Wayne Crews testimony before the Committee on House Administration: “Congress in a Post-Chevron World”

Introduction

Chairman Steil, Ranking Member Morelle, and Members of the House Committee on Administration, thank you for the opportunity to testify today on issues surrounding Congress in a Post-Chevron World. My name is Wayne Crews and I am the Fred L. Smith Jr. Fellow in Regulatory Studies at the Competitive Enterprise Institute – a non-profit, non-partisan public policy organization dedicated to advancing individual liberty and free enterprise with an emphasis on regulatory policy.

I will state my conclusion first, which is that Congress must reclaim its lawmaking and rule-writing authority from the executive branch by marshaling appropriate resources and full-time personnel to perform regulatory oversight, including cost-benefit analysis and disclosures often neglected by the executive branch, sometimes in violation of law.

There are numerous approaches to achieving this goal, and what follows is not exhaustive. But the Committee on Administration, with its focus on internal operations, can effectively engage in regulatory oversight support functions in collaboration with the Judiciary, Oversight, and Budget Committees. And by coordinating with existing congressional bodies such as the Government Accountability Office (GAO), the Congressional Budget Office (CBO), and the Congressional Research Service (CRS), this committee can have a crucial role to play in challenging regulatory premises and ensuring compliance with existing laws.

The committee can support broader regulatory reform efforts by advocating for necessary resources, enhancing oversight mechanisms and infrastructure, and promoting operational efficiencies. By leveraging its administrative oversight capabilities, the committee can improve coordination and collaboration with agencies and congressional offices. Additionally, it can contribute significantly to hearings and investigations into agency processes, transparency, compliance, data collection, and reporting. Utilizing reports and analyses from GAO, CBO, and CRS (and encouraging improvement in those reports) will support its efforts in regulatory reform and ensure comprehensive and effective reporting.

Understanding the Scope of Regulatory Overreach

While federal spending and the $35 trillion national debt dominate the spotlight, the hidden tax of regulation is equally significant,¹ impacting nearly every facet of daily life – from the homes we live in to the food we consume, to the nature of our work. When the era of the “administrative state began” during the presidency of Woodrow Wilson, few could have anticipated the vast web of transformative rules now enveloping the economy and society, reflected in a Code of Federal Regulations that today spans 188,000 pages and growing. Unlike the precise figures available for debt and deficit,² many regulatory costs remain unaccounted for in Office of Management and Budget (OMB) assessments.³ This includes influential independent agencies like the Federal Communications Commission and the Federal Trade Commission, as well as guidance documents, antitrust regulations, federal land management, and the oversight of spectrum and other commons. As we face unprecedented legislative enactments costing trillions,⁴ the rise of public-private partnerships (PPPs),⁵ subsidies, and governance-by-contract further

obscures the regulatory nature of federal actions that may remain undetected in the Federal Register and other reporting mechanisms. With so many unmeasured areas of intervention, no comprehensive justification for the net benefits of the regulatory enterprise exists. Congress should recognize the extent to which agency lawmaking has supplanted its own, as evidenced by the 3,018 rules and regulations issued by agencies in 2023 compared to just 65 public laws passed by Congress – 46 rules for every law.⁶

Congress and the Committee on Administration Must Confront Major Changes in the Administrative State

The Trump-era ethos was one of regulating administrators rather than the public (there were, of course, exceptions⁷). Trump’s flagship Executive Order 13,771 on “Reducing Regulation and Controlling Regulatory Costs”⁸ established a one-in, two-out requirement for certain significant regulatory actions, implementing a rudimentary regulatory budget by stipulating that the “total incremental cost of all new regulations, including repealed regulations…shall be no greater than zero.” The Biden Administration brought abrupt reversals of this streamlining,⁹ culminating in E.O. 14,094 on “Modernizing Regulatory Review.”¹⁰ This directive raised thresholds for what regulatory actions are considered highly significant (from $100 million annually to $200 million and adjusted by changes in GDP) and worthy of extra OMB scrutiny. E.O. 14,094 also triggered a rewrite of OMB’s Circular A-4 guidance on regulatory analysis, placing OMB in a regulatory advocacy role rather than that of a watchdog.¹¹ The nomenclature of cost- benefit analysis remains, but the elevation of largely unquantifiable whole-of-government progressive pursuits on the likes of equity, competition policy, and climate crisis substitute for it.¹² This makes an already opaque rulemaking process even more cloudy. Spending initiatives like the Inflation Reduction Act and the American Rescue Plan create further consolidation with goals brought to fruition via subsidies, contracting and procurement, grants-in-aid, and guidance documents.

