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Sunsetting Federal Regulations

An average of around 70 rules and regulations are issued every week. There were 3,554 in 2015, and have been 1,693 in 2015 as of today.

Rules appear, but rarely are rolled back even though the administration’s “Retrospective Review of Regulations.” E.O. 13563 calls for agencies to: 

[P]periodically review its existing significant regulations to determine whether any such regulations should be modified, streamlined, expanded, or repealed so as to make the agency’s regulatory program more effective or less burdensome.

(Gotta love the word “expanded” tossed in there.) Enforcement is unclear and rollbacks amount to a drop in the bucket and. Although prospects are dim, some in Congress is looking again at review and sunsetting of regulations.

Sens. Mark Kirk (R-Ill.) and Steve Daines (R-Mont.) introduced the “Small Business Regulatory Sunset Act”; versions appeared in this (S. 846) and the prior congressional session. It calls for agencies to publish plans for review of small business rules, assemble comments from the affected and sunset rules after seven years unless agencies reaffirm (see this coalition letter in support).

Similarly Sen. Roy Blunt’s (R-Mo.) “Regulatory Review and Sunset Act“ (S. 1067) (The House version is H.R. 2010 from Rep. Randy Hultgren) provides for reviews of the heftiest of rules and for assessments of whether they should be “continued, modified, consolidated, or terminated.” 

This isn’t new; President George H.W. Bush issued regulatory moratoria and review back in the early 1990s. And upon entering office, President Obama’s chief of staff announced a regulatory freeze of the second President Bush’s pending rules in the first press release the administration issued. These freezes didn’t reduce the march of rulemaking much. The Federal Register popped back up to where it had been as if nothing had occurred, even hitting record levels recently.

Legislation like sunsetting matters since campaigns of a few months are inadequate to examine the fruits of an intense, thorough audit; plus rules often implement statutory requirements and are exempt from executive waiver and so require law. (Normally, that is; with respect to the Patient Protection and Affordable Care Act, waivers were applied via bulletin, memo and press release by the Internal Revenue Service.) 

Obama’s unilateral waivers notwithstanding, getting regulations off the books requires the same laborious public notice and comment procedures of a new rule (well, that new rules are supposed to, but may not actually, get).

Just as Congress may continue to explore regulatory sunsetting this summer and fall (we shall be interested to see if they really do), the president too could, in his notorious “pen and phone” fashion, require agency-generated regulatory requirements to expire or sunset within a given period of time unless they are re-proposed with public notice and comment. This task, however, requires an executive who agrees with the observation that regulations sometimes go too far, that allowing even good rules to accumulate inappropriately is counterproductive. That perspective is not what we have now.

If a president were so inclined, efforts could build upon lessons of the Bush and earlier Obama moratoria and lawfully freeze regulation for a more thorough audit, publish reports on data generated and seek public comment on which rules should sunset. More aggressive periodic rule review by Office of Management and Budget (OMB) and agencies would be valuable too. Creativity would produce useful information to support more substantive reforms.

A related approach is stipulating that for every new rule, one within or outside the agency should be eliminated as has been done in Canada and the U.K. “One in, one out” would freeze regulatory burdens, amounting to a status quo “regulatory budget.”; The U.K. version calls for one in, two out.

The annual OMB Reports to Congress (the draft 2015 edition is overdue) do make several worthwhile recommendations for regulatory disclosure, including:  

[F]acilitating public participation and fostering transparency by using plain language; making objective, evidence-based assessment of costs and benefits an integral part of the regulatory decision-making process; using retrospective review to inform decisions about specific rules and, more broadly, about the appropriate interpretation of impact analyses that feature incomplete quantification; and, finally, aligning agency priorities across all levels of internal hierarchy.

These are useful steps, but note how they fall short of actually getting rid of the buildup of regulation. Agency’s Regulatory Impact Analyses and the entire executive branch review process should reflect a higher burden of proof regarding rules’ value. Another regulation isn’t always the answer. Where agency analyses under the various executive orders appear not to justify a rule, OMB should say so, and it should challenge non-major rules as well:

  • Which rules can be eliminated or relaxed without becoming bogged down in scientific disputes over risk assessment? Which rules are just silly? Which are paternalistic?
  • Are the data that regulated entities are required to report being used at all?
  • Does the rule create unfavorable health effects (such as health costs of advertising restrictions on some needed drug)?

It would be nice if presidential and OMB leadership could address regulatory overreach, but in reality sunsets or rule phase-outs are going require aggressive legislative backup.

OMB has the experience and know-how to create a benefit “yardstick” to objectively critique high cost, low benefit rules. OMB could disclose costs of regulations, and compare their claimed benefits to what’s available elsewhere (hiring policemen or firemen, dividing or painting highways). Policymakers exploring transparency, sunsetting and regulatory budgets can demand that agencies rank regulations and show that their least effective rules are superior to another agency’s rules.

Part of leadership is rolling government back from the places it should not be. A president can help, but Congress must engage.