Professor, University of Virginia School of Law
Subcommittee on Commercial and Administrative Law
Committee on the Judiciary
United States House of Representatives
“60th Anniversary of the Administrative Procedure Act: Where Do We Go From Here?"
July 25, 2006
My name is Elizabeth Magill and I am a law professor at the University of Virginia School of Law. Thank you for asking me here today.
My teaching and research are in the fields of constitutional law and administrative law. I have taught administrative law and related courses—food and drug law, advanced administrative law—since 1998. My academic writing in administrative law is about judicial review of administrative action and about the varied procedural choices agencies make when they implement their statutory mandates—whether, for instance, they adopt a legislative rule or adjudicate a case or bring an enforcement action in the courts. I have served as a reporter for the APA Restatement Project of the Administrative Law and Regulatory Practice Section of the American Bar Association.
I am especially pleased to be asked to testify before this Subcommittee. Like many administrative law professors, I have admired this Subcommittee’s work on administrative process. The academics I know all cheered this Subcommittee’s leadership in seeking the reauthorization of the Administrative Conference of the United States and we hailed its passage in 2004. We have also admired the efforts of this Subcommittee to, with the assistance of the Congressional Research Service’s American Law Division, identify a research agenda to address important questions of administrative process and to fund several research projects.
I. Where do we go from here?
This hearing, which recalls the adoption of the Administrative Procedure Act sixty years ago, has been convened to ask what the future holds. I will do my best to answer that question in a moment, but I must note at the outset that it is not exactly clear where we go from here. That is because we do not fully comprehend where we are this moment. Despite the scope and significance of the administrative state, there is not enough systematic work that identifies what agencies are doing and asks whether they are doing it well; nor is there enough systematic work that asks about the effects of the mechanisms used to curb agency discretion—Congressional oversight, Executive and judicial review. There are many examples that highlight this lack of empirically-grounded research and writing on the administrative state. As Professor Jody Freeman pointed out in her testimony before this Subcommittee in 2005, an often-repeated statistic was that 80% of EPA rules were challenged in court; the only problem was that this had no basis in fact as one study demonstrated. Another often repeated statistic is that 90% of agency action is “informal” – that is, it does not follow procedures specified in the APA – but, after tracing the origin of this statistic, I found that the author of the statistic represented it as a “guess.”
The first most important step to setting a course for the future is the investment of resources in careful study of the most pressing issues that arise across a range of agencies. This Subcommittee’s leadership has started us down that road, and I will speak in a moment about work that advances that objective. But I do not have any doubt that more remains to be done.
Careful and systematic study is not an easy task and that is one reason why there is not enough of it. The administrative state is incredibly complex. Agencies have distinctive statutory mandates—some distribute benefits, some regulate the market, some protect the nation. They also follow different processes and have distinctive designs—Commission, Administrator, Cabinet level or not Cabinet level. They address a dizzying variety of tasks in varied ways. That complexity makes systematic and generalizable research very difficult to conduct.
At the same time, it is clear that administrative agencies are not so distinctive that one cannot generalize about their behavior and draw conclusions about what may trouble us about the soundness or wisdom of their activities. Of course, most agencies are subject the basic template provided for in the Administrative Procedure Act. More than that, though, many agencies share similar substantive tasks---they must rely on scientific judgments to do their business or they manage large benefit programs or they are in the business of licensing firms before they enter the market. Looking across agencies to determine and assess how they perform these tasks is obviously a worthwhile endeavor. Agencies are also subject to similar controls. They are the object of close oversight by Congress, the Executive, and/or the federal courts. Thus, despite the enormous complexity of the administrative state, there are common issues and problems that affect a large set of agencies such that cross-agency study will repay enormous dividends and will guide administrative reforms.
To figure out where we go from here, then, we must invest the resources to study the general issues that affect a substantial number of agencies and, if warranted, identify problems and formulate solutions. I would emphasize that those resources must be put in the hands of people who will approach their study in a systematic way. In my view, such studies must rely on the time-tested methods of social scientific inquiry, rather than the haphazard gathering of data or, worse, anecdote. It is only careful study that can establish the facts of the matter and thus provide a sound basis for identifying problems that need to be rectified.
