Politics and Regulatory Agencies

Politics and Regulatory Agencies: Law and Politics in Administration


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Let us not seek the Republican answer or the Democratic answer, but the right answer. Let us not seek to fix the blame for the past. Let us accept our own responsibility for the future.

John F. Kennedy

Politics is the art of looking for trouble, finding it everywhere, diagnosing it incorrectly and applying the wrong remedies.

Groucho Marx


If there’s something I hate the most, it’s feeling helpless, powerless.

Jillian Michaels

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Changing Times

In the past voices around the word (including the United States) had called upon governments to unleash the forces of the marketplace to solve

pressing problems that had in the past been dealt with through regulatory process.

However as we approach the 21st Century even in light of the condemnation, there seems to be an increasing demand for

more, different, and increasingly complex regulatory programs.


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Attacks began with President Carter..

Carter advise Congress:

“We must work together to review the laws that established the regulatory programs. Those that needlessly restrict competition, impose rigidity, or are otherwise out of date must be revised or eliminated.”

Natural gas deregulation legislation was adopted in 1978 and Carter immediately announced his intention to

roll back price constraints on oil with effective deregulation to be completed by mid-1981.

The President called upon regulatory agencies to examine their decision-making processes, both to improve their existing operations

and also to consider alternatives approaches to regulation that made greater use of market-oriented tools.

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Market-Oriented Tools

Going from a “command and control” mentality to a market-oriented tools strategies;

Market rights (a distribution of a limited amount of rights or permits)

Economic incentives (use of user fees, subsidies, or tax credits)

Compliance reform (use of self-certification to reduce governmental cost)

Enhanced completion (reduce barriers to market entry)

Performance standards (to reduce strict standards in order to meet the demands of consumers.)

Information disclosure (to provide relevant information to the users of their product)

Voluntary standards

Tiering (to tailor regulatory requirements to fit the size or nature of the regulated entity)

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The Message from all the Presidents was:

Principals for Regulations:

Regulation should not be imposed unless it is truly necessary

Regulation is not truly necessary if there is some less intrusive mechanism for obtaining the same results

There are market-oriented tools that rely upon incentives, information, and market choice that avoid the need for traditional command and control regulation.

If regulation does appear to be needed, it is essential to ensure that the potential impacts of those programs are carefully analyzed before they are imposed.

If they are imposed, they should be as flexible as possible and oriented toward a risk-assessment approach to determine how much action is truly needed given enforcement costs.

Some folks felt that even if some regulatory were necessary, there were far too many cases in which agencies were taking rigid and insensitive approaches to enforcement.

One of the arguments was that regulations and the “taking of a property (i.e. monies)” are not separate categories but ends of a single continuum.

A type of revenue enhancement program!

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Demands for New Regulations

Even in light of a demand for deregulation folks were pushing their governments to growing problems on what is called the “green and brown agendas of environmental protection.”

Green issues included questions of conservation and environmental protection.

Brown issues included concerned the management of hazardous materials, such as toxic chemicals and nuclear waste, and the clean-up of previous polluted sites.

As a result Richard Nixon created the “Environmental Protection Agency (EPA) through a reorganization order.

This open the floodgates for additional regulations to ensure the health and well being of the American citizen.

More broadly, the global community embarked on a new ear of efforts to respond to environmental problems while simultaneously

addressing the pressing need for economic development in many countries around the world.

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Sarbanes–Oxley Act as a Policy Option

The Sarbanes–Oxley Act of 2002 , also known as the “Public Company Accounting Reform and Investor Protection Act” (in the Senate) and “Corporate and Auditing Accountability, Responsibility, and Transparency Act” (in the House) and more commonly called Sarbanes–Oxley,

is a United States federal law that set new or expanded requirements for all U.S. public company boards, management and public accounting firms.

A number of provisions of the Act also apply to privately held companies, such as the willful destruction of evidence to impede a federal investigation.

The bill, which contains eleven sections, was enacted as a reaction to a number of major corporate and accounting scandals,

including Enron and WorldCom.

The sections of the bill cover responsibilities of a public corporation’s board of directors, add criminal penalties for certain misconduct, and require the Securities and Exchange Commission

to create regulations to define how public corporations are to comply with the law

https://en.wikipedia.org/wiki/Sarbanes– Oxley_Act


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Regulation as a Policy Option

Agenda Setting

Policy Formation

What type of policy is to be employed?

Regulatory policy

Distributive policy

Capitalization policy

Ethical policy

What means will work best?

Cost /benefit analysis?

How important is the problem?

Economic vs political issues

Technical challenges and difficulties

Efficiency vs effectiveness

Policy Adoption



Policy Termination or Transformation

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Regulation by Contraction

The call to privatize, or more accurately to contract out, has often been justified on the grounds that the approach to accomplishing public purpose will free the organizations involved of regulations and permit flexible and efficient responses to problem solving and service needs.

However contracting is a tool that sometimes used to accomplish regulatory purposes.

Contracting arises from the nature of contracts itself:

the system of regulations that govern government itself;

the use of accounting rules and expenditure controls as regulatory instruments;

the use of grants and contracts a mechanism of inter-governmental regulation;

and the common requirements the government contracts meet what are often termed national (or state) goals clauses.

