Paper. $27.95£16.95. ISBN: 9780691134642.
Reviewed by Robert A. Kagan, Department of Political Science and School of Law, University of California, Berkeley. Rak [at] berkeley.edu.
Steven Croley, a professor of administrative law at University of Michigan Law School, has written an ambitious and valuable book. It offers a strong defense of the American regulatory state and the role of administrative procedure in encouraging good regulatory governance. The book should be illuminating and useful for political scientists and legal scholars interested in regulatory policy, the politics of regulation, public administration, and administrative law. REGULATION AND PUBLIC INTERESTS would be an excellent book for graduate courses in any of those fields.
The central assertion of REGULATION AND PUBLIC INTERESTS is that the influential, interest-group-domination picture of regulation and the regulatory state that has been painted by “public choice” theorists is conceptually and empirically flawed. The regulatory process in the United States, Croley argues, and argues well, quite often serves the public interest rather than private interests. The public interest often is vindicated, Croley claims, because of the pluralistic, transparent, evidence-based administrative rule-making process that is mandated by the rules and principles of American administrative law.
Nowadays, Croley laments, “confidence in public regulatory institutions . . . is widely dismissed as [unrealistically] idealistic” (p.9). That cynical view of regulation, he suggests, stems from what he claims is the near hegemony of the public choice theory, originally put forth by University of Chicago economist George Stigler (1971, 1975) and cited by many legal scholars, political scientists, and critics of regulation from both the political left and political right. Croley summarizes that “cynical view” as follows (p.9):
The combination of elected legislators who require economic resources to maintain their positions, on the one hand, and regulatory agencies that . . . depend on the legislature for political and budgetary resources, on the other, provides a recipe for a regulatory state that works to advantage well-organized yet narrowly focused political interest groups – ‘special interests’ . . . . Such groups exchange economic and political resources for what are essentially regulatory rents. Regulatory institutions deliver those rents [because they are dominated by the legislative interests that oversee and fund them].
Part I of REGULATION AND PUBLIC INTERESTS offers a lucid exposition of this public choice theory, outlining its basic assumptions and claims. But Croley also makes a strong argument that those assumptions – ranging from [*641] the invariably lopsided array of interests that contend over regulatory policy to the motivations of legislators and agency officials – are empirically implausible as general propositions, obviously contradicted by many significant regulatory policies and rules.
Against the public choice theory, Croley pits what he calls “administrative process theory.” Most regulatory statutes, he points out, delegate a wide swath of policymaking choice to a specified administrative agency. And one key step in the public choice theory is that “agencies advance the interests of potentially powerful interest groups” – not only because those groups’ organizational advantages allow them to exert influence on legislatures” but also because “legislatures in turn are able to influence regulatory agencies” to further those narrow group interests. Legislatures control agencies, according to public choice theory, first, via direct oversight plus budgetary rewards and punishments. Second, as developed in the widely-cited works of McCubbins, Noll, and Weingast (McNollgast, 1987, 1989, 1990), legislatures structure the rules of the regulatory policymaking process to enable legislators and the interest groups they favor to monitor and influence agency actions. Croley sharply disagrees with this view of the regulatory policy-making process.
The institutionalized rules of administrative procedure, Croley argues, (a) give regulatory agencies considerable independence from Congressional control; (b) guarantee transparency, openness, and at least some level of responsiveness to the views of a pluralistic array of interested groups; (c) ensure a prominent role for science and rational policy analysis, as opposed to political favoritism, in shaping regulations; and hence (d) push agencies toward public-regarding, welfare-enhancing regulatory policies whose social benefits exceed their social costs. In spelling out the details of this administrative process model, Croley provides a clear, useful tour of the law flowing from the Administrative Procedure Act and of the legally-structured relationships between agencies and other branches of government in the rule-making process. In the course of this tour, Croley also offers a powerful critique of the McNollgast position.
American regulatory government, REGULATION AND PUBLIC INTERESTS proclaims, is administrative government. And the “administrative decision process to some degree levels the field of interest group competition by providing less powerful interests the means to compete with more powerful interests” (p.74). Moreover, administrative processes, it is contended, “generate information that reveals the costs and benefits of alternative regulatory outcomes and thereby allow agencies . . . to choose socially beneficial outcomes” (id). That does not always happen, Croley repeatedly acknowledges, but he claims it happens often enough to rebut the essential premises of the cynical public choice view of regulation.
