The Bullet-proof way to Rein in the Bureaucracy

Ok, not completely bullet-proof, but good

Conservatives across the country have launched some inspired attempts this year to rein in the power of rogue bureaucracies, aka the seat of real power in both the federal and state governments.

Here in Wisconsin, lawmakers have introduced a so-called Red Tape Reset, with four modest but solid proposals, including a sunset review that otherwise automatically expires a rule after seven years, and a narrowing of permissible scope statements to one rule per scope, as well as net-zero regulatory growth, that is, new rules must be offset by eliminating outdated and costly ones.

It’s nibbling around the edges of bureaucratic power, but nibbling around the edges may be the best we can do in Wisconsin at the moment, given a Democratic governor. Even these bills will never become law, but they do serve a foundational purpose in education and building for the future.

It’s useful to remind people that, in Wisconsin, the heart of recent attempts to control the state’s bureaucratic colossus, the REINS Act, is still in the crosshairs of the state Supreme Court, which could gut the statute by declaring unconstitutional its principal mechanism, the legislature’s ability to object indefinitely to rules while the legislature decides whether they align with statutory intent.

In addition, several years ago, the Supreme Court gave the administrative state another pass by slapping down legislative oversight of agency guidance documents.

Even worse, with a left-wing radical Supreme Court in place, things are even more dismal because you can bet a bottom dollar that even if a miracle occurred and some of these bills were enacted, progressives would challenge their constitutionality on some fantastical grounds, and their progressive allies, perhaps the most dishonest and nakedly political court majority ever, will go right along with them.

On the federal level, things are even worse, if that’s possible. Despite the Supreme Court’s scrapping of Chevron deference, and despite the arrival of the Trump administration, the federal bureaucracy retains massive power, not least in its lawmaking ability. As Dena Adler and Max Sarinsky (the senior attorney at the Institute for Policy Integrity at New York University School of Law and the regulatory policy director of NYU, respectively) wrote in their piece for the Yale Journal on Regulation last year, “With or Without Chevron Deference, Agencies Have Extensive Rulemaking Authority,” statutory grants of power to executive agencies are everywhere.

“Many statutes, for instance, instruct agencies to regulate in the ‘public interest’ or use similar language like ‘public convenience and necessity,’” Adler and Sarinsky wrote.

There’s more. As Adler and Sarinsky point out, Chevron deference is limited to interpretations of law rather than findings of fact:

“Agencies’ factual findings—including those based on scientific or economic analysis—will still merit judicial respect so long as they do not violate the Administrative Procedure Act’s ‘arbitrary and capricious’ standard,” they wrote. “As the Supreme Court explained in its 1983 decision in Motor Vehicle Manufacturers Association v. State Farm—a bedrock case that courts must apply regardless of what happens with Chevron—judicial review of agency factual findings is ‘narrow, and a court is not to substitute its judgment for that of the agency.’”

What’s more, Adler and Sarinsky continued, agencies can assert authority based on non-Chevron legal-deference regimes: “For example, Skidmore deference predates Chevron and gives weight to agency interpretations based on their ‘power to persuade.’”

The bottom line is, it’s not that Chevron doesn’t matter; it’s just that Chevron doesn’t matter as much as we think it does.

Are we at the mercy of the administrative state, then? Well, for the moment, perhaps. But in the long-term, there are ways to bring control of government back to the people. In fact, in the long run, there’s only one way, and I’ll get to that in a moment.

First, though, let’s take a look at efforts by conservatives to control the federal bureaucracy because it’s helpful and relevant to what we should be doing in Wisconsin.

Administrative reform Yin and Yang

There are two distinct approaches to controlling the unfettered issuance of regulations by executive agencies on the federal level, one ongoing in the House and the other in the Senate.

The starting point in the House is the traditional version of the REINS (Regulations from the Executive in Need of Scrutiny) Act. Like the Wisconsin version, it aims to jettison passive legislative rule review in favor of active rule review, that is, Congress would have to affirmatively approve any rule with an economic impact of $100 million or more (in Wisconsin, the threshold is $10 million over two years in implementation and compliance costs).

Never mind all the expected playing around with economic impact analyses, the original legislation gets to the heart of the problem—rulemaking authority must derive from Congress, and so it makes sense, except to progressives, that Congress should be able to judge whether executive agencies have stayed within the realm of that assigned authority.

The problem is, though it has passed the House multiple times, the REINS Act has been proposed for 15 years and it hasn’t been able to get out of the Senate alive, even when Republicans controlled that chamber and the presidency. That’s because the measure, which has no specific budgetary effect on outlays or revenues, runs head-long into the need for 60 votes to invoke cloture and end debate in the Senate. So the filibuster can sometimes have a downside.

But downsides lead to upsides in creativity, and this year the authors of the House budget bill have upped their inventiveness by tucking a modified version of REINS—a version with a budgetary effect—into the House budget reconciliation bill, which will need only a simple majority in the Senate. This version came out of the House Judiciary Committee.

In this iteration, instead of requiring congressional approval for rules with $100 million or more in economic impact, congressional approval would be needed for any “major rule that increases revenues….” Because most significant regulatory actions come with attached bonuses for government—new permitting fees, taxes, or levies—this would pretty much accomplish the same thing as the original REINS Act, and it has a budgetary impact, so the GOP hopes it will pass muster as part of the reconciliation bill.

There are potential land mines. Over at the Competitive Enterprise Institute, James Broughel has pointed out that deregulatory measures could be swept up in this version of REINS because “eliminating regulations spurs economic growth, which boosts federal income and corporate tax revenue indirectly.”

Broughel suggests modifying the language to require congressional approval for major rules that “directly” increase revenue through the aforementioned fees, levies, and taxes, not for incidental revenue gains from a growing economy spurred by deregulation.

The other potential fly in the ointment is the Senate parliamentarian, who decides what is proper for the reconciliation bill and what is not. If the parliamentarian decides the provision is merely incidental to the budget, then it would be a no-go.

A potentially better approach—and one that Wisconsin lawmakers should be looking at on the state level—is a proposal in the Senate to overhaul the federal Administrative Procedure Act (APA), which, as a reminder, serves as the bureaucracy’s de facto constitution.

A proposal to do just that was introduced this past week by our own U.S. Sen. Ron Johnson and Republican Sen. James Lankford of Oklahoma. Unfortunately, at least upon first reading, this bill, which Lankford says he has worked on for a decade and a version of which he has introduced before, falls short.

Not that it’s not a step forward. Lankford’s and Johnson’s Regulatory Accountability Act (RAA) would require that new rules be directly tied to a law passed by Congress, not to a broad grant of unchecked authority to the agency; it would end rulemaking through informal guidance documents; it would guarantee adequate public comment periods and data disclosure; and it would require courts to review agency interpretations de novo rather than deferentially.

Those are all very needed reforms. As noted above, just because the U.S. Supreme Court knocked down Chevron doesn’t mean courts can’t still defer to executive agencies through other legal deference regimes, and the use of guidance documents as instruments that carry the force and effect of law is systemic to the federal bureaucracy, even more so than they have been in Wisconsin.

“This bill restores accountability to a regulatory process that has become overly complex and burdensome, especially for small businesses and workers,” Johnson said in introducing the measure. “It reins in unelected bureaucrats by ensuring major regulations receive proper scrutiny and cost analysis before taking effect. Increasing transparency and simplifying the regulatory process will further economic growth for all Americans.”

A number of the potential benefits are tied together here, but under the proposed bill agencies would have to fess up about whether their rules were actually tied to specific statutes rather than simply promulgated under a broad grant of statutory power. More precisely, the bill would require the agency to cite “the legal authority under which a rule may be proposed, including whether rulemaking is required by statute or is within the discretion of the agency.”

There is no such requirement now for agencies to make that distinction, and the bill also requires the agency to consider whether existing laws or rules could be amended or rescinded to address the problem, as well as to consider reasonable alternatives. Most important, the legislation requires agencies to provide advance rulemaking notice for proposed major rules, and to establish a procedural framework for assessing those rules, with much more robust notice-and-comment requirements for stakeholders to respond and offer alternatives.

All of this is reviewed for compliance by the Office of Information and Regulatory Affairs (OIRA). The more specific binding of rules to law is essential precisely because of the broad flexibility many statutes have given the executive agencies. This bill would close the barn door at least partially, and add more transparency to the process.

What the bill does not do is require the opportunity for a formal public hearing for major or high-impact rules. Such a measure was included in a tougher version of the Regulatory Accountability Act introduced in early 2023 by Rep. Beth Van Duyne (R-Texas). In that bill, as analyzed by the Congressional Research Service, for all proposed major or high-impact rules—those with a specified significant economic impact or adverse effect on the public health or safety—an agency would have had to publish notice of such rulemaking and “invite interested parties to propose alternatives and ideas to accomplish the agency’s objectives and allow persons interested in high-impact or certain major rules to petition for a public hearing with oral presentation, cross-examination, and the burden of proof on the proponent of the rule.”

More specifically, an administrative law judge would preside over findings-of-fact hearings about disputed issues such as the costs and benefits of the proposed rule; or whether the proposed rule would achieve relevant statutory objectives, including the objectives of the statutory provision on which the rulemaking relied.

A hybrid approach

Previously I have written how the current informal rulemaking process known as notice-and-comment has been manipulated by special interest groups in a process that should take place during deliberation on the original legislation. But this hearing requirement would be something else again, a chance for Congress, using its array of experts, to home in on the underlying constitutionality of the rulemaking, and to have a (relatively) independent judge rule on the proposed rule’s compliance with statutory intent.

A formal hearing would dismiss campaign theatrics and drill down to the responsible exercise of rule-making authority. As some have said, the bill offered by Van Duyne would have established a hybrid model, if you will, between formal and informal rulemaking. The collapse of formal rulemaking—and the Supreme Court has aided in that implosion—has helped to fuel the growth of regulatory power precisely because it dispenses with formal hearing requirements that require real evidence and adjudication and substitutes informal, non-adjudicated notice-and-comment periods. Out with objective facts, and in with subjective ideological dogma.

As a result, progressives hate formal rulemaking (and so does the uni-party), arguing that such rulemaking bogs the process down. It does, but that’s not a bad thing. It would force agencies to prioritize truly needed rules.

Progressives have also argued that formal rulemaking favors industry because only regulated firms have the resources to participate substantively in public hearings.

Well, we all know that’s a croc, given the millions of dollars that non-profit and progressive interest groups spend on those notice-and-comment “grassroots” campaigns that provide public-relations cover for the big-government decisions of their bureaucratic allies. The only difference would be that, instead of spending that money to organize pressure from fake grassroots, they would have to spend it on producing actual evidence for their positions, and to do so in a public, transparent, and challengeable way.

As Kent Barnett, an associate professor at the University of Georgia School of Law, pointed out way back in 2017 in The Regulatory Review, in a rebuttal to the argument that formal hearings bias toward industry, Congress, in the 2010 Dodd Frank Act, called for formal rulemaking to further progressive ends by permitting the Office of Comptroller of the Currency (OCC) to preempt certain state laws only after on­-the-­record adjudication or rulemaking.

“Legislative history indicated that prior to Dodd­Frank, the OCC had eagerly preempted state law as a way of attracting fee­-paying financial institutions to select it as their prudential regulator,” Barnett wrote. “Formal proceedings, by requiring agencies to build a record and rely exclusively upon it, can serve as a tool for ensuring that agencies use their expertise and forgo actions that simply benefit regulated parties or the agency itself. Formal rulemaking, in other words, can be a device for limiting, as opposed to furthering, regulatory capture.”

Ordinarily, Barnett continued, one would expect public­ interest groups to “have lawyers at the ready, as they do in environmental and consumer matters, to represent less engaged or less well-funded parties.”

In other words, the thumb is not on the scale in formal rulemaking, but formal rulemaking does remove the bureaucracy’s thumb on the scale—actually, its two thumbs—during notice and comment periods.

Barnett believed, and I think he is correct, that the Supreme Court allowed formal rulemaking to be jettisoned as a way to get around certain requirements of the APA, and, as recent history proves with notice-and-comment, it seems the entire informal rulemaking process has seriously damaged Congress’s ability to oversee the regulatory process and ensure that it aligns with the will of the people.

