Monday, November 18, 2013
Susan C. Morse (Texas) presents Safe Harbors and Rulemaking Over Time at USC today as part of its Center for Law and Social Science Workshop Series:
Safe harbors are a widely used and understudied hybrid consisting of a ex ante rule that guarantees compliance on certain facts together with an ex post background standard that applies to fact situations outside the boundaries of the safe harbor. Safe harbor rulemaking permits administrative agencies to focus only on those portions of a rulemaking project that are ready for ex ante rulemaking and to shift the burden of further development of the background standard to regulated parties. It produces some deadweight loss as a result of the incentive regulated parties face to change their behavior to comply with the safe harbor rule, but this deadweight loss should be less than that produced by an analogous brightline rule, since the legal results immediately on either side of the line drawn by a safe harbor are likely to be the same.
Safe harbor rulemaking is suitable where interest group lobbying is strong enough to generate serial proposals for the establishment of safe harbor rules. The importance of interest groups in safe harbor rulemaking means that agencies must guard against the risk that such interest groups will successfully lobby for inappropriate safe harbors. Agencies should force interest groups to bear as much of the burden of rulemaking as possible when safe harbor rules are proposed. For example, they should require interest groups to require interest groups to provide policy briefs subject to strict length limitations. This appropriately internalizes costs and could result in better analysis of a proposed ex ante safe harbor rule. However, the agency must retain and fulfill the task of vetting the congruence of the rule with underlying policy.