This article is part of a three-part series on the environmental consequences of the REINS Act.
The Regulations from the Executive in Need of Scrutiny Act (“REINS Act” or “Act”) is a legislative proposal that seeks the amendment of the Congressional Review Act (CRA) to expand congressional control over the federal administrative rulemaking process based on the estimated cost of regulations. Pursuant to the CRA, Congress has authority to overturn agency actions by enacting joint resolutions of disapproval, subject to constitutional parameters related to the enactment of laws. The REINS Act would shift the procedure by automatically suspending the effect of “major rules”––a rule with an estimated annual cost of at least $100 million––unless joint resolutions of approval are enacted into law. REINS Act bills have been repeatedly introduced since 2011 without success. However, as the deconstruction of the administrative state continues to take shape, further restricting regulatory authority based on policy questions of major economic significance and the nondelegation doctrine fits perfectly to the current anti-regulatory landscape.
This first post focuses on the REINS Act as another sweeping statutory tool of the current political trend towards the deconstruction of the administrative state and explores the arbitrariness of the statute’s underlying policy of misusing economic information to guide significant regulatory decisions.
The REINS Act as an Ideal Feature of the Deconstruction of the Administrative State
A functional administrative regime is capable of balancing legislative power, expert decision-making, public participation, and judicial review. The basic set up of the modern administrative state was:
- Congress establishes the fundamentals of a law and “lay[s] down by legislative act an intelligible principle to which the person or body authorized to [act] is directed to conform.”
- “The power of an administrative agency to administer a congressionally created … program necessarily requires the formulation of policy and the making of rules to fill any gap left, implicitly or explicitly, by Congress.”
- “[N]otions of fairness and informed administrative decisionmaking require that agency decisions be made only after affording interested persons notice and an opportunity to comment.”
- The judiciary scrutinizes agency final decisions for potential violations of constitutional rules, statutory mandates, or procedural administrative requirements.
Under this model, the administrative state strived to equilibrate different sources of power to effectively administer public law. Two principles are key to this practical framework: (1) Congress is allowed to explicitly or implicitly delegate policy-making power to expert agencies and (2) Courts are required to defer to reasonable exercises of agency power. However, the Supreme Court, in recent (West Virginia) and upcoming (Loper Bright/Relentless) opinions, seems to be “systematically eroding the legal basis of effective governance” by seizing power from the Executive in a way that invites regulatory dysfunction, democratic unaccountability, and bad policy-making.
In this context, “the ability of EPA to promulgate meaningful environmental policies is difficult at best and impossible at worst.”
In this legal landscape, the REINS Act is an ideal feature of this new administrative model. The REINS Act completes this deregulatory design aimed at curtailing regulatory authority from agencies by giving Congress virtually unchecked authority to skew enabling statutes, expert based policy-making, and public participation. First, the automatic suspension of rules based on economic costs occurs without regard to the substance of the enabling statute. Paradoxically, the legislative branch casts shadows on its own constitutional power as the lawmaking body when––through the operation of the REINS Act––it blatantly disregards the statutes animating the promulgation of a rule. Secondly, the Act directly hampers the ability of agencies to execute enabling laws using their expertise. Finally, the Act’s regulatory veto has the potential to weaken public participation by rendering it an obsolete procedural fiction.
It’s easy to observe how the REINS Act would nicely complement the Court’s power grab with a Congressional power grab by further removing rulemaking authority from the hands of the Executive. In this context, “the ability of EPA to promulgate meaningful environmental policies is difficult at best and impossible at worst.”
The Arbitrariness of the “Cost-Nothing” Analysis Underlying the Myopic Policy of the REINS Act
Blocking regulations solely based on economic costs is a myopic and arbitrary approach to regulation, but very functional to a deregulatory or anti-regulatory blunderbuss. This one-sided approach that has no room for quantified and/or quantitative values has not fared well under judicial scrutiny because of its inherently arbitrary character. Yet, the REINS Act would legitimize the flawed presumption against environmental, public health, and safety regulation due to cost considerations by codifying a legislative procedure to withdraw rulemaking authority from agencies based on cost-nothing analyses.
In 2008, the Ninth Circuit evaluated the rationality of a rule issued by the National Highway Traffic Safety Administration (NHTSA) that failed to consider important quantitative or qualitative benefits from reducing carbon dioxide emissions. The agency set a corporate average fuel economy standard based on a cost-benefit analysis that ignored carbon reduction. The court held that the basis for NHTSA’s decision was arbitrary and capricious, reasoning that agencies “cannot put a thumb on the scale by undervaluing the benefits and overvaluing the costs of more stringent standards.”
About a decade later, a rule issued by the Bureau of Land Management (BLM) came under scrutiny for disregarding benefits altogether. BLM decided to suspend the Methane Waste Prevention Rule that sought to reduce waste of natural gas from venting, flaring, and leaks during oil and gas production on onshore leases. The agency justified its decision based on “the substantial cost that complying with these requirements poses to operators.” A Ninth Circuit district court found the suspension irrational because it “entirely failed to consider the benefits of the Rule, such as decreased resource waste, air pollution, and enhanced public revenues.”
[A] decision-making process that does not take a hard look at the statutory mandates animating regulation, nor the benefits of regulations, is the epitome of arbitrary and capricious.
The D.C. Circuit has also recognized that consideration of benefits matters in risk regulation. Reviewing a rule from the Federal Motor Carrier Safety Administration that increased maximum driving time for commercial trucks, the D.C. Circuit rejected the agency’s decision to disregard the health effects of an increase in daily driving time because they were uncertain. The court reasoned that “the mere fact that the magnitude of [certain] effects is uncertain is no justification for disregarding the effect[s] entirely.”
Similarly, the D.C. Circuit recently held EPA’s decision to delay the effective date of the Chemical Disaster rule––which sought to improve safety at facilities that handle hazardous chemicals to avoid catastrophic incidents––to be arbitrary and capricious. EPA sought to justify the decision due to “the speculative but likely minimal nature of the forgone benefits.” The court disagreed, concluding that the agency failed to reasonably explain why the benefits of avoided harms that were previously considered, like loss of productivity, costs of emergency response, and environmental impacts, now didn’t matter.
As shown by judicial decisions that acknowledge basic notions of economics and administrative rationality, a decision-making process that does not take a hard look at the statutory mandates animating regulation, nor the benefits of regulations, is the epitome of arbitrary and capricious. When cost determines the outcome of regulatory efforts exclusively, decision-makers will be misguided, and meaningful protective regulations are highly likely to be conspicuous by their absence.
Jorge Roman is an environmental attorney working on regulatory matters and litigation involving water quality, chemicals regulation, and climate and energy policies at the Georgetown Environmental Law & Justice Clinic. In this role, Jorge supervises student-attorneys representing underserved clients, co-teaches a seminar on environmental justice, and develops scholarship on the equitable use of economic data to guide policy in resource management and environmental health risk regulation. He earned a J.D. and LL.M. in Energy and Natural Resources Law from the University of Tulsa College of Law.