Contracts are in their nature regulatory

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Why Have Policymakers Opted for Regulation?

Ultimately the choice is not based on economics or on the views of policy analysts, but a political judgement.

The need to regulate natural monopoly

Efforts to encourage proper use of natural resources

The need to ensue that participants in the marketplace take account of externalities or “spillover” effects of their actions

Problems of unavailability, inadequacy, or fraudulent information about health, safety, financial services, or other concerns

Prevention of destructive competition

Protection of consumers from sharply rising and windfall profits

Dangers of price discrimination

Efforts to promote or preserve key industries

Decisions to provide services to special groups through the use of cross-subsidies

Control of competing industries

Preservation of established property rights

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Regulatory Agencies of 21st Century

There is a renewed interest in recognizing the need to pay attention to the institutions designed to carry out regulatory and other governmental functions.

Those who work in or deal with regulatory agencies should be alert to the opportunities and dangers that their organization face

in the political environment in which they operate.

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The President and the Regulatory Process

The president is an important figure in regulatory administration.

However, the chief executive’s opportunities and resources are more complex than many recognize.

The key elements necessary to an understanding of the president’s role are:

An assessment of the actual power the chief executive possesses;

Presidential controls on regulatory bodies;

A critical assessment of presidential consultation and coordination of regulatory activity.

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Key Elements to Understand the President’s Role

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An assessment of the actual power the chief executive



Presidential controls on regulatory bodies



A critical assessment of presidential consultation and coordination of regulatory activity.



Presidential Power: Real and Imagined

Presidents have several more or less formal sources of authority at their disposal to deal with regulatory agencies, including

appointment and removal powers,

budgetary authority,

rulemaking clearance power,

coordination and control authority.

The power of the chief executive over regulatory agencies may, in some cases, be more apparent than real.

First, there are limits to the president’s formal powers. Because the president has the power to make appointments, but the appointments are subject to Senate confirmation process.

Second, since the president is required to respect properly enacted laws, the president is also limited by a maze of statutes.

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Presidential Controls and Constraints on Regulatory Bodies

Among the possible tactics that a president can employed to meet the challenge what can be perceived as a contentious, unresponsive , and even unbridled agencies are:



Direct legislative or administrative attack;

Indirect administrative attack.


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Presidential Controls on Regulatory Bodies

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Control through Executive Orders



negotiating strength in the congressional appropriations process.



creation of a counter-bureaucracy.



Indirect and Direct Administrative Attack

There are a number of indirect devices the can employ among the most common are budget authority and creation of a counterbureaucracy.

The most widely use tacit by the president is budget preparation process and White House negotiating strength in the congressional appropriations process.

However, direct administrative attacks have often been undertaken through legislation or by executive orders in addition to more subtle means.

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What is an Appropriations Bill?

An appropriations bill is a bill that appropriates (gives to, sets aside for) money to specific federal government departments, agencies, and programs.

The money provides funding for operations, personnel, equipment, and activities.

Regular appropriations bills are passed annually, with the funding they provide covering one fiscal year.

The fiscal year is the accounting period of the federal government, which runs from October 1 to September 30 of the following year.

Appropriations bills are under the jurisdiction of the United States House Committee on Appropriations and the United States Senate Committee on Appropriations.

Both Committees have twelve matching subcommittees, each tasked with working on one of the twelve annual regular appropriations bills.

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Annual Appropriations Bills




Financial Services

Homeland Security


Labor-Health and Human Services-Education

Legislative Branch

Military Construction-Veterans Administration

National Defense

State Department-Foreign Operations

Transportation-Housing and Urban Development

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Presidential Consultation and Coordination of Regulatory Policymaking an Enforcement

Some presidents focus a good deal of attention on regulatory agencies for a wide range of reasons.

Some do it to serve the rational and desirable interest in the betterment and coordination and management of the executive office.

However some agencies (even those created by statute) are looked upon by the chief executive as a way to accomplish their personal goals

and those partisan goals of the political party that helped put him or her into office.

There are some means that presidents may clearly employ,

but the debate over the extent of permissible presidential involvement in agency operations is unresolved.

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Purpose of Legislative Oversight

Legislators have an obligation to ensure the accountability of administrators but should not interfere for narrow purposes with ongoing efforts by professional administrators.

In providing the kinds of checks envisioned by the framers of the Constitution, they must respect the concept of the separation of powers.

The purpose of oversight is a means to:

Improve the efficiency, economy, and effectiveness of governmental operations;

Evaluate programs and performances;

Direct and prevent poor administration, waste, abuse, arbitrary and capricious behavior, or illegal and unconstitutional conduct;

Protect civil liberties and constitutional rights;

Inform the general public and ensure that executive policies reflect the public interest;

Gather information to develop new legislative proposals or to amend existing statutes;

Ensure administrative compliance with legislative intent;

Prevent executive encroachment on legislative authority and prerogatives.

In sum, oversight is a way for Congress to check on, and check, the chief executive.

Copyright © 2015 Cengage Learning. All rights reserved.


Copyright © 2015 Cengage Learning. All rights reserved.


Copyright © 2015 Cengage Learning. All rights reserved.




Copyright © 2015 Cengage Learning. All rights reserved.


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