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Does Extending a Comment Period Equal Regulatory Delay?
No full textDoes extending a comment period equal regulatory delay? The short answer is “yes.” Numerous media accounts suggest that an extension of a comment period amounts to a delay in a regulation, no matter the length of the extension. Given that many rulemaking proceedings span several years before a rule is finalized, does an extension of the comment period by 30 to 60 days really count as a meaningful delay? After reviewing more than 360 “major” and “economically significant” rulemakings from the past ten years, I can report that the answer is “yes.” Rules that allow more time for comments are generally associated with longer rulemaking periods. Of course, rulemaking time cannot simply be explained by a longer comment period. These comment extensions should be viewed as a symptom, and not as the cause, of regulatory delay, as the rulemakings receiving extensions are often controversial, expensive, or subject to intense litigation. The length of a comment period is obviously but one metric to use in examining a rule’s life. To conduct our study of regulatory delay and comment periods, we examined major completed rulemakings in the Unified Agenda, from the fall 2006 edition to the most recent spring 2014 edition. There were numerous rulemakings listed as “completed” but that were actually withdrawn, and we removed those entries. In the end, 361 remaining major rulemakings actually found their way into the Federal Register. Here’s the bottom line on delay: rulemakings with extended comment periods took almost twice as long to complete as rules without such extensions. For example, of the 361 rulemakings in the sample, regulators extended the comment period for 88 of them. On average, those measures took 1,133 days to complete, or 3.1 years. However, using the median is probably a better measure of central tendency because the range extended to over 16 years for one rulemaking. (We measured “length of rulemaking” from the first publication in the Unified Agenda to the final publication in the Federal Register). Using the median, these periods shrank to 795 days – or 2.1 years. Compare those figures to rules without an extended comment period: 351 days, or 0.96 years (median). It certainly appears that extending the comment period is associated with a delay. But there are a few caveats. Because we defined the length of rulemaking as the initial Unified Agenda entry to final publication in the Federal Register, there were several rulemakings that, because they were never originally listed in the Unified Agenda, have negative time horizons. For example, interim final rules that agencies do not initially list in the Unified Agenda, but that later appear in the Agenda, obviously do not have extended comment periods for their proposed versions. The rule establishing preventative coverage for group health plans under the Affordable Care Act, for example, was listed in the fall 2010 Unified Agenda, which was published on November 29, 2010. However, the Unified Agenda listing occurred after the agency issued an interim final rule, published on July 19, 2010. Thus, the rulemaking had a negative time horizon because the first notice was a publication in the Federal Register, not in the Unified Agenda. Excluding these rulemakings (just 24 in total) does not significantly alter the results. For example, the median period for rules with an extended comment period grew to 2.25 years from 2.1 years. For all other rules, the median length of the time for completion grew to 1.04 years from 0.96. Our methodology does fail to recognize that agencies probably begin working on long-term actions before notice in the Unified Agenda. But what it fails to capture in that respect, it also assumes the rulemaking is not final until the Federal Register publication. As previous research has shown, there can be a significant lag – up to 197 days – between when the Office of Information and Regulatory Affairs finishes its review of a final rule and the publication of that rule in the Federal Register. Beyond establishing overall length of rulemaking, and demonstrating that extensions of comment periods are associated with a regulatory life around twice as long as those without extensions, Unified Agenda data allow us to contrast target publication dates with actual publication dates. For rules that provided a target publication date in their Unified Agenda entry, we were able to compare the scheduled publication date with the actual Federal Register date. For the sample as a whole, the “gap” between the Unified Agenda target and actual publication was a median of just ten days, which is somewhat incredible considering the life of most rulemakings. Yet, rules with extended comment periods missed their target publication by a median time of 49.5 days, compared to just seven days for rulemakings without comment extensions. The averages for extended and “normal” rules were 193 days and 60 days, respectively. This demonstrates, generally, that extending the comment period is associated with longer rulemaking timelines and that these rules are more likely to miss their initial publication dates. The above evidence makes sense intuitively. A rulemaking that extends the comment period by 30 to 60 days is likely to take longer, and as the data demonstrate, it will probably miss its scheduled publication by roughly 50 days. Although there are countless factors involved in rulemaking delay, it is clear that extending the comment period will likely result in a lengthier process