Another major change influencing this committee’s internal deliberations is found in the hearing title’s own reference to a “Post-Chevron World,” specifically the end of court deference with respect to agency interpretation of ambiguous statutes. Loper Bright Enterprises v. Raimondo¹³ overruled the longstanding doctrine of Chevron deference (in effect since 1984’s Chevron U.S.A., Inc. v. Natural Resources Defense Council, Inc.) which compelled courts to defer to federal agencies’ reasonable interpretations regarding ambiguities in statutes they administered. Loper holds that deference to agency interpretations undermines separation of powers by expanding executive power at the expense of the judiciary.

While the end of Chevron deference represents a positive and potentially transformative shift, the committee should be aware that it will likely galvanize regulatory advocates. The Loper minority opinion, which suggests that recent Supreme Court decisions could “devastate the functioning of the federal government,” ¹⁴ seems exaggerated. Although there were significant expansions of central power during the COVID era and through subsequent legislation, much of the administrative framework was established prior to Chevron. Loper workarounds regulatory advocates may pursue include:¹⁵

• Coordinating with lawmakers to pass broad progressive legislation with minimal ambiguity (e.g., on energy transformation and artificial intelligence).
• Engaging private enterprises through subsidies, grants, partnerships, and blueprints to support economically-interventionist legislation, exploiting contracting rules for greater regulatory impact.
• Increasing reliance on sub-regulatory guidance documents and notices.

Closing the Circular A-4 and Loper Loopholes with a Focus on Enumerated Powers

In confronting how the regulatory state attained its sweeping yet unmeasured dimensions and how this committee can contribute to reform, deliberations naturally must address the over-delegation of legislative power. However, the main threat to liberty is not over-delegation, but Congress’s mounting disregard for enumerated powers. This is why progressives may not fear constraints on agencies, such as overturning Chevron deference. A substantial part of our dilemma lies not in agency misinterpretation of ambiguous statutes, addressed by Loper, but in explicit statutes themselves. While the Chevron doctrine is dead, the enumerated powers doctrine is arguably even more so, and that’s the opening progressives will exploit.

Via decidedly unambiguous statutory directives such as the CARES Act, American Rescue Plan, Infrastructure Investment and Jobs Act, Inflation Reduction Act, and the CHIPS and Science Act, we confront an increasing fusion of spending and regulation. These create compounding costs of intervention even if no specific notice-and-comment rules with questionable interpretations are issued. Businesses are seduced with downstream subsidies,¹⁶ contracts, and procurement deals, while states and localities are enticed with grants-in-aid. The committee should appreciate that regulatory transformations enabled with cash neutralize what would otherwise be the natural constituency for regulatory liberalization, as evidenced by the surge in regulatory reform during the 1990s. Nevertheless, it is easy to fight unfunded mandates; but funded ones are tougher.

Addressing federal bloat requires reassessment of centralized power as such, not just a rock/paper/scissors division of it amongst the three branches. The root problem is not just Congress’s over-delegation of authority or numerous agency abuses; rather it is Congress exercising powers that we, as citizens, do not possess and cannot delegate to it. Therefore, even developments such as 2022’s West Virginia v. EPA‘s establishment of major questions doctrine barring agencies “from resolving questions of ‘vast economic and political significance’ without clear statutory authorization,”¹⁷ cannot fully halt the wider regulatory state as opposed to the administrative one.

This emphasis on enumerated powers rather than on over-delegation underscores the importance of ensuring that Congress and this committee have the necessary resources and personnel for these initial deliberations and future legislative innovations in regulatory oversight. As Congress passes onerous laws in areas like finance, energy policy, manufacturing, health care, tech policy, artificial intelligence, digital currencies, and other spheres, it often imposes rapid statutory deadlines for new regulations, prohibits cost analysis of rules, creates loopholes that enable avoidance of review, or acts to benefit special interests.

