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OpenMarket: March 2014

  • New Data: Code of Federal Regulations Expanding, Faster Pace under Obama

    March 17, 2014 10:03 AM

    The annual Code of Federal Regulations (CFR) is the "codification of the general and permanent rules published in the Federal Register by the departments and agencies of the Federal Government."


    The page count for final general and permanent rules in the 50-title CFR seems less dramatic than that of the oft-cited Federal Register, which now tops 70,000 pages each year (it stood at 79,311 pages at year-end 2013, the fourth-highest level ever). The Federal Register contains lots of material besides final rules.


    Still, the CFR "Archive-Of-All" is big. Very big. Back in 1960, the CFR contained 22,877 pages in 68 volumes.


    The pace picked up. The CFR stood at 71,224 pages by year-end 1975, in 133 volumes.


    Now, new data from the National Archives shows that the CFR stands at 175,496 at year-end 2013, including the 1,170-page index. (See the breakout below.)


    That's a 146 percent increase since 1975. The number of CFR volumes stands at 235 (as of 2012; the 2013 count remains unavailable for the time being), compared with 133 in 1975.


    More recently, at the end of President George W. Bush's second term (2008), there were 157,974 pages in the CFR.


    That means President Obama has added 17,522 pages of regulations in his five years in office; one president growing the regulatory state 11 percent increase in five years.


  • CEI’s Battered Business Bureau: The Week in Regulation

    March 17, 2014 6:50 AM

    67 new regulations, from reformulated gasoline to vitamin D2.


  • Bureaucrats Line Up to Regulate Bitcoin

    March 12, 2014 4:56 PM

    The regulators are tasting blood around bitcoin, and like sharks they are positioning for the kill. The blood that they taste was not actually shed by bitcoin itself but by a bitcoin exchange, Mt.Gox, which filed for bankruptcy in a U.S. court on March 10. The troubles faced by the exchange have led to calls by legislators like Senator Joe Manchin (D.-WV) for regulators to act. It is a rare regulator that does not seek to expand his powers, so they are lining up for a piece of the regulatory action.


    First up was FINRA, the Financial Industry Regulatory Authority, which issued a warning to investors about possible fraud in “bitcoin-related companies” on March 11. This warning is a bit of a stretch for FINRA, whose job is “efficient regulation of the securities industry.” Bitcoin is not in any way a security, it being primarily an electronic payment system, and so FINRA’s reach would seem to be limited.


    Next up was the CFTC, the Commodities Futures Trading Commission, which announced it was looking internally at whether it could regulate bitcoin as a commodity or otherwise under its powers to regulate derivatives. Once again, this is a stretch. Bitcoin, as noted is a network for payments, which seems far away from the traditional definition of commodity - a basic good that can be exchanged for other goods. It is illuminating that some within the agency appear to be arguing that this definition extends to bitcoin.

  • CEI Podcast for March 12, 2014: CEI Turns 30

    March 12, 2014 4:55 PM

    The Competitive Enterprise Institute celebrates its 30th anniversary this month. Founder and Chairman Fred Smith reflects on CEI's accomplishments and what the next 30 years will hold.


  • Supreme Court Overwhelmingly Votes to Uphold Rights of Private Property Owners

    March 12, 2014 3:44 PM

    The Supreme Court has decided an important property rights case in favor of the private property owners and against the claim of the federal government by an eight-to-one majority. Surprisingly, the Court’s liberal Justices, with the exception of Justice Sonia Sotomayor dissenting, signed Chief Justice John Roberts’s March 10 decision. In reversing the Tenth Circuit Court of Appeals, the Court ruled, in Brandt Revocable Trust et al. v. United States, that a right of way granted to a railroad in 1908 did not revert to the federal government when the railroad abandoned the tracks in 2004.


    The original right of way was over federal land, but 83 acres of that land were patented in 1976 in a land swap with the U. S. Forest Service. The Department of Justice argued that even though those 83 acres had been turned over to private owners, the right of way over that now-private land had reverted to the federal government when the railroad stopped running. Arguing for the Brandts, Steven J. Lechner of Mountain States Legal Foundation stated that the right of way was an easement granted for a particular use, and therefore had expired when its intended use, operation of a railroad, had ended.


    The Chief Justice’s opinion relies heavily on the 1942 Supreme Court decision, Great Northern Railway Company v. United States (315 U. S. 262), in which the Court agreed with the federal government’s argument that the General Railroad Right of Way Act of 1875 only conveyed easements. The majority opinion stated:


    More than 70 years ago, the Government argued before this Court that a right of way granted under the 1875 Act was a simple easement. The Court was persuaded, and so ruled. Now the Government argues that such a right of way is tantamount to a limited fee with an implied reversionary interest. We decline to endorse such a stark change in position....


  • Reining in the Executive Branch Bureaucracy, Part 11: Sunset Regulations and Implement a “One In, One Out” Procedure

    March 11, 2014 1:29 PM

    Since the Federalist Papers, America has debated “Energy in the Executive.” But President Obama’s 2014 agenda framed by his State of the Union address heralds a class warfare agenda, one fusing an “income inequality” theme with federal industrial policy and other activism.


