Notice & Comment

The Biden Administration and Democratic Regulatory Processes, by Andrew Kloster

Having served in various capacities in the Trump administration, including the White House, I wish the Biden administration well. I hope that Neera Tanden, if confirmed, can help develop the machinery to attack what I consider to be the biggest nondelegation issue in administrative law: the ability of bureaucrats and their economists to couch policy judgments in luminous terms that courts take seriously. These bureaucrats often have civil-service protections, and are able to make essentially unreviewable decisions about what “the science” or “the economics” defines as the reasonably foreseeable outcomes of agency actions.

Much ink will be spilled on the right, criticizing the Biden administration’s day one revocation of a number of executive orders that sought to institutionalize a certain laissez faire proceduralism in rulemaking. But we ought to be paying attention to, and learn from, the positive program of the Biden administration. They have an opportunity to move the ball forward, in a manner consistent with democratic norms and the America First agenda of President Trump, if not precisely in the way that administration might have hoped.

One promising example is Biden’s day one Executive Order on Modernizing Regulatory Review, which directs the Director of the Office of Management and Budget (OMB) to work with other agency heads to develop recommendations to improve regulatory review. These “recommendations should provide concrete suggestions on how the regulatory review process can promote public health and safety, economic growth, social welfare, racial justice, environmental stewardship, human dignity, equity, and the interests of future generations.”

If there is one second-order policy preference motivating the 2016 election, it was dissatisfaction with so-called neutral principles. Facially neutral trade deals, facially neutral foreign agreements and multilateral organizations, and facially neutral immigration policies were all critiqued as interfering with the structure of American politics. Later Trump administration critiques of “Big Tech” followed suit. But this soft postmodernism was straightjacketed within the bounds of reasonableness set by American pro-corporate conservative policy.

Specifically, the Trump OMB (and sub agency, the Office of Information and Regulatory Policy) contented itself with purporting to avoid explicit substantive policy goals, merely “juicing up” preexisting biases in the rulemaking process. I served, for example, at the U.S. Department of Transportation, an agency that prided itself on making policy in a “mode neutral” fashion. That is, rulemakings under Secretary Chao purported to “not pick winners and losers.” In an environment where the plurality of federal dollars goes to highway funding, and where subsidies to air travel is a close second, this sort of “mode neutrality” is an effective thumb on the scale against passenger rail and mass transit.

Similarly, it was only at the end of the Trump administration when major efforts were initiated to use federal procurement policy to drive explicit and well-considered public policy goals. OMB strongly resisted leveraging federal contracting to fund “Buy America” and “Buy American”, and it was only direct executive grace that led to the executive order limiting what it termed “critical race theory.”

“We don’t make policy” is the mantra taught to OMB careers and center-right bureaucrats, leading to an effective swamp of business-as-usual preferred contractors and entitlement to continued operations.

If this Biden initiative is to be taken seriously, his administration, with Neera Tanden at the helm of OMB, is poised to attack this machinery, developing rubrics and training that will serve to change, if not improve, how agencies do business. Agency cost-benefit analysis always accounts for distributional concerns—doing so explicitly helps recenter rulemaking in the democratic and legislative sphere, where it belongs, rather than deceiving the public that economics is a science, or that cost-benefit analysis airs out optimal policymaking outcomes in a mathematical fashion.

The Trump administration had several aborted attempts move to constructively un-delegate cost-benefit analysis—an effort at Labor to utilize NAICs codes and develop rubrics for assessing job impacts of agency actions showed some promise (although by attributing all productivity gains to labor it was, obliquely, parroting Marx). The one-way ratchet of discounting “cobenefits” notwithstanding, there was an effort at EPA to more robustly account for disruption to historical patterns of settlement in permitting and NEPA. Most importantly the government-wide “Schedule F” coming out of the Office of Personnel Management would have had serious downstream effects on rulemaking, by rendering economists across the federal government at will. Aside from ensuring direct manageable control over “neutral” processes, this effort sent a clear message that democratic accountability is a touchstone for all agency action. This message was made doubly clear by the fact that the first agency certifying its rolls was OMB, which correctly assessed that the bulk of its workforce, even (especially!) economists, were policymakers who should be lawfully subject to political control.

Numerous agencies had difficulty over the past four years with agency components with unaccountable control over certain aspects of rulemaking. As a part of its efforts to reform the processes for agency scientific assessments, EPA did seek to bring the Scientific Advisory Board to heel. HHS had difficulty with Anthony Fauci and others. Various agencies ran into issues involving black box algorithms set and applied by coders and actuaries, with no effective ability for political appointees to amend. Part of this is a lack of political will, surely, but much of this represents a major nondelegation issue that could be addressed by a robust and more honestly political OIRA, which we might now see under President Biden.

I might disagree with much of what this administration will do—in fact I expect to. I suspect the left progressivism of many in the new administration could lead to explicit racial considerations in rulemaking, for example. But I prefer these considerations to be explicit, and owned by politically accountable officials, rather than the soft tyranny of sham cost-benefit neutrality.

Andrew Kloster is a member of the Council of the Administrative Conference of the United States and a former Trump administration official.

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