Cost and Benefit Changes During Federal Rulemakings
No full textToday’s regulatory process is anything but simple and transparent. Critics on both sides of the political divide complain that agencies and the Office of Information and Regulatory Affairs (OIRA) are impervious “black boxes.” The critics further charge that OIRA routinely slashes benefit estimates of rulemakings and often inflates cost projections to delay “economically significant” rules. Because of the opacity of the process, we cannot say exactly why rulemakings change at OIRA and at independent agencies. We can, however, examine how the regulations change as they move from proposed to final rules. Based on an analysis of 160 rulemakings published in 2012 and 2013 (excluding airworthiness directives), the calculated costs of 74 rules (46%) increased at the final rule stage, compared to the proposed rule stage. Only 46 rules (28%) had lower estimated costs, and the costs of 40 rules (25%) did not change during the rulemaking process. Independent agencies are not generally required to submit their rules to OIRA review. Not surprisingly, cost changes for rules that OIRA reviewed were dramatically different from rules created by independent agencies. The estimated costs of finance rulemakings – regulations by the Consumer Financial Protection Bureau (CFPB), the Commodity Futures Trading Commission (CFTC), and the Securities and Exchange Commission (SEC) – increased by an average of 1,691 percent from the proposed to final rule stages. In contrast, healthcare rulemaking costs increased by 143 percent, and Environmental Protection Agency (EPA) rulemaking costs only increased by 41 percent. (Data on file with author. Click chart for full size image.) The sample-wide average showed a nearly 400 percent increase in calculated costs as rules move through the rulemaking process, although this number is inflated by a few finance regulations. The first column in the accompanying table is the raw average percent change in calculated costs from the proposed to final rule. The next column is the average excluding the three rules with the largest percent changes in each category (“adjusted average”) to better capture the typical change. The finance rules had the largest disparity in percent changes, as displayed by the dramatic reduction between the average and the “adjusted average.” The need to exclude outliers was less essential in the other two areas because the dispersion was not nearly as pronounced. When analyzing this data, we expected special scrutiny on large, “economically significant” rulemakings. We hypothesized that more expensive rules would be subjected to longer OIRA review times and more pressure from outside interests during the rulemakings process — and that therefore they would have larger percentage changes. However, the evidence does not support these expectations. Regression analyses do not reveal any correlation between the aggregate cost of a proposed rule and either net or percent change in cost calculation. In addition, there is no correlation between length of review time at OIRA and the net change in rule cost or the percent change. Although critics may have other reasons to chastise OIRA for lengthy rule reviews, there is no statistical evidence that OIRA is unduly distorting the cost and benefit calculus of rules by holding them for a longer period. A more targeted look at the federal government’s most notable regulations reveals results similar to the larger sample. Among those rules that OIRA included in its 2013 Draft Report to Congress, fourteen rules contained both cost and benefit estimates at both stages of the rulemaking process (proposal and final rule). Only three rules increased in cost from their proposed to final version; six decreased in cost, and five had no change. Recall, for the broader sample, roughly half of the rules increased in costs, compared to just a quarter for this smaller OIRA sample. On the other side of the cost-benefit calculus, seven of the fourteen most significant rules increased in calculated benefits from proposed to final rule stages. Four rules saw decreases, and three remained unchanged. The average calculated benefits in this sample increased by 14 percent, but the sample size for benefit changes is surely too small to draw sweeping conclusions. Suggestions that OIRA systematically reduces benefits and inflates costs are simply not supported by the data. Changes in agencies’ cost-benefit analyses appear instead to be specific to the unique nature of individual rules. There is a large amount of variability in the data that neither length of OIRA review nor the cost of the rule appears to explain. Of course, this systematic analysis of how rules are changing is unable to prove why they are changing. For that, greater transparency at OIRA and in agency processes can help to answer why regulatory changes occur
It Is Premature to Label a Regulatory Budget Unconstitutional
