March 30, 2017
“Cutting red tape,” “regulatory tsunami,” an “out-of-control regulatory process,” “regulatory overreach,” and estimates of “trillions of dollars of regulatory costs” are terms in the modern lexicon that attempt to capture the frustration over a federal administrative state that is big, complex, and seemingly incomprehensible.
With over 190,000 regulations put on the books since 1976, along with hundreds of thousands of guidance documents, opinion letters, and orders, the frustrations with the administrative state are well justified. But taking on the entire administrative state is a much more difficult matter than ordering it gone; there are simply too many complications and unintended consequences that can arise from an abrupt elimination.
Should we be concerned about the number of regulations produced each year?
While the administrative state is massive, all regulations are not equal. Some regulations keep society functioning. Some regulations protect health and safety. Some regulations however are purely legislative actions that go well beyond any delegated authority given to the agency by Congress. It is these regulations that transform society that must be more critically reviewed before being imposed on the country.
What are the categories of regulations?
Between 2008 and 2016, federal agencies issued 32,882 regulations; 3,261 were significant rules, which are classified as rules agencies believe to impact competition or the economy.
There is a smaller group of regulations that impose an annual cost of $100 million-plus. These are often called “economically significant rules” or “$100 million-plus rules.” From 2008 through 2016, the number of regulations identified in this category is about 140.
Finally there are the high-impact regulations that have an annual cost of over $1 billion.
By identifying the rules that are the most costly to the economy, agencies should apply more scrutiny to these rules before they are final, so as to ensure that the benefits outweigh the costs, and the public has the ability to openly test the accuracy of the agency determinations.
What is the annual cost of the costliest rules?
Only about 4.3% of the significant rules are $100 million plus rules. These $100 million-plus rules represent most of the known costs of the regulatory process. However, it should be noted that agencies only prepare a cost analysis for a very small number of rules.
Which agency imposes the greatest regulatory burden?
EPA imposes the greatest amount of regulatory burden as measured by the number of $100 million-plus rules issued, as well as by annual cost of the rules. EPA issued 36 of the 140 $100 million-plus rules from 2008 to 2016 and these rules accounted for $72.7 billion of the $130 billion cost for all such rules; that is, 56% of the total cost of all $100 million-plus rules.
Who produces the largest number of regulations having an annual cost of $1 billion or more?
EPA also leads all agencies when it comes to issuing high-impact rules having an annual cost of $1 billion or more. Among executive branch regulatory agencies, EPA issued 13 of the 28 rules that had an annual cost of $1 billion or more between 2008 and 2016.
Will agencies be significantly burdened if required to undertake more scrutiny of high-impact rules or rules having an annual cost of $100 million?
Since there are only a few high-impact rules or $100 million-plus rules per year, there should be little impact on agency resources to give greater scrutiny to these regulations. As the following chart shows, that burden would be very small since out of the 32,882 final rules between 2008 and 2016, only 140 rules would have been subject to a more rigorous rulemaking process under legislation like the Regulatory Accountability Act (RAA). RAA would require that these most expensive regulations go through an open and transparent process, including public hearings and a requirement to use the best available evidence, to ensure that rules don’t impose an unnecessary burden on the economy.
How can we tame the administrative state?
By identifying the most costly and transformative regulations, Congress and federal agencies are better able to develop a process that will ensure future regulations achieve congressional intent and avoid agency overreach. To achieve that goal, the U.S. Chamber makes several recommendations, including:
- Congress should pass the Regulatory Accountability Act;
- the president should mandate all agencies follow the Information Quality Act;
- the president should mandate that all agencies comply with the Unfunded Mandates Reform Act;
- the president should mandate all agencies comply with the Regulatory Flexibility Act;
- the president should mandate agencies conduct employment impact analysis, when required;
- Congress should continue using the Congressional Review Act;
- the president should mandate periodic review of rules; and
- the regulated community should petition agencies for the amendment and repeal of overly burdensome regulations.
You can read the entire report below: