The dan­ger posed by the grow­ing ad­min­is­tra­tive state

The cost of reg­u­la­tions is al­most al­ways un­der­es­ti­mated and in­no­va­tion is sti­fled

The Washington Times Daily - - COMMENTARY - By Ran­dolph J. May Ran­dolph J. May is pres­i­dent of the Free State Foun­da­tion.

Talk of the “deep state” is much in the air these days. To some, the deep state refers to what they see as a con­spir­a­to­rial in­tel­li­gence com­mu­nity leak­ing se­crets. To oth­ers, the deep state refers to what they see as an out-of­con­trol bu­reau­cracy out to bury — or at least trump — Pres­i­dent Trump’s ini­tia­tives.

I am not es­pe­cially en­am­ored of the “deep state” la­bel or of over­wrought con­spir­acy the­o­ries. And I don’t much take to hy­per­bolic bu­reau­crat-bash­ing or in­dis­crim­i­nate at­tacks on all fed­eral reg­u­la­tions. In­deed, there are many reg­u­la­tions, es­pe­cially in the health and safety ar­eas, that serve im­por­tant pub­lic pur­poses.

But surely there is a case to be made for the propo­si­tion that, as Chief Jus­tice John Roberts put it in 2013 in his City of Ar­ling­ton v. FCC dis­sent, “the dan­ger posed by the grow­ing power of the ad­min­is­tra­tive state can­not be dis­missed.” In that case, Chief Jus­tice Roberts ar­gued, on sep­a­ra­tion of pow­ers grounds, that the def­er­ence reg­u­larly given by courts to statu­tory in­ter­pre­ta­tions by fed­eral ad­min­is­tra­tive agen­cies — even to agency in­ter­pre­ta­tions re­gard­ing their own ju­ris­dic­tional bound­aries — has led to an ad­min­is­tra­tive state that “wields vast power and touches al­most every as­pect of daily life.”

Mak­ing the power-wielding all the more prob­lem­atic is the fact that, in many in­stances, the same agency of­fi­cials pos­sess au­thor­ity to pro­mul­gate reg­u­la­tions (a leg­isla­tive func­tion), po­lice com­pli­ance with the reg­u­la­tions (an ex­ec­u­tive func­tion), and ad­ju­di­cate dis­putes brought to en­force the reg­u­la­tions (a ju­di­cial func­tion). James Madi­son, fa­mously wrote in Fed­er­al­ist No. 47 that the “ac­cu­mu­la­tion of all pow­ers, leg­isla­tive, ex­ec­u­tive, and ju­di­ciary, in the same hands. . .

. may justly be pro­nounced the very def­i­ni­tion of tyranny.” No doubt, if he were able to con­tem­plate to­day’s ad­min­is­tra­tive state, he would turn com­pletely over in his grave.

Ex­am­ples of the wielding of such “vast power” by bu­reau­crats in the mod­ern ad­min­is­tra­tive state are fairly lim­it­less, of course. Here, to il­lus­trate, I want to dis­cuss just one paradig­matic ex­am­ple of an agency rule sub­ject to abuse — what the Fed­eral Com­mu­ni­ca­tions Com­mis­sion calls its gen­eral “con­duct” rule which it adopted in 2015 as part of a set of reg­u­la­tory man­dates to po­lice the prac­tices of In­ter­net ser­vice providers. This reg­u­la­tion pro­hibits In­ter­net providers from “un­rea­son­ably in­ter­fer­ing” with or “un­rea­son­ably dis­ad­van­tag­ing” ei­ther com­peti­tors or con­sumers.

You don’t need a de­gree in meta­physics — or in law — to fig­ure out that these mal­leable terms don’t es­tab­lish clear rules of the road. Rather they are so in­her­ently vague that the FCC it­self was not em­bar­rassed in its of­fi­cial or­der to call the In­ter­net con­duct rule a “catch-all stan­dard.” And shortly af­ter the con­duct reg­u­la­tion was adopted, the FCC Chair­man Tom Wheeler con­ceded “we don’t re­ally know” what it means.

The rule-of-law and due process prob­lems should be self-ev­i­dent re­gard­ing a reg­u­la­tion the agency con­cedes is a “catch-all” and which the agency’s chair­man ad­mits he doesn’t know what it means. Such a reg­u­la­tion, which has the force of law, in­vites abuse and fa­voritism in its en­force­ment, an ex­ec­u­tive func­tion, and in its im­po­si­tion of sanc­tions, a ju­di­cial func­tion. It’s more than a bit trou­ble­some when the very same of­fi­cials who adopt a vague reg­u­la­tion may then se­lec­tively ini­ti­ate reg­u­la­tory pro­ceed­ings to sanc­tion those they de­ter­mine have run afoul of it. A Madis­o­nian night­mare.

Lo and be­hold, not long af­ter the FCC adopted the In­ter­net con­duct reg­u­la­tion it ini­ti­ated an in­ves­ti­ga­tion of the “free data” plans of Ver­i­zon, T-Mo­bile, and AT&T, sup­pos­edly to de­ter­mine whether these of­fer­ings some­how “un­rea­son­ably” dis­ad­van­taged com­peti­tors. No mat­ter that these in­no­va­tive of­fer­ings, which ex­empt ac­cess to cer­tain web sites from the car­ri­ers’ data us­age caps, are very pop­u­lar among con­sumers.

For­tu­nately, within days af­ter Mr. Trump ap­pointed him the new FCC chair­man, Ajit Pai or­dered the in­ves­ti­ga­tions ter­mi­nated. A few weeks later, he pro­posed elim­i­nat­ing the con­duct reg­u­la­tion, call­ing it “a rov­ing man­date to mi­cro­man­age the In­ter­net.”

Aside from of­fend­ing rule of law and due process norms, a ma­jor prac­ti­cal prob­lem with reg­u­la­tions like the FCC’s con­duct rule — and there are many oth­ers like it still on the agency’s books — is that in­no­va­tion is sti­fled when busi­nesses are dis­cour­aged from ex­per­i­ment­ing. Ser­vice providers may wish to ex­plore news busi­ness mod­els that may meet evolv­ing con­sumer de­mand by dif­fer­en­ti­at­ing their ser­vices, but they may pull back be­cause they fear hav­ing sanc­tions levied for cross­ing a vague line in a reg­u­la­tion the agency calls a catch-all.

In his mon­u­men­tal work, “The Con­sti­tu­tion of Lib­erty,” F. A. Hayek ob­served, with re­gard to reg­u­la­tions, that “their over-all cost is al­most al­ways un­der­es­ti­mated,” while “the pre­ven­tion of new de­vel­op­ments” is never fully con­sid­ered. Cer­tainly, Hayek’s cri­tique ap­plies to the FCC’s at­tempt to mi­cro­man­age the dy­namic en­vi­ron­ment in­hab­ited by In­ter­net providers.

There’s no need to con­jure up the “deep state” to jus­tify wor­ry­ing, along with Chief Jus­tice Roberts, about “the grow­ing power of the ad­min­is­tra­tive state.”


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