Taking Administrative Law to Tax Exceptionalism

Kristin E. Hickman, Administering the Tax System We Have, 63 Duke L.J. 1717 (2014), to be reprinted in Duties to the Tax System: A Resource Manual for Tax Professionals (Scott Schumacher & Michael Hatfield eds, forthcoming 2014), available at SSRN.

In addition to regular servings from the Administrative Law Review and Yale Journal on Regulation, I look forward to two annual administrative law symposia. This year’s symposium from the George Washington Law Review will not become available here until later this month, so I’ll focus on the Duke Law Journal’s Taking Administrative Law to Tax Symposium, which was published in May. There is a lot to like about this symposium, starting with a refreshingly succinct foreword from Andy Grewal and followed by articles from Ellen Aprill, Bryan Camp, Kristin Hickman, Steve Johnson, Leandra Lederman, and Lawrence Zelenak. [Video of the symposium is available here, and the written issue is here.]

As the title suggests, the symposium focuses on tax exceptionalism, or “tax myopia” as Paul Caron coined the phenomenon two decades ago. Tax exceptionalism is the misperception that tax law is so different from the rest of the regulatory state such that general administrative law principles do not apply. But tax exceptionalism is dying—something my tax colleague Stephanie Hoffer and I document in a forthcoming article on the Tax Court and the Administrative Procedure Act (“APA”). In Mayo Foundation v. United States, for instance, the Supreme Court refused to apply a standard less deferential than Chevron to the Treasury Department’s interpretation of the tax code, noting that it was “not inclined to carve out an approach to administrative review good for tax law only.” That same year (2011), in Cohen v. United States, the D.C. Circuit held that the judicial review provisions of the APA apply to IRS notices: “The IRS is not special in this regard; no exception exists shielding it—unlike the rest of the Federal Government—from suit under the APA.”

It is thus only fitting that Professor Hickman contributed to the symposium. After all, as a scholar at the intersection of administrative law and tax, she has spent nearly a decade calling for the reconsideration of tax exceptionalism. She wrote the foundational article in 2006 for the Court’s 2011 Mayo decision, filed an amicus brief in Mayo, and published a terrific article (covered by Jotwell) on Mayo’s aftermath. Similarly, she wrote a number of articles (e.g., here and here) that formed the basis for the Cohen decision as well as filed an amicus brief in that case.

In her symposium contribution, Professor Hickman turns her attention to one of the most compelling policy reasons for treating tax differently: the tax code’s revenue-raising function. As she explains (P. 4), “courts and scholars often invoke the importance of revenue raising to explain or defend tax exceptionalism.” To test this justification, Professor Hickman has engaged in a comprehensive empirical project to assess the regulatory activity of the Treasury Department and IRS. This is an ambitious and important project, and in this article she provides a preliminary account of one relatively narrow context: proposed, temporary, and final regulations promulgated by the Treasury’s Office of Tax Policy (in consultation with the IRS) from the beginning of 2008 through the end of 2012.

During this five-year period, she locates 449 major rulemaking documents in the Federal Register or Internal Revenue Bulletin, and these documents form the basis for her analysis. In analyzing the documents based on a variety of factors, she finds (P. 7):

Across measures, between 30 percent and 40 percent of observations fell into subject matter categories that are most clearly oriented toward programs, purposes, and functions other than traditional revenue raising. Another 25 percent of observations fell into subject matter categories that arguably serve dual functions. In short, a lot—maybe even a majority—of the effort that [the] Treasury and the IRS spend promulgating Treasury regulations concerns programs, purposes, and functions other than raising revenue.

In light of these findings, Professor Hickman explores (PP. 36-43) a number of anti-tax exceptionalist implications—i.e., pre-enforcement judicial review of Treasury regulations, retroactivity of these regulations, and certain reforms at the IRS.

No doubt these findings—and those of Professor Hickman’s ongoing larger empirical project—will spark much discussion among tax scholars about the continuing validity of tax exceptionalism. But they should also encourage administrative law scholars to pay more attention to tax. Professor Hickman details in Part I (P. 9) that “taxes are routinely recognized as a tool in the regulatory toolbox”—some of which are collected by other federal agencies and many of which are implemented in close cooperation with other agencies. And she later notes (P. 43) that Congress is increasingly delegating nontax program administration to the IRS, such that “the tax system may be reaching an organizational tipping point of being stretched too thin between too many, arguably competing goals.” Yet perhaps because of tax exceptionalism, not only have tax scholars failed to look to administrative law, but administrative law scholars have paid too little attention to tax. As William Funk recently observed on an administrative law professor listserv, “We adlaw geeks traditionally don’t know much about tax law, and tax profs likewise rarely know about adlaw. Kristin Hickman is one exception.”

Moreover, with tax exceptionalism and Professor Hickman’s work as a jumping-off point, administrative law scholars can better consider other forms of regulatory exceptionalism. After all, such exceptionalism is not unique to tax, as Professor Zelenak underscores in his symposium contribution—a provocative, partial defense of tax exceptionalism. Citing the recent study by Richard Levy and Robert Glicksman on agency-specific precedents (to which, of course, Professor Hickman penned a response), Professor Zelenak explains (PP. 1910-11) that agency-specific deviations from general administrative law principles have been documented in at least four regulatory contexts in addition to tax: environmental protection, federal communications, national labor relations, and social security. Intellectual property seems like another obvious example. Professor Hickman’s research shows that, aside from issues of congressional intent and acquiescence to exceptionalism (or deviation), scholars should scrutinize more closely the underlying bases for regulatory exceptionalism. And her scholarship provides a helpful roadmap to investigate such exceptionalism in other regulatory contexts.

 
 

Rulemaking is Biased in Favor of Regulated Firms

Kimberly D. Krawiec, Don't "Screw With Joe the Plummer": The Sausage-Making of Financial Reform, 55 Ariz. L. Rev. 53 (2013).

Kimberly Krawiec has made a major contribution to the growing number of empirical studies that find that the notice and comment rulemaking process is systemically biased in favor of regulated firms. Professor Krawiec read all of the comments that were submitted in the rulemaking that led to the issuance of the Volcker rule—arguably the most important rule that has been issued to implement the Dodd-Frank Act—as well as all of the agency meeting logs that described the meetings that agency decision makers had with parties who were interested in the outcome of that proceeding.

Krawiec found that, while proponents of strict regulation of financial institutions dominated the comment process numerically, their comments were useless to decision makers. Proponents of strict regulation filed 7831 of the 8000 comments, but 7316 of those were identical brief form letters that provided no data or analysis that would be potentially useful to decision makers. The other 515 comments filed by proponents of strict regulation appeared to be drafted independently by individuals, but they too were worthless as potential aids to decision making. The comment that inspired the title of Krawiec’s article was typical of those comments: The commenter urged the agency to keep “big banks” from attempting to “screw joe the plummer,” with plumber misspelled.

