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

    March 23, 2015 7:15 AM

    New rules published in the last week include everything from the IRS and Executive Office of the President declaring themselves exempt from select transparency laws, to requirements for observing sea turtles.

    On to the data:

    • Last week, 68 new final regulations were published in the Federal Register, after 60 new regulations the previous week.
    • That’s the equivalent of a new regulation every two hours and 28 minutes.
    • So far in 2015, 616 final regulations have been published in the Federal Register. At that pace, there will be a total of 2,852 new regulations this year, which would be nearly 1,000 fewer rules than the usual total.
    • Last week, 1,157 new pages were added to the Federal Register, after 1,242 pages the previous week.
    • Currently at 15,133 pages, the 2015 Federal Register is on pace for 70,061 pages.
    • Rules are called “economically significant” if they have costs of $100 million or more in a given year. Six such rules have been published so far this year, one in the past week.
    • The total estimated compliance cost of 2015’s economically significant regulations ranges from $693 million to $746 million for the current year.
    • Fifty-nine final rules meeting the broader definition of “significant” have been published so far this year.
    • So far in 2015, 127 new rules affect small businesses; 21 of them are classified as significant. 
  • Yes, and Water Can Run Uphill!

    March 20, 2015 10:05 AM

    A recent Washington Post story by Joby Warrick says much about the credulity of the media. The story extols the great gains in wind power, noting that it “could provide more than a third of the country’s electricity by 2050 while yielding a net savings in energy costs paid by consumers.”

    Warrick, like many in the media, viewed this prediction by the Department of Energy as clear evidence of the gains by non-fossil fuel sources. Indeed, he quoted without comment the Department’s statement that there would a “net savings in energy costs paid by consumers” and later that this shift “would result in a net price increase of about 1 percent for consumers” even though “an overall savings of 2 percent.” The “savings” would include the imputed values of CO2 and other pollutant reductions. Consumers are going to pay more, but “society” will benefit—a story we’ve heard before. 

    But, although the article suggests that dramatic cost reductions in the wind power area have made this source more economically attractive, the report also “warned that consistent government policies were critical to avoiding boom and bust cycles,” and that “Congress must keep the wind-friendly tax policies in place.” So, an efficient technology option has to be subsidized to survive in the marketplace?  Does the media ever read its own stories?

    Of course, wind power can be attractive to some if it is heavily enough subsidized. But an energy alternative that’s been around since the Middle Ages and which the Department of Energy claims to be cost-competitive cannot survive without continued government subsidies? The media seems to like any energy source that requires government support.

  • Is Ferguson "the Norm"? In Some Ways, Yes

    March 20, 2015 7:30 AM

    Recently, the Justice Department issued a report that was very critical of the Ferguson police department and courts. In response, President Obama stated that “he doesn't believe Ferguson is typical of most police departments,” and that the city’s practices were “not the norm.”

    But in reality, the practices described in the report are commonplace outside of Ferguson, including both those that the Justice Department rightly condemned for violating Fourth Amendment rights, and those that may have had a more innocent explanation given the Justice Department’s very poor use of statistics.

    The report leaves the indelible impression that Ferguson’s municipal government was extortionate towards many of its citizens, and took great liberties with the Fourth Amendment. Unfortunately, these practices are not in any way unique to the Saint Louis region, but rather are typical in some neighboring municipalities. In The Washington Post, Radley Balko wrote about how many municipalities in Saint Louis County gouge motorists and others to raise revenue. They also are very harsh and hostile to small businesses in their code enforcement and permitting requirements, an abuse they share with other economically-depressed cities like Detroit.

    In the St. Louis area, there are innumerable tiny municipalities. Just driving to work can take you through a dozen. The tax base can’t possibly support that many little governments, so they engage in predatory practices. One possible solution would be to merge a lot of these small municipalities but, of course, no one wants to vote themselves out of power.

  • When Regulations Undermine Justice and Due Process

    March 19, 2015 4:10 PM

    Recently, I participated in a March 13 panel discussion at the National Press Club titled “Bringing an End to Second-Class Justice,” discussing how federal micromanagement of college discipline by the Education Department ignores federal court rulings, increases college costs, and stacks the deck against some accused students. Here is the text of my remarks at the event, which was put together by the group Stop Abusive and Violent Environments:

    A Stacked Deck: OCR and Sexual Harassment Liability

    In the attached handouts, I have explained how the Office for Civil Rights, where I used to work, has made punishment of innocent students more likely, and in some cases, inevitable, through its rules on how colleges must handle sexual harassment allegations, which apply both to verbal harassment and sexual assault. 

