Just as Chevron was an iconic decision marking the rise of the administrative state, so its relative decline is also a powerful symbol.
In a decision that has been criticized on both the right and left, the FDA announced a ban last week (via executive decree) on the use of wooden boards for aging cheese. It has since relented after receiving pushback from cheese interests, including the American Cheese Society. While hardly unprecedented, this example of bureaucratic rule helps illustrate a few basic, fundamental problems with the administrative process.
First, the FDA did not use notice-and-comment rulemaking procedures to announce the ban. It merely fit the prohibition within an existing rule in the Code of Federal Regulations: a rule requiring that “all plant equipment and utensils shall be so designed and of such material and workmanship as to be adequately cleanable, and shall be properly maintained.” This relatively vague rule was interpreted by the Branch Chief of the FDA’s Center for Food Safety and Applied Nutrition’s Dairy and Egg Branch to prohibit the use of wood boards, which are porous and therefore more difficult to sanitize than metal substances.
Once the blowback began, the administrator suddenly changed position without much explanation. This illustrates that the ad hoc decisions of relatively unknown administrators, not the settled decisions of the agency, were at work. While there are procedures in place for the rulemaking process, much of agencies’ activities are now conducted through very informal memoranda, opinion letters, and the like.
Second, this policy threatened small, artisanal cheesemakers rather than large cheese manufacturers. Let’s just say Kraft isn’t as invested in upholding the process of aging cheese on wood boards as smaller, artisanal cheesemakers are. This illustrates a common effect of agency regulations: they hurt small businesses and favor their the large and powerful competitors. Many estimates of regulatory burden conclude that small businesses pay more in compliance costs than larger corporations. The Small Business Association, for example, has found that their compliance burdens are “36 percent higher than the regulatory cost facing large firms.” One cheesemaker determined that the replacement of his wood planks would cost him $20 million, which might be manageable for a large company like Kraft but makes it impossible to sustain a small cheesemaking business.
Third and finally, organized interests mobilized to lobby the agency for a reversal of policy. This shows a very important and often-overlooked fact about how the administrative state functions. It is highly responsive, but primarily to special interests who are mobilized and whose stake is significant. The public interest, which is diffused over the entire citizenry, cannot be brought to bear on the agencies because it is not concentrated in the same way.
Lawmakers in Congress quickly pounced on yet another opportunity to take credit for saving their constituents from the big bad wolf (that they created and fed). Peter Welch, who represents many of these cheesemakers as Vermont’s representative in the House, is planning to attach an appropriations rider to the Agriculture Appropriations bill prohibiting FDA from pursuing this policy. Senator Charles Schumer from New York slammed the FDA for “bureaucratic overreach” and threatened to press legislation correcting the agency if it did not back down. After the outcry from the cheese interests and from interested legislators, FDA quickly backtracked and declared that it would “engage with the artisanal cheesemaking community” before taking next steps.
The FDA, like any agency, relies upon Congress for authority and for funding. When the agency steps on constituents’ toes, if they are sufficiently organized they will receive the support of their representatives, who will advocate for the little guy against the big bad government. Constituents are so thankful to be relieved from the agency’s rule that they rarely consider how the whole process is set up to harm them in the first place.
FDA’s brief flirtation with shutting down wood aging in the cheese industry featured arbitrary changes in the law’s meaning, hurt small cheese producers, and illustrated how agencies respond to concentrated and special interests. Maybe common sense ultimately prevailed, but only after the agency induced panic. Meanwhile, Congress continues to take credit for fixing a problem that it, ultimately, perpetuates.