Regulation and the Crisis of Legalization in the United States

Regulation and the Crisis of Legalization in the United States

Description

This paper examines the current debate in the United States over the use of administrative regulation and alternative instruments to achieve economic objectives, and the relation between regulation and legalisation. It will consider the reasons why administrative regulation has been the dominant instrument and administrative rulemaking the dominant legal measure for implementing economic policy; the choices made among various types of regulatory instruments; the role of administrative regulatory controversies in the development of administrative law and the crisis of legalisation in the U.S.; and current movements toward deregulation and use of alternative instruments in response to this crisis. Such a paper will necessarily be summary and impressionistic. Unfortunately, there is not available a standardised inventory of U. S. instruments and measures in energy and manpower policy comparable to that prepared for this project on selected European nations. This paper accordingly cannot directly compare U. S. experience with the European experience, insightfully analysed by Hans Jarass. It offers more general hypotheses and observations, some drawn from the U. S. experience in energy policy, in the hope that they will be of comparative interest. During the period 1965-1980 there was a very large increase in the number, scope, and intensity of economic policy instruments deployed by the U. S. government in response to political demands for new economic and social programmes. This growth was especially pronounced in administrative regulatory programmes. Congress during the 1960-1980 period doubled the number of major federal regulatory programmes, creating by statute some thirty new programmes. The characteristic measure used to implement these programmes consisted of administrative regulations adopted by federal agencies through rulemaking. The number of pages in the Federal Register, where such regulations are published, increased from 14,000 pages in 1960 to over 87,000 pages in 1980. These regulations sought to impose uniform and often rigid requirements on a vast, diverse, and dynamic nation. Centralised controls were imposed not only on private business activity but also on the practices of and services provided by state and local governments and universities, hospitals, and other non-profit organisa-tions. Beginning about 1975, strong adverse reactions to these developments appeared, culminating in President Reagan's election in 1980. Federal administrative regulatory programmes were condemned as excessively centralised, overly uniform and rigid, unduly costly and burdensome, and destructive of liberty, diversity, and initiative. One can thus speak of a crisis of regulation. The growth of administrative regulation was associated with a sharp increase in litigation. The new regulations were generated through complex rulemaking proceedings lasting several years, followed in many instances by years of litigation in the federal courts and remands for still further agency proceedings. Firms seeking to market new products or construct new facilities would encounter a maze of regulatory requirements and licensing proceedings. The delay, expense, constraints, inconsistencies, burdens, and uncertainties generated by adversary legal proceedings led to sharp criticism of the legal system which had developed in order to control administrative regulation. Thus a crisis of legalism became associated with the crisis of regulation, merging into a crisis of legalisation. This paper considers the reasons why this crisis arose and the solutions to it that have been proposed. There has during the past fifteen years been a tremendous increase in academic studies of regulation in the U. S., not only by legal scholars but also by economists, political scientists, policy analysts, and historians. This paper will provide a highly selective overview of what we do and do not know, giving some examples from energy policy as a case in point. (It will, for the sake of economy, deal only with the federal government.) The paper will then examine the current political debate over regulation and economic policy. President Reagan has effectively exploited popular dissatisfaction with administrative overregulation and legalisation to initiate a far-reaching but highly incomplete effort to relax or eliminate regulatory requirements. Some critics of this effort advocate “reregulation”: reinstatement, expansion, and strengthening of administrative regulatory programmes. Others, while believing that deregulation is appropriate in some sectors, assert that where government intervention is needed it should take the form of decentralised market-type incentives. Still others believe that the entire system of economic policies must be coordinated and rationalised through a new "industrial policy". Still others advocate radical political and economic decentralisation. Each of these alternatives responds to the crisis of legalisation.

Source Publication

Law as an Instrument of Economic Policy: Comparative and Critical Approaches

Source Editors/Authors

Terence Daintith

Publication Date

1988

Regulation and the Crisis of Legalization in the United States

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