Inertia Wins!

The House this week is considering H.R. 1675, the Encouraging Employee Ownership Act, sponsored by Rep. Randy Hultgren (R-Ill.). I’ll leave it to my colleague John Berlau to comment on the bill’s impact on employment and financial regulation. But I do want to point out an important regulatory reform it contains for getting rid of old or obsolete rules. The idea is similar to something CEI has been promoting for years: retrospective review. While this particular bill would only affect the Securities Exchange Commission (SEC), the model can easily be applied to other agencies.

Typically, benefit-cost analysis for regulations is done only before they come into effect. Once a rule goes live and we actually have real-world data on it, nothing is done to measure it. This is a problem, especially since complicated rules are prone to unintended consequences. Even the most diligent analyst cannot foresee everything. That’s why regulations should also be subject to cost analysis after coming into effect, not just before.

There are lots of ways to do retrospective review. The way the Encouraging Employee Ownership Act goes about it is to require the SEC to, at least once per decade, look at each of its “significant” regulations (for which there is a special definition) and have the Commissioners vote on whether to keep them, scrap them, or update them. This review doesn’t necessarily involve benefit-cost analysis, just the SEC Commissioners’ judgment. This sort of periodic review is a regulatory best-practice that all agencies should engage in periodically.

The entire Code of Federal Regulations is now longer than 175,000 pages long. Surely some of its rules are obsolete, redundant, or ineffective. These should be gotten rid of, and retrospective review is one way to encourage agencies to clean out their regulatory attics every now and then.

The Encouraging Employee Ownership Act’s review procedures are an improvement on the status quo. But there is one further improvement I would make: have the review to be done outside the agency, not inside. While the SEC might prune back rules that are obviously outdated, the Commissioners are unlikely to vote for any major reductions in their own power and authority. Having the review done instead by the Office of Management and Budget (OMB) or by an independent commission, such as the one the SCRUB Act would create, would have fewer incentive problems than asking the SEC to police itself.

Another, simpler model would be to simply have built-in sunsets for all new regulations. Rules would expire automatically after, say, five years unless Congress votes to keep them. This means obsolete or harmful rules would automatically fall off the books without Congress or agencies having to do so much as lift a finger.

Regulatory reform is a neglected issue compared to more telegenic issues such as tax and budget battles, immigration, or foreign policy. But regulation is just as important, if not more so. The Encouraging Employee Ownership Act’s retrospective review requirements for the SEC represent a step in the right direction. If anything, all federal agencies should be subject to similar reform.

The big Snowzilla storm came and went, but still made its presence known in the Federal Register. For many documents, there is a lag of a few days between submission and publication. So while the first three days of the week was business as usual despite a government slowdown, Thursday’s edition was only 69 pages, and Friday’s was 92 pages. A normal day is around 300 pages. Despite the temporary slowdown, regulators still issued rules covering everything from spray valves to alien medical exams.

On to the data:

• Last week, 56 new final regulations were published in the Federal Register, after 59 the previous week.
• That’s the equivalent of a new regulation precisely every three hours.
• With 217 final regulations published so far in 2016, the federal government is on pace to issue 2,855 regulations in 2016. Last year’s total was 3,406 regulations.
• Last week, 1,096 new pages were added to the Federal Register, after 1,213 pages the previous week.
• Currently at 5,029 pages, the 2016 Federal Register is on pace for 66,172 pages. To give some context, the 2015 Federal Register had an adjusted page count of 81,611.
• Rules are called “economically significant” if they have costs of $100 million or more in a given year. Three such rules have been published so far in 2016, one in the last week.
• The running compliance cost tally for 2016’s economically significant regulations ranges from $402 million to $1.24 billion.
• 27 final rules meeting the broader definition of “significant” have been published this year.
• So far in 2016, 55 new rules affect small businesses; 13 of them are classified as significant.

Highlights from selected final rules published last week:

• A 67-page Energy Department regulation for pumps will cost somewhere between $80.2 million and $120 million per year.
• And another one for commercial prerinse spray valves, but we don’t know how much it costs because the Office of Management and Budget will not be doing a cost analysis.
• Medical examination of aliens.
• The U.S. government’s thaw with Cuba continues: new rules for asset controland licensing policies.
• 29,783 square nautical miles of ocean are being designated as critical habitat for North Atlantic right whales.
• The Small Business Administration is updating its definitions of “small business” for various and sundry industries.
• The FCC is exempting small Internet Service Providers from its net neutrality regulations.

For more data, see Ten Thousand Commandments and follow @10KC and@RegoftheDay on Twitter.

There are some doozies in an infographic put together by Olivet Nazarene University.

It was a short week due to both MLK Day and a large snowstorm in the DC area, but regulators still issued new rules covering everything from potato proteins to Wisconsin air.

On to the data:

• Last week, 59 new final regulations were published in the Federal Register, after 70 the previous week.
• That’s the equivalent of a new regulation every two hours and 51 minutes.
• With 153 final regulations published so far in 2016, the federal government is on pace to issue 2,875 regulations in 2016.
• Last week, 1,213 new pages were added to the Federal Register, after 1,617 pages the previous week.
• Currently at 3,933 pages, the 2016 Federal Register is on pace for 70,233 pages.
• Rules are called “economically significant” if they have costs of $100 million or more in a given year. Two such rules have been published so far in 2016, none in the last week.
• The running compliance cost tally for 2016’s economically significant regulations ranges from $321 million to $1.118 billion.
• 17 final rules meeting the broader definition of “significant” have been published this year.
• So far in 2016, 39 new rules affect small businesses; 7 of them are classified as significant.

