Politics & Policy

The ‘Regulatory Cliff’

Regulatory reform has become more urgent than ever.

Among the outgoing Senate’s graveyard of stalled budgets, authorizations, and other urgent measures are some 36 regulatory-reform bills passed by the House with bipartisan support. These bills are needed to rein in a regulatory spree that is crushing business activity and unnerving investors. They deserve first priority in the new Senate — but the newly elected body, with two fewer GOP members than its predecessor had, is likely not interested.

Senate majority leader Harry Reid has denied all these bills access to the Senate floor. Many, if not most, of these bills address the Obama administration’s “regulatory cliff,” as Senator Rob Portman dubbed the situation in a Wall Street Journal op-ed.

The president quipped in his State of the Union address last February that he had issued fewer rules in his first three years than did his predecessor in a comparable period. Although technically correct, the president’s numbers omit the most important factor: cost. According Wayne Crews of the Competitive Enterprise Institute, President Obama issued 953 “major regulations” (meaning regulations with a cost of $100 million or more, or an impact the federal government deems otherwise significant) in his first three years, while President George W. Bush issued 30 such regulations during the similar period. According to the federal government, 3,807 new final rules were issued in 2011, and 4,128 more rules are now in the pipeline. Take just one agency, the EPA. In 2010, EPA rules accounted for $23 billion in federal regulatory costs. Once just a peripheral source of pesky but absorbable costs, the EPA is now Ground Zero for regulatory damage. Seven of the ten House bills now in Senate limbo aim to restrain the EPA. 

Once promulgated through the formal rulemaking process, the EPA’s rules are not easily unwound. Any attempt to reverse course will inevitably result in a protracted legal battle, and even a successful resolution to a legal challenge (whether through court victory or settlement) often means only that the EPA must begin the rulemaking process again. There is little that even a determined Congress can do by itself to stop agency rulemaking.  

The EPA may estimate compliance costs, but the full costs borne by the economy and individual consumers are cumulative and indirect. New EPA regulations come one at a time, with staggered effective dates, typically with specific impacts for each particular region or economic sector, through a thousand pages of technical bureaucrat-speak.

As Steven Hayward noted in The Age of Reagan, “The striking aspect of the EPA and other regulatory agencies created contemporaneously [OSHA, CPSC] . . . is that they were the first agencies with a mandate to range widely throughout the economy and set their own policy strategies largely without the deliberation of, or input from, Congress” (emphasis added). Yet many policymakers remain blasé about the constitutional murkiness of unelected federal employees making regulatory decisions of national consequence, and they are apparently resigned to the growing regulatory strictures that limit personal and economic freedoms.

Expanding the administrative state has been a project of congressional majorities and administrations from both parties for decades. It took the grassroots tea-party movement and the new legislators that movement helped elect to get bold bills passed in the House that are serious about reducing the EPA’s extra-constitutional powers. The REINS Act is a good example: It would require congressional approval of “major” new rules.

Norman Thomas, a six-time presidential candidate for the Socialist Party of America, noted in 1944: “The American people will never knowingly adopt Socialism. But, under the name of ‘liberalism,’ they will adopt every fragment of the socialist program, until one day America will be a socialist nation without knowing what happened.” Similarly, under the innocuous nostrum of “environmentalism,” whole swaths of the “socialist program” can be established without any input from elected representatives. As the Senate dithers, America will continue to trudge toward the regulatory cliff.

— Kathleen Hartnett White is director of the Armstrong Center for Energy and Environment at the Texas Public Policy Foundation. From 2001 to 2007, she was chairman of the Texas Commission on Environmental Quality.

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