No full textIn their recent essay appearing in The Regulatory Review, Scott Slesinger and Robert Weissman declared that Executive Order 13,771, which directs agencies to repeal two existing regulations for every new regulation they seek to promulgate, is unconstitutional. The constitutionality of regulatory reform appears to be an emerging theme in 2017, as at least one other group has argued separately that another tool for regulatory reform—the Congressional Review Act, passed by both houses of Congress and signed by President Bill Clinton in 1996—is also unconstitutional. Although Slesinger and Weissman might have legitimate policy objections to Executive Order 13,771 and its application of regulatory budgeting, claims of that order’s unconstitutionality are premature. Can anyone point to one instance when the Trump Administration rescinded a regulatory standard to satisfy the one-in, two-out order? According to the American Action Forum (AAF), the Administration has not finalized a single major regulatory action that would trigger the need for two or more deregulatory actions under the executive order. It is hard to see how anyone can have standing in court to challenge an executive order that has yet to lead to any changes in regulations. Slesinger and Weissman’s argument explaining the lawsuit filed by their organizations—the Natural Resources Defense Council (NRDC) and Public Citizen, respectively—is filled with speculative language that shows that any constitutional suit against the executive order is far from ripe for judicial review. Words and phrases such as “potentially,” “will make,” “would inflict,” and “will have,” can be found throughout their essay. Are not courts more interested in actual harms that result in victims from agency action? What harm can Public Citizen or the NRDC claim from the executive order, which has yet to lead to a repeal of a regulation about which they are concerned? Furthermore, Slesinger and Weissman, along with other critics of regulatory budgeting, seem to forget crucial language contained in EO 13,771: “unless prohibited by law,” a phrase that appears four times in the executive order. In rhetoric, strawmen are erected and burned that seem to depict an alternate reality where the U.S. Environmental Protection Agency (EPA) must choose between clean air and clean water. Because there are statutes directing EPA to preserve both, the Agency will not have to abandon particulate matter standards if it seeks to implement a clean water rule. If it did, the Agency would surely lose in court. The dictates of existing statutory law still remain; Executive Order 13,771 does not change the law, just the priorities. This executive order, as countless previous executive orders have done, merely moves the margins of regulation. There were no cries of unconstitutionality when President Barack Obama issued Executive Order 13,563 directing agencies to conduct retrospective review to see if they should “modify, streamline, expand, or repeal” existing regulations. Although progressives had policy objections when President Obama repealed or significantly modified rules, there were no constitutional lawsuits racing toward the courts. Indeed, President Obama cut costs from final rules more than 100 times during his Administration. Would President Trump be prohibited from replicating and building on those successes? Marcus Peacock, who led the “landing team” at the Office of Information and Regulatory Affairs during the first few months of 2017, offered some hints about how the one-in, two-out budget might work at a recent Resources for the Future event. He cited both Canada and the United Kingdom, which have operated regulatory budgets without abandoning clean air or water standards. In those countries, reducing paperwork—through recordkeeping and reporting requirements—dominates the deregulatory actions. Peacock predicted similar actions for the United States. He stated, “I’m guessing we’re going to find something similar. And a lot of the deregulatory actions that people will focus on first are those that simply make it easier for people to fill out paperwork or just fill out less paperwork, probably.” From that remark, it is hard to spot the fundamental constitutional conflict between Executive Order 13,771 and existing law. Indeed, with every administration, regulators trim paperwork and reduce regulatory costs without flouting the intent of Congress or their statutory directives. For example, during the Obama Administration, the U.S. Department of Transportation revised its rule on driver vehicle inspection reports. This rulemaking relieved truck drivers from having to file “no defect” reports. Essentially, they no longer had to report that their trips from one city to another occurred without incident. According to the Obama Administration, this saved $1.7 billion annually by cutting 46.6 million paperwork burden hours. This is not to say that implementation of the executive order will be a walk in the park. On the contrary, it will be difficult. Fulfilling the executive order’s requirements will demand a robust retrospective review and program evaluation initiative from agencies. Perhaps this effort might give rise to new agencies that will aid in the effort. Following Executive Order 13,771 might prove difficult for some agencies, but the action itself is hardly unconstitutional. If the Administration starts uprooting particulate matter and carbon monoxide standards as a prerequisite for issuing new major rules, perhaps there will be a case. If instead, the margins of existing regulations are reworked to decrease costs—which, in some cases, is no easy task—then the executive order will remain in place for the foreseeable future
The Constitutional Executive Order on Regulatory Budgets
