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Oct
17

Regulatory Review, Capture, and Agency Inaction by Michael A. Livermore & Richard L. Revesz

Editor’s Note: The Livermore & Revesz paper is attached here.

From: New York University School of Law

PUBLIC LAW & LEGAL THEORY RESEARCH PAPER SERIES — WORKING PAPER NO. 12-47

LAW & ECONOMICS RESEARCH PAPER SERIES — WORKING PAPER NO. 12-28

Abstract: This Article highlights the role of capture in providing a normative foundation for regulatory review of administrative action, which at the federal level is conducted by the Office of Information and Regulatory Affairs (OIRA) within the White House Office of Management and Budget (OMB). It also establishes a reform agenda to help bring the practice of review in line with its anti-capture justification. There are two traditional justifications for OIRA review: that centralized review facilitates the exercise of presidential authority over agencies; and that bureaucratic tendencies toward overzealousness require a centralized checking response. Both of these justifications are problematic, however. The normative desirability of maximizing presidential power is subject to debate, and OIRA’s contribution to increasing presidential control is minimal. Bureaucratic incentives can lead to both over- and underregulation, raising doubts about the need for a systematic check focused solely on the former. An anti-capture function for OIRA provides a more promising ground for regulatory review. OIRA has four important features that, in principle, can facilitate an anti-capture role: its generalist nature; its coordination function; its use of cost-benefit analysis; and a tradition of independent leadership. There are, however, elements of OIRA review that undermine its anti-capture potential, most importantly the nearexclusive focus on the review of agency action. The failure of an agency to act can be just as detrimental to social well-being as overzealousness, and special interests may seek deregulation, delay, and weak regulation as often as over-regulation. This Article proposes a specific mechanism for OIRA to engage in review of agency inaction by examining petitions for rulemakings filed with agencies. This procedure cabins OIRA’s inaction review powers within a fairly limited field, making the task workable, and takes advantage of information held by parties outside the government.

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