There are several promising signs that such study is starting to occur. In part, these developments are due to the efforts and vision of the Members and staff of this Subcommittee and the CRS. Re-authorization of ACUS has generated enormous enthusiasm in the administrative law community. The studies that this Subcommittee’s efforts have spawned—Professor West’s work on public participation in rulemaking that we are hearing about today and Professor Freeman’s study of judicial review of administrative action—are important efforts that will advance our understanding and clarify what, if anything, is needed in the way of law reform. More than that, in my corner of the world, an increasing number of my peers are convinced of the need for empirical study of the administrative state and an increasing number of people in law teaching have the necessary training to engage in rigorous empirical work.
II. Establishing an Accurate Picture of the Administrative State’s Activity
For the past several years, I have been working with a colleague to complete what I just testified was the most important step to take before we could identify what comes next—that is, we have been working on a project to find out exactly where we are now. My colleague is Professor Steven Croley at the University of Michigan Law School and we have been working together to provide a comprehensive empirical picture of federal agency decision-making. We have received several grants to support our work, including from the Milton and Miriam Handler Foundation and the Olin Foundation. Our goal, in the most general terms, is to describe what agencies do and how that has changed over time.
Our project will present detailed data on the frequency and type of decisions that federal agencies make, both across agencies and across time. Our book explains the legal parameters of agencies’ primary decision-making tools—including legislative rulemaking, adjudication, litigation, and agency guidance—and provides as in depth data as is available about the frequency, including change in frequency over time, of agency reliance on those tools. Our data is presented in the aggregate (how many rules across the federal government and how has that changed over time) as well as agency by agency. We also identify patterns in that data. Our project is heavily descriptive, but we also provide narrative explanation of why, when, and how federal agencies make decisions, and we plan to address various normative questions implicated by our empirical findings as well.
Professor Croley and I undertook this project because, as students of the administrative state, we were frustrated by the lack of comprehensive information about agency decision-making. Most administrative law scholarship focuses primarily on judicial review of agency decision-making. While obviously important, judicial reaction to agency work product is only one window onto the activities of the administrative state. Meanwhile, political scientists and economists who write about agency behavior are not generally attentive to the legal differences among the agencies’ policymaking tools. As teachers of administrative law, we found no work that examined empirically the range and frequency of procedures agencies employ. More than that, no work provides a ready general source of data about the form and frequency of administrative agencies’ legal work-product. Our motivation for undertaking this project has been primarily to supply what is missing–certain basic, comprehensive facts–about agency behavior and agency decision-making.
Our effort has several goals. Most basically, we aim to shed descriptive light on fundamental but understudied questions about federal agency decision-making. For example: Exactly how often do agencies engage in rulemaking and adjudication processes under APA? Which agencies do so the most, and which the least? Have agencies engaged in more or less rulemaking, and adjudication, over time (and adjusting for variables like population, GNP, and legislative activity)? In addition, how many of which different types of rules–“regulatory rules,” “redistributive rules,” “governmental housekeeping rules,” etc.–have agencies issued over recent years? How many staff have agencies committed to the adjudication processes over time? How many times do agencies sue to enforce their statutory mandates and how, if at all, has that changed over time? How often are agencies sued and required to defend their exercises of authority and how, and if so, has that changed over time?
A related goal of our project is to provide others with an empirical base from which others can draw their own conclusions about administrative government. We hope to inspire others to enlist the data we supply to advance their own research on agency behavior. Abstract discussions of administrative government should be grounded as much as possible in concrete facts about what agencies really do, and the facts we present will inform others’ work.
Last but not least, we engage in analyses ourselves, practicing what we preach. That is, in addition to presenting the facts about the type and volume of agency activities, we consider how those facts might connect to perennial normative debates about, for example, executive versus legislative control of agencies, agency accountability and independence, and the appropriate size and role of the federal government, among others. We also explore our descriptive findings by running several statistical tests to evaluate hypotheses related to normative discussions of agency activity. For example, we investigate whether certain agency decision-making procedures increase or decrease with Republican or Democratic administrations, or in times of divided or undivided government, among other things.