How often? Croley’s analysis in the first two parts of the book rests for the most part on common-sense armchair analysis, rather than on empirical evidence, although he does a reasonably good job of identifying the relatively limited body of empirical studies that do [*642] bear on the issues. Providing empirical support for his argument (or the public choice position) Croley acknowledges, is not easy:
Unfortunately, questions concerning issues such as what motivates administrative decision-makers, how the administrative process limits congressional control over agencies, and the extent to which judicial review reinforces congressional control or instead liberates agencies to pursue general interests are issues difficult to tackle, much less resolve as a matter of theory (p. 159).
In Part III of REGULATION AND PUBLIC INTERESTS, Croley takes a useful step toward addressing those questions by offering three chapter-length case studies of regulatory policymaking – the Environmental Protection Administration’s 1997 decision to tighten air quality standards governing ozone and particulate matter, the Food and Drug Administration’s 1996 decision to regulate tobacco products (later struck down by the Supreme Court), and the Forest Service’s 2001 decision to limit road-construction in national forests – plus three shorter case studies. This handful of process-tracing studies, Croley notes, cannot resolve the empirical issues, “but,” he cheerfully writes “it sure helps” (p.160).
At a minimum, as Croley intended, his case studies rebut the sweeping generalities of the public choice model. In the course of providing detailed illustrations of how the administrative process model actually works in some high-stakes regulatory disputes, Croley shows precisely how and why Congressional-control-of-administrative-processes theory did not hold, and why his “administrative process” account did. In two of the cases, pro-regulation groups used legal procedures (rights to petition and to sue agencies to commence rule-making) to put the regulatory initiative on the agency’s agenda in the first place (p.259). In all the cases examined, regulatory officials sought to, and to considerable extent did, advance broad-based interests in the face of opposition from mobilized, concentrated business interests. The concentrated interests failed to derail the proposed regulations either at the agency level or via appeal to Congress. They failed at least partly because agency officials followed the administrative rules. They gathered and publicized information that preempted much, if not all, criticism of regulatory proposals for being ill-considered or scientifically unjustified. In the course of the notice and comment process, agency officials refined initial proposals in response to claims of both supporters and opponents. They relied on established administrative procedures to “inoculate themselves from interest-group criticisms and congressional sanctions” (p.282). Croley thus concludes, “The administrative process constrains agencies with poor regulatory proposals, as well as empowers agencies seeking to do what is socially beneficial” (p.267).
Croley successfully, in my view, rebuts the pure Stiglerian public choice view of the regulatory policymaking process. One might complain, however, that he has rebutted only an extreme straw man version of the theory. Croley anticipates and rejects that complaint, emphasizing its author’s own insistence that the theory fails if it is not applicable to all cases. That may be a permissible move [*643] in academic combat, but it does fail to take into account the growing recognition, even among public choice analysts, that policy outputs in the modern regulatory state vary – diffuse interests sometimes prevail and concentrated interests sometimes lose. The Stigler view was forged in the context of New Deal-era economic regulatory programs, such as trucking, airline, and dairy products regulation. As Croley acknowledges (in his lucid review and analysis of alternative theories) the rise of the “new social regulation” in the 1960s, the proliferation of public interest advocacy groups, and their empowerment by “the reformation of American administrative law” (Stewart 1975) in the 1960s and ‘70s all have compelled scholars to recognize that in many cases, political entrepreneurs and advocacy groups successfully balance the pressures exerted, both in Congress and in agencies, by concentrated industry groups (Wilson 1980); that concentrated group influence tends to wane when high levels of media attention to a regulatory issue give politicians little “slack” to make back-room deals with industry (Levine, 2006); and that regulatory agencies themselves, deliberately or as a result of their structures, shape regulation in ways that depart from the clash of interest group pressures (Schepsle 1981; Moe 1989; Rothenberg 1994).
