Federal Regulatory Agencies -- The Need for a Broader Constituency

Federal Regulatory Agencies — The Need for a Broader Constituency

Roderick A. Cameron, Executive Director, Environmental Defense Fund

This morning, Fred Anderson described several assessments of the performance of federal regulatory agencies. He identified one as "pessimistic." That view held that federal agencies would always remain more responsive to money, economic and political power than to the "public interest." With some qualifications I subscribe to that pessimistic view. My judgment, however, is tempered by sympathy for the plight of the bureaucrat at all levels of government. The problem, as I see it, is that the bureaucrat's constituency is unbalanced. The pressure brought to bear by well-defined, organized and economically concentrated interests is significant and unrelenting. On the other hand, pressure from the "public interests" — those that are diffuse, long-range and often hard-to-quantify — is either not present or is inadequate.

This is not a new state of affairs. The Interstate Commerce Commission was created in 1887. A mere five years later, in 1892, a Chicago lawyer, Richard Olney, who represented the Chicago, Burlington and Quincy Railroad, had already perceived the situation. Just before leaving Chicago for Washington to become President Cleveland's Attorney General, Olney was urged by the Railroad to do what he could to abolish the ICC when he got to Washington. In a letter to his client he counseled it against this course.

My impression would be that looking at the matter from a railroad point of view exclusively it would not be a wise thing to undertake … The attempt would not be likely to succeed; if it did not succeed, and were made on the ground of the inefficiency and uselessness of the commission the result would very probably be giving it the power it now lacks. The commission, as its functions have been limited by the courts, is, or can be made, of great use to the railroads. It satisfies the popular clamor for a government supervision of railroads, at the same time that that supervision is almost entirely nominal. Further, the older a commission gets to be, the more inclined it will be found to take the business and railroad view of things. It thus becomes a sort of barrier between the railroad corporations and the people and a sort of protection against hasty and crude legislation hostile to railroad interests … The part of wisdom is not to destroy the commission, but to utilize it.

The emergence of large federal bureaucracies to play important regulatory, managerial and developmental roles in our society has been a salient characteristic of American government during the middle third of this century. Today these bureaucracies — the Department of the Interior, the Federal Power Commission, the Food and Drug Administration, to name just a very few — probably account for the bulk of the business of government. Nearly every service or command a citizen receives from his national government comes via such agencies. The same can also be said of state governments. It is unlikely that this proliferation will abate during the remainder of the century.

The electorate can speak collectively to the Congress and the White House. These entities "control" the bureaucracies in an abstract sense. Practically, however, this control is stretched too thin. The agencies are too big and numerous, their actions are too detailed and technical, for them to be more than superficially accountable for their actions. But this lack of accountability extends only to the public and to the political organs of government: the Presidency and the Congress.

A President is not elected because he intends to reform grazing policy on federal lands administered by the Bureau of Land Management. He rarely focuses on such an issue. Congress may hold hearings when the FDA permits the marketing of a dangerous drug but it is unlikely to respond decisively or in more than a small percentage of such cases. The political processes have little capacity to police this bureaucratic world. From this perspective, our democracy is only a veneer on the hulk of a technocracy.

For decades the public seems to have assumed that these government bureaucracies were performing their duties wisely and efficiently.Now that assumption is wearing thin. People feel ill-served and cynical about government. A growing and persuasive feeling about the agencies today is that they do not serve the public interests but rather are deflected to serve narrower interests. A knowing remark that is now commonly heard about regulatory agencies is that they tend to be dominated by the industries they supposedly regulate.

This is a plausible state of affairs and one which corroborated my own observations. The public, the Congress and the White House form largely inert constituencies for these agencies. But the economic interests which are affected by the agencies' policies form a natural, responsive and potent "constituency." The agencies seem vulnerable to long-term pressure from such interests. The reason for this is that, over the course of years, agency personnel, like other people, seek ways of doing things that make their lives relaxed and routine. The best method of accomplishing this is for the bureaucrats to acquire perceptions and perspectives which comport with those of their active "constituencies" out in the world of organized interests.

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The bureaucrat is, after all, a specialist. His bailiwick may be, for example, the safety and maintenance practices relating to the landing gear of jet airliners. His active constituency is not the innocent and largely passive public but the airplane manufacturers and airlines whose activities are affected by his actions. It is this constituency to which he is responsive, cordial and familiar. It is only there that his triumphs and defeats will be understood, appreciated, condemned.

The agency, and the bureaucrat within it, exist to protect the public interest. But a "public interest," almost by definition, is broad, diffuse and often long-term. Because of its diffusion, a public interest is not represented by expensive law firms with armies of impressive expert witnesses to buttress every contention or ferret out every "error" in agency policy. Special interests such as the American Air Transport Association, however, are so represented. A "special interest" is, typically, tightly organized, focused on the short-term and superbly represented by skilled lawyers specializing in the areas of law and substance relevant to that area of regulation. For the bureaucrat the special interest becomes the "public interest" by default. While he is beneath accountability to the White House or Congress, he is very accountable to the special interest affected by his actions.