No full textThe constitutional concerns that Scott Slesinger and Robert Weissman express over Executive Order 13,771 are little different from the kind of policy objections raised during previous administrations about other presidential efforts to oversee the work of regulatory agencies. Their constitutional argument suffers from at least five significant flaws. First, the general lack of regulatory output during the first few months of the Trump Administration is a political choice. It is fair to attack the Administration’s low output based on one’s political views, but the fact is that every administration’s regulatory output ebbs and flows, often due to politics. (Just examine the slowdown in regulation during the Obama Administration in the lead-up to the 2012 election.) Absent statutory and judicial deadlines, every President can determine the timing and the volume of major regulatory activity. Second, Slesinger and Weissman exaggerate the extent to which President Trump’s executive order blocks regulations. They claim that “the order prohibits agencies from issuing new significant regulations unless they repeal at least two other regulations to offset the new rule’s costs.” But this statement is belied by the implementation of Executive Order 13,771 to date. In May, for example, the U.S. Department of Health and Human Services (HHS) proposed a major rule with more than 1.7 billion in costs. The next year, the Environmental Protection Agency (EPA) finalized new ozone standards for 940 million in annual costs. The next year, EPA implemented new particulate matter standards, at a cost of $350 million. This is not to say it will be easy to offset the costs entirely with less paperwork, but it is not impossible. Finally, Slesinger and Weissman’s constitutional objections sweep much too broadly. Arguably, the same critiques they make with respect to Executive Order 13,771 could be leveled against the very concept of regulatory review by the Office of Information and Regulatory Affairs (OIRA), an interagency review process first established during the Reagan Administration. In the same way it has expressed concerns about Executive Order 13,771’s slowing down rulemaking, Public Citizen has claimed that OIRA “impedes agencies’ ability to issue the rules that Congress mandates.” Other critics have similarly argued that OIRA unnecessarily slows regulatory activity and places an undue emphasis on costs. Yet, there have been no credible claims that the OIRA review process raises constitutional concerns, even though it serves as a check on rules with statutory mandates and often delays agency action. Instead, six consecutive presidential administrations have embraced OIRA’s interagency review process. OIRA review is constitutional because Presidents have recognized that they have broad discretion in how they execute the law. When President Barack Obama formally returned a 2011 ozone rule to EPA, then-OIRA Administrator Cass Sunstein reminded EPA that the law allows “meaningful guidance and oversight so that each agency’s regulatory actions are consistent with…the President’s priorities.” Sunstein noted that the ozone action was not mandatory at that time and the President still had discretion in how to implement the law. That action was controversial, admittedly, but, as far as I am aware, there were no protests from Public Citizen or the Natural Resources Defense Council (NRDC) that OIRA’s action was unconstitutional. Executive Order 13,771 might lead to similarly provocative actions, but those will be procedural in nature, not constitutional. Once again, all of these considerations—the uncertainty over the executive order and whether it has yet resulted in the repeal of old rules or any slow-down in new rules—demonstrate that a lawsuit is hardly ripe for review. How can anyone argue that it is unconstitutional to slow down the regulatory process when it is not possible to point to a rule with a statutory or judicial deadline that has been held up by the executive order? Slesinger and Weissman seem to acknowledge that no significant rule has been repealed because of the executive order. But then, how can they argue that it is unconstitutional for the President to call for the repeal of existing rules when the Trump Administration has not repealed a major rule? Slesinger and Weissman also complain that it is unconstitutional to reduce regulatory output to a trickle. Was President Obama’s “regulatory freeze” then unconstitutional because it held up rules at the opening of his Administration? It is hard to distinguish the effects that Slesinger and Weissman attribute to Executive Order 13,771 from the explicitly intended effects of White House directives that have for years routinely halted regulations at the start of each new administration. If Executive Order 13,771 is unconstitutionally intrusive, why did NRDC and Public Citizen not sue over President Donald Trump’s transitional regulatory moratorium? Even if a lawsuit challenging Executive Order 13,771 were ripe for judicial consideration, what has been left unsaid is the incredible burden of convincing a court that the executive order is unconstitutional. Although courts have struck down unilateral executive actions in the past, those instances are rare, and I can find no action of “general applicability,” like Executive Order 13,771, that courts have invalidated. Slesinger and Weissman might well have political and policy objections to the “one-in, two-out” executive order that are worth debating, but those objections will not be sufficient to convince a court to find constitutional deficiencies in the exercise of a kind of executive discretion that Presidents have enjoyed for decades
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It Is Premature to Label a Regulatory Budget Unconstitutional
