Notice & Comment

D.C. Circuit Review – Reviewed: Why Regulation is a Dirty Word

Who doesn’t love a great headline? Years will go by without so much as a single thought about Elvis Costello crossing my mind, but yet when I read a headline like “When Elvis Costello Was Cruel,” I click. Funny headlines are great too: “Big Rig Carrying Fruit Crashes on 210 Freeway, Creates Jam.” And some of my favorite headlines are about headlines. For instance, it is worth pausing to appreciate this masterpiece: “Hey, Google! Check Out This Column on Headlines.” (Or maybe even better: “Why Internet Headline Writers Hate Themselves.”)

Regulation is a Dirty Word” is a great headline. It certainly caught my attention. In his post, co-blogger Bruce Huber “bemoans” recent “attacks on regulation.” As I think about his observations, however, I’m not sure that what is said today is that different from what was said in the past. Nor is it only those who worry about regulation who cloak their claims in hyperbole. Nevertheless, Bruce’s post does prompt an important question: Why is this sort of rhetoric persuasive? And that brings me to this week’s D.C. Circuit opinions.

Reading this week’s opinions, it struck me that regulation may be a dirty word to many voters because of the collision of four factors. What agencies do is (1) important; (2) complicated; (3) unfamiliar; and, sadly, (4) sometimes unfair and even abusive, even if not on purpose (“Absent such review, the Commission’s compliance with the law would rest in the Commission’s hands alone. We need not doubt the EEOC’s trustworthiness, or its fidelity to law, to shy away from that result. We need only know — and know that Congress knows — that legal lapses and violations occur, and especially so when they have no consequence.”). All of these factors take on special weight, moreover, in an era in which many major policy decisions are made by agencies, not Congress. Of course, the overwhelming majority of regulatory decisions are perfectly sound: “The charge of politicization contains a kernel of truth but is nearly always an overstatement.” But even though regulators usually advance the public good, no one thinks they always do, and it can be hard for non-specialists to sort it all out. When important matters are at stake, especially politically sensitive ones, complexity can be a seedbed for suspicion.

This week’s cases demonstrate why administrative law often is hard for ordinary Americans to understand. Consider Treasure State Resource Industry Association v. EPA. In this National Ambient Air Quality Standards (NAAQS) case, Judge Williams, joined by Judges Griffith and Millet, denied two petitions for review challenging nonattainment designations regarding sulfur dioxide standards. One petitioner argued that the EPA relied on outdated and unreliable data collection methods. The other argued that EPA’s line-drawing was arbitrary. The panel rejected both petitions. Along the way, Judge Williams tackled how the NAAQSs program works, retroactivity, and standing — all with a lot of technical terms. Judge Williams is a very smart judge who writes well, even when addressing complicated subjects.* Even so, I think it is fair to assume that almost no one other than the parties to the litigation, the panel, and a small set of specialists fully appreciates what this discussion means:

Although the Association says that Montana’s QAPP was “outdated” because it was developed in 1996, it identifies only one respect in which Montana’s failure to adjust the QAPP might have undermined its usefulness or accuracy. Specifically it claims that the 1996 QAPP was aimed at an obsolete NAAQS standard, seeking “to measure a standard set at more than six times the 2010 SO2 NAAQS and [it therefore] contains sub-optimal equipment settings, range levels, and monitoring guidance” for measuring satisfaction of the new NAAQS. We can easily imagine a situation where a calibration aimed at a different ambient pollution level would lead to such questionable readings that agency acceptance of the data would be arbitrary and capricious. But the Association presents no evidence that the calibration to a prior standard here has actually led, or was likely to lead, to faulty measurement.

The upshot is that although this case concerns air quality — a politically important topic — almost no one will really understand it. And that is not a critique of Judge Williams; sometimes complicated things have to be complicated.

Although not as complex (but still not a walk in the park), Hyundai Am. Shipping Agency v. NLRB is also tricky. Here, Judges Henderson, Griffith, and Williams partially upheld an NLRB decision. The agency concluded that the company’s handbook violated employee rights to organize and bargain in various ways. Judge Williams, for the panel, sided with the agency in some respects and against it in others. If you are a labor lawyer, check it out. For purposes here, however, I think this case again illustrates why some people may be instinctually suspicious of the administrative process. After all, the employee at issue, everyone agrees, would have been fired “regardless of whether she had violated any of the challenged [handbook] rules.” Likewise, “there is no allegation that Hyundai’s rules were promulgated in response to protected concerted activity, and the Board does not suggest that Hyundai applied them to restrict such activity.” Nonetheless, the agency concluded that existence of the handbook provisions (i.e., a requirement that investigations be kept confidential and that messages from the company’s email system should only be shared with “authorized persons,” a policy that employees can be punished for engaging in non-work activities during work hours, and an admonition to “voice your complaints” to your supervisor or HR) may “chill” organizing conduct. The panel upheld the agency’s conclusion as to all but the last of those provisions. The opinion is well written, but it is easy to imagine the nuances of this federal scheme being lost on lay readers.

Finally, in Willson v. Commissioner of IRS, Judge Henderson (joined by Judges Kavanaugh and Pillard) addressed the overpayment of taxes. Here, the IRS refunded money to a taxpayer not once, but twice. After realizing the mistake, the IRS treated the double payment as a new tax liability and attempted to levy property to recover the amount owed. After litigation began, however, the IRS erased the new liability and moved to dismiss the case as moot, but the tax payer had already made some payments in the meantime and sought reimbursement. The tax court granted the motion to dismiss, and the D.C. Circuit affirmed, concluding that the tax court only had jurisdiction so long as there was a tax liability. Because the IRS erased the liability, the doors of the tax court were shut, leaving the tax payer to seek relief elsewhere. I suspect that most taxpayers would be able to follow Judge Henderson’s analysis, but many would wonder why such a complex system exists.

So if I am right that complexity is part of the reason why regulation is a dirty word to many voters, what can be done? Making that question even more difficult is the reality that regulators usually seek the public benefit — but not always; that regulation often is cost-justified — except when it’s not; and the public generally should have confidence in the regulatory process — other than when it shouldn’t. The consequence is that even if voters understood how administrative law works, it still would be hard for them to sort out good regulation from bad regulation. Add a cloud of threshold confusion to the mix, however, and the difficulty increases by orders of magnitude.

At bottom, I agree with Bruce. No sensible person thinks we should eliminate all regulation. But still, it is “appropriate to debate the scope of regulatory intervention.” When it comes to administrative law, there’s more work to do.

* Judge Williams, for instance, wrote perhaps the greatest opening line in the history of the D.C. Circuit: “In the Spring of 1985, as Mikhail Gorbachev was assuming the duties of General Secretary and inaugurating perestroika, the Federal Energy Regulatory Commission launched its own restructuring of the natural gas industry.” Judicial opinions don’t have headlines, but boy, does that sentence sizzle.

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