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OpenMarket: Regulatory Reform

  • The 2014 Federal Paperwork and Red Tape Roundup, Part 5: Executive Agency Regulatory Costs

    October 24, 2014 10:45 AM

    In Parts 1 through 4 of The 2014 Federal Paperwork and Red Tape Roundup we compiled a basic picture of federal paperwork costs with respect to independent agencies and federal tax collection, as well as took a look at taxation’s deadweight costs.

    Now we will briefly visit the executive departments, agencies and commissions to see what might be appraised about their paperwork.

    For the most part, executive agency paperwork costs will have already been captured, at least as far as officialdom is concerned, in regulatory impact analyses and in OMB reporting on these agencies, whether the legacy estimates or the more detailed annual tallies. These all appear, as covered many times, in the Office of Management and Budget’s annual Report to Congress on the Benefits and Costs of Federal Regulations.

    During the first years of the 2000s, OMB noted about $5 billion annually as the average amount of regulatory costs imposed annually. That has changed recently; last year’s executive agency costs acknowledged by OMB were only $3.5 billion, but the year before that they were $25 billion. Since fiscal year 2009 the lowest amount otherwise has been $12 billion.    

    It may or may not be true that paperwork costs are contained within most OMB estimates; probably not, as we’ll seen, and given the plethora of non-major rules that nonetheless generate paperwork. But I avoid possible double counting even when it understates cost.  There are many other reasons regulatory costs are higher than what OMB reports on each year besides.

    What I will do here however, is specify an excess of official paperwork cost estimates (to which I apply a $35 hourly rate) when paperwork hours-times-wage registers as greater than the costs of regulations about which OMB has otherwise informed us for a particular executive department or agency.

  • The 2014 Federal Paperwork and Red Tape Roundup, Part 4: Independent Agency Paperwork Costs

    October 22, 2014 12:46 PM

    recent post here at OpenMarket noted the Annual Costs of Independent Agency Rulemakings and presented an annual cost placeholder of $6.14 billion annually stemming from compliance with rules issued since 2009. This vastly understates the overall impact of independent agencies given the number of agencies, the number of rules and simple lack of accountability.

    Independent agencies are not subject to even the minimal cost disclosure that a few executive/cabinet agencies present in the Office of Management and Budget’s Annual Report to Congress on the Benefits and Costs of Federal Regulation.  

    But we can supplement independent agencies costs with what we know of their paperwork burdens, as presented in the (sometimes) annual federal Information Collection Budget.

    These independent agency paperwork burdens do not get accounted for in OMB’s annual benefits and costs roundup of executive agency rules, and include bureaus like the Securities and Exchange Commission with its 234 million reported hours of paperwork (Table 1, p. 9), and the Federal Communications Commission’s 82 million (Table 1, p. 9). Some of these hours, like contracting regulations and Social Security amount to costs of doing business with the government and administration of economic benefits like Social Security payments.

  • The Great Unknown - Federal Independent Agencies’ Regulatory Costs

    October 21, 2014 3:14 PM

    Let’s be independent together! —Herbie the Dentist Elf to Rudolph in Rudolph the Red-Nosed Reindeer

    Independent agencies are not subject to Office of Management and Budget review as executive agency rules are, so their rules’ costs are not included in the annual Report to Congress on the Benefits and Costs of Federal Regulations, confounding as that may be.

    So costs again are understated to this degree. OMB noted implications of this shortcoming in the 2011 report (not for the first nor last time):

    We emphasize that for the purposes of informing the public and obtaining a full accounting, it would be desirable to obtain better information on the benefits and costs of the rules issued by independent regulatory agencies. The absence of such information is a continued obstacle to transparency, and it might also have adverse effects on public policy.

    Technically, a portion of independent agency cost information is available in Regulatory Impact Analyses and the Governmental Accountability Office’s (GAO) database compiled per the Congressional Review Act. But once again it is highly incomplete. Of the independent agencies’ rules issued during FY 2013, for example, the GAO reported that seven agencies issued 18 rules, of which only two provided monetized cost estimates (OMB listed these rules in a table, but did not provide any of the numerical costs for readers).

    Referring to whatever cost estimates independent agencies may perform on their own, OMB stated that it “does not know whether the rigor of the analysis conducted by these agencies is similar to that of the analyses performed by agencies subject to OMB review” (taking rigor of executive agency reviews for granted, somehow, although these too are highly incomplete.)

    How OMB couldn’t know, even out of curiosity, whether comparable rigor exists after all these years is hard to fathom, but there you have it.