After all, Congress is a formal body; it operates under formal procedures. Take away formality and the guardrails formality provides, and then delegate the process to the bureaucracy, and what you have is a bunch of rogue bureaucrats informally writing powerful rules in their cubicles with virtually no oversight or accountability.

Sadly, in the new version of the Regulatory Accountability Act, Van Duyne’s hearing requirement has gone the way of Puff the Magic Dragon. Sen. Johnson should amend the bill to put it back in.

As I wrote earlier, all of this is instructive for state lawmakers here in Wisconsin, where chapter 227 for administrative procedure and review serves as the state version of the APA. While the Red Tape Reset aims to inflict flesh wounds in the pen fingers of cubicle dwellers, a more comprehensive overhaul—down to rewriting the core mission of rulemaking—is long overdue.

Wisconsin is not alone. As on the federal level, the core language and goals of most states’ APAs are to enshrine the administrative state as an eternal and central part of the lawmaking landscape, if not as the primary force in legislation then at least as a senior partner. With such strong statutory language, we can’t just clip fingernails of pencil pushers. We have to amputate the pen fingers and reconstruct administrative rules, procedures, and mission from the ground up.

That starts with stripping state bureaucracies of any lawmaking authority at all—a statutory declaration that broad grants of power are unconstitutional delegations of vested legislative authority—and restricting executive agencies strictly to implementation and enforcement. It ends with powerful legislative oversight and the ability to stop rules before they are ever promulgated.

There’s so much to tear down in Wisconsin’s APA, too much for this one piece, but let’s just extract an example right off the bat. For starters, the statute says, “Each agency may promulgate rules interpreting the provisions of any statute enforced or administered by the agency, if the agency considers it necessary to effectuate the purpose of the statute, but a rule is not valid if the rule exceeds the bounds of correct interpretation.”

The problem with this broad statutory construction is that bureaucrats always think it’s necessary to interpret and the re-interpret statutory provisions, and they always think such reinterpretation is necessary. That provision is an effective legislative delegation.

And that’s why we have so many rules whose scope statements merely cite their vague statutory authority to promulgate a rule by interpretation, according to the whims of the bureaucracy. As for correct interpretation, the fight over legislative oversight of rulemaking authority, still in the courts, screams for modification of that language because it is obvious from their court initiatives that progressives want to cabin interpretation completely within their jurisdiction.

Rulemaking should begin, and end, in the legislature, with nothing left to interpret. The only things agency heads need bother themselves with is how to implement, not what to implement, and the top priority for any constitutional conservative these days is to make it so.

Transform, not reform

At the end of the day, while all the measures the GOP are seeking are positive, none are transformative. Until we unequivocally strip the bureaucracies of any lawmaking power, the bureaucracies and their progressive allies will find ways to manipulate the system. Even the most robust laws keeping agencies in their separate lanes will not prevent bureaucrats from causing trouble as bureaucrats are wont to do, especially given their strong civil service protections, aka their licenses to kill, here in Wisconsin.

The only true way to control the bureaucracy is to smoke it. It can’t be eliminated but it can be all but eliminated, especially in comparison to today’s leviathan.

As such, those wishing to curb bureaucratic power should look to reduce the number of bureaucrats. Fewer bureaucrats means fewer civil servants wielding ideological power. Fewer agency personnel means fewer agency personnel to enforce overreaching rules, thereby forcing executive agencies to perform only core government functions.

This week, testifying in Congress, Health and Human Services secretary Robert F. Kennedy, Jr., explained why he was making massive reductions in the agency’s workforce, the very kinds of reductions I would propose for Wisconsin. When he arrived on the scene, Kennedy said, there were eight minority health offices, nine women’s health offices, 27 HIV offices, and 59 behavioral health programs.

As for personnel reduction, Kennedy said he had simply pared agency growth to pre-pandemic levels. Since 2020, the number of personnel at HHS grew by 70 percent, and what he did was reduce to 2019 levels.

Lawmakers take notice: This is the way to rein in bureaucracy. Keep in mind, according to the latest figures from the Evers’ administration, the state bureaucracy is still growing.

It’s time to stop it, and the way to stop it is to cut it.