The case for a Congressional Regulation Office

The attached policy study was co-authored by Philip Wallach, senior fellow in governance studies at the Brookings Institution. It originally appeared in the Fall 2016 edition of National Affairs.

To appreciate the limited and largely dysfunctional role Congress plays in contemporary regulatory policymaking, consider the evolution of our current renewable-fuel standards. As part of the bipartisan Energy Independence and Security Act of 2007, Congress amended the requirements for blending ethanol into gasoline. The Energy Policy Act of 2005 had mandated a single level of biofuel obligations for gasoline refiners and importers, but the 2007 law required meeting escalating targets for specific kinds of biofuels, including greenhouse-friendly cellulosic biofuels derived from plant waste. Following the “technology forcing” strategy familiar in environmental policy, Congress chose to require future use of far more cellulosic biofuel than was then available so as to incentivize the development of new techniques and a larger market.

In case the legislated targets proved too ambitious, Congress gave the Environmental Protection Agency, which is charged with enforcing the rule, waiver authority to bring the requirement into alignment with actual production. By 2012, when 500 million gallons of cellulosic biofuel were required, the EPA estimated that only around 10 million gallons would be available. In fact, the total amount available turned out to be just over zero, but refiners had to purchase waivers from the EPA based on the 10 million-gallon estimate. Understandably, refiners sought legal relief from this bizarre situation, and they won a victory in the D.C. Circuit Court of Appeals in 2013. But that changed very little: The EPA continues to use the same methodology to set future targets from which waiver requirements are derived. Refiners continue to bear the costs of the failures of the cellulosic-biofuel industry. Future litigation is inevitable and disruptive regulatory uncertainty is a fact of life. The need for congressional action is obvious, and yet, aside from a few bills that have died in committee, Congress has shown little inclination to revisit the question.

Unfortunately, this has become Congress’s standard operating procedure for regulatory policy in recent years: Drop a daring and attractive-sounding mandate that may or may not be achievable or well-defined, charge the executive branch with making something sensible of it, hope the courts clean up any messes, and then rail against “out-of-control bureaucrats.” For any given regulatory issue, there are plenty of reasons why iterated, incremental legislating can be difficult: inertia and distraction, tricky interest-group conflicts, or a sense that opening up a policy to change might leave it worse off than before. But, when it comes to complicated policy questions such as the biofuel mandates, there is clearly another cause as well. Congress simply lacks the capacity to understand the real-world impacts of the policies it sets in motion. It is bombarded by lobbyist-provided noise and has limited resources to seek out other information independently, so its default stance becomes that of resentful onlooker. Republican self-government this is not.

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