With gridlock in Congress the norm for the foreseeable future, the federal regulatory process has taken on greater importance as a policy tool.  But relying on the regulatory process to advance progressive, pro-worker policy is problematic.  The modern federal rulemaking process is not a level playing field in the contest between different stakeholders for influence.  Decades of studies have documented that corporate interests have a much greater level of participation in the regulatory process than do other stakeholders, such as consumers, workers, or nonprofits. As early as 1977, a Senate report found that “regulated industries spend from ten to one hundred times as much as public interest groups in rulemaking.”

In 2010, Senator Sheldon Whitehouse held a hearing on regulatory capture that came to the same conclusion, finding bipartisan agreement among the hearing’s witnesses that, “regulated entities usually have organizational and resource advantages in the regulatory process compared to public interest groups.”  Because corporate interests push towards deregulation (see here, here and here), corporate influence on the regulatory process constrains the field of contestation.  Even in an administration inclined towards regulation, the fight ends up being over what is the least intrusive regulation possible.

One driver of this imbalance is the role of the Small Business Administration’s Office of Advocacy.  It has an outsized influence on the regulatory process.  Its intervention amplifies and subsidizes the voice of corporations, while leaving other stakeholders to fend for themselves.  I believe that to make the process more fair, the law should provide similar subsidies to other affected stakeholders, such as workers.

The Office of Advocacy is an agency within the Small Business Administration that is tasked with advancing the views and concerns of small businesses across the government.  The Office’s duties derive from two sources: the Regulatory Flexibility Act (RFA) and E.O. 13272.  Specifically, the Office of Advocacy:

  • Monitors agencies compliance with RFA requirements to include detailed analyses of the impact of rules on small businesses in all proposed and final regulations;
  • Chooses participants for pre-publication review panels mandated for regulations proposed by the EPA, OSHA and CFPB;
  • Reviews and comments on draft regulations that agencies are required to send to the Office prior to publication in the Federal Register – note that agencies are required to respond to all Office of Advocacy comments; and
  • Conducts roundtables on rules proposed by federal agencies to solicit the views of small business and submits summaries of the roundtable comments to the agencies.

The role of the Office of Advocacy exacerbates the corporate bias in the regulatory process.  As reports issued by the Center for Effective Government and the Center for Progressive Reform found, the Office of Advocacy’s positions mimic those of big business.  One problem with the Office of Advocacy’s role is that it is premised on the conclusion that regulations are burdensome for small businesses and should be minimized if possible.  Absent from the Office of Advocacy’s mandate is any assessment of the benefits of regulations – for workers, consumers or any other small business stakeholders. Thus, the Office’s interventions all push regulations in one direction – towards less regulation.

The bias that these interventions inject into the regulatory process is magnified by the fact that the government pays for these interventions.  Through the Office of Advocacy, small business interests can weigh in on any and all regulations that they do not like.  Because they are not expending their own resources to draft comments or file briefs in litigation, they have no need to set priorities.  The Office of Advocacy’s ability to compel agencies to take its comments into consideration gives small businesses a low- or no-cost option for influencing the regulatory process.  They need only show up at an Office of Advocacy roundtable to get their views considered.  This channel for influencing the regulatory process essentially condones ex parte, non-record communication from just one stakeholder perspective – a dynamic counter to the spirit of the Administrative Procedure Act.  Or, small business interests may do nothing at all, knowing that the Office of Advocacy will reflect their general anti-regulatory perspective on its own.

All other stakeholders must expend their own resources to participate in the regulatory process.  Many noncorporate stakeholders must forego commenting on all but the most important rules because of limited resources.  This inequity creates a regulatory record that does not reflect the real breadth or intensity of the public’s view of proposed regulations.

Other noncorporate stakeholders cannot necessarily rely on agencies within the Executive Branch to advance their interests, even if they think those agencies’ interests align with theirs.  While the Office of Advocacy gets to muscle into any rulemaking it wants, other agencies are often left on the sidelines.  The Office of Information and Regulatory Affairs within OMB acts as a gatekeeper within the Executive Branch – it has to refer draft rules to an agency before the agency can weigh in.  Even if they get invited to weigh in, E.O. 12866 limits their review to identifying inconsistencies or duplication with other regulations. The Office of Advocacy, in contrast, gets to make a policy judgment on whether a proposed regulation is good or not.

One option for making the regulatory process more fair would be to create countervailing voices within the process.  As Sabeel Rahman has noted, it simply is not possible to “sterilize” or “insulate” the rulemaking process from moneyed political interests so the only viable option is to “expand[] the ability of diverse constituencies to engage in a democratic process of contestation and debate.”

To ensure that workers have a voice in the regulatory process, I propose creating an Office of Advocacy within the Department of Labor.  The DOL Office of Advocacy would intervene in the regulatory process of agencies across the government to highlight how proposed rules would either benefit or harm workers.  For example, the Department of Transportation is planning to issue regulations on the safe introduction of automated driving systems.  The DOL Office of Advocacy could ensure that DOT considers a broad array of workers who would be impacted by the introduction of driverless vehicles, including some who DOT may not think of, such as the warehouse workers who would have to load and unload driverless trucks.  The Federal Aviation Administration is considering revising regulations for who can bring service animals on airplanes.  The DOL Office of Advocacy could hold a roundtable to get the views of flight attendants who have to deal with animals in flight to ensure that their views, in addition to passengers’ views, are considered.  Similarly, when the Environmental Protection Agency issues proposed regulations implementing the Clean Air Act, the DOL Office of Advocacy could share its views on whether the proposal goes far enough in protecting the quality of air for workers whose jobs require them to work outside in high pollution areas.

There’s a popular saying in DC – if you’re not at the table, you’re on the menu.  We know that business has a seat at the regulatory table.  Creating a DOL Office of Advocacy would ensure that workers could come off the menu and take a seat.

A version of this post first appeared in “Rethinking Admin Law: From APA to Z”, American Constitution Society Issue Brief.