No full textIn their recent essay appearing in The Regulatory Review, Scott Slesinger and Robert Weissman declared that Executive Order 13,771, which directs agencies to repeal two existing regulations for every new regulation they seek to promulgate, is unconstitutional. The constitutionality of regulatory reform appears to be an emerging theme in 2017, as at least one other group has argued separately that another tool for regulatory reform—the Congressional Review Act, passed by both houses of Congress and signed by President Bill Clinton in 1996—is also unconstitutional. Although Slesinger and Weissman might have legitimate policy objections to Executive Order 13,771 and its application of regulatory budgeting, claims of that order’s unconstitutionality are premature. Can anyone point to one instance when the Trump Administration rescinded a regulatory standard to satisfy the one-in, two-out order? According to the American Action Forum (AAF), the Administration has not finalized a single major regulatory action that would trigger the need for two or more deregulatory actions under the executive order. It is hard to see how anyone can have standing in court to challenge an executive order that has yet to lead to any changes in regulations. Slesinger and Weissman’s argument explaining the lawsuit filed by their organizations—the Natural Resources Defense Council (NRDC) and Public Citizen, respectively—is filled with speculative language that shows that any constitutional suit against the executive order is far from ripe for judicial review. Words and phrases such as “potentially,” “will make,” “would inflict,” and “will have,” can be found throughout their essay. Are not courts more interested in actual harms that result in victims from agency action? What harm can Public Citizen or the NRDC claim from the executive order, which has yet to lead to a repeal of a regulation about which they are concerned? Furthermore, Slesinger and Weissman, along with other critics of regulatory budgeting, seem to forget crucial language contained in EO 13,771: “unless prohibited by law,” a phrase that appears four times in the executive order. In rhetoric, strawmen are erected and burned that seem to depict an alternate reality where the U.S. Environmental Protection Agency (EPA) must choose between clean air and clean water. Because there are statutes directing EPA to preserve both, the Agency will not have to abandon particulate matter standards if it seeks to implement a clean water rule. If it did, the Agency would surely lose in court. The dictates of existing statutory law still remain; Executive Order 13,771 does not change the law, just the priorities. This executive order, as countless previous executive orders have done, merely moves the margins of regulation. There were no cries of unconstitutionality when President Barack Obama issued Executive Order 13,563 directing agencies to conduct retrospective review to see if they should “modify, streamline, expand, or repeal” existing regulations. Although progressives had policy objections when President Obama repealed or significantly modified rules, there were no constitutional lawsuits racing toward the courts. Indeed, President Obama cut costs from final rules more than 100 times during his Administration. Would President Trump be prohibited from replicating and building on those successes? Marcus Peacock, who led the “landing team” at the Office of Information and Regulatory Affairs during the first few months of 2017, offered some hints about how the one-in, two-out budget might work at a recent Resources for the Future event. He cited both Canada and the United Kingdom, which have operated regulatory budgets without abandoning clean air or water standards. In those countries, reducing paperwork—through recordkeeping and reporting requirements—dominates the deregulatory actions. Peacock predicted similar actions for the United States. He stated, “I’m guessing we’re going to find something similar. And a lot of the deregulatory actions that people will focus on first are those that simply make it easier for people to fill out paperwork or just fill out less paperwork, probably.” From that remark, it is hard to spot the fundamental constitutional conflict between Executive Order 13,771 and existing law. Indeed, with every administration, regulators trim paperwork and reduce regulatory costs without flouting the intent of Congress or their statutory directives. For example, during the Obama Administration, the U.S. Department of Transportation revised its rule on driver vehicle inspection reports. This rulemaking relieved truck drivers from having to file “no defect” reports. Essentially, they no longer had to report that their trips from one city to another occurred without incident. According to the Obama Administration, this saved $1.7 billion annually by cutting 46.6 million paperwork burden hours. This is not to say that implementation of the executive order will be a walk in the park. On the contrary, it will be difficult. Fulfilling the executive order’s requirements will demand a robust retrospective review and program evaluation initiative from agencies. Perhaps this effort might give rise to new agencies that will aid in the effort. Following Executive Order 13,771 might prove difficult for some agencies, but the action itself is hardly unconstitutional. If the Administration starts uprooting particulate matter and carbon monoxide standards as a prerequisite for issuing new major rules, perhaps there will be a case. If instead, the margins of existing regulations are reworked to decrease costs—which, in some cases, is no easy task—then the executive order will remain in place for the foreseeable future
Can a Regulatory Budget Trim Red Tape?