The spectre which presents itself from these observations, corroborated by the environmental degradation so long a characteristic of our society and by recent phenomena such as the energy crisis, is that of a government serving short-term special interests. The agencies become agents for particular industries, and a particular industry becomes the government in affairs of significance to it.

It is important not to overdraw these arguments. The agencies are clearly not just tools of the industries they regulate. They have performed valuable services in curtailing some of the side effects of the economic growth of the last half century. It is difficult to see where we would be without the ameliorating effect of agency watchdogging. There seems to be no alternative to the agency proliferation we have experienced, other than a laissez faire policy which would seem to be outside the range of acceptable suggestions today. We need the agencies to continue doing what they have been doing and at the same time we must find ways to make them function better.

It may be that a democracy is vulnerable to this kind of perverison as a general rule. The process by which government serves special, short-term interests at the expense of public interests is consistent with, and may be a manifestation of, a basic characteristic of any relatively unstructured society. Such societies are vulnerable to a phenomenon known as the Tragedy of the Commons: A common, in this context, is any free resource, or a resource which is underpriced. Garrett Hardin, a biologist, disinterred the concept in a 1968 article in Science. Hardin pictured a village commons where herdsmen are free to graze their cattle. The "tragedy" develops as the village's population of herdsmen grows:

As a rational being, each herdsman seeks to maximize his gain. Explicitly or implicitly, more or less consciously, he asks, "What is the utility to me of adding one more animal to my herd?" This utility has one negative and one positive component.

1.The positive component is a function of the increment of one animal. Since the herdsman receives all the proceeds from the sale of the additional animal, the positive utility is nearly +1.

2. The negative component is a function of the additional overgrazing created by one more animal. Since, however, the effects of overgrazing are shared by all the herdsmen, the negative utility for any particular decision-making herdsman is only a fraction of -1.

Adding together the component partial utilities, the rational herdsman concludes that the only sensible course for him to pursue is to add another animal to his herd. And another; and another…. But this is the conclusion reached by each and every rational herdsman sharing a commons. Therein is the tragedy. Each man is locked into a system that compels him to increase his herd without limit — in a world that is limited.

Abstracting this concept to its essentials, there is a weakness in a free society whenever the benefits of an act are concentrated on a subset of the whole while its costs are diffused onto the whole set — onto a common,or into the future, or among a large class of people. In a society undergoing long-term growth the public interest in air, water, land, health, natural resources — and the future — are all at risk. The government, if my previous assertions are correct, is not an adequate guardian against the one additional herdsman — the oil driller seeking offshore drilling permits from the Department of the Interior, the food additive manufacturer relentlessly pushing its own test results and data on the FDA in order to get permission to rush its products to market, the railroad pressuring the ICC to abandon yet another passenger service made unprofitable by policies of economic discrimination and the subsidy of competing transportation. The problems grow critical because the growth in population and consumption have stressed our commons — our resources, our supplies, our welfare — to the point where mistakes and unsound policies carry high prices. The process is exponential. The cost will continue to mount. The commons will be increasingly unforgiving of mistakes.

Yet our administrative agencies are, as aforementioned, prone to serve as cogs in the Tragedy of the Commons process rather than as bulwarks against it. Indeed the laws which the agencies implement reflect the costly disparity between "tight" and diffuse interests. They always have. An old anonymous English rhyme puts the matter thus:

The law locks up both man and woman

Who steals the goose from off the common

But lets the greater felon loose

Who steals the common from the goose.

The urgent task is to improve the quality of agency [4 ELR 50134] decision making. This is a delicate undertaking. We wish to diminish the vulnerability of an agency decision-maker to narrow interests without reducing his willingness to give such interests a fair hearing and a thoughtful consideration of their needs. We want to make government agencies cling more tenaciously to the broad, diffuse and long-term interests which comprise such an important part of "the public interest." Yet, in so doing, we do not want to make such agencies rigid and unable to accomodate extraordinary circumstances. The problem is a subtle one.

Following are some suggestions which might benefit agency functioning. They are not intended to be panaceas but only suggestions meriting further investigation. Some of the avenues of investigation that would be fruitful are:

1. The Ombudsman. The device is a promising one and deserves exploration and experimentation. An ombudsman office with adequate funding could greatly increase the amount of self examination and reexamination taking place in the agencies. An ombudsman agency might very well be a place attractive to the idealistic segments of society both young and old. It could be one of the national services we expect the young to render their country in lieu of military service if the notion of mandatory national service is ever resurrected; or, a place where lawyers of all ages discharge professional obligations to serve the public interest. Such obligations are currently being re-articulated by ABA special committees.

2. Public Interest Law Firms and Other Public Interest Groups. In the last six years the philanthropic world has created a new approach to the problem of defending the public interest. These are the public interest law firms who have, by and large, concerned themselves with agency functioning. These groups have made a good beginning and have the potential of being a beneficial gadfly to the agencies — but unfortunately not much more. They can challenge only a small portion of agency actions.

3. Citizen Review Panels. Such panels exist at the state and local levels of government but have been confined to advisory status in the federal establishment. Their role is probably limited since their ability to effectively advocate a sophisticated point of view is small. Still it seems that such panels could occasionally provide a counterweight to the specialized perspective of the agencies themselves.

