Can Executive Review Help Prevent Capture?
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Description
Centralized review of federal regulations has become a core institution in the contemporary administrative state. Presidents of both political parties have embraced it, with relatively few changes since President Reagan put in place the basic architecture in 1981. Although the institution of centralized review continues to receive criticism from some quarters, there is broad consensus that it is likely to remain a persistent feature of the administrative state for the foreseeable future. Since its inception, centralized review has been closely linked with theories of agency capture. Many of its most prominent defenders have grounded the legitimacy of regulatory review in fears that unchecked agencies will be systematically biased in the exercise of their powers, including by accommodating powerful special interests to the detriment of general social welfare. According to this line of thinking, centralized review facilitates presidential control over agencies, which helps to ensure that administrative action is responsive to the broad national constituency represented by the president rather than to parochial special interests. There are two important problems with this account. First, the background assumption of the conventional account – that the president responds to a national, rather than parochial, constituency – is overly simplistic. Presidents respond to a range of incentives that may not be well aligned with the broad national interest. More important, the Office of Information and Regulatory Affairs (OIRA), which is charged with carrying out centralized review, is not the functional equivalent of the president. Even if increased presidential control is desirable, it is not obvious that OIRA review always achieves this goal. This does not mean, however, that OIRA cannot and does not play an important role in mitigating the threat of agency capture, but it does so for four reasons unrelated to proximity to the president. First, because OIRA is a generalist institution, it is more difficult to capture than a single-issue agency. By creating a generalist body like OIRA to oversee agency decisions, the institutional structure of centralized review can reduce the potential influence of special interest actors on regulation. Second, OIRA often plays a coordinating role, bringing together different agencies, which are each likely to be influenced by different interest groups. Because this coordination function requires interest groups to capture multiple agencies involved in decision making, it reduces the ability of any one interest group to dictate decisions, by raising the cost of capture. Third, cost-benefit analysis, which is the standard used to conduct regulatory review, is a professionally accepted methodology that is available for public scrutiny. It therefore acts as a check against capture by raising the risk of detection for agencies tempted to massage the economic analysis in response to interest group pressure. Finally, there is a tradition of appointing relatively independent individuals without strong connections to special interest groups to run OIRA, which helps reduce the threat of capture. Two steps can be taken to expand this anti-capture role. First, retrospective review can require interest groups to continually reinvest in capture to ensure their preferred regulations are not amended or rescinded, which in turn decreases the return on investment of capture and acts as a disincentive to agency capture. A recent retrospective review process initiated by the Obama Administration, however, has focused too much on cost cutting, rather than net-benefit maximization, creating the risk of antiregulatory bias. This process should be reformed to be more balanced, examining how agencies can increase benefits as well as reduce costs. Second, OIRA should expand its review of agency inaction. In large part, OIRA has focused its review on agency action, examining major rules that are proposed by agencies before they are finalized. There has been significantly less review of agency inaction – that is, of the cases where net benefits could be generated through rulemakings in new areas. This bias has historical roots in the original conception of OIRA as a check against overzealous regulators. However, because an agency’s failure to act can be as detrimental to social well-being as overactivity – and can just as easily result from agency capture – it is important that OIRA establish an institutional mechanism to ward against both kinds of failure. This chapter proceeds in three parts. The first part provides a brief overview of the thirty-year history of OIRA oversight of agency rulemaking, discussing and criticizing traditional capture-related justifications for OIRA review. The second part examines the features of OIRA that suggest it can reduce capture risks, focusing on its role as a generalist body, its coordinating function, the nature of cost-benefit analysis, and the tradition of drawing OIRA directors from the academic community rather than from interest groups. The final part of this chapter discusses steps that can be taken to improve regulatory review with an anti-capture role in mind.
Source Publication
Preventing Regulatory Capture: Special Interest Influence and How to Limit It
Source Editors/Authors
Daniel Carpenter, David A. Moss
Publication Date
2013
Recommended Citation
Livermore, Michael A. and Revesz, Richard L., "Can Executive Review Help Prevent Capture?" (2013). Faculty Chapters. 1931.
https://gretchen.law.nyu.edu/fac-chapt/1931