By contrast, Krawiec found that the comments filed by financial institutions and their representatives were “lengthy and contain cogent arguments in support of a generally narrow interpretation of the Volcker rule’s scope of prohibited activity. Overall, they advance detailed legal arguments relying on numerous statutes and cases, reference the Dodd-Frank legislative history, and often contain thorough empirical data. Most are meticulously argued and carefully drafted.”

Krawiec found an even greater imbalance in the meetings with interested parties that preceded the issuance of the Notice of Proposed Rulemaking (NPR) that formally began the rulemaking proceeding. The agency meeting logs described 450 meetings to discuss the terms of the proposed rule that took place between agency decision makers and interested parties prior to the issuance of the NPR. Of those, only 31 were meetings with groups or organizations that favor strict regulation of financial institutions. The vast majority of the meetings—93.1%—were with financial institutions or their representatives.

Krawiec’s broad findings are consistent with those of the other scholars who have studied the notice and comment rulemaking process. They also fit well with the many books and articles in which Cynthia Farina has described her frustrating efforts to expand the scope of effective participation in rulemakings in her capacity as head of the Cornell eRulemaking Initiative. The pre-NPR part of the decision making process is far more important than the post-NPR part of the process. Both the pre and post-NPR parts of the process are powerfully biased in favor of regulated firms, but the pre-NPR part of the process is characterized by the most extreme forms of bias in favor of regulated firms.

The sources of the bias in favor of regulated firms in both the pre and post-NPR parts of the decision making process include most prominently: collective actions problems that invariably favor a small number of parties, each with a large amount at stake, in any dispute with a large number of parties, each with a small amount at stake, and many of the judicial decisions that force agencies to act in ways that favor regulated firms. Thus, for instance, the decisions that require agencies to issue NPRs that “adequately foreshadow” the terms of the final rule the agency issues have the effect of requiring the agency to make most important decisions during the pre-NPR part of the decision making process when regulated firms have a particularly powerful systemic advantage over proponents of strict regulation.

Professor Krawiec’s excellent contribution to the growing body of literature that documents the existence of systemic bias in favor of regulated firms in the rule making process raises an important question—what, if anything, should scholars do to recognize and to address this phenomenon? The answers would seem to include urging Congress to amend the APA and/or urging courts to overrule some of the judicial decisions that interpret the APA. One logical first step would be to determine whether the bias in favor of regulated firms in the rulemaking process actually has the adverse effects on the product of the rulemaking process that many of us suspect it has. It is plausible that the effect of that bias is actually socially beneficial because it offsets the pro-regulatory bias of agency decision makers. That is merely a plausible hypothesis, however, that needs to be empirically tested.

 
 

Unifying the Not-So-Unitary Executive

Jason Marisam, The President’s Agency Selection Powers, 65 Admin. L. Rev. 821 (2013), available at SSRN.

Jason Marisam’s recent article on what he calls presidential “agency selection powers,” The President’s Agency Selection Powers, 65 Admin. L. Rev. 821 (2013), provides new insight into a president’s capacity to shape regulatory policy even without relying on a so-called “unitary executive” reading of the Constitution.

Should a history of arcane legal debates ever be written, perhaps authors will mark the so-called “unitary executive” debate as one of the strangest. Technically, the controversy centers on whether the President is constitutionally entitled to dictate how all other executive branch officials exercise whatever discretionary functions are vested in them by statute. I have argued that the Constitution embodies no such principle.1 On the other hand, scholars as otherwise unalike as Steve Calabresi and Cass Sunstein have urged—on originalist and nonoriginalist grounds, respectively—to the contrary.

This sounds like a big deal, and it is—in principle. But the main significance of the doctrine is primarily its potential impact on the ethos of executive power. If the small-“u” unitarians are right, then executive officers are likely to attend as diligently to the president’s policy preferences as they do the laws enacted by Congress. In contrast, my negative response to the question is intended as an institutionally potent reminder that much of what the executive is allowed to do is entirely at Congress’s sufferance. Administrative power under this view ought to be exercised in a conscientious, well-reasoned way, as attentive to law as to politics. Any Administration’s view of the “unitary executive” theory is likely to be an important mood-setting device for governance, pointing in one direction or the other.

There are two reasons, however, for the limited direct operational relevance of unitary executive theory. The first is that it would be both too difficult and too costly for presidents to engage in the pervasive direction of their subordinates’ discretion in a heavy-handed way. The “executive establishment,” as an Administrative Conference report calls it2 is simply too complex and, in significant ways, too fractured to function as a domain of unified White House control. Nor would a politically savvy White House always want to bear the risk of trying to make it so.

Conversely, when presidents want to be influential, they by and large don’t need unitary executive theory. Besides the influence presidents wield simply by picking sympathetic chief administrators and arguing for White House policy preferences, presidents can effectively assert informal authority to coordinate executive branch activity to insure that legal implementation is efficient and coherent. That authority—coupled with the vast scope of administrative power Congress has vested in the executive branch—gives a president significant influence over executive branch policy output.

Jason Marisam’s article highlights a frequently overlooked dimension to the president’s coordinating influence. Professor Marisam focuses on three such powers:

(1) the President’s power to subdelegate authority to the agency of his choosing when Congress has expressly delegated that authority to the President; (2) the President’s power to delegate his constitutional powers to an agency and thereby force Congress’s choice of agency to work with the President’s choice of agency on particular regulatory matters; and (3) the President’s power to reconcile agencies’ overlapping jurisdiction by deciding which of the agencies in the shared regulatory space should act.3

Different agencies—although operating within the same general framework of policy values—have different priorities, different orientations towards policy and different professional cultures. A president can go far in shaping the exercise of policy discretion not by commanding its exercise, but simply by assigning it.

Of course, the first of Professor Marisam’s three categories—presidential subdelegation of authority Congress vests personally in the president—does not require constitutional argument. The Presidential Subdelegation Act of 1951, 3 U.S.C. §§ 301-303, authorizes such moves explicitly. What Professor Marisam contributes, however, to our understanding of this aspect of the subdelegation phenomenon is a thoughtful analysis of why Congress sometimes decides to delegate directly to the president, even when its choice leaves the president, an institutional competitor, with unusual policy-shaping authority.