    When I can act on my own without Congress, I’m going to do so,” Obama promises. This spend-and-transfer fixation makes Americans poorer and dependent except for the lucky few running things.


    Others have argued for federal budget rationality as essential to any anti-poverty agenda. This series proposes a greater prosperity enhancing opportunity, streamlining the nearly $2 trillion regulatory state and ending the uncertainty, wealth destruction and job loss it creates.


    What if regulations went away occasionally?


    Review and sunsetting requirements built into laws and regulations might be used to incentivize agencies to repeal outdated rules.


    Sunsetting clauses essentially put an expiration date on new regulations such that they phase out unless their extension is justified through a review process (yes, most will call for continuation, which is a massive problem with the idea). Such procedures could encourage efficiency, boost accountability and foster more productive versions of reports like the Office of Management and Budget's Reports to Congress on Regulatory Benefits and Costs.


    The United Kingdom, which, among other nations, is experimenting with bulk regulatory reduction commission mechanisms and other "Better Regulation" programs, has created sunsetting and review options to apply to new regulations.


  • More Unfunded Mandates for Private Colleges: Activists Seek Restrictions on Campus Sex in California

    March 10, 2014 12:48 PM

    Legislators impose all sorts of misguided or costly mandates on colleges and schools that harm young people directly or indirectly. California activists are now seeking to redefine most campus sex as sexual assault, by requiring verbal permission before any sex or sexual activity (never mind that most happily married couples have engaged in consensual sex without any verbal discussion). The first step towards this goal is Senate Bill 967, a pending California bill that would require "affirmative consent" for sexual activity on public and private college campuses (although it does not expressly rule out non-verbal consent), and would require colleges to enforce such rules. I discuss the bill, and related policies at the University of California, at this link.


    The bill, SB 967, also contains various provisions that impose unfunded mandates on colleges. It authorizes funding for these mandates for public colleges, but nothing for private colleges burdened by the bill's requirements. I also discuss in the Sacramento Bee how the bill would undermine due process and privacy on campus.

  • Minimum Wage Increase Is Still Bad Policy

    March 10, 2014 12:45 PM

    Obama RacineFor the past two years, President Obama has proposed raising the federal minimum wage in his State of the Union address. The main arguments for raising the minimum wage have typically ignored economic arguments against it, and relied upon more politically charged arguments. This time around the argument is a bit different because progressives are now using new studies in economics as intellectual ammunition. Shortly before the State of the Union address, 600 economists signed a letter to the president endorsing a raise in minimum wage, citing the new studies. These studies have argued that moderately increasing the minimum wage would have a negligible impact on employment levels.


    Obama himself relied on these revisionist economists in his announcement of the executive order: “Just last month, 600 economists, including seven Nobel Prize winners, wrote the leaders of houses of Congress to remind them that the bill before Congress would have little or no negative effect on hiring, on jobs. So it's not going to depress the economy. It will boost the economy.”


    The mistake being made by using these studies is that 79 percent economists have not actually changed their longstanding consensus against a high minimum wage, and are skeptical of the new studies. The 600 signatories do not necessarily represent the field as a whole, and their suggestions, as such, should be taken with caution.


  • CEI’s Battered Business Bureau: The Week in Regulation

    March 10, 2014 9:18 AM

    84 new regulations, from soybean referendums to jaguars.


  • The "California Rule" and the "The Fall of Pacific Grove"

    March 6, 2014 3:36 PM

    In my previous post, I described the "California rule," which puts state governments in a legal straitjacket when trying to reform underfunded public pensions. Specifically, it places pensions in a privileged position relative to other types of compensation, like salary or health insurance benefits, by making them more difficult to change. This post highlights a real-world example of the California rule's dangers.


    The place is Pacific Grove, California, a town of 15,000 residents on the Monterey Peninsula's northern tip, with an annual budget of $11 to $12 million. In 2008, John Moore, a Pacific Grove resident and retired attorney, learned that the City of Pacific Grove had issued $19 million of pension bonds two years earlier, while at the same time it gave the police union a 30% raise.


    After making several requests under California's Public Records Act, Moore uncovered a tale of self-dealing by Pacific Grove and union officials to rip off California taxpayers. The result of Moore's investigation, "The Fall of Pacific Grove," was published in The Pine Cone, a Monterey County paper; it's now available online thanks to the California Public Policy Center.


    In 2002, the Pacific Grove city council adopted a 50 percent pension increase for public safety workers, after being told by the city manager that the increased benefit would cost around $51,500 per year. However, the city manager withheld from the council an actuary report that estimated the benefit at over $800, 000 per year. The hidden actuary report was not discovered until 2009. The results have been predictable and dire. Pacific Grove's pension deficit has ballooned to $45 million, plus $20 million in pension bonds, and is growing at 7.5 percent a year, according to Moore.


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