Reforming Regulation in 2016

By Ryan Young

The year 2015 was a record-setting one for regulation. The 2015 Federal Register, the daily digest where agencies publish proposed and final rules, reached 82,035 pages — the most since 1936. Yet Congress passed relatively little legislation — only 87 bills all year.

Only Congress has the power to legislate. But more and more, it has delegated power to regulatory agencies. If a regulation proves controversial, unpopular, or unduly burdensome, lawmakers can simply blame a regulatory agency. Unlike members of Congress, agency officials don't have to face voters every few years. It's a political win-win — Congress escapes voter ire, and agencies get more power.

Last year, agencies issued 3,408 regulations — beating the number of bills Congress passed by of a factor of 39, a ratio my colleague Wayne Crews calls the "Unconstitutionality Index." That is equivalent to a new regulation hitting the books every two and a half hours, 24 hours a day, seven days a week.

The need for regulatory reform is more urgent than ever. With Congress's approval ratings south of 20 percent, passing substantive regulatory reforms can help skittish members during an election year. Fortunately, there are several reform bills currently in various stages of the legislative process. Two of them will receive votes this week in the House of Representatives.

The Sunshine for Regulatory Decrees and Settlements Act of 2015 (H.R. 712) would rein in a practice known as "sue-and-settle," which agencies and activists use to regulate while circumventing the legally required rulemaking process. In a typical sue-and-settle situation, an environmental-activist group sues the Environmental Protection Agency for not meeting deadlines or not enforcing certain regulations thoroughly enough. EPA officials, who may have been working with the plaintiffs behind the scenes, happily admit guilt and agree to a settlement that expands the agency's power and scope. The Sunshine Act would mandate disclosure of attorney fees and other financial data, and require settlement terms to be published in the Federal Register.

The Sunshine Act would also add needed transparency to the rulemaking process by requiring agencies to issue monthly reports on their activities and future plans. Current reports, such as the Unified Agenda, are twice-annual at most, are increasingly issued late — or not at all — and lack much valuable data. The Sunshine Act would help to fix that by improving cost disclosure.

Currently, cost-benefit analysis is required only for rules officially defined as "significant," which means they either concern novel policy issues or are estimated to cost at least $100 million a year. Potentially, a rule costing $99 million per year could completely escape scrutiny. The Sunshine Act would give the public a much better idea of what new regulations might cost by requiring agencies to disclose annual cost estimates in tiers — starting at less than $50 million, then between $50 and $100 million, and so on, going all the way up to over $10 billion.

Also, the House will be voting today on the Searching for and Cutting Regulations that are Unnecessarily Burdensome (SCRUB) Act (H.R. 1155). It would establish an independent commission to comb through the 175,000-page Code of Federal Regulations for old, obsolete, redundant, and harmful rules. Its goal is to "achieve a reduction of at least 15 percent" in cumulative regulatory costs. With that goal in mind, and given that federal regulations now cost nearly $1.9 trillion per year, a successful commission could save the American people around $285 billion per year.

Once the commission assembles a package of old rules to get rid of, it sends it to Congress for a vote. If Congress approves the package, agencies must repeal those rules within 60 days.

The SCRUB Act includes other important reforms. One is a "one-in, one-out" requirement, under which agencies issuing new rules must repeal an equivalent dollar amount's worth of costs from old rules.

Another is a provision that makes all new agency rules subject to review within ten years of their coming into effect. Reviews can be done by either the agencies themselves or a third party, such as the Office of Management and Budget. Currently, all cost estimates are done before a regulation is passed. Once it actually goes into effect, the government does almost nothing to track its costs. SCRUB would change that.

Regulation is one of the biggest obstacles to entrepreneurship, innovation, and consumer satisfaction. Pruning regulations back to more reasonable levels should be an urgent priority for lawmakers from both parties. This week's bills would make for a good start.

Ryan Young is a Fellow at the Competitive Enterprise Institute.

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