    For example, in recent investigations, OCR has required that colleges impose “interim measures” against accused students before they ever receive a hearing on the charge against them, measures that can include expulsion from a dorm and classes shared with the accuser. In its April 2011 Dear Colleague letter to the nation’s colleges, OCR instructed to colleges to restrict cross-examination, even though the Supreme Court has declared that cross-examination is the “greatest legal engine ever invented for the discovery of truth.” It also ordered colleges to abolish the clear-and-convincing standard of evidence that was once the norm in college discipline.

    OCR also has recently required some investigated colleges (such as Harvard and SUNY) to conduct “individual complaint reviews” for all allegations in past academic years to see if the college “took steps” against harassment in each case. That creates the risk of students being investigated all over again for an offense the college previously found them not guilty of, much like double jeopardy.

    But a bigger threat to innocent students is the massive financial risk colleges face if they do not swiftly expel accused students. Thanks partly to OCR stacking the deck, it can be much cheaper for a college to expel a possibly innocent student than to find him not guilty. Even before OCR’s recent rules changes, colleges had massive incentives to suspend or expel students who might be guilty of sexual assault or harassment.

  • Data Torturing at the CPSC

    March 19, 2015 1:57 PM

    James Mills of the National Institute of Child Health and Human Development lamented in an article in the New England Journal of Medicine back in 1993: “‘If you torture your data long enough, they will tell you whatever you want to hear’ has become a popular observation in our office. In plain English, this means that study data, if manipulated in enough different ways can prove whatever the investigator wants to prove.”

    Government regulators will resort to such data torture to justify an activist regulatory agendas if they can’t do it with good data and sound science. One approach includes selective use of data—excluding years or datasets that might change the conclusions of a risk assessment. The Consumer Product Safety Commission’s recent Chronic Hazard Advisory Panel (CHAP) report on the chemical class known as phthalates offers one new example of excluding inconvenient data.

    In short, the CHAP report is being used to justify a proposed rule that would essentially ban the use of certain chemicals for toys that children might mouth or chew. These chemicals make plastics soft and pliable, suited for such things as a plastic version of a “rubber duckie.” For background on this issue, see my other blog posts here and here

    In addition, in the absence of any compelling body of data that any individual phthalate is the cause of human health effects, the panel relied on the possibility that the cumulative effects of phthalates as a class pose risks. Accordingly, they needed data on human exposure from all sources.

    The panel developed a “cumulative risk assessment” that they maintained justified regulations. But pharmacologist Christopher J. Borgert, Ph.D., observes in a review of the CHAP report that the panel’s cumulative risk assessment: “failed to recognize obvious inconsistencies with human experience and clinical evidence”; “overstates the accuracy of its cumulative risk methods and conclusions”; and “appears to have grossly overestimated chemical potencies.” In other words, the panel failed to properly apply the available data and research.

    To make matters worse, they used old and irrelevant data for their human exposure assessments even though more accurate and recent data was available. Former and current CPSC commissioners have noted that had the panel used the most recent data, their risk assessment would have produced the opposite result. This issue raises the prospect that the panel members were intentionally “selective” in their use of data because they desired to generate a particular conclusion, as appears to be the case with their selection of studies that they also reviewed. 

  • Benning Road: The Last Refuge of Streetcar Apologists

    March 19, 2015 1:02 PM

    Washington City Paper’s Housing Complex blogger Aaron Wiener has an unintentionally hilarious article on the slow-motion implosion of the D.C. Streetcar. But before I get to Wiener’s piece, let’s recap:

    To Wiener’s post, the streetcar boosters are now conceding what opponents (like your author) have been saying for years: H Street, N.E., does not need a streetcar. But they aren’t giving up yet; rather, it is Benning Road that needs the streetcar more than anything. Wiener closes with this: “But first, the streetcar has to start running. The ball’s in your court, Bowser and Dormsjo. And the future of Benning Road hangs in the balance.”

    Apparently, the D.C. neighborhoods of sleepy Kingman Park and former notorious drug-warzone Trinidad are in dire need of public subsidies to boost property values. I found this hilarious because when I was looking to buy a home a year ago, I looked in both neighborhoods and found myself priced out.

  • Least Transparent Administration Closes Records on Fannie and Freddie

    March 19, 2015 10:30 AM

    This Sunshine Week, the administration that swept into office promising to be the “most transparent” in history was just judged by a major news service as least transparent of modern presidencies.

    An analysis by the Associated Pres found that “the Obama administration set a record again for censoring government files or outright denying access to them last year under the U.S. Freedom of Information Act.” The AP adds that the administration “also acknowledged in nearly 1 in 3 cases that its initial decisions to withhold or censor records were improper under the law - but only when it was challenged.”

    But FOIA requests are just the tip of the iceberg for this administration’s secrecy, much of which has nothing to do with the legitimate exception of national security. In Dodd-Frank, the administration set up the Consumer Financial Protection Bureau and the Financial Stability Oversight Council—the constitutionality of both of which are now subject to a lawsuit from the Competitive Enterprise Institute and other parties—to be exempt from many open meetings and (especially with FSOC) open records requests.