4. Increased Court Review of Agency Actions. This potentially potent tool was severely limited in the 1930's and '40's by the Supreme Court's own reaction to its earlier excesses in striking down New Deal initiatives. Under extraordinary political pressure, the Court rebounded and severely handcuffed the judiciary in its review of agency actions. A growing body of opinion holds that the courts should overrule agencies more freely than they have in recent decades. Recent court decisions have shown some inclination to move a little of the way back into the field of reviewing agency action. This is a subtle and difficult area but one that has great potential for jolting the agencies out of set modes and perspectives.

5. General versus Specialized Decision Makers. This concept is suggested by judicial review of agency action. The notion is that a bureaucrat's specialized perspective is confining. By bringing a more generalized perspective to bear, one pays a higher price in terms of educating the decision-maker about the specifics of the issue. But the payoff is that the constraints of the specialists' perspective are avoided. This is why a judge can sometimes see something a bureacrat cannot see. The generalized decision-maker brings no previous prejudices to the issue; he is handicapped by no jurisdictional or power struggle within the agency; he probably has no loyalties to, or intimate relationships with, the partisans of the issue. Procedures might be developed within an agency to employ hearing examiners, or administrative law judges as they are sometimes called, with more generalized skills and less specific orientation to the concerns of the agency.

6. General Improvement in the Professional Quality of Agency Decision Makers. Point Number 5 leads to the further inquiry of how to improve the general quality of hearing examiners and other key officials in federal agencies. Presently the quality seems spotty. The method by which these people are chosen is casual and inadequate. Such decision-makers play an important role and should be chosen with much more care and thought than is presently the case.

7. Agency Renewal. As Attorney General-Designate Richard Olney observed in 1892, agencies come to reflect industry viewpoints as the years roll by. The converse of that, which also seems to be true, is that agencies defend the public interest with particular zeal when they are still new and fresh and innocent. One route to increased effectiveness might be to reshuffle the agencies more frequently, giving them new missions or old missions in new contexts. An example of this was provided by the creation of the Environmental Protection Agency. Many divisions and bureaus and sections from established departments were put under the new umbrella. The result was a renewed vigor which still sustains EPA three years later.

8. Personnel Reassignments. A variation of the previous idea is to transfer career bureaucrats from one agency and job to another periodically. This is a technique used by the military and by many large corporations. Management personnel are shifted to a new job and a new location every three to five years. This broadens the person's experience and, on the whole, I think, tends to reinvigorate him or her. Among regulatory agencies it would permit a more rigorous, ongoing reexamination of past assumptions, commitments and practices. It would tend to limit the development of loyalties and close relationships that might taint decision-making and policy formulation.

9. Government Retention of Outside Attorneys. Agencies receive legal counsel from their own legal offices. These offices often suffer from the same inbred qualities that the general bureaucracy does. As well, when the agency is taken to court, it is assigned a litigating lawyer from either the Justice Department or the local U.S. Attorney's [4 ELR 50135] Office. In specialized matters, these attorneys are often as inbred as the agency's own attorneys. There also seems to be an upper limit on the quality of representation provided by both the agency and the Department of Justice. It is generally believed that the "Super Lawyers" of Washington — the private lawyers practicing before the government agencies — are superior to their government opposition. The government might profit greatly by occasionally retaining outside attorneys, just as would a private claimant before the government, to represent it in critical matters. This would bring more diversity and occasionally higher quality to government legal representation. I believe the process would be beneficial both for the private bar and for the government. Such service would tend to remind the private bar of its duty to serve the public interest.

10. Freedom of Information Act. Perhaps the most serious obstacle to agency reform is secrecy. Much of the information upon which agencies act is withheld from the public on the grounds that it has been given to the agency for its use only by the corporations being regulated. The information is asserted to be of a proprietary nature and thus protected from public scrutiny. The Freedom of Information Act was passed to correct the most flagrant abuses based upon secrecy. But it was so watered down and shot through with exceptions that it is ineffective.

11.Transfers Back and Forth Between Industry and Agencies. This is a serious problem and has received much attention in recent years. Yet it is useful for industry people, and for lawyers representing industry, to spend a year or two working in a regulatory agency. The agency is benefitted by having available to it a more intimate understanding of the problems of the regulated industry. Upon the executive's return to industry, he or she has a more thorough understanding of the problems and objectives of the agency. That of course is the official line. The criticism comes from the fact that this practice enhances the already cozy relationship between regulator and regulatee. The problem becomes more acute when the agency employee seeks to ingratiate himself to industry in the hope of getting a lucrative job in the industry after leaving the agency. Rules exist pertaining to behavior of this sort. They should be made more strict and enforced more vigorously.

The above suggestions are not revolutionary in nature. They would not solve the problem of the disparity in advocacy between narrow, concentrated interests on the one hand and diffuse, broad or long-range interests on the other. They would simply reduce that disparity. While there is no simple way to improve agency functioning, I believe the above suggestions could lead to improvement in government performance.