How to Stem the Regulatory Flood
November 5, 2014
In President Obama's first five years in office, executive agencies passed 157 new "major" regulations ("major" meaning the regulation would have a yearly economic impact of at least $100 million). At an annual cost of $73 billion, the effect is enormous, and there are at least 120 more major rules to come, according to the agencies themselves.
As James Gattuso and Diana Katz of the Heritage Foundation explain, the regulatory state has not stopped growing since 1982. While the SEC issued the most regulations in 2013, the EPA is responsible for the most expensive ones; since 2009, the EPA has imposed $40 billion in new costs annually, more than all other executive branch agencies put together. The sheer size of the regulatory state staggering, but so is the process associated with rulemaking -- according to Gattuso and Katz, there were a number of rules issued in 2013 that lacked critical information about costs. Of the 26 "major" rules issued last year, regulators did not quantify costs for seven of them, and eight were missing cost data for key elements of the rules.
How to deal with regulatory overload? Gattuso and Katz offer a few legislative solutions:
- The REINS Act: This bill (H.R. 367, S. 15) would require Congress to approve all "major" regulations before they could go into effect.
- Require regulatory impact analyses of legislation: Congress can pass laws without analyzing what they will ultimately cost. Requiring lawmakers to evaluate the regulatory impact of any potential legislation would do much to reveal the true costs of laws and could slow the growth of regulation.
- Have sunset dates for all regulations: There are plenty of outdated regulations still on the books, because there is no system in place to get rid of them. A sunset provision could require that regulations automatically expire after a certain period of time, unless an agency chooses to extend them by going through the typical rulemaking process.
- Require independent agencies to undergo regulatory review like all other agencies: A few agencies -- such as the FCC, SEC and Consumer Financial Protection Bureau -- are considered "independent," and their regulations are not required to be reviewed by the Office of Information and Regulatory Affairs, nor are the agencies required to conduct a cost-benefit analysis of potential regulations. They should be required to conform to the same standards as other agencies.
It is up to Congress, contend Gattuso and Katz, to slow the growth of regulations and the associated expense and red tape.
Source: James L. Gattuso and Diane Katz, "Regulation: Killing Opportunity," Heritage Foundation, October 31, 2014.
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