The second category—which I believe to be quite rare in practice—is constitutionally more interesting. It potentially comprises administrative functions as to which the president may claim independent authority under Article II—military and foreign affairs are the obvious domain—that interfaces, so to speak, with authorities Congress has vested in an administrative agency. In such a situation, a president might direct Congress’s chosen agency to interact with another agency that the president has selected in order to help the president in the implementation of his constitutional powers.

Professor Marisam draws our attention to an example of this phenomenon of which I had been quite unaware. Congress enacted statutes in the 1930s requiring would-be U.S. sellers of natural gas or electric power crossing international borders to get permits from the old Federal Power Commission (now, the Federal Energy Regulatory Commission). In response, FDR unilaterally created a requirement that such sellers also obtain a “presidential permit” for such sales. Even today, FERC grants its permits for the cross-border shipment of energy only upon consultation with the Secretaries of State, Energy, and Defense. If those departments cannot agree, Executive Order No. 10485 requires them to submit the question of a presidential permit directly to the president. This is a remarkable example because Article II, of course, conveys no specific authority to the president akin to Congress’s express Article I power to regulate commerce with foreign nations.

Professor Marisam’s last category involves a less dramatic, but perhaps more pervasive Article II-statutory interaction—namely, designating certain agencies as having lead or supervisory power when Congress has given multiple agencies overlapping regulatory jurisdiction. This may happen over time, for example, as Congress allows Agency A to tackle one aspect of a problem and then, later, Agency B to tackle another. Prior to the creation of the Department of Homeland Security (DHS), border control matters provided an important example. A similar need for coordination may occur, however, when Congress within a single statute vests multiple agencies with joint jurisdiction—frequently, to bring a problem within the purview of multiple congressional oversight committees.

In both situations, a president may wield significant influence over how policy discretion is exercised by deciding which agency takes the lead—for example, centralizing pre-DHS immigration coordination in the Justice Department or, in 2010, having the Department of Energy, not the Mineral Management Service, take the lead in addressing the BP Deep Horizon oil spill. Professor Marisam aligns the first of these moves with the kind of initiative FDR took with regard to cross-border energy transmission, but I think both kinds of “interagency hierarchy,” to use Professor Marisam’s phrase, belong in the same category. In these examples, as well as others Professor Marisam cites, the president’s initiative of policy coordination rests only on a fairly modest assertion of Article II coordinating power. When Congress creates shared jurisdiction in a single statute, the president may also claim implicit statutory authority to harmonize the process—but what makes any such inference credible is the idea that, with or without implicit congressional approval, Article II coordination authority, within whatever structural or procedural scaffolding Congress provides, already exists.

Without taking an across-the-board normative position on the desirability of presidential agency selection, Professor Marisam concludes his discussion with a careful analysis of its advantages and disadvantages, factors Congress ought to consider in deciding whether to enable or resist presidential agency selection as a tool of administration. All in all, his article stands as a thoughtful contribution to the possibilities for robust “presidential administration” that can exist without regard to the tenets of unitary executive theory.



  1. Peter M. Shane, Madison’s Nightmare: How Executive Power Threatens American Democracy (2009). []
  2. David E. Lewis & Jennifer L. Selin, Sourcebook of United States Executive Agencies 1 (2013). []
  3. P. 823. []
 
 

The APA as “Superstatute” and What Does That Mean?

Kathryn E. Kovacs, Superstatute Theory and Administrative Common Law, 90 Indiana L. J. (forthcoming 2014), available at SSRN.

Most administrative law aficionados would think of the Administrative Procedure Act as a “superstatute,” but they might not all focus on what that might mean. Kathryn Kovacs has undertaken to tease the meaning of the APA as a superstatute and address the implications of such a characterization. They might not be what you would imagine.

Professor Kovacs begins by asking to what extent is administrative law “common law.” The APA is, of course, a statute, but it is viewed as largely codifying the then-existing common law. Moreover, after its passage courts continued to develop a common law of administrative law both to flesh out the ambiguous provisions of the APA and quite clearly to add on to them. While Vermont Yankee Nuclear Power Corp. v. NRDC, 435 U.S. 519 (1978), may have drawn the curtain on new judicial inventions to administrative common law, it did not repeal those that had become well ingrained in the case law. Professor Kovacs focuses on two such inventions that have no basis in the text or history of the APA: deference to the military in matters subject to the APA and the ripeness doctrine.

How does this relate to the APA as a superstatute? One way of viewing a superstatute would be to allow courts broad leeway not only in its interpretation but also to further its purposes, at least as perceived by the judiciary, rather than awaiting legislative amendment. Indeed, Professors Eskridge and Ferejohn in their article, Super-Statutes, argue that superstatutes should be interpreted dynamically and evolutively. If the APA is so interpreted, perhaps the judicial invention and maintenance of deference to the military and the ripeness doctrine would be appropriate. Professor Kovacs, however, thinks otherwise. She notes that while the APA meets some of the criteria for a superstatute as described by Eskridge and Ferejohn, it does not meet them all. Clearly the APA is a statute that, as stated by Eskridge and Ferejohn, “successfully penetrate[d] public normative and institutional culture in a deep way,” and which, because it arose from a extended deliberative process and has survived efforts to change it, has taken on a “normative gravity” unlike normal statutes. Moreover, the APA is stable over time but adaptable to new circumstances. However, at least two features of the APA do not meet Eskridge and Ferejohn’s characteristics for superstatutes. One is the fact that according to their taxonomy superstatutes are adaptable over time because the details are worked out by experts working under the statute, but the APA has adapted over time because of judicial interpretations, not the kind of experts Eskridge and Ferejohn have in mind. Another and probably more important difference is the fact that superstatutes maintain their legitimacy because their development over time is the result of popular deliberation through public input, but again the APA has maintained its legitimacy not through popular deliberation through public input but through faith in the judiciary. Eskridge and Ferejohn’s paradigmatic superstatutes, such as the Securities Act of 1933, the Securities Exchange Act of 1934, the Food, Drug, and Cosmetic Act, the Clean Air Act, and the Clean Water Act, involve expert agencies interacting with regulated entities and regulatory beneficiaries within fairly broad grants of discretion to hone their respective statutes under the watchful eye of the courts. This is not the trajectory of the APA.

So what? According to Kovacs, the Eskridge and Ferejohn theory of superstatutes actually suggests that courts should not interpret the APA broadly. Only by hewing closely to the text and legislative history will judicial review accord with Eskridge and Ferejohn’s demand that judicial review of superstatutes be “deliberation-respecting,” “deliberation-inducing,” and “deliberation-rewarding.” Such review would be “deliberation-respecting” because it would respect the deliberation, compromises, and choices that were made when the APA was enacted. It would be “deliberation-inducing” because it would force Congress to deliberate as to how to deal with new administrative problems and issues. For Eskridge and Ferejohn’s normal superstatute, judicial review would be deliberation inducing by leaving to the agency the choices to be made, in light of the agency’s expertise and interaction with the relevant public in making the choices. And, while with normal superstatutes “deliberation-rewarding” would mean respecting the choices made by agencies pursuant to their expertise and public deliberation, with the APA the agencies do not make the administrative law choices in this way. Hence there is no deliberation-rewarding to be done.

Kovacs sees some evidence that the Supreme Court at least in part follows the path she is suggesting. For example, Vermont Yankee certainly fits her analysis, as do Director, Office of Workers’ Compensation Program v. Greenwich Collieries, 512 U.S. 267 (1994), which rejected an agency’s attempt to shift the burden of proof in black lung and longshoremen workers compensation act proceedings to the employer, and Dickinson v. Zurko, 527 U.S. 150 (1999), which held that Federal Circuit reviews of Patent and Trademark Office were governed by the APA. And earlier, the Supreme Court applied the APA in Wong Yang Sung v. McGrath, 339 U.S. 33, 41 (1950), which resulted in a statutory change, thereby reflecting deliberation-inducing.

In light of these considerations, Professor Kovacs would conclude that current ripeness doctrine applied by courts in administrative law cases should be jettisoned, much as Darby v. Cisneros, 509 U.S. 137 (1993), adhered strictly to the language of the APA and rejected the administrative common law doctrine of exhaustion of administrative remedies. Similarly, she would overturn the common law deference to actions by military agencies otherwise subject to the APA in light of the lack of text or history to support it. And, although she does not address it, she should sign onto the law professors’ amicus brief supporting a grant of certiorari in Perez v. Mortgage Bankers Ass’n (Mortgage Bankers Ass’n v. Harris, 720 F.3d 966 (D.C. Cir. 2013)), and seeking reversal of the D.C. Circuit’s decision requiring agencies to use notice-and-comment rulemaking to change a definitive interpretation contained in an interpretive rule adopted without notice-and-comment. As that amicus brief makes clear, such a requirement is inconsistent with the explicit text of the APA. It is a requirement invented by the D.C. Circuit from whole cloth.

Professor Kovacs does not ignore arguments in favor of judicial common law development of administrative law, addressing in particular Gillian Metzger’s Embracing Administrative Common Law. Ultimately, Kovacs finds that judicial development of administrative law fails to be adequately accountable to the public. The APA is special, she says, because of the extreme public effort and deliberation that went into its enactment. It is deliberation-respecting for courts to resist the urge to make common law changes to it, especially changes that are directly inconsistent with the language and history of the APA.

One need not agree with all that Professor Kovacs suggests in this article to appreciate both its novelty of approach to the APA and its capacity to inspire other connections from her analysis. For example, how should one characterize Chevron, USA, Inc. v. NRDC, 467 U.S. 837 (1984)? Some have suggested it is inconsistent with the APA, which states that courts reviewing agency action should “decide all relevant questions of law [and] interpret . . . statutory provisions.” Is Chevron a judicial common law development of the APA? If so, Professor Kovacs should not approve, but is Chevron not a paradigmatic deliberation-inducing and deliberation-rewarding interpretation of the APA? By deferring to agencies’ reasonable interpretations of their statutes, the courts are rewarding agencies for adopting interpretations through rulemaking or adjudication, which are deliberative activities involving the interested public. Moreover, by not freezing a static meaning onto an ambiguous statutory term, the courts induce agencies to adopt interpretations, which may indeed shift over time, through a deliberative process.

It is the hallmark of a good law review article to inspire new thoughts about and approaches to recurring issues. By that measure, this article is a good one.

 
 

Rethinking the Role of Agencies in Private Regulatory Enforcement

David Freeman Engstrom, Agencies as Litigation Gatekeepers, 123 Yale L. J. 616 (2013).

Over the past several decades, many scholars have weighed in on benefits and detriments of authorizing private parties to sue to enforce federal regulatory standards. They often take either of two opposing positions: Some argue that private enforcement is necessary to supplement underfunded and perhaps captured agency enforcement mechanisms; others contend that private enforcement undermines social welfare or even statutory goals by sacrificing officials’ prosecutorial discretion not to pursue cases that, while technically justified, would not further regulatory goals. Few scholars, however, have written about the trade-offs triggered by a choice between public and private enforcement.

In Agencies as Litigation Gatekeepers, David Engstrom views the issue as one of when and how agencies should control the use of private enforcement. He is not the first to write about vesting agencies with such gatekeeper functions. But, others who have written on the subject generally have done so within the context of a particular regulatory program or litigation regime. Agencies as Litigation Gatekeepers views the structure and control of private enforcement as a unique kind of regulatory problem that extends potentially to every regulatory program. Doing so allows the article to develop some theoretical insights into how private enforcement might be structured and how agencies might best further the use of private enforcement mechanisms.

Engstrom begins the article simply enough by reviewing the potential benefits and detriments of private enforcement. He then presents arguments why the blunt instruments of litigation reform are unlikely to mitigate the pitfalls of private enforcement without sacrificing many of its benefits. Based on these arguments, he concludes that “vesting administrative agencies with litigation ‘gatekeeper’ powers” is a preferable alternative. (P. 616.) This conclusion then frames the remainder of the article, in which Engstrom lays out a “taxonomy” of how agency litigation gatekeeping might be structured, and evaluates the potential benefits and problems of the various categories in his taxonomy.

Engstrom identifies five “dimensions” along which agency gatekeeping can be oriented. The first characterizes agency gatekeeping as “affirmative” versus “residual,” by which Engstrom means whether the agency will have explicit power to control private litigation, as opposed to mere exercise of residual powers such as intervention in a private enforcement action as an interested party or amicus. The second distinguishes between “retail” (i.e. case by case) and “wholesale” (across an entire program or class of private actions within a program) gatekeeping. The third asks whether the agency power is “binding” or “advisory,” the latter referring to an agency determination of the propriety of a private action that only has power to persuade the courts. The fourth addresses whether agency control is “passive” as opposed to “active,” essentially hinging on whether the agency can simply decree whether the private enforcement action may proceed without substituting itself actively in the action. Finally, the fifth dimension, which applies only to affirmative, binding gatekeeping, differentiates between agency “veto” and “license,” essentially based on the default ability of private entities to bring enforcement actions if the agency does not make an explicit determination.

