze their regulations in light of the problems they’re trying to solve, the costs and benefits of their proposals, and alternative approaches. There is a special list of “independent regulatory agencies,” including the Securities and Exchange Commission, Federal Trade Commission, and, yes, the Consumer Financial Protection Bureau, that are exempt from these analytical steps. This special list also places these agencies behind a firewall—their regulatory analysis is not reviewed by the Office of Information and Regulatory Affairs (OIRA), the government’s expert in these analytical techniques.

While cellphones, children’s products, clothing labels, and nuclear power plants are exempt from executive branch policies that encourage rigorous analysis, pharmaceuticals, passenger cars, endangered species, and workplace safety are covered. Depending on your view of tools like cost-benefit analysis in regulation, this might be frustrating or a relief. Either way, it is incoherent, because there is no meaningful way to explain why agencies assess these regulatory areas differently.

This arrangement was set up for political reasons several decades ago, because OIRA review ensures presidential oversight of regulatory choices. An unintended consequence: independent regulatory agencies were separated from the analytical improvements of the other agencies. There are calls to revisit this decision, but the question is how. If the president moves too aggressively, the agencies might resist and kick off decades of litigation with agency-specific holdings as in Seila Law. Congress, too, might object.

A new idea is negotiation. Under my proposal, the president would direct OIRA to negotiate with these agencies to bring their regulatory analysis in line with best practices while respecting the independence given to them by Congress. If it seems odd that OIRA would negotiate with an agency, it’s actually a bipartisan practice.

Until recently, the independent regulatory agencies might not have been open to OIRA review. Why would they, if it meant the end of their ability to make decisions on their own? But Seila Law casts a long shadow over agency independence and the courts are paying more attention to agency analysis, which puts independent regulatory agency rules at risk. On their own, some of these agencies are taking steps to beef up their analyses, but this is harder than it needs to be without OIRA’s help. And it is a terrific waste for an agency to write a rule that gets overturned in court.

The way forward is bespoke regulatory review, because it allows for a tailored approach to regulatory review. It would bring bipartisan best practices to agencies that need them, while honoring the unique features of each agency. The ultimate beneficiary, though, will be everyday people, who will benefit from regulations grounded in time-tested analytical techniques.

Bridget C.E. Dooling is a research professor at the George Washington University Regulatory Studies Center. She served as a deputy chief, analyst, and attorney in the Office of Information and Regulatory Affairs at OMB from 2007 to 2018. Follow her on Twitter: @BridgetDooling.


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