The traditional central review mechanisms, now weakened by the Circular A-4 rewrite, cannot block motivated legislators or presidents with regulatory ambitions.

The GAO Recently Reinforced this Committee’s Interest in Regulatory Oversight

Given that costly “off-budget” regulatory interventions lack discipline and are rarely quantified, it is crucial to prioritize regulatory concerns alongside fiscal ones. Pertinent to this hearing, the Government Accountability Office’s (GAO) December 2023 report on Enhancing Congressional Oversight of Rulemaking and Establishing an Office of Legal Counsel¹⁸ should not be overlooked by this committee. Some of its rulemaking oversight reforms should be incorporated into fresh negotiations over federal spending. The bipartisan appeal of legislative oversight of the executive branch is reflected not only in GAO’s report, this hearing, and in initiatives like the 117^th Congress’s formation of a Select Committee on the Modernization of Congress.

The GAO’s proposed options for congressional oversight of rulemaking include (1) establishing a new regulatory review entity within Congress; (2) modifying existing review processes; and (3) reforming regulatory oversight procedures.

Create a New Regulatory Entity: Noting the backdrop of the existing regulatory review function at OMB, GAO sketched options for creating an office, joint committee, commission, or advisory committee in Congress. This new body could be the strongest form of some version of the long-proposed Congressional Office of Regulatory Analysis (CORA)¹⁹. GAO points to the obvious staffing and cost considerations. But compared to the need to exercise necessary oversight, reconfigure existing regulatory laws and costs of over-regulation, those are negligible.

While non-partisanship and bipartisanship are crucial, the primary concern with a new regulatory review body is not necessarily partisanship, but rather the potential tendency to default to administrative regulatory solutions, akin to current practices at OMB. The administrative mindset often attributes ongoing policy concerns, from antitrust interventions to infrastructure rollout, blindly to market failure rather than potentially more significant political failures

Revise Existing Regulatory Review Processes: GAO’s second option involves amending current regulatory procedures but without creating a new oversight body. These mirror many already prominent legislative regulatory reform proposals. Options include publicly disclosing the information upon which a rule is based (“including data, and scientific and economic studies”) before it can take effect; requiring periodic retrospective reviews of rules; allowing congressional disapproval of parts of a rule rather than the whole as provided for in the Congressional Review Act (CRA); cost ceilings, a unified regulatory budget; and mandating expiration dates or “sunsetting” for specific rules.

Alter the Oversight Function: Modifying oversight functions in GAO’s telling involves adjusting the duties of the entities already engaged in rulemaking. These proposals include:

• Having agencies perform uniform cost-benefit analysis for rules (GAO does not critique OMB’s revised Circular A-4 regulatory review procedures, but these undermine the spirit of GAO’s proposals by embedding interventionist biases into the regulatory process²⁰).
• Development of rear-view mirror methods for evaluating rule effectiveness.
• Having congressional committees, when drafting laws that entail downstream agency rulemakings, estimate benefits and costs of regulatory programs.
• Reporting on the number of rules in effect, the number of major rules, and total economic costs imposed.
• Having agency rulemaking preambles describe how regulatory impact analysis was incorporated into a given rule.
• Having agency draft regulatory impact analyses and incorporating their preferred alternatives before they issue a proposed rule.

The Committee Should Consider Resourcing a Congressional Office of Regulatory Analysis (CORA) that Challenges the Presumption of Agency Expertise

GAO’s strongest recommendation is its first. Central OMB review has been a pivotal innovation but is only appropriate to a limited government setting we no longer occupy. Reconsideration is particularly relevant given the reversals that occur when administrations change. The same OMB championing “one- in, two-out” during the Trump administration²¹ abandoned it under Biden.²²

The call for an independent “Congressional Office of Regulatory Analysis” resembling the Congressional Budget Office to supplement or replace agency operations and the OMB oversight role stretch back at least to the 1990s.²³ The committee should recognize however that any such entity should formally chartered with an anti-regulatory “bias” to offset the pro-regulatory bias that prevails in the remainder of the federal government.²⁴ Recognizing that political failure rather than market failure is the dominant trend, this body could showcase market alternatives over command options for regulations, continually presenting cases for eliminating existing rules and creating plans for elimination of regulatory agencies themselves particularly as advancing technologies eliminate legacy arguments of market failure and public goods challenges.

