Economy & Business

Idaho’s Deregulatory Revolution

The Idaho Capitol Building (Wikimedia )
All of the state’s regulations will expire this summer.

Oh, gridlock! Glorious gridlock! Is there anything it can’t do?

It has been an ugly year in the Idaho state legislature. Both chambers are controlled by Republicans, but they disagreed over a constitutional question concerning how the state’s administrative rules — its regulations — are renewed, something that has to happen every year under Idaho state law. When they could not come to an agreement, the legislature adjourned without reauthorizing the state’s regulations. As a consequence, all of them — all of them! — will expire this summer.

“Idaho’s governor now has sweeping authority to eliminate thousands of state-approved rules without public participation or lawmaker oversight,” the Associated Press reports. That is not exactly right: “Any rules the governor opts to keep will have to be implemented as emergency regulations, and the legislature will consider them anew when it returns next January,” James Broughel of Mercatus writes. “Governor Brad Little, sworn into office in January, already had a nascent red tape cutting effort underway, but the impending regulatory cliff creates some new dynamics. Previously, each rule the governor wanted cut would have had to be justified as a new rulemaking action; now, every regulation that agencies want to keep has to be justified. The burden of proof has switched.”

Nice.

The administrative state is, in many ways, the real government at the federal, state, and local levels. Partly because of legislative sloth, partly because of the complexity of the regulatory tasks that states have taken up, legislatures have taken to outsourcing a large part of lawmaking to the executive branches, drawing up fuzzy statutory directives that the bureaucracies create rules in pursuit of policy goals defined with varying degrees of precision. Think of the so-called Affordable Care Act and its endless litany of “the secretary shall . . .”

A great many of the laws relevant to business are created this way. There are many setbacks: One is that there is no democratic accountability for bureaucrats, meaning relatively little political pain for creating cumbrous or counterproductive rules, and little incentive to consider costs relative to benefits. And as sclerotic as legislatures can seem, bureaucracies can be paralytic by comparison. Legislators at least respond to electoral incentives and listen to cheesed-off constituents. The DMV lady, not so much. Bureaucratic inertia enabled by legislative laziness and incompetence can have crippling effects on investment and innovation.

To mitigate those problems, some states have passed sunsetting rules and created reform commissions to repeal or update regulations that no longer serve their purpose or that impose too heavy a burden on those regulated. Idaho’s reauthorization rule is an example of that genre, albeit one that probably was not created with the idea that it would be used to dissolve the entire administrative regulatory corpus. But, now that it has, there are opportunities.

Governor Little says that this was not his desired outcome. “I’m not looking at this as an opportunity to do mischief,” Little said during a public appearance on Tuesday. “I do not want to exacerbate this thing. This was not our deal. We did not do this.”

But the deal is done, as the legislature will not meet again until January — at which point, instead of considering the authorization of a menu of new rules, it will be asked to consider all of the old ones, some 8,200 pages and counting. In the meantime, Little’s chief aide in the matter promises that “we would not make any decision that is not supported by the agencies.” But that is the wrong way to look at it: The agencies serve the people and were created by the people’s elected representatives. They are the people’s instruments, not their masters. Their preferences and conveniences are not to be understood as the controlling concerns.

Idaho has an opportunity here not only to reform regulations that were already on the books but, more important, to reform the way regulations are created in the first place — and its first priority should be pushing the responsibility for the contents of the state’s rules and regulations as close to the legislature as possible, ensuring that not only the broad policy goals but the nitty-gritty details of regulation are voted on by the people who are given the name lawmakers for a reason.

We have democratic processes for making law and antidemocratic processes (bills of rights, constitutions, etc.) for limiting the mischief that lawmakers can do. Some of the worst of that mischief has come from lawmakers using the administrative apparatus to strip the democratic character from much of the lawmaking enterprise.

Idaho here has a chance to show the rest of the nation how to revitalize the democratic character of legislation and to put the administrative state back on the short leash it needs.

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