Publication first appeared in "News from ACUS" column of the American Bar Association Section of Administrative Law & Regulatory Practice's Administrative & Regulatory Law News Spring 2015 edition. Reposted with permission.
In 2013, I had the privilege of joining a group of government lawyers and academics for a conference in Beijing examining reforms to the Chinese system of administrative licensing. Overhauling the licensing regime has been a major emphasis of the administrative law reform efforts underway in China, and officials in certain provinces have enjoyed major successes in substantially reducing the hundreds of licensing approvals a business must obtain prior to opening shop or undertaking certain regulated activities. While preparing my remarks, I sought to gain a more complete understanding of the U.S. licensing system, attempting to identify “best practices” that Chinese scholars might wish to consider while contemplating reforms. In so doing, I was struck by the paucity of scholarship in the area: though licensing and permitting represent a major mechanism for federal agencies (as well as their state and local counterparts) to regulate economic activity, few law review articles or even general treatises examine the topic at any length.
To be sure, the lack of scholarly attention to the topic does not represent general contentment with the status quo. As a recent report by the Business Roundtable explored, licensing requirements pose a significant impediment to opening a new business, developing property, or undertaking any number of productive economic activities. Though the U.S. licensing system is undoubtedly less burdensome than that prevailing in China or many other major trading partners, U.S. businesses nevertheless must navigate a confusing array of federal, state, and local permits and licenses in any number of contexts, and this can both serve as a barrier to new market entrants and greatly increase costs for existing firms. Frustrating though this may be for domestic players, it is even more challenging for foreign firms that may not otherwise be familiar with the U.S. legal landscape, a concern I have often heard expressed in my discussions with Chinese administrative law experts. At the same time, federal, state, and local licensing regimes serve a crucial function in preserving the environment, promoting worker safety, and otherwise advancing the public interest. Thus, any reform effort must strive to retain these important public protections while minimizing the burden on regulated entities.
On Capitol Hill, Senators and Congresspersons from both parties have recently proposed a number of bills that seek to streamline the federal licensing and permitting regime. Earlier this year, Senators Portman and McCaskill introduced the Federal Permitting Improvement Act (S. 280). This follows on the heels of a number of other bills designed to improve federal licensing and permitting considered in previous sessions of Congress, including the Water Resources Development Act of 2013 (S. 601), the RAPID Act (H.R. 2641), the Natural Gas Pipeline Permitting Reform Act (H.R. 1900), and several other pieces of legislation. At the same time, the White House has initiated its own reforms, issuing Executive Order 13,604 on Improving Performance of Federal Permitting and Review of Infrastructure Projects.
These various reform efforts share a number of common elements: all feature some combination of enhanced coordination amongst federal permitting agencies (and between federal agencies and their state and local counterparts), concurrent review by agencies with jurisdiction over permitting determinations, and/or periodic deadlines for permitting decisions. In this respect, they closely resemble Administrative Conference Recommendation 84-1, Public Regulation of Siting of Industrial Development Projects, which similarly promoted the use of “coordinating agencies” in instances where multiple agencies enjoy jurisdiction and of intermediate deadlines during long-term approval processes. The Conference is very pleased to see this resurgence of interest in the approach it recommended some thirty years prior and welcomes the opportunity to work with Congress, the White House, and affected agencies as they consider and implement these various initiatives.
As these reform efforts proceed apace, the Conference is interested in exploring yet another aspect of the federal permitting and licensing framework. In a recent article in the Duke Law Journal (64 Duke L.J. 133), Professors Eric Biber (UC-Berkeley Law School) and JB Ruhl (Vanderbilt Law School) articulate an overarching categorization scheme for federal permits, dividing them into “general” and “specific” permitting programs (while acknowledging that many intermediate cases exist). “General permits” are more akin to agency rules: the issuing authority sets forth a generally applicable framework, and all entities that meet certain qualifications are entitled to engage in a particular activity. “Specific permits,” by contrast, are issued via adjudicative procedures: an entity must furnish certain pieces of information to apply for the permit, and the agency then decides each application on a case-by-case basis. Each approach possesses certain advantages. General permits are usually less burdensome on regulated entities and are therefore more politically viable in contexts in which heavy regulation may prove unpopular. Specific permits allow agencies to tailor the legal requirements in light of the complexities of individual cases and can allow for greater outside participation in rendering individual decisions.
Federal policymakers have not, as a general matter, carefully assessed the comparative strengths and weaknesses of general and specific permitting regimes to determine which approach is optimal in any given case. In some instances, Congress or an administrative agency might be able to streamline an existing specific permitting regime by transitioning to a more generalized framework, setting forth criteria governing a large number of cases rather than considering each application individually. In other cases, a specific permitting regime may be entirely appropriate, allowing the agency to gather extensive information from each applicant and tailor the requirements in light of the complexities of each case. Thus, legislators and agency decisionmakers could benefit from a list of factors to consider in selecting between specific and general permitting programs (or designing hybrid permitting programs).
By the same token, Congress and agency officials should be especially attuned to the benefits and drawbacks of both styles of permitting when designing new regulatory regimes. For instance, Professors Biber and Ruhl have explored the potential use of general permitting under the Clean Air Act to enhance oversight of small-scale sources of carbon emissions (e.g., individual automobiles). Though the more intrusive approach associated with specific permitting would impose a substantial burden on the economy and likely produce public backlash, a relatively modest general permitting system may prove more economically and politically viable.
In this light, the Administrative Conference’s project will seek to produce such a list of factors that legislators and agency officials could consider when designing new permitting regimes or reassessing existing ones. Professors Biber and Ruhl will serve as consultants on the project, building on the research that they’ve done in connection with the Duke Law Journal article and examining additional permitting regimes. The research will proceed over the next several months, and the Conference aims to hold committee meetings on the project in the Fall of 2015 and produce a set of recommendations for consideration at the December 2015 Plenary Session.
One can debate whether the public welfare benefits of modern permitting regimes justify the economic costs, and some scholars of a libertarian bent, most notably Professor Richard Epstein, have suggested that the entire permitting apparatus be scrapped in favor of less restrictive alternatives. Whatever their merits, such proposals for radical reform are unlikely to materialize in the near future. Regulatory advocates and skeptics would likely agree, however, that whatever system of permitting Congress and agencies erect should be no more burdensome than necessary to achieve its legitimate objectives. The Conference’s project should substantially advance this goal, providing a clearer picture for legislators and regulators when deciding how to design and tailor permitting programs.