    Over the entire decade of 2004-2013 and according to OMB, the total number of major rules issued during this period by independent agencies was 128 (OMB, Table C-1, p. 88). Among them, the total number of independent agency major rules with “some information on benefits or costs” is 76 (italics added; Table C-2, pp. 89-90).

    So, the cumulative annual cost of these independent agency rules? Nobody really knows; it’s the same story as that of executive agency rules of the past decade, and as that of legacy regulatory costs.

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

    October 20, 2014 7:47 AM

    The federal government took Monday off for Columbus Day, but still managed to pack more than 50 new regulations into a short week.

    On to the data:

    • Last week, 52 new final regulations were published in the Federal Register. There were 62 new final rules the previous week.
    • That’s the equivalent of a new regulation every three hours and 14 minutes.
    • So far in 2014, 2,870 final regulations have been published in the Federal Register. At that pace, there will be a total of 3,570 new regulations this year. This would be the lowest total in decades; this will likely change as the year goes on.
    • Last week, 990 new pages were added to the Federal Register.
    • Currently at 62,528 pages, the 2014 Federal Register is on pace for 77,772 pages. This would be the 6th-largest page count since the Federal Register began publication in 1936.
    • Rules are called “economically significant” if they have costs of $100 million or more in a given year. 34 such rules have been published so far this year, one in the past week.
    • The total estimated compliance costs of 2014’s economically significant regulations currently ranges from $7.62 billion to $10.87 billion. They also affect several billion dollars of government spending.
    • 237 final rules meeting the broader definition of “significant” have been published so far this year.
    • So far in 2014, 546 new rules affect small businesses; 80 of them are classified as significant. 
  • CEI’s Battered Business Bureau: The Week in Regulation

    October 14, 2014 6:44 AM

    Even with a mid-term election coming up next month, agencies are cranking out a dozen or so new regulations every workday. The federal government also announced that, having solved all other problems, it will be holding a Tall Wood Building Prize Competition.

    On to the data:

    • Last week, 62 new final regulations were published in the Federal Register. There were 79 new final rules the previous week.
    • That’s the equivalent of a new regulation every two hours and 43 minutes.
    • So far in 2014, 2,818 final regulations have been published in the Federal Register. At that pace, there will be a total of 3,576 new regulations this year. This would be the lowest total in decades; this will likely change as the year goes on.
    • Last week, 1,503 new pages were added to the Federal Register.
    • Currently at 61,538 pages, the 2014 Federal Register is on pace for 78,094 pages. This would be the 6th-largest page count since the Federal Register began publication in 1936.
    • Rules are called “economically significant” if they have costs of $100 million or more in a given year. 34 such rules have been published so far this year, one in the past week.
    • The total estimated compliance costs of 2014’s economically significant regulations currently ranges from $7.62 billion to $10.87 billion. They also affect several billion dollars of government spending.
    • 231 final rules meeting the broader definition of “significant” have been published so far this year.
    • So far in 2014, 538 new rules affect small businesses; 79 of them are classified as significant. 
  • A Pen and Phone Strategy to Shrink Government

    October 9, 2014 12:36 PM

    President Obama is right that Congress doesn’t do much. That’s not necessarily a bad thing, of course. But the pen and phone strategy Obama proposed can be used for a lot of things. The president seems inclined to use it mostly to expand government. But the pen and phone can also shrink government and make it more accountable, as Wayne Crews and I explain over at RealClearMarkets:

    Congress passed 72 laws in 2013, while agencies issued 3,659 rules and regulations—a 51 to one ratio. This disparity suggests two areas where a pen-and-phone strategy might do some good. First, increased government transparency about the nature of all these rules. Second, establishing something akin to a federal "Department of No" to reduce the bureaucracy's output relative to Congress.

    In short, we propose the Executive require already-required transparency documents such as the Unified Agenda to at least come out on time. And we propose at least an informal check on agency rulemaking that asks agencies to look before they leap. Read the whole thing here.

  • The 2014 Federal Paperwork and Red Tape Roundup, Part 2: Billions of Dollars and 13,000 Lifetimes Annually

    October 9, 2014 9:38 AM

    Whoever makes two ears of corn, or two blades of grass to grow where only one grew before, deserves better of mankind, and does more essential service to his country than the whole race of politicians put together. —Jonathan Swift

    The Office of Management and Budget, in its 2014 Information Collection Budget of the U.S. Government (encompassing fiscal year 2013 data), estimates that it takes citizens 9.453 billion hours to complete the paperwork requirements from 22 executive departments and six independent agencies subject to the survey.

    Tax compliance (Treasury Department) represents the bulk, some 75 percent at 7 billion hours.