To evaluate the different gatekeeper structures that result from various regions within Engstrom’s five gatekeeper dimensions, he reviews the functions the agency would need to perform to play its gatekeeper role in an ideal manner, and then discusses how some well-known imperfections in administrative processes—limits on institutional competence, regulatory capture, and undue political influence—might cause deviations from ideal gatekeeping. In doing so, Engstrom reveals an impressive knowledge of actual experiences in myriad contexts in which private regulatory enforcement plays a role. Engstrom’s taxonomy is too rich to allow me to even to summarize his entire analysis of how these imperfections might bear on litigation gatekeeping, but it is worth mentioning a few of his arguments and conclusions.

Engstrom finds wholesale gatekeeping less susceptible to regulatory pathologies than retail gatekeeping. He notes that wholesale gatekeeping is not particularly useful for enhancing the efficiency of private enforcement by winnowing out cases that are unlikely to prevail in court. But it is potentially valuable towards the ends of ensuring that private enforcement does not undermine fundamental statutory goals or compromise the public interest—ends to which, he contends, agency expertise and political accountability are well suited. He further concludes that capture, if it occurs at all, is not likely as great a problem for wholesale as opposed to retail gatekeeping. Engstrom does not discuss the problems of overly politicized wholesale gatekeeping, but given that such gatekeeping usually will be more salient and more likely to require the agency to resort to notice and comment rulemaking, transparency and accountability are likely to be greater for wholesale than retail gatekeeping. The downside of wholesale gatekeeping is that it is relatively indiscriminate in allowing an agency to differentiate meritorious claims from perverse ones (whatever metric one uses to evaluate merit). Overall, I read Agencies as Litigation Gatekeepers to strongly support wholesale gatekeeping in those contexts where the costs created by private actions are unlikely to vary with the particular factual circumstances of the case. Its view of the value of retail gatekeeping is much more guarded and dependent on the facts of any particular private enforcement suit.

The most significant value of Agencies as Litigation Gatekeepers, however, is not any precise prescriptions one might derive from its analysis. Rather, its value is in reconceptualizing the concerns raised by private enforcement as squarely falling within the ambit of matters that agencies might address. By its nature, the article is very general in its analysis, but it is certain to generate an interesting literature that applies, evaluates and expands on his taxonomy in particular regulatory contexts.

 
 

Viewing the Arbitrary and Capricious Test as a Set of Function-Specific Criteria

Louis J. Virelli III, Deconstructing Arbitrary and Capricious Review, 92 N.C.L. Rev. (forthcoming, 2014), available at SSRN.

The Administrative Procedure Act’s “arbitrary and capricious” standard has been a source of power for the courts, but also a source of bewilderment. It is a source of power because it provides courts with the authority to set aside agency action and, in particular, agency rulemaking, perhaps the most important and characteristic tool of regulatory governance. It is a source of bewilderment because its defining terms are enigmatic. Fairly early in its history, the D.C. Court of Appeals interpreted it as requiring courts to take a “hard look” at the agency’s action. Despite this formulation’s popularity, it has failed to dispel the mystery, first because it is excessively metaphorical, but even more seriously because it is deeply ambiguous. Does it mean that the court must take a hard look at the way the agency reached its decision (a procedural hard look), or rather that the court is insisting that the agency take a hard look at the evidence and arguments being presented to it (a substantive hard look)? The Supreme Court’s decision in Motor Vehicle Manufacturers Assoc. v. State Farm Ins. became the leading decision on the subject because it parsed the substantive hard look standard, providing at least some operationally defined criteria by which the agency’s application of the evidence can be assessed.

Given the importance and ambiguity of the arbitrary and capricious test, it is hardly surprising that the scholarly literature on the subject is voluminous. One approach that commonly appears is the effort to articulate a single test or standard that would enable courts to determine whether an agency decision is arbitrary or capricious. In this innovative and insightful article, Louis Virelli adopts the opposite approach. His idea is to multiply the number of considerations that the arbitrary and capricious test includes, combining both substantive and procedural standards. The point of this proliferation is not to make judicial review more demanding; he agrees with the prevailing view that the agency is the principal decision maker in our system and is entitled to considerable deference from the judiciary. But he argues that the administrative decision-making process necessarily consists of various discrete, qualitatively different steps, and that the standard for arbitrary and capricious action should vary in accordance. Thus, the hard look doctrine should be viewed as “a collection of more targeted inquiries into specific aspects of agency action.”

The article divides the various stages in the agency’s decision making process into two main categories; first, the agency’s “modes of self-education and information gathering,” and second, the conclusions that the agency reaches on the basis of the information that it has obtained. It proposes that judicial review of each stage, which is labeled simply as first and second order review, should be distinguished. In essence, this means that the court will engage in both a procedural hard look at the way the agency reached its decision and a substantive hard look at the quality of its decision making. But Virelli is not simply suggesting that courts engage in each type of review, rather than choosing between them. Rather, he disaggregates each of these large and familiar categories into separate components, and it is these components, not the general categories, to which his task-specific tests apply. The first and second order, or procedural and substantive categories, which he readily concedes are “inexact,” serve largely as a means of organizing the more individualized criteria.

Within the first category, the specific functions are for the agency to define the scope of its research, to gather information within that ambit, to build a record and to give reasons for the conclusions it reaches on the basis of that record. In each area, it has a great deal of discretion, being the institution the legislature has chosen to implement its statute and being a repository of substantive expertise. But the agency might fail in carrying out each of its functions. It might define the scope of research too narrowly, omitting relevant and important issues. It might rely on poor quality information, with obvious methodological errors or inadequate quantities of data. It might fail to document whatever information it has obtained, and it might fail to explain how it used that information to arrive at its conclusions. Within the second category, the functions that agency is expected to perform are to consider relevant factors and to establish a rational connection between the data gathered and the conclusions reached. Here too, the agency has wide discretion, and here too, it can abuse that discretion. It might overlook issues that it needs to consider, either by statutory command or good decision-making practice, or it might engage in slovenly or defective analysis of the information it has gathered. After specifying the way that the arbitrary and capricious standard can be given meaning in the context of each of these procedural and substantive functions, Virelli goes on to elaborate on the advantages of his approach and, to his credit, a few of the disadvantages as well.

A number of observers have criticized legal scholarship in general, and administrative law scholarship in particular, for being “juriscentric,” that is, for focusing excessively on judicial decision making and ignoring or under-emphasizing the legislative and administrative realms where most of modern governance occurs. Virelli’s article is hardly exempt from that criticism; it is a piece about judicial review, not about, say, the way agencies resolve scientific uncertainties. But one of the many virtues of the article is that it takes a non-juriscentric approach to judicial review. Instead of focusing on the reviewing court’s decision-making process—what are its competencies, which sorts of information it needs, how should it articulate the standard that it is applying—the article focuses on the decision-making process in the agency. The standard of review, it suggests, should be determined by the task the agency is carrying out, and should be specific to that task. In other words, instead of deriving the content of the arbitrary and capricious test from judicial precedent, from the conceptual framework and long established standards of judicial review, the article attempt to derive this content from the administrative process itself. What is good practice, it inquires, at each stage in this process. To what standard would a conscientious agency hold itself if it were conducting its own internal review of its own decision making.

