Administrative Procedure Act Codifies Regulatory Process, Creates Industry Capture Opportunities

Congress passes the Administrative Procedure Act (APA) on June 11, 1946, establishing uniform procedures for federal agency rulemaking and adjudication. While ostensibly designed to ensure fairness and public participation, the APA creates structural opportunities for well-resourced interests to dominate regulatory processes through notice-and-comment rulemaking, judicial review, and procedural requirements that favor those with legal and technical expertise.

The APA emerges from a decade-long campaign by business interests and the American Bar Association to constrain New Deal agencies. Critics of the administrative state argue that agencies exercise legislative, executive, and judicial powers without adequate checks. The APA responds by requiring agencies to publish proposed rules, accept public comments, and explain their reasoning, creating a paper trail subject to judicial review.

On its face, the APA democratizes regulation by requiring public notice and the opportunity to comment. In practice, the comment process favors corporations and trade associations that can afford teams of lawyers and technical experts to submit detailed, lengthy comments. Academic studies consistently find that industry comments far outnumber and outweigh public interest submissions.

The APA’s judicial review provisions allow courts to overturn agency rules as “arbitrary and capricious” or procedurally deficient. Business interests use this provision to delay or block regulations through litigation, adding years to the regulatory process. The mere threat of litigation forces agencies to devote enormous resources to bulletproofing rules, slowing regulatory action.

The law also establishes the framework for the “revolving door” between agencies and regulated industries by requiring agency decision-making to be based on a formal record, expertise becomes paramount, and expertise resides disproportionately in industry. The APA’s legacy is mixed, while it provides some protection against arbitrary agency action, it creates systematic advantages for well-resourced interests in shaping regulation, establishing procedural tools that would be weaponized against public interest regulation for decades to come.