Ghost Rules and Dark Matter: Developments in Regulatory Law

I recently had the opportunity to attend a public policy conference at George Mason University’s Antonin Scalia Law School on “Environmental Law in the Administrative State.” The conference consisted of four panels, each with four or five experts including, among many others, a professor from Yale Law School, the Solicitor General of Oklahoma, and CEI’s own Vice President for Policy, Wayne Crews. Each panel was oriented around a paper written by one of the panelists and submitted in advance, which was then discussed and commented on by the other participants.

The initial panel addressed how state governments react to burdensome regulations from federal agencies and the conditions under which they have standing to challenge them in court, with the case of Massachusetts v. EPA serving as a prime example. Having worked on many such cases as solicitor general of Oklahoma, Patrick Wyrick had many insights to offer. He made apparent the value of state-led lawsuits as a check on agency overreach. Some panelists expressed concern that the courts, rather than the ballot box, were becoming the first destination for resolving public policy disputes. These concerns, however, were challenged by the observation that there is no effective alternative for handling these issues, because agency rule-makers are not accountable to the voting public. Subsequent panels added greater depth to the democratic questions surrounding regulatory agencies.

The second panel put the spotlight on the energy sector and oversight of utility infrastructure, in particular the amount of attention directed at the proposed Keystone XL pipeline. Panelists speculated whether the Keystone’s lengthy and controversial public debate would become the norm for major utility infrastructure projects in the future. Controversy arose as some panelists argued that greater evaluation of the environmental impact of new projects is entirely beneficial, as it simply provides more information. Other panelists countered that an overly-detailed evaluation process can cause delays that prevent beneficial projects from ever coming to fruition. Furthermore, a lengthy review process can become a tool for interested parties, in particular environmental activist groups, for imposing unnecessary costs and blocking new projects irrespective of their merits.

The third panel focused on the constitutionality of the 1970 Clean Air Act and its subsequent amendments, asking whether agency officials or judges should be the primary interpreters of resulting regulations. Participants considered the legal doctrines by which courts have deferred to the judgment of executive agency officials, in particular “Chevron deference” and “Auer deference.” Panelists also considered whether it should be lawful for agencies to force state compliance by pulling strings on funds not connected to the regulation in question, such as the Environmental Protection Agency threatening states with the loss of federal highway funds.

The conference closed with a discussion of the paper “Ghost Rules,” by panelists Lincoln Davies and Amy Wildermuth, both of the University of Utah’s S.J. Quinney College of Law. This panel included Prof. Richard Pierce from George Washington University as well as CEI’s Wayne Crews. The primary concern was the myriad ways federal agencies are able to control the private sector through informal policymaking and guidance. The unaccountable way in which many agencies now set policy outside of the formal rulemaking procedures established by Congress is the inspiration both for the “ghost” rules of Davies’ and Wildermuth’s title and Wayne’s own work on “regulatory dark matter.”

Wayne drew the audience’s attention to recent Federal Aviation Administration (FAA) regulations on the budding drone industry, specifically rules requiring individual certifications, which are granted at the agency’s discretion, in order to be able to engage in certain drone-related activities. This brought up what became a key point in the discussion – the desire for regulatory certainty by industry. One of the greatest costs inherent in the practice of legislation by agency regulation is that businesses can never be sure when the rules of the game are about to change, or which of their competitors might end up exempt. This problem is costly and frustrating for any firm, but can become crippling in new, frontier industries. Becoming the target of an enforcement action can be crippling for a new business, draining capital and scaring off potential investors. This dynamic creates an environment where the only safe thing to do is what is already being done – the opposite of the entrepreneurial spirit.

View the conference’s full schedule, a complete list of panelists, and links to the conference papers here.