No full textThe idea of a regulatory budget has been around for decades. Unfortunately, given the current political environment, the idea of placing a budgetary cap on the overall costs of regulation will likely remain for some time just an idea that regulatory scholars will continue to debate without any practical results. However, a more achievable goal would be to adopt a modified regulatory budget that targets government paperwork requirements. Such a paperwork budget could reduce red tape while leaving current health protections unchanged, thereby generating bipartisan support. Unlike total regulatory costs and benefits in our economy, we already have a tally of the active collections of information and the total amount of time it takes annually to complete federal paperwork. Although the figure changes daily, the Office of Information and Regulatory Affairs (OIRA) reports approximately 9,100 collections of information (essentially government forms) and more than 10.3 billion hours of paperwork. If trimming this large burden seems impossible, it isn’t. While the overall trend has been toward more paperwork throughout the years, the accompanying graph does show that there have been deceases at times. (Because Treasury is 75 percent of all paperwork, any single tax collection can drastically affect total numbers; the graph therefore displays collections of information without Treasury, better demonstrating the growth rate of typical regulatory agencies – and the possibility of reductions.) A paperwork budget could be set up to function much like the United Kingdom’s “one-in, one-out” system for regulation, which recently expanded to “one-in, two-out.” A U.S. version of “one-in, one-out” for paperwork would cap the overall number of Office of Management and Budget (OMB) paperwork approvals and the overall number of hours associated with them. The budget would operate by agency. For instance, if the Department of Health and Human Services (HHS) wanted to require an additional form, it would have to consolidate or eliminate one of its nearly 1,200 existing forms and ensure the resulting swap would not increase its current 644 million hour paperwork burden. HHS provides an example of the explosive growth of paperwork—but it also illustrates the feasibility of restraining paperwork. The agency’s total paperwork burdens grew fourfold since 1995. But in 2008 and 2011, the agency did reduce its total burden. In 2012, HHS also finalized a rule to save hospitals 31.23 (the median wage for a regulatory compliance officer), a 100 million hour reduction could save 11.8 billion (again assuming a cost of 12 billion in FY 2010 for all the major rules it reviewed. Although a comprehensive regulatory budget is likely a non-starter politically, a paperwork budget could garner bipartisan support because it will save time and money while doing nothing to alter fundamental health and safety protections. Of course, if in the end Congress cannot pass such a reform, the President could still issue an executive order implementing a paperwork budget for cabinet-level agencies
What Will the Regulatory Landscape Look Like in 2021?
No full textAs The Regulatory Review celebrates its five-year anniversary, what will the regulatory world look like during the next five years? More acrimony, legal and political battles, debate about the role of the White House Office of Information and Regulatory Affairs (OIRA)? Yes to all, regardless of which party occupies the White House in 2017. Given the reality that Democrats are overwhelmingly favored to retain the White House next year, it is perhaps more appropriate to talk about the future of regulation through that lens. Yet, the failure of political prognostication lately has made fools out of virtually everyone in the process. In the immediate future (the remainder of 2016), President Barack Obama will continue to put the finishing touches on his regulatory legacy, publishing long-delayed measures. As of this writing, the Occupational Health and Safety Administration has just published its rule on silica exposure, a priority for public health groups and unions. The Administration also recently finalized the controversial “conflict of interest” or fiduciary rule for investment advisers, which was proposed initially in 2010 and re-proposed in 2015. Finally, expect the U.S. Environmental Protection Agency to put the final touches on rules curbing greenhouse gas emissions from fracking and heavy-duty trucks by the summer or fall. These rules do not mean President Obama will accomplish everything on his ambitious agenda. The Administration likely will not have time to finish additional methane rules or regulate greenhouse gas emissions from refineries or agriculture—two other major sources. Those tasks will likely be left to the next Democratic administration. What can we expect in 2017 and beyond? Given the current battles over income inequality and the nation’s broken immigration system, it is probably safe to predict those areas will receive increased attention in the future. President Obama has already publicly tried to fill some of the gaps through policies he could not accomplish on the legislative front. Immigration executive orders—now under Supreme Court review—and extensions to minimum wage protections for government contractors are two examples. If any branch of Congress remains in Republican control in the near future, expect the “Pen and Phone” approach to immigration reform and income inequality