Highlights from selected final rules published last week:

• New rules for exporting livestock and hatching eggs.
• Federal regulations for potato proteins.
• The Banggai cardinalfish is now a threatened species. Harrisson’s dogfish, a small shark native to coastal Australia, will not be listed on the threatened species list—though the Australian government considers it an endangered species.
• The FCC has a plan to revitalize AM radio.
• Microlending for farmers.
• The federal government now officially recognizes the Los Olivos District winemaking area in southern California.
• Iranian sanctions.
• Wisconsin air.
• NASA may officially no longer discriminate against disabled people.
• Another regulation for preventing collisions at sea.
• A combined 7,855 acres of critical habitat for two species of cactus.

For more data, see Ten Thousand Commandments and follow @10KC and @RegoftheDay on Twitter.

Things sped up last week after 2016’s slow start. The Energy Department issued the year’s first two economically significant regulations, and other new regulations cover everything from responsible people to injurious slamanders.

On to the data:

• Last week, 70 new final regulations were published in the Federal Register, after 32 the previous week.
• That’s the equivalent of a new regulation every two hours and 24 minutes.
• With 102 final regulations published so far in 2016, the federal government is on pace to issue 2,550 regulations in 2016.
• Last week, 1,607 new pages were added to the Federal Register, after 1,113 pages the previous week.
• Currently at 2,720 pages, the 2016 Federal Register is on pace for exactly 68,000 pages.
• Rules are called “economically significant” if they have costs of $100 million or more in a given year. Two such rules have been published so far in 2016.
• The running compliance cost tally for 2016’s economically significant regulations ranges from $321 million to $1.118 billion.
• 13 final rules meeting the broader definition of “significant” have been published this year.
• So far in 2016, 25 new rules affect small businesses; 5 of them is classified as significant.

Highlights from selected final rules published last week:

• The EPA is temporarily allowing “Aspergillus flavusAF36 in or on dried figs.”
• 2016’s first economically significant regulation is a 115-page Energy Department rule for commercial HVAC equipment. The present value of its compliance costs range from $7.7 billion to $14.9 billion. Annual cost estimates range from $231 million to $1.028 billion. This factor-of-four difference translates roughly to “we have no idea.”
• The year’s second economically significant rule is a 99-pager, also from the Energy Department, for residential boilers. The cost estimate is not exactly a model of clarity, but the cost of complying with 2015 standards appears to be $90.2 million, with future standards adding costs as they phase in, totaling in the hundreds of millions of dollars. I am sticking with the $90.2 million number for our running compliance cost tally to keep the number as low as possible.
• Good news for college professors and researchers from Chile, Singapore, and Australia who want to visit or emigrate to the U.S.: the Homeland Security Department is loosening your visa requirements.
• Continued implementation of the 2004 U.S.-Australia free trade agreement.
• Restrictions on importing Ancient Roman artifacts.
• A new rule from the Alcohol, Tobacco, Firearms, and Explosives Bureau takes 67 pages to define the term “responsible person.”
• Don’t go hunting for northern long-eared bats.
• If you want to import shell eggs, you may now submit your request electronically.
• Injurious salamanders.
• Good news: a plant species called the Johnston’s frankenia is no longer an endangered species.

For more data, see Ten Thousand Commandments and follow @10KC and @RegoftheDay on Twitter.

After a record-setting 2015, 2016 got off to a slow start, with new rules covering everything from vending machines to Nebraskan sludge. Even so, it may be a busy few months until May 17 or so, when a soft deadline for Congressional Review Act enforcement comes into effect. Congress could potentially block most rules issued after that date, so agencies are likely to hurry as many of this year’s rules as possible. Think of it as an early midnight rush.

On to the data:

• Last week, 32 new final regulations were published in the Federal Register, after 67 the previous week.
• That’s the equivalent of a new regulation every five hours and 3 minutes.
• With 32 final regulations published so far in 2016, the federal government is on pace to issue 1,600 regulations in 2016.
• Last week, 1,113 new pages were added to the Federal Register, after 1,401 pages the previous week.
• Currently at 1,113 pages, the 2016 Federal Register is on pace for 27,825 pages.
• Rules are called “economically significant” if they have costs of $100 million or more in a given year. No such rules have been published so far in 2016.
• That means this year’s running compliance cost tally stands at zero. 2015’s estimated tally ranges from $6.18 billion to $8.69 billion.
• 3 final rules meeting the broader definition of “significant” have been published this year.
• So far in 2016, 6 new rules affect small businesses; 1 of them is classified as significant.

Highlights from selected final rules published last week:

• New rules for sewage sludge incinerators in Nebraska.
• Plans to link health care databases to criminal background checks. What could possibly go wrong?
• Energy standards for lights in ceiling fans.
• Indirect Food Additives: Paper and Paperboard Components.
• Another regulation for preventing collisions at sea.
• Energy efficiency standards for vending machines.

For more data, see Ten Thousand Commandments and follow @10KC and@RegoftheDay on Twitter.