Shifting agency resources to a CORA would be necessary, but Congress is where the lawmaking function and the capacity to address the administrative state belong.²⁵ A CORA could house expertise in cost benefit analysis, law, and even subject-matter proficiencies. However, the earlier caution over enumerated powers is crucial. Most matters should not rise to the federal level, which would free up resources for a CORA focused on limited objectives. The House’s 2023 and 2024 attempt to defund the Circular A-4 rewrite through the appropriations may not succeed in the Senate, but reallocating money and staffing to a CORA would reconstitute the watchdog role within Congress. Given the reaction of regulatory advocates reaction to the demise of Chevron, any CORA the committee helps develop and perhaps supervise should have a founding charter that recognizes political and administrative failures as more likely than market failures. This would enable a culture of prioritizing competitive disciplines and devolving federal power.²⁶ A successful CORA would internalize the principle that benefits sought through regulation—such as public health, financial stability, food safety, auto safety, airspace allocation, privacy, cybersecurity and so forth, are also forms of wealth that require market disciplines, not just administrative ones, to flourish. As CEI founder Fred L. Smith Jr. has noted, markets and competitive enterprise make the world not just richer – but fairer, safer and cleaner.²⁷

The Committee Can Play a Role in Ensuring Compliance with Existing Regulatory Law

Enacting new laws is important to regulatory reform, but this committee and any offices it oversees or takes an interest in (including a hypothetical CORA) should ensure that existing laws are followed.

Compliance with prior laws and procedures (the Regulatory Right-to-Know Act, the Congressional Review Act, E.O. 12,866) has been disregarded or has languished. Even the Information Collection Budget created by the Paperwork Reduction Act has vanished from the scene.²⁸ The “annual” Report to Congress on costs and benefits of “significant” and “major” rules remains perpetually tardy (the last one covers fiscal year 2022). A recent hearing showcased disregard of the Regulatory Flexibility Act, which had been intended to ease small business burdens. The aggregate regulatory cost assessment required by the Regulatory Right-to-Know Act has been ignored almost since the law’s inception.²⁹

The CRA provides Congress with a 60-legislative-day window in which to review a major rule and pass a “resolution of disapproval.” But despite the issuance of thousands of rules since passage, fewer than two dozen have been overturned. The CRA is also undermined by the fact that major rules are not always submitted to the GAO,³⁰ and there is no way to readily affirm the required submission of major rules

to both houses of Congress.³¹ Even before Biden’s E.O. 14,094, the proportion of non-major rules with any reviewed cost analysis averaged less than one percent.³² Meanwhile, the Unfunded Mandates Reform Act, surveyed in the Report to Congress, exempts a significant amount of regulatory intervention from critical analysis.³³ Even the recent changes to discount rates required by EO 14,904 have been incorrectly applied.³⁴ Addressing sub-optimal compliance with these key laws and executive orders could be fostered by this committee.

The Committee Can Foster Legislative Reforms to Right-Size Government

While regulatory reform is contentious, we know that streamlining sometimes becomes overwhelmingly bipartisan. A generation ago, the Unfunded Mandates Act, the Small Business Regulatory Enforcement Fairness Act, and the Congressional Review Act—the CRA now causing consternation—passed with overwhelming bipartisan support, led by figures like Nevada’s Senator Harry Reid (D).

Today’s hearing shows there is an appetite in the 118^th Congress for reforms, and we certainly do periodically see bipartisan appeals for transparency, better disclosure, and supervision of regulatory burdens, even today. Members may have forgotten that Biden signed the “Providing Accountability Through Transparency Act of 2023” (Public Law 119-9³⁶), requiring agencies to include a 100-word plain language summary of proposed rules when providing notice of rulemaking. Modern proposals such as the Regulatory Accountability Act, the Guidance Out of Darkness Act, a Regulatory Improvement Commission, and regulatory budgeting all boast bipartisan support.

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