to continue, at least absent Supreme Court action. If Hillary Clinton becomes President, expect a major push on renewable energy—perhaps even an unprecedented effort. She has pledged a 700 percent increase in solar power by 2020. Solar capacity would need to rise from roughly 20 gigawatts to approximately 140 gigawatts. This would likely require 50 percent more land area than the state of Rhode Island occupies. Such an expansion in solar capacity would probably require congressional action, but more regulation of coal and natural gas could make solar a more attractive option within the next few years. If U.S. Senator Bernie Sanders (D-Vt.) becomes President, renewables will also be an agenda item, in addition to what appears to be a third round of Corporate Average Fuel Economy standards for cars and light-duty trucks. The current standard is 54.5 miles per gallon by 2025; any platform that calls for a 40 percent overall reduction in greenhouse gas emissions by 2030 will heavily rely on new regulations from EPA to curb emissions and from the U.S. Department of Energy to promote energy efficiency—or what Senator Sanders calls the “low-hanging fruit” of energy investments. Hedging bets and assuming that a Republican wins this November, expect regulatory modernization bills to pass the House easily, as they have in the past, and then bump up against the 60-vote threshold in the Senate. A regulatory budget has gained significant attention recently, but its fate likely lies in its form. Would any moderate Democrats support a flexible regulatory budget that allocates to each agency a set amount annually, or will legislators try to capture the United Kingdom’s “one-in-two-out” system of regulatory budgeting? Yet even with a unified conservative government, do not expect every regulatory reform measure to pass or even to alter the regulatory world significantly. A strict budget could accomplish the latter notion, but logistics and political concerns would likely shutter any attempt. The modern regulatory environment was created over decades, and given the general inertia in Washington, D.C., one or two reform bills will not undo the system. However, they could make notable changes at the margins: fewer major rules, more procedural requirements for agencies, a stronger OIRA, and greater oversight of independent agencies. There is also the remote chance of broad bipartisan reform: heightened transparency at OIRA and licensing reform. Currently, OIRA’s record on transparency is mixed, at best. As the U.S. Government Accountability Office has noted, OIRA has completed just a fraction of the proposed transparency recommendations. Delayed meeting postings and explanations for “withdrawn” rules are two other areas where Republicans and Democrats could likely find common ground. Occupational licensing reform, to the extent the federal government has a role, is another area where bipartisan compromise could be forged in the coming years. In sum, for those hoping for a sea change in the regulatory landscape over the next five years, prepare for disappointment. This is Washington, D.C. President Obama has averaged roughly 80 major rules annually during his tenure. If a Republican is elected, expect slightly fewer major rules. If a Democrat wins, expect roughly the same amount, with a particular focus on curtailing income inequality and greenhouse gas emissions. Despite platitudes about the critical importance of each election, the combination of Congress, the courts, and the politicization of almost every issue limit the possibility for fundamental regulatory reform. Sea change takes decades, not years. This essay is part of The Regulatory Review’s sixteen-part series, RegBlog@5
President Trump’s Regulatory Vision
No full textWith the inauguration of Donald Trump, conservatives are pining for perhaps the biggest deregulatory push since the Reagan Administration, while progressives are fretting that many public health and safety regulations from the last eight years could be undone. And although the specifics of President-elect Trump’s regulatory vision will likely become clearer over the coming months, his campaign and transition team have already provided some clues about his views concerning federal regulation and plans for reform. Overall, President-elect Trump appears to be advocating for steep reductions in the number and magnitude of federal rules. During the presidential campaign, he noted, that his administration will be “cutting the regulation at a tremendous clip. I would say 70 percent of regulations can go.” Later, during a roundtable with farmers in Florida, he increased that figure to 80 percent. These remarks beg several questions. 