Is this article the golden key that will permanently unlock the mysteries of the arbitrary and capricious doctrine? Of course not. There is no such key because the problem is too large to yield to a single resolution. The question that judicial review of agency action confronts is the effectiveness and fairness of the basic means by which we, as a collectivity, govern ourselves. Modern government is regulatory in its essence. In seeking standards for judicial review of agency action, we are asking—albeit in new ways and in a contemporary setting—the age-old question: what is good government and what is bad government. This article, needless to say, has not settled that question, but it advances and clarifies the inquiry in a creative and insightful way, which is why I like it lots.

 
 

Judge Wald and Justice Scalia Dance the Chevron Two-Step

Gary Lawson & Stephen Kam, Making Law Out of Nothing at All: The Origins of the Chevron Doctrine, 65 Admin. L. Rev. 1 (2013), available at BePress.

If you are teaching administrative law this semester, you can look forward to a riveting discussion of Chevron. There have been volumes written on this topic, and here I plead guilty. But if you will indulge me for a moment, I’d like to recommend that you read one more article about Chevron.

Professor Gary Lawson and former student Stephen Kam collaborated to write Making Law Out of Nothing At All: The Origins of the Chevron Doctrine. Their mission is to explain why the Chevron decision is irrelevant to the Chevron doctrine. They write not to praise or criticize the case, but “to bury it.” Or, to put it another way, they explain why one cannot resolve the many questions relating to the Chevron doctrine by examining the Chevron decision. In their article, Lawson and Kam elucidate how the lower courts, particularly the D.C. Court of Appeals, transformed the unrevolutionary Chevron case into the revolutionary Chevron doctrine within just two short years.

The authors begin by explaining the state of the law pre-Chevron. Specifically, they contend that the world of administrative law deference was broken into two categories: (1) agency decisions involving pure questions of law; and (2) agency decisions involving the application of law to fact. Courts reviewed decisions involving pure questions of law de novo, while they reviewed decisions involving the application of law to fact with some deference, although the exact level of deference was unclear. Further, these standards were not absolute, but rather only rebuttable presumptions.

Lawson and Kam digress briefly to describe and distinguish legal deference from epistemological deference. Legal deference is deference owed to someone simply because of the identity of the entity making the decision; think of parents or a board of directors or juries. Chevron deference is a form of legal deference. In contrast, epistemological deference is deference earned from experience and wisdom; think of a mentor or a consultant to a corporation or an expert witness. Skidmore deference is a form of epistemological deference. These categories, which the authors created, may help you understand and explain the difference in how the doctrines should be applied and why.

The pre-Chevron deference world was not a simple one; hence, a clearer two-step deference framework would have been appealing to the lower court judges, especially those on the D. C. Circuit who routinely faced these issues. Along comes Chevron, a case that no one expected to alter this deference framework; as we know, Justice Stevens, Chevron’s author, intended to do no more than restate existing law. You don’t need me to explain either the decision or the doctrine, but what happened after Chevron was decided merits explanation, as it illustrates the development of the Chevron doctrine. First, in General Motors Corp. v. Ruckelshaus, 742 F.2d 1561 (D.C. Cir. 1984), Judge Patricia Wald, a friend of administrative law, ignored the pre-Chevron categorization step and framed Chevron as a “scope-of-review doctrine.” Next came the first clear delineation of Chevron as a two-step process in Reting v. Pension Benefit Guaranty Corp., 744 F.2d 133 (D.C. Cir. 1984). It might come as no surprise that Judge Wald authored that opinion as well. Then, the D.C. Circuit issued two more Chevron opinions authored by, yes you guessed it, Judge Wald. In Railway Labor Executives’ Ass’n v. United States Railroad Retirement Board, 749 F2d. 856 (D.C. Cir. 1984), Judge Wald articulated and applied the two step-analysis she had delineated in Reting; however, in Pennsylvania Public Utility Commission v. United States, 749 F.2d 841 (D.C. Cir. 1984), she did not refer to Chevron despite resolving what she called “substantial issues of statutory interpretation.” Id. at 849. As Lawson and Kam note, “By the end of 1984, the D.C. Circuit … was applying the Chevron two-step episodically at best. Even the judge who birthed the Chevron doctrine was not applying it consistently.” (P. 50.)

But the schizophrenia did not linger. By Chevron’s first anniversary, Judge Wald’s Chevron two-step had firmly taken root in the circuits, although it had not yet migrated to the Supreme Court. However, in 1986, three judges from the D.C. Circuit authored law review articles identifying the Chevron decision as revolutionary. One of these judges, Antonin Scalia, ascended to the Supreme Court on September 26, 1986. Justice Scalia brought with him expertise in administrative law, as well as an understanding of Chevron’s significance: “The more Chevron mandates deference, the more power flows from the judiciary to the executive.” (P. 61.)

INS v. Cardoza-Fonseca , 480 U.S. 421 (1987), set the stage for battle. Trying to return the analysis to pre-Chevron categorization, Justice Stevens explicitly and pointedly stated, “The question [in the case]… is a pure question of statutory construction for the courts to decide.”  Id. at 446. Justice Scalia astonishingly responded that “the Court badly misinterprets Chevron.” Id. at 455 (Scalia, J., concurring). Presumably, Justice Scalia was not suggesting that Justice Stevens misinterpreted the opinion he had authored just three years prior; more likely Justice Scalia meant that Chevron had taken on a life of its own regardless of Justice Stevens’ intent when writing the opinion. As we know, Justice Scalia won the battle and today, the Chevron doctrine bears little resemblance to the decision that birthed it.

My brief summary does not do justice to the depth and complexity of Lawson and Kam’s analysis and the variety of cases they cover, including some from other judges such as Ken Starr and Stephen Breyer. What, if anything, does this article add to the Chevron discussion? I have always found the Chevron two-step to be unintuitive: why aren’t judges deciding pure questions of law, perhaps with agencies acting as expert advisors? Having used Lawson’s administrative law text, I was already familiar with the pre-Chevron categorization framework, but I was unaware of the large role Judge Wald played in forming the Chevron doctrine and why she might have done so. Also, from reading the article, I better understand the Scalia/Stevens INS v. Cardoza-Fonseca battle. Perhaps most importantly, the piece is written with great humor and wit (the headings are all pop culture references, for example) and relatively few footnotes, making it an easy read. And while the authors explain well why the Chevron case and the Chevron doctrine have little relationship to each other, the article will likely not, as they had hoped, bury the former.