Croley cannot and does not claim that his alternative “administrative process theory” always ensures that the narrow interests of well-organized industry groups will not prevail. His case studies, all drawn from the Clinton administration, are chosen to point in one direction. Perhaps for that reason, Croley pays little attention to the frequency with which a presidency that, for ideological or interest-group reasons, is hostile to regulation can use appointments (Mashaw 2006) or the regulatory analysis office of the Office for Management and Budget (Bressman and Vandenberg 2006 ; Vladeck 2006) to squelch or dilute the carefully-wrought regulatory proposals and analyses that Croley celebrates. Nor does REGULATION AND PUBLIC INTERESTS – because of its focus on rule-making – pay any attention to the various ways in which regulated interest groups and their political allies, even if they lose at the rule-making stage, can undermine regulatory programs by cutting the budgets of monitoring and enforcement offices or by pushing agencies to change targeting strategies.
What Croley has done – and it is an important contribution – is to remind us that the regulatory state quite often does act much more in accordance with public interest theories of regulation than many scholars assume, and to show us how and why. REGULATION AND PUBLIC INTERESTS does not answer the “how often” question or the “under what conditions” question. But it does a very fine job in highlighting one important variable – the legally-structured regulatory rule-making process – in a still-inchoate multi-variate understanding of regulatory policymaking.
Bressman, Lisa Schultz, and Michael P. Vandenberg. 2006. “Inside the Administrative State: A Critical Look at the Practice of Presidential Control.” 105 MICHIGAN LAW REVIEW 47-99. [*644]
Levine, Michael R. 2006. “Regulation, The Market, and Interest Group Cohesion: Why Airlines Were Not Reregulated.” in Marc Landy, Martin A. Levin, and Martin Shapiro, (eds), CREATING COMPETITIVE MARKETS: THE POLITICS OF REGULATORY REFORM. Washington, DC: Brookings Institution Press.
Mashaw, Jerry. 2006. “Motor Vehicle Mfgrs. Assn v. State Farm Mutual Auto Insurance.” in Peter Strauss (ed), ADMINISTRATIVE LAW STORIES. New York: Foundation Press, pp. 334-397.
McCubbins, Mathew D, Roger G. Noll, and Barry R. Weingast. 1990. “Positive and Normative Models of Procedural Rights: An Integrative Approach to Administrative Procedures” 6 JOURNAL OF LAW, ECONOMICS, AND ORGANIZATION 307-332.
McCubbins, Mathew D, Roger G. Noll, and Barry R. Weingast. 1989. “Structure and Process, Politics and Policy: Administrative Arrangements and the Political Control of Agencies.” 75 VIRGINIA LAW REVIEW 431-482.
McCubbins, Mathew D, Roger G. Noll, and Barry R. Weingast. 1987. “Administrative Procedures as Instruments of Political Control.” 3 JOURNAL OF LAW, ECONOMICS & ORGANIZATION 243-277.
Moe, Terry M. 1989. “The Politics of the Bureaucratic State.” in John E. Chubb and Paul E. Peterson, (eds), CAN THE GOVERNMENT GOVERN? Washington, D.C.: Brookings Institution.
Rothenberg, Lawrence S. 1994. REGULATION, ORGANIZATIONS AND POLITICS: MOTOR FREIGHT POLICY AT THE INTERSTATE COMMERCE COMMISSION. Ann Arbor: University of Michigan Press
Schepsle, Kenneth. 1981. “Review of Wilson’s The Politics of Regulation.” 90 JOURNAL OF POLITICAL ECONOMY 216-221.
Stewart, Richard B. 1975. “The Reformation of American Administrative Law.” 88 HARVARD LAW REVIEW 1669-1813.
Stigler, George J. 1975. THE CITIZEN AND THE STATE: ESSAYS ON REGULATION. Chicago: University of Chicago Press.
Stigler, George J. 1971. “The Theory of Economic Regulation.” 2 BELL JOURNAL OF ECONOMICS AND MANAGEMENT SCIENCE 3–21.
Vladeck, David. 2006. “Unreasonable Delay, Unreasonable Intervention: The Battle to Force Regulation of Ethylene Oxide.” in Peter Strauss (ed), ADMINISTRATIVE LAW STORIES. New York: Foundation Press, pp.190-226.
Wilson, James Q. 1980. THE POLITICS OF REGULATION. New York: Basic Books.
© Copyright 2008 by the author, Robert A. Kagan.