Why Should Regulators Have to Listen to You?Cass R. Sunstein
Oct. 4 (Bloomberg) -- The U.S. Bill of Rights declares that no one may be deprived of life, liberty or property “without due process of law.” The core meaning of this provision is that the government cannot hurt you -- by taking away your freedom or what you own -- without giving you an opportunity to have your say.
This right helps to define liberty under law. Public officials are fallible, and before they take action against you, they should hear you out to make sure that they have the facts straight. Human beings should also be treated with respect. If public officials proceed against you without giving you a chance to be heard, they are treating you disrespectfully.
In light of the defining importance of the due process clause, many people are stunned to learn a remarkable fact: When the government issues regulations, the Constitution doesn’t require officials to listen to you, even if your liberty and your property are at stake.
That is what the U.S. Supreme Court ruled in 1915, in a case with the somewhat ominous name of Bi-Metallic Investment Co. v. State Board of Equalization. The great jurist Oliver Wendell Holmes Jr. made it clear that while the government must give hearings to aggrieved individuals, the matter is different when a lot of people are simultaneously affected: “Where a rule of conduct applies to more than a few people, it is impracticable that everyone should have a direct voice in its adoption.”
Remarkably, Holmes said that it is permissible for a general rule to harm people, even “to the point of ruin, without giving them a chance to be heard.”
For regulations, these words have an unmistakable implication. If the Agriculture Department issues a rule significantly affecting farmers, or the Transportation Department issues a rule imposing big costs on the railroad industry, or the Labor Department issues a rule with major effects on workers, the Constitution does not create any right to a hearing.
As far as the Constitution is concerned, the government can act unilaterally. “Regulatory due process” has been like a unicorn or a time-travel machine or a bipartisan Congress. It doesn’t exist.
This state of affairs was far from satisfactory in 1915, and it is even less satisfactory today. Farmers, railroads and workers are likely to know a lot about the real-world impact of rules that affect them. Sure, some of their comments will be self-serving -- but they may also be informative, even crucial.
In the almost 100 years since Holmes wrote, the Supreme Court has not seen fit to question his views. But in the past two decades, Presidents Bill Clinton, George W. Bush and Barack Obama have quietly given birth to regulatory due process.
In 1993, Clinton directed executive agencies to provide the public with a meaningful opportunity to comment on any proposed regulation -- in general, through a comment period of at least 60 days. He added that even before agencies propose a rule for public comment, they should seek to involve those who are intended to benefit from and those expected to be burdened by regulation.
In 2001, Bush accepted and thus reaffirmed these principles. His administration undertook additional initiatives to make rulemaking more transparent to the public, among other things by establishing guidelines for agencies to follow in analyzing the likely effects of their rules.
In 2011, Obama took even more ambitious steps. He required rulemaking to be based on “an open exchange of information and perspectives,” including businesses (both small and large) and the public as a whole.
He directed agencies not only to provide, wherever feasible, a comment period of 60 days, but also to give the public timely online access to the scientific and technical support for their rules -- in an open format that can be easily searched and downloaded, so as to allow public comment on those materials as well.
Perhaps most important, Obama required agencies to continue to scrutinize significant rules after they have been finalized, and to allow public participation in that process. There might be serious problems in regulations completed two decades ago, two months ago, or even two days ago. Members of the public are in a good position to spot those shortcomings.
A well-functioning regulatory system creates a right to appeal, making structures available to fix such problems. Though it isn’t yet widely known, Obama has put those structures in place.
Public comments have helped improve numerous rules. A 2012 rule from the Department of Health and Human Services, eliminating about a billion dollars in annual regulatory burdens on hospitals, was influenced by comments from nurses who sought to reduce red tape and to allow patients and their caregivers to administer certain medications themselves.
And a 2011 rule from the Environmental Protection Agency and the Transportation Department, producing an improved fuel-economy label for new vehicles, greatly benefited from comments by automobile dealers and public interest groups, emphasizing the need for clear, meaningful information about the potential savings (or costs) accompanying vehicles with high (or low) fuel economy.
A key task in the near term is to make people aware of ever-growing opportunities to comment on both proposed and final rules. As comments are increasingly submitted and made available online (via regulations.gov), another task is to enlist technologies, perhaps including web applications, to allow regulators to learn from the dispersed knowledge of the public without being drowned by sloganeering and pleading from interest groups.
Fact-free letter-writing campaigns (sometimes consisting of little more than hissing or applause) are less helpful than novel information and perspectives. Technologies are increasingly available to help sort the wheat from the chaff.
But whatever the Supreme Court thought in 1915, and whatever it may think now, one thing is clear. Regulatory due process exists, and it has come of age.
(Cass R. Sunstein, the Felix Frankfurter professor of law at Harvard University, is a Bloomberg View columnist. He is the former administrator of the White House Office of Information and Regulatory Affairs, the co-author of “Nudge” and, most recently, the author of “On Rumors: How Falsehoods Spread.” The opinions expressed are his own.)
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