 
 

What Does It Feel Like To Have OIRA Review Your Rule?

Lisa Heinzerling, Inside EPA: A Former Insider’s Reflections on the Relationship Between the Obama EPA and the Obama White House, Pace Envtl. L. Rev. (forthcoming), available at SSRN.

Ever wondered what it is like—really like—to be an agency official confronting review by the Office of Information and Regulatory Affairs (OIRA) of your agency’s rule? Readers of JOTWELL’s administrative law blog are disproportionately likely to be part of the small group that wonders about such things, and this post has some very good news for them.

Surely, the best way to find out what it is really like to run a rule through OIRA would be to become an insider, serving as a high-ranking official at a major rulemaking agency. Most of us will never have that option. Fortunately for outsiders, a leading administrative law scholar, Professor Lisa Heinzerling of Georgetown University Law Center, did. She left academia for two years to serve as Senior Climate Policy Counsel to EPA Administrator Lisa Jackson from January to July 2009 and then as Associate Administrator of the Office of Policy from July 2009 to December 2010. Now back in the academic fold, she has written a fascinating account of the way that centralized White House review has affected agency rulemaking during the Obama administration.

Inside EPA begins by concisely telling the story of the evolution of centralized executive review from the Nixon through the Obama administrations. A theme of running through this history is how OIRA’s informal, practical power can exceed the limitations that appear on paper in the governing executive orders. For instance, responding to criticisms of President Reagan’s EO 12,291, President Clinton imposed a variety of seemingly strict transparency and deadline requirements on OIRA in EO 12,866. There is less here than meets the eye, however, because OIRA has “taken the position that only when a regulatory action is sent to OIRA through official channels—which include a computer system used for the purpose of facilitating the transfer of rules between the agencies and OIRA—do the transparency requirements of EO 12,866 kick in.”  (P. 9.) This stance leaves OIRA free to intervene earlier in the rulemaking process without leaving fingerprints. (P. 9.) It also gives a rationale for OIRA’s infamous refusal during the Bush II administration to upload EPA’s draft endangerment finding on greenhouse gases. After all, “[i]f OIRA does not upload the package, … it is as if it was never sent to OIRA; no clock begins ticking, and the package does not does not appear on OIRA’s website listing rules under review.” (P. 10.) EO 12,866 might look like it addresses problems of OIRA delays and transparency. It doesn’t.

The heart of Inside EPA is a section entitled, “The Common Law of 13,563.” In it, Professor Heinzerling explains how, to her mind, centralized executive review has actually worked during the Obama administration. She divides her account of the “common law” into five subsections, each asks and attempts to answer a different question. The questions follow—as well as some highlights from her answers.

Who Decides? Professor Heinzerling reports that, from her perspective, “it was often hard to tell who exactly was in charge of making the ultimate decision on an important regulatory matter.” (P. 14.) She notes that Professor Cass Sunstein, former administrator of OIRA and administrative-law superheavyweight, has described OIRA as an “information aggregator” that collects from a variety of sources across the White House and the broader executive branch. On this view, resistance to a rule could come from many different sources—it could be the Chief of Staff; it could be another agency head. Sitting at EPA, Professor Heinzerling couldn’t tell—which, on a moment’s reflection, is pretty remarkable. (P. 15.)  Her general sense, however, was that OIRA wielded much more clout than the mild-mannered “information aggregator” description suggests.  Along these lines, she cites Sunstein’s remark in his recent book, Simpler: The Future of Government, that he had the power to throw “highly touted rules, beloved by regulators, onto the shit list.” (P. 16, citing Simpler at 6.) “Shit,” of course, might lie in the eye of the beholder.

What Is Reviewed? OIRA reviews whatever it wants to review. (P. 18.)

Why Do Rules Fail? It can be hard to tell, but Professor Heinzerling identifies several possibilities. A rule might fail because it creates more costs than benefits on a formal, monetized cost-benefit analysis. (P. 22.) For those who think that excessive reliance on this type of analysis is a very bad idea—and Professor Heinzerling has long been a strong critic—this possibility is naturally very troubling. Another possibility is that OIRA determines that the rule is flat-out wrong “on the merits.” (P. 24, citing Simpler at 27.) But exactly who is in a better position to determine the “merits” of an EPA rule? EPA or OIRA?

When Does Review End (and Begin)? Forget the deadlines of EO 12,866. Agencies can, ahem, “ask” for indefinite extensions of OIRA’s deadlines. And OIRA asks agencies to ask for them—and the agencies, knowing what is good for them, say “yes.” (P. 27.)

What Are We Told? “OIRA follows, and allows the agencies to follow, almost none of the disclosure requirements of EO 12,866.” (P. 29.)

Professor Heinzerling closes with some pointedly normative observations and a simple, partial prescription for improvement. As applied, the regime of EO 12,866 and EO 13,563 raises serious problems of transparency, misallocation of power, and accountability. OIRA could alleviate many of these problems by following the letter and spirit of the EOs themselves. (P. 35.) Left unsaid, perhaps as an exercise for the reader, is the problem of why OIRA does not do so—or why somebody with real power over this agency does not insist that it do so.

(P.S. We now have Professor Heinzerling’s account of OIRA review from an EPA perspective, and we have Professor Sunstein’s account of OIRA review in works such as Simpler. The former is a noted critic of OIRA-style cost-benefit review; the latter is one of its greatest proponents. Maybe next time, as an experiment, Professor Heinzerling could run OIRA and Professor Sunstein could serve at EPA.)

 
 

Soft Institutional Design

Margo Schlanger, Offices of Goodness: Influence Without Authority in Federal Agencies, U. Mich. Pub. L. Res. Paper No. 353 (September 9, 2013), available at SSRN.

Margo Schlanger is a law professor at Michigan well-known for her work on prisons, structural reform litigation, and civil liberties, but not (yet) on administrative law as such. Perhaps for precisely that reason, she has given us here a novel, plausible and important account of a new species of administrative institution, one that administrative lawyers have heretofore failed to describe in general terms. A “new” species not in the sense that the species is new to the world, of course, but in the sense that it is newly identified by theory. Field zoologists discover species or traits of species that complicate or overturn established theoretical taxonomies; W.H. Caldwell famously proved that the platypus is a mammal that nonetheless lays eggs (“monotremes oviparous, ovum meroblastic”—so ran the immortal telegram). Likewise, field research on institutional design in the wild often does more for the progress of knowledge than a dozen nth-decimal refinements on whiteboard models of administrative interaction.