We have collected data from a very wide variety of sources. In identifying sources, we had a strong preference for data collected across a large number of agencies, and collected by neutral entities at regular intervals. We wished to avoid collecting data agency by agency because of the risks of inconsistency this raises. Our sources are largely available from various government sources. The data come from, for example, Office of Personnel Management, GAO, the Regulatory Information Service Center, Office of Information and Regulatory Affairs at OMB, the General Services Administration, Executive Office of the United States Attorneys, and the Administrative Office of the U.S. Courts. Much of it is available in a raw form that must be analyzed and aggregated to be meaningful and appropriate for generalization. Most of the labor of our project consists of the legwork of finding, compiling, and aggregating data across many different sources, and then organizing and presenting that data in meaningful ways.
We are still in the process of producing our book. But in January of 2006, at the annual meeting of the American Association of Law Schools, we presented some of our preliminary findings. I will recount for you some of what we reported there.
The core of the book are chapters devoted to each of the major policy making tools available to agencies—rulemaking, adjudication, government litigation, and guidance. Let me provide a few highlights of our findings about rulemaking, adjudication, and government litigation:
*Rules: Knowing how many rules are promulgated each year depends on the type of rule as well as the classification system of the entity that collects the information. “Rule” is a legal term of art and there are different definitions of rule and different types of rules. But, two sources, RISC and GAO, provide the most useful aggregate data on the number of rules issued each year. Relying one these data sources, we have come to the following preliminary conclusions.
First, agencies together issue just over 4,000 final rules per year, an amount reflecting a gradual decline since the early 1980s, when they issued just over 6,000 rules a year. Second, about 66% of all final rules come from agencies whose heads report to cabinet secretaries, while only about 10% percent come from the independent agencies, down from about 20% percent two decades ago. The remaining 25% come from executive-branch agencies, like the EPA, whose heads do not report to cabinet secretaries but to the President.
Considering proposed rather than final rules, the same general pattern emerges. Agencies now publish about 2,700 proposed rules a year, down from over 3,500 in the early and mid-1980s. Here, however, independent agencies publish a bigger share, 15-20% of proposed rules, with non-cabinet executive agencies publishing just barely more than that, and the remaining 60% then coming from cabinet agencies.
Not all rules, however, have a substantive effect. Somewhere between 1,000 and 1,200 rules issued each year have a substantive effect. Among substantive rules, between about 500 and 700 rules each year are far-reaching enough to trigger White House review. The number was closer to 500 in the late 1990s, and approximates 700 each year since 2000. Of those, about 45 to 75 per year constitute huge rules with an estimated annual impact on the economy of more the $100 million.
*Adjudication: Tracking adjudication in the federal government is difficult because there are different types of adjudicators—Administrative Law Judges (ALJs) and Presiding Officers (POs)—who preside over evidentiary hearings and there is no current government-wide collection of data on the number of adjudications conducted each year. For one putting together an accurate empirical picture of administrative adjudication, the primary sources are OPM personnel data, two publications by the ACUS in the late 1970s, and two surveys of non-ALJ adjudications conducted in 1989 and 2002.
The vast majority of ALJs in the federal government adjudicate cases in the Social Security Administration. SSA ALJs have, since 1991, always constituted more than 72% of the total ALJs in the federal government. After SSA, the next highest employers of ALJs are Labor, NLRB, and the Energy Department.
In the aggregate, from 1991 through 2004, the total number of ALJs increased by 13% , from 1191 to 1341. This increase occurred during a period when total government employment declined by 15%.
But the 13% increase in the number of ALJs was not consistent across agencies. Social Security Administration ALJs increased by 31% while the number of non-SSA ALJs declined 37% between 1991 and 2004. In other words, the number of adjudicators who are implementing regulatory programs declined while those adjudicating benefits have increased.
Many who adjudicate cases in the federal government are not ALJs. We know from two surveys that there are several thousand POs conducting evidentiary hearings. In a 1989 survey, the author found 2,692 POs and this number increased to 3,370 according to a follow-up survey conducted in 2002. As of the 2002 survey, the largest number POs were in the Justice Department’s Executive Office for Immigration Review, the Veterans Administration, and the IRS and the largest number of cases decided by POs were in EOIR, the IRS, and the Appeals Council of the SSA.
*Government Litigation: One window onto to the administrative state is to observe litigation on behalf of agencies in the courts. This includes affirmative litigation –called “US as plaintiff” litigation—brought by the federal government as well as litigation where the government is defending against a challenge to its activities—called “US as defendant.” The Administrative Office of the Courts and the Executive Office of U.S. Attorneys each track this litigation.
