Improving Regulatory Accountability: Lessons from the Past, Prospects for the Future

February 18, 2015


In the more than 125 years since Congress created the first regulatory body — the Interstate Commerce Commission -- the number of agencies and the scope and reach of the regulations they issue has increased significantly.

There are now more than 70 federal agencies, employing almost 300,000 people, that write and implement regulations. Every year, they issue tens of thousands of new regulations, which now occupy over 175,000 pages of code. Concerns over the accountability of what some have called the “fourth branch” of government have led all three branches of government to take steps to exercise checks and balances.

While legislative and judicial branch actions have ensured some accountability on the part of regulatory agencies, the executive branch has generally been most active in oversight.  Congress has not taken full advantage of its “awesome arsenal of weapons” for controlling bureaucracy.  Very few statutes direct executive branch agencies to consider benefits and costs when issuing new regulations, and some have been interpreted to prohibit such considerations. Courts generally defer to agency interpretations of their statutes and do not review agency compliance with executive orders.

The foundations of the current regulatory state date back to the first half of the last century. In 1946, the passage of the Administrative Procedure Act established procedures — notably public notice and comment — that agencies must follow to promulgate binding rules and regulations under delegation from Congress. In the late 1970s and early 1980s, all three branches contributed to the successful deregulation of industries in the transportation and telecommunication sectors, which had been subject to regulatory approval of rates, service and entry.  At the same time, the legislative and executive branches created new regulatory agencies, such as the Environmental Protection Agency and the Occupational Safety and Health Administration. Their regulatory focus on protecting public health and safety differed from the focus of earlier economic regulatory agencies. 

The regulatory activity of these new agencies has led every president since Nixon to establish accountability procedures aimed at understanding regulatory impacts before new regulations are issued.  Since 1981, presidential executive orders have not only required agencies to conduct analysis to demonstrate proposals pass a benefit-cost test, but they have authorized the Office of Information and Regulatory Affairs within the executive office of the president to ensure regulations and their supporting analysis meet established principles.

Today, with concern over regulatory impacts rising, proposals for regulatory reform are gaining traction.  Legislation has already been introduced in the 114th Congress aimed at altering regulatory procedures and analytical requirements.  The APA has not been substantively amended in almost 70 years, and Congress may consider legislation to require earlier public consultation, more experimentation, and a greater role for both the courts and congress.  They may also clarify the decision criteria agencies use to develop regulations, perhaps by codifying existing executive order requirements. They also may want to provide incentives for better ex-post evaluation of regulatory outcomes, perhaps by establishing a third-party entity to evaluate existing regulations.

Like the bipartisan, inter-branch regulatory reform efforts of the 1970s and 1980s, which brought about unexpected innovation, higher quality and lower prices in previously regulated industries, reforms today could spur economic growth and improve the welfare of American families, workers and entrepreneurs.

This commentary was originally posted on the U.S. Chamber of Commerce's blog under the title "Improving Regulatory Accountability: Lessons from the Past, Prospects for the Future."