The novel institutional form here is the “Office of Goodness,” an office embedded within a larger agency and tasked with promoting or enforcing an extrinsic value that is orthogonal to the agency’s mission, or even one that constrains the agency’s mission. Schlanger headed the Office of Civil Rights and Civil Liberties embedded within the Department of Homeland Security from 2010 to 2012, and she draws upon her personal experiences with the effort to temper the imperatives of security by a measure of attention to liberty and security. But there are no war stories here, only informed illustrations of the larger theme. And Schlanger identifies similar offices from elsewhere in the government.

The striking feature of Offices of Goodness is that they typically lack operational legal authority over the host agency’s decisions, in any hard sense. Although Offices of Goodness may have power to delay or clear decisions, their officers are generally empowered to consult, to advise, or to report to outside third parties, but not to dictate or countermand operational decisions. Even so, Schlanger convincingly documents through case studies that Offices of Goodness can really wield “influence without authority.” Just as we now understand that there is such a thing as “soft law,” which accomplishes its ends through non-coercive mechanisms of signaling, coordination and information, so too there is such a thing as soft institutional design that gives power to agents indirectly. Rather than granting them rights and powers of legal control, soft institutional design works through mechanisms of participation in group decision-making, agenda-setting, and the ability of actors committed to Goodness to pull fire alarms that outside actors will hear. Agencies that do not want the fire alarm to go off will then anticipate or accommodate objections based on Goodness.

Schlanger is alert to the standing risk that Offices of Goodness will be co-opted or neutered by mission-oriented administrators or by principals in Congress or the White House, who may want political credit for promoting Goodness but don’t want Goodness offices with real teeth. Those risks are real, and she is right to be worried about them (assuming, of course, that one shares whatever conception of Goodness underpins whatever Office is at issue in a given case. Nothing in Schlanger’s institutional analysis depends one iota on any particular substantive conception of Goodness). Yet reading her case studies, one is struck not so much by the fragility of Goodness as by its power—by the sheer surprising power of awarding Goodness a seat at the table, wherever that table may happen to be.

Recent work in psychology has underscored the scarcity of cognitive resources and the resulting limits of attention at the individual level. All decisions and choices are made subject to limited time, limited information, and the limited processing capability of the brain. At the group level, there are equally sharp limits to institutional attention, emphasized by Herbert Simon and many others. Those limits imply that values extrinsic to the agency’s ordinary mission, or even constraints on the agency’s mission, may often be slighted not out of malice or bad faith, but just because no one thinks about them. Merely putting a representative of Goodness in the room and at the table to raise the relevant issues, to steer the group’s attention in certain directions, may produce outsize effects even if those representatives have no coercive power whatsoever. Neglect is one of the parents of bad government, and Offices of Goodness may ameliorate neglect even if they are helpless in the face of willful and deliberate abuse.

Schlanger has given us one of very few treatments of soft institutional design — perhaps the very first, depending whether one thinks that earlier papers on privacy offices and inspectors-general properly belong in the same category, or instead raise somewhat distinct issues. In any event, those papers did not abstract from the particulars. Schlanger has thus gone well beyond the earlier efforts by generalizing her analysis to the level of species-identification. The result is a memorable contribution to the institutional design of the administrative state.

 
 

What Is the Real Effect of OIRA Application of Cost Benefit Analysis?

Michael A. Livermore, Cost-Benefit Analysis and Agency Independence, 81 U. Chi. L. Rev. (forthcoming, 2014), available at SSRN.

The Office of Information and Regulatory Affairs (OIRA) in the Office of Management and Budget (OMB) has been applying cost-benefit analysis (CBA) to major rules issued by exec­­­utive branch agencies for over thirty years. The practice has long been controversial among legal academics but the debates have taken place against a generally-agreed set of beliefs about the effects of OIRA application of CBA—it increases the power of the President to control policy making by the bureaucracy. Michael Livermore’s meticulously researched and well argued article challenges this enduring belief.

Livermore argues that the relationship between OIRA application of CBA to major rules and presidential influence over policy making by the bureaucracy is far more complicated than the standard account can capture. He contends that the practice has actually increased agency autonomy by providing agencies a means of protecting themselves from presidential control. In Livermore’s view, the practice of OIRA application of CBA to agency rules provides agencies with a “safe harbor” they can access by dominating the process for developing the methodology government uses to apply CBA.

Livermore’s research and analysis focuses almost entirely on the relationship between OIRA and the Environmental Protection Agency (EPA)—the agency that has issued by far the largest number of rules that have been subjected to OIRA review through application of CBA. Livermore documents in detail the ways in which EPA has determined the methodology that OIRA uses to apply CBA. EPA has hired large numbers of staff economists and consulting economists who write studies, books, and articles that dominate the field of CBA.

EPA can, and has, hired far more economists than OIRA, and EPA has consulting contracts with the most prolific and most respected economists who write in the field of CBA. As a result, OIRA has no choice but to adopt as its own the methodologies that EPA supports. Livermore documents the history of every important component of CBA methodology to show how each component that OIRA now applies had its origin in studies conducted by economists under contract with EPA.

The history of two of the most important components of CBA methodology illustrates Livermore’s point well. The most important single input to any CBA of a potential life-saving rule is the estimate of the value of the statistical lives saved by the rule. The methods OIRA uses for this purpose were derived entirely from EPA studies. More recently, estimates of the social cost of carbon dioxide emissions have occupied center stage in the heated debates about whether to continue to use coal as our primary source of electricity. Livermore describes the ways in which EPA has used its position as the dominant source of expertise on regulatory economics to persuade OIRA to adopt EPA’s estimate of the social cost of carbon to evaluate the costs and benefits of the rules EPA is proposing to reduce dramatically use of coal to generate electricity in the United States.

As Livermore recognizes, his research raises many important questions that he is unable to answer. To what extent are his findings applicable to agencies other than EPA? If the traditional simplistic explanation for the decisions of each of the last five Presidents to instruct OIRA to apply CBA to agency rules is unsupportable, in what ways does OIRA application of CBA help Presidents influence policy making? Perhaps each President believed that agencies should use CBA to make major policy decisions and that instructing OIRA to apply CBA to agency rules would further that goal by forcing agencies to retain the services of large numbers of economists as a means of insulating their decisions from presidential control? Perhaps each President created a decision making process that favors EPA because each was more comfortable with the views of his EPA Administrator than his OIRA Administrator? Scholars need to test each of these and scores of other hypotheses that are suggested by Livermore’s article. Livermore has forced us to think more deeply about the inherently complicated relationship between OIRA application of CBA and presidential influence over rulemaking by executive branch agencies.