Chairman Smith, Ranking Member Conyers, thank you for the opportunity to testify on the proposed "Regulatory Accountability Act of 2011" (H.R. 3010), which would amend the Administrative Procedure Act of 1946.
The APA was enacted as Congress returned to domestic business following the conclusion of World War II. It was a war-delayed response to the proliferation of regulatory agencies during the New Deal. Agencies such as the Securities and Exchange Commission, Federal Communications Commission, and Civil Aeronautics Board combined legislative, executive, and judicial functions. That raised serious separation-of-power questions under the Constitution. The APA's standards and procedures for administrative decision-making and judicial review resolved the constitutional questions to the satisfaction of the courts, and have served as the statutory backbone of federal regulation for the past sixty-five years.
The Regulatory Accountability Act would be the first major revision of the APA's core regulatory procedures. It is a response to the dramatic growth of regulation and unusual number of controversial regulatory proceedings of recent years. Prominent examples are the Treasury Department's and Federal Reserve Board's aggressive regulatory responses to the 2008 financial crisis and, more recently, the Environmental Protection Agency's highly ambitious rulemaking initiatives, the Federal Communications Commission's efforts to regulate the Internet, and the hundreds of high-stakes rulemakings pursuant to the Energy Independence and Security Act of 2007, the Patient Protection and Affordable Care Act of 2010, and the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010. Many of the agency proposals would be very costly--at a time when the economy is in the doldrums, business investment is anemic, and unemployment is high. Many of them involve 1 statutes that give the agencies enormous policy latitude--contributing to the pervasive business uncertainty that seems to be weighing on the economy. And all of them cast Congress more as a kibitzer than lawmaker--Members can hold hearings, give speeches, and write letters, but the ultimate policy decisions are made downtown rather than on Capitol Hill.
Yet the current controversies reflect developments that have been underway for forty years: the migration of lawmaking authority from Congress to the executive branch, and the problems of policy substance and political accountability that have arisen from executive lawmaking. These problems, like those that led to the original APA, are of constitutional dimension. Regulation has grown in scope and impact far beyond anything the framers of the APA (or for that matter the New Deal) could have anticipated. The APA has not kept up, and special-purpose administrative agencies have acquired an unsettling degree of power over our economy and society. The Regulatory Accountability Act is an effort to channel the discretion and improve the performance of the modern administrative state.
Christopher DeMuth is the DC Searle Senior Fellow at AEI