70 to 80 percent of what? Do these goals refer to total regulations, major rules, or the magnitude of regulatory burdens? What is the time period for these reductions? How will his administration make these reductions? President-elect Trump answered some of these questions during one of his first statements after the election: “On regulation, I will formulate a rule which says for every one new regulation, two old regulations must be eliminated.” Policymakers refer to such limits as a form of regulatory budgeting, a concept that requires officials to track the private-sector costs imposed by regulation in a manner similar to how federal agencies track their own spending on government programs. If President-elect Trump implements a one-in, two-out policy, the United States would operate under a regulatory budget for the first time ever. Other nations—including Canada, the United Kingdom, and Australia—have implemented regulatory budgets recently. In 2016, the United Kingdom moved to a one-in, three-out system for regulation, in an effort to cut £10 billion in regulatory costs. Critics have noted, however, that the British system is riddled with loopholes, and that a similar system would be difficult to implement in the United States. The details of a regulatory budget matter greatly. If a budget applies to all types of final rules—regardless of their scope or financial impact—regulators could be forced to rescind between 6,000 and 7,000 existing regulations each year, considering that agencies issued 3,853 final rules in 2016. If the regulatory budget covers just major rules, that figure shrinks to roughly 200 rules, assuming the regulatory output in 2016. If the regulatory budget applies only to rules with a price tag of a billion dollars or more—or what are known as “high-impact” rules—agency officials could meet the requirements of a one-in, two-out policy by amending or removing just four to six regulations each year. As evidenced by its international implementation, the idea of a federal government controlling regulatory output is hardly novel or radical. In 1980, President Carter’s Administration outlined the potential for a budget and concluded that “tools like the regulatory budget may have to be developed.” Because political winds can impact the timing for release or delay of federal rules, the nation already operates under a de facto budget. The Trump Administration could argue that processes already occurring behind closed doors should be transformed into a formal regulatory budget policy. If the United States moves toward a formal regulatory budget, regulators will face the challenge of selecting existing rules to review and rescind. President Obama and several of his predecessors already requested that agencies look back at existing regulations to find ones “to modify, streamline, expand, or repeal.” Although President Obama’s efforts resulted in some substantive reviews, regulators often added new regulations and costs rather than trimming them. Does President-elect Trump leave retrospective review in the hands of cabinet agencies, or task other governmental bodies such as the Congressional Budget Office or the Bureau of Economic Analysis with the job of reviewing more than 170,000 pages of past rules to determine candidates for rescission? Regardless of who is in charge, a functioning regulatory budget depends upon a robust retrospective review effort. Beyond the mechanics of a regulatory budget, the Trump Administration will have wide latitude to amend the regulatory mechanics in the executive branch. His legal advisors and the Office of Information and Regulatory Affairs (OIRA)—a White House body that oversees new regulations promulgated by federal agencies—likely will formulate executive orders implementing a new vision for regulatory reform. In addition, Trump Administration officials may prioritize review of OIRA’s guidance document on regulatory analysis, OMB Circular A-4. For example, this document might be amended to address concerns conservatives have noted with weighing international benefits in regulatory benefit-cost analysis or with counting so-called private benefits like consumer energy savings. These issues, among others, could be addressed through a few simple changes to Circular A-4. Another key piece of President-elect Trump’s regulatory vision will turn on how the White House and environmental regulators address the social cost of carbon. Developed by the Obama Administration as a tool for estimating the benefits of regulating greenhouse gas emissions, the current figure for saving one ton of carbon emissions totals $42 in the year 2020. Could the Trump Administration alter the monetary value and adjust the discount rate? Already, a member of the transition team has remarked, that in the Trump Administration the social cost of carbon “would certainly be much lower than what the Obama administration has been using.” Should the Trump Administration revise the social cost of carbon in this manner, it would be more difficult for the U.S. Environmental Protection Agency and other regulators to justify the regulation of greenhouse gases, absent large co-benefits derived from reducing other forms of pollution. Finally, conservative think tanks and members of Congress will push the Trump Administration to enhance oversight of independent agencies, suggesting that the Administration require them to submit regulations to OIRA for review. Although OIRA already reviews regulations issued by most federal agencies, such as the U.S. Department of Agriculture and EPA, a longstanding legal debate persists over whether the White House should review the work of independent agencies, such as the Federal Reserve and the U.S. Securities and Exchange Commission. During the presidential campaign, notions of how a Trump Administration would address regulation remained vague. After a new OIRA Administrator is confirmed and the Trump Administration begins to issue executive orders, the nation will have a better understanding of the President-elect’s regulatory agenda. These details will determine whether the Trump Administration’s regulatory vision will follow those of previous Republican presidents, or whether it will follow an entirely novel trajectory
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