A look at those data are revealing on a variety of fronts, but the most dramatic descriptive trend is the decline in “US as plaintiff” litigation. The Administrative Office of the Courts reports that US plaintiff litigation declined by two-thirds in a 14 year period. In 1990, there were 30,000 US plaintiff cases and this declined to 10,000 in 2004. During the same period, US as defendant litigation increased dramatically, from just under 25,000 cases to nearly 40,000 cases.
The Executive Office of the US Attorneys reports similar data, although its data track agency litigation more precisely because the reports categorize litigation based on the client agency that US Attorneys are representing. From 1991 through 2003, overall civil cases handled by US Attorneys declined by 11%. But US plaintiff cases declined by 60% while US defendant cases increased by 11%. Affirmative litigation on behalf of every agency that DOJ represents declined, except the Interior Department.
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This whirlwind tour of statistics provides just a slice of the data we will present in our book. As you can see, our goal is to provide an accurate and systematic picture of the activities of the administrative state. It is our hope that this sort of grounding will be a basis for moving forward by identifying the right questions to ask. And the data raise many questions: Why, in the last five years, are there more “significant” rules being forwarded to OIRA for review? What accounts for the rise in POs? Why is the number of regulatory ALJs declining? Why has US Plaintiff litigation declined so dramatically?
III. Where do we go from here?
So I return to the question I started with, namely, where do we go from here? As I said at the outset, I do not know where we go next because of the dearth of sound and careful work about where we are now. I am absolutely confident that further study is necessary to identify problems and formulate solutions. And the reauthorized ACUS provides an opportunity to move forward. Once funding is secured, many will clamor to fund various research projects. They may disagree on the priority, but few will disagree about the central need for more and more rigorous work about what is occurring at agencies. And there are many worthy research projects. In the fall of 2005, you heard testimony from Professor Jeffrey Lubbers, Mr. Mort Rosenberg, and Professor Jody Freeman, all suggesting possible avenues for research of a reconstituted ACUS. I have read their testimony and believe they made extremely valuable suggestions. I will add a few of my own to the list. My suggestions are not detailed proposals for study, but what I view to be the most important general areas for research.
External Agency controls: To my mind, a central question about agency activity is whether and how the various oversight mechanisms that are in place for agencies work. Agencies are subject to control and oversight by Congress, by the Executive, and they are subject to judicial review by courts. Asking about the function and efficacy of these control mechanisms is probably the most important question we can be asking. Thankfully, there is work that has been and is being done on these areas. Professor Croley has carefully studied the White House Review of agency rules and Professor Freeman is now engaged in her own comprehensive study of judicial review of agencies. These two studies are notable for their systematic—as opposed to ad hoc—approach and they have and will teach us a lot. But we need to do more because these external controls on agencies are so important and it is a complex enterprise to assess their efficacy. In my view, we are just at the beginning of building an accepted base of knowledge and moving toward conclusions about the wisdom and efficacy of these control mechanisms.
Internal Agency Controls: Another promising area for research is to get inside the agency and study how agencies make their important decisions. My own research has made me very interested in why it is agencies choose to implement their mandates in such different ways, some relying heavily on adjudication, others relying heavily on rules. But there are many other questions, for instance: When and why do agencies adopt enforcement guidelines? How do they organize internal appeals from front-line decision makers? How do they set their regulatory priorities? These questions about the internal decision-making process of agencies are central to understanding why they behave the way they do and, as a result, are worthy of sustained attention.
Effectiveness of Rules. Many have noted that we have no way to determine the effectiveness of rules after they are in place. Among other things, we presently have no mechanism to determine whether the projections contained in the cost-benefit analysis when the rule is adopted turn out to be accurate in the long-run. Answering this question may not answer questions about the overall efficacy of regulations, but it would be a useful question to ask and, more importantly, it is just the sort of analytic task that a think tank arm of government could design and conduct. A research program aimed at identifying the promising ways to go about assessing the costs and benefits after implementation and comparing them to earlier projections would be a worthy enterprise.
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Thank you for inviting me here today. I am gratified by the interest this Subcommittee has shown in the efficacy and fairness of administrative process.