Sticky Regulations

Abstract

Administrative law is often said to present a dilemma. On one hand, all three branches of the federal government have crafted procedures to facilitate public participation in the regulatory process and to ensure that the benefits of regulations outweigh their costs. But on the other hand, such procedures have a price — they delay administrative action and sometimes thwart it altogether. In fact, marching under the banner of “ossification,” an entire literature has formed around the idea that there are too many procedures and that administrative law should be transformed to speed up the regulatory process.

Ossification, however, has an overlooked, pro-regulatory benefit: It allows agencies to promulgate “Sticky Regulations,” i.e., rules that cannot be changed quickly. And sticky regulations can be quite valuable, especially when one recalls that agencies seek not only to regulate things as they now exist but also to encourage the emergence of a future that does not yet exist. Regulators are often hard pressed to achieve long-term policy goals absent private investment in innovation — and private investment is enhanced by regulatory stability. Agencies thus can be benefited by their ability to reassure private parties that the regulatory landscape will not be upended before long-term investments can be recouped. Hence the counterintuitive upside of ossification: The very fact that regulatory change is hard creates the stickiness that helps agencies regulate into the future. This is not to say that ossification is always a boon for agencies or that all procedures are cost-justified. It is to say, however, that once the value of sticky regulations is accounted for, the widely held belief that a dilemma exists between robust procedures and agency flexibility must be rejected as too simplistic.

Keywords: What Is New in Administrative Law, Administrative Law, Rules, Ossification

JEL Classification: K23