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Life In The Administrative State – Part 1 of an Occassional Series

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Regular listeners to the radio show have heard the host and Larry Arnn discuss “the administrative state” on and off for years now.  Talk of this thing has increased immensely amongst those two and on the show generally with Justice Kennedy’s retirement.  In his Washington Post promotion of Raymond Kethledge for SCOTUS, the host cites the administrative state as a primary reason for Mr. Kethledge’s nomination:

In these and many more cases, Kethledge has been faithful for more than a decade to the originalist approach. White House staffers will have read every word of Kethledge’s many writings, and they will conclude: Gorsuch 2.0, especially with regards to a willingness to challenge so-called Chevron deference toward the vast administrative state, a doctrine dangerous in its corrosive effect on self-government.

Arnn has defined “the administrative state” numerous times during his Hillsdale Dialogue discussions with the host.  However, a definition is only the beginning of understanding a thing.  For example, since Justice Kennedy’s retirement, as you will note in the pullquote above, has come much mention of “Chevron deference.”  What is that? – I had to look it up because I am not a lawyer.

I live my life in the administrative state.  My firm helps companies, especially smaller companies, figure out how to economically survive in the administrative state.  We do so by understanding both the rules and the technology.  One of the first things to be learned about the administrative state is that it greatly reduces the voice of small actors in the governmental process.  Part of the reason small manufacturing is disappearing in the country – once a source of vast numbers of jobs – is that because the bigs have the economic resources to engage in the rule making process (very different from the law making process) the rules that get promulgated often favor their operations over those of smaller operators.  (More on this later in the series.)  How do the small guys compete?  That’s where I come in.

So I am somewhat uniquely positioned to talk about the day-to-day practicalities of life in the administrative state.  We all live in it actually, but most of us get to live our lives without running face first into it – that’s part of its dark art.  The problems endemic in the administrative state seem always to be someone else’s problem, or limited in scope, or doing more good than harm, or simply unknown.  So in this series of posts, to be published sporadically and continue based on response, I hope to illustrate just how life is, how difficult life is, in the administrative state.  I will endeavor to do so without naming names or pointing fingers, tempting though it will be.  The administrative state has developed with the best of intentions, and with very few exceptions, its promulgators are decent people trying to do a hard job.

And so with that introduction let’s get the basics out of the way.

The administrative state is about rule making, which is as we have said, quite different than law making.  Laws are made by legislatures, composed of people elected by the citizens of a place.  Rules are made by agencies, composed of people hired by a government entity of some sort to become “experts” in some particular field that the agency is formed to oversee.  Agencies make rules, based on the “expertise” they develop, that tell the area they oversee what to do – often in excruciating detail.

Before I proceed I should note that not all government agencies make rules.  Some exists purely to study something (The U.S.G.S. for example) and some exist to enforce laws, rightly passed by legislation.  This later is roots of the FBI or the Secret Service.  The enforcement job is where we begin to see why “Chevron Deference” is important.  That term comes from a SCOTUS case:

Justice Scalia taught administrative law, among other subjects, and thus was well-versed in its history and effects.  Chevron laid out a 2-step test for whether a court should defer to an administrative agency’s statutory interpretation: (1) Did Congress directly address the precise question at issue? And (2) if not, is the administrative agency’s answer based on a permissible construction of the statute?

Thus an enforcement agency can, through statutory interpretation effectively make law, not unlike a court.  That is a power the constitution never intended agencies of the executive branch to have.  But this deference becomes even more onerous when an agency is formed for regulatory purposes.

Regulatory agencies make sense on the surface – a given area needs some control and it is too complex and too specialized, seemingly, to be handled in Congress, so Congress “deputizes” and agency to do its job for it.  But that is, as Arnn and the host have discussed many times, the legislative branch giving its power to the executive branch and thus unbalancing the Constitution.

It is also worthy of note that many agencies are charged with enforcing the regulations they promulgate.  Thus they take on the role of the courts as well.  So, we end up with an agency that has the power of all three branches of government to itself.  So much for checks and balances.  Now granted this extreme amount of power is in some specific area, limited by the law that formed the agency but, given “Chevron deference,” many agencies have been able to expand their authority to places never dreamed of by the legislature that originally authorized them.

Again, as Arnn and the host have often discussed, the real problem here is a lack of accountability for the agencies.  They are not elected and therefore cannot be thrown out of office if we, the people, do not like what they did.  For example.  I was in a situation once where an agency and my client had a disagreement on a situation.  The agency grew very high-handed.  We called on a legislator acquaintance who brokered a meeting and we came to an agreement with that legislator’s help.  However, a few years later when that legislator left office, for reasons having nothing to do with us, the agency immediately threw out the agreement and went back to its high-handed ways with my client.  Once the legislator was not longer there to hold them accountable – in this case through funding bills – they felt no need to abide by what they had agreed to.

This brings up one other often highly problematic thing about regulatory agencies – the legislation that creates them often requires them to be self-supporting.  That is to say, rather than draw on tax payer money, they are set up in a way that they are paid for out of the fees and penalties they collect.  The thinking behind this seems reasonable; they are created to control a specific problem area and that area should bear the burden it creates, not the general public.  But here is the problem – under such circumstance one must begin to ask whether the agency serves the public good or its own.  Was that regulation promulgated because there really is a problem or because it will generate revenue?

Most businesses, when their revenues decrease, lay people off.  They do not have much choice – they are losing market share.  When a regulatory agency’s revenues start to shrink it could be an indication that the problem is approaching resolution so perhaps they too should decrease in size.  However, I have known them under decreasing revenues to actually hire enforcement personnel because stepped up enforcement will generate additional revenues.

So here, after some introduction, we have seen two practical day-to-day examples of the problems of the administrative state.  They are extremely difficult to hold accountable and it is difficult to sort what they do for the public good and what they do for their own good.  As this series of posts progresses, if response to this post warrants progression, I hope to point out many other more practical examples of why the administrative state is a problem.

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