    The grand total is said to be a decrease from the 9.467 billion hours of fiscal year 2012. However, it is up from 8.783 billion in the 2011 report, and considerably up from 7.4 billion in 2000.

    Note that many compliance hours attributable to the Dodd-Frank law and its agency spawn are not included in the official tally here, but are rather exiled to an appendix on the last page of the Information Collection Budget. We’re early in the life-cycle of that red tape machine, but at least hours are disclosed. Expect growth in these categories and their playing a greater role in future editions.

    How does one visualize 9.5 billion hours? I don’t know, but an 80-year human lifespan is 29,200 days. In hours, that’s 700,800 hours.

    That means 2013’s 9.5 billion hours of paperwork took up the equivalent of 13,488 full human lifetimes. I’m being generous in saying everyone lives 80 years. And this is paperwork only, not other compliance costs, tasks, duties, restrictions, directives and mandates. Is red tape a time waster? You can decide, you don’t want to hear it from me about how you spend your finite 700,000 hours.  

  • The 2014 Federal Paperwork and Red Tape Roundup, Part 1: Big Bucks for Pencil Pushers

    October 8, 2014 2:01 PM

    The more restrictions and prohibitions are in the Empire, the poorer grow the people. —Lao-Tzu

    When it comes to red tape and federal paperwork, the costs of tax compliance for individuals and businesses are said to account for most of the federal paperwork burden.

    And according to federal data, the Treasury Department does indeed account for the bulk of federal paperwork. But increasingly, paperwork-heavy compliance in other areas like health (Obamacare), finance (Dodd-Frank), and labor asserts itself.

    In any event, paperwork costs associated with non-Treasury federal executive branch regulation are presumably accounted for in the Regulatory Impact Analyses for executive agency rules.

    Thus such paperwork should already be reflected in the annual Office of Management and Budget Report to Congress on the Benefits and Costs of Federal Regulations. Whether in actual fact paperwork is adequately accounted for there is another matter.

    Unfortunately, these OMB reports only address a handful of major or economically significant executive branch rules, and those having a notable impact on small business. These reports ignore independent agencies like those administering Dodd-Frank altogether, even though that’s where fertile paperwork burdens multiply. The Information Collection Budget, another OMB document, is where one must look for partial answers on these. Regrettably even the paperwork we do know about is duplicative to the tune of tens of billions of dollars annually.

    A managerial accounting journal referenced the complex issues involved in simply determining, as an accounting matter, how to even allocate the many varieties of costs in areas like environmental compliance:

    As companies feel pressure from consumers and competitors to lower cost while maintaining profits they have found a greater need to accurately allocate environmental cost. There also has been a growing need to trace compliance cost that governmental regulations have caused. These costs, including such items as permit fees, compliance and filing cost, training of personal, and others has been so large in recent years that they can make up a significant cost in some industries. As these environmental and compliance cost rise comparative to other cost, accurate assignment of them will become even more important.

    It is doubtful that such costs get accurately reflected in agency Regulatory Impact Analyses, which are prepared worlds away from those actually grappling with the real world effects of regulation and day-to-day business.

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

    October 6, 2014 7:40 AM

    The Federal Register topped the 60,000-page mark on Friday, and is on pace for the 6th-highest page count in its 79-year history. Along the way, new regulations cover everything from 5K races to how magnets work.

    On to the data:

    • Last week, 79 new final regulations were published in the Federal Register. There were 84 new final rules the previous week.
    • That’s the equivalent of a new regulation every two hours and eight minutes.
    • So far in 2014, 2,756 final regulations have been published in the Federal Register. At that pace, there will be a total of 3,589 new regulations this year. This would be the lowest total in decades; this will likely change as the year goes on.
    • Last week, 1,814 new pages were added to the Federal Register.
    • Currently at 60,035 pages, the 2014 Federal Register is on pace for 78,171 pages. This would be the 6th-largest page count since the Federal Register began publication in 1936.
    • Rules are called “economically significant” if they have costs of $100 million or more in a given year. 33 such rules have been published so far this year, none in the past week.
    • The total estimated compliance costs of 2014’s economically significant regulations currently ranges from $7.62 billion to $10.87 billion. They also affect several billion dollars of government spending.
    • 227 final rules meeting the broader definition of “significant” have been published so far this year.
    • So far in 2014, 527 new rules affect small businesses; 78 of them are classified as significant. 

    Highlights from selected final rules published last week:

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

    September 29, 2014 7:21 AM

    A busy week ended with a flourish, with Friday’s Federal Register alone containing 28 final regulations and 542 pages.

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