    But probably the most egregious example of this administration’s practicing of secrecy concerns its management of the government-sponsored housing enterprises (GSEs) Fannie Mae and Freddie Mac. In August 2012, then–Treasury Secretary Tim Geithner issued the “Third Amendment” to the GSE conservatorship. The Third Amendment would require all of the GSEs’ profits to be siphoned off to the U.S. Treasury Department in perpetuity—even after the GSEs paid back what they owed to taxpayers.

    This arbitrary action has spawned more than 20 lawsuits from Fannie and Freddie’s private shareholders. The suits charge the administration with everything from violating the Administrative Procedure Act to unconstitutionally taking property without just compensation.

    The Third Amendment has also raised concerns that the profit sweep is leaving Fannie and Freddie with very little capital reserves, furthering the chance for more taxpayer bailouts should something go awry with the housing market again. See this excellent paper by Cato Institute Director of Financial Regulation Studies Mark Calabria and former FDIC General Counsel Michael Krimminger on this point.

  • CPSC's Scientific Shenanigans on Phthalates

    March 18, 2015 2:00 PM

    Many “stakeholders” have complained about the process through which the Consumer Product Safety Commission (CPSC) developed its proposed rule related to a class of chemicals called phthalates—and rightly so. In particular, the agency’s failure to allow public comment and open peer review of its Chronic Hazard Advisory Panel report (CHAP report) underscore the fact that bureaucrats want to avoid scrutiny that might hold them accountable for rash and unscientific decisions. 

    Designed to make plastics soft and pliable, these chemicals have many valuable uses for making a wide range of products from blood bags, to rain boots and swimming pool liners as well as children’s toys, which are the subject of this regulation. Safely used for decades, activists and regulators are poised to essentially throw away these valuable technologies based largely on junk science. 

    While this rule only affects toys that children might place in their mouths or chew, it sets a terrible precedent. I already detailed how this rule might harm consumers in a blog post last week. Now let’s look at the so-called “science” behind it.

    The justification for the proposed regulations are found within the CHAP report, which is a review and risk assessment that the agency released in July 2014. A key problem stems from the fact that the CHAP report relies on a selective review of limited studies that offer scant evidence that individual phthalates or cumulative exposure pose any significant risk to humans at current exposure levels. 

    Most of the CHAP-report-identified “evidence” that these chemicals pose health risks comes from lab tests that over-dose rodents to trigger health effects. Such tests are not particularly relevant to humans that better metabolize the substance and who are exposed to traces that are multitudes lower.

    The human research highlighted in the CHAP report is not particularly compelling either. Many of these human studies are noted to be “small,” which limits their value for drawing any conclusions. And many of them report associations between potential health effects in babies whose mothers’ phthalate exposure levels were measured in single “spot” urine samples during pregnancy. Given that humans metabolize phthalates relatively quickly, one time spot measurements may be misleading about actual exposures, raising important questions about the utility of such studies.

  • The Republican Budget and Middle Class Economics

    March 18, 2015 12:35 PM

    Yesterday the House Republicans released their “Balanced Budget for a Stronger America” and the Senate Republicans will release their budget proposal today.

    House Republicans would cut $5 trillion over 10 years and get rid of Obamacare. Their main goal is to balance the budget without raising taxes over that 10-year period. I wrote about this in Forbes yesterday.

    Republicans are more likely however to dissipate energy fighting amongst themselves over increased defense spending.

    Obama, by contrast, will respond to the House and Senate Republicans by giving a speech reiterating his “Middle-Class economics” pitch, which, in short means more spending and more government. Democrats will unite behind this.

    Obama’s fiscal year 2016 budget proposal called for $3.999 trillion, just shy of the four-trillion-dollar heights we were in during the downturn. On our current path, the deficit would be $1 trillion in 10 years. The Republicans would spend $3.8 trillion in 2016, so their future cuts would need to be aggressive to really attain a balance at the end of the decade.

    The president seeks seven percent spending increases in both domestic and military. He wants taxpayers to provide free community college for C-students.

    He wants big new infrastructure spending projects including an “infrastructure bank” at the level of some half a trillion over six years. Stimulus anyone? Why not, since it worked so well before.

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

    March 16, 2015 12:41 PM

    An otherwise slow week ended with a bang on Friday, with 27 new regulations, or nearly half the week’s total, covering everything from calorie counts to gas vapors.

    On to the data:

    • Last week, 60 new final regulations were published in the Federal Register, after 72 new regulations the previous week.
    • That’s the equivalent of a new regulation every two hours and 48 minutes.
    • So far in 2015, 548 final regulations have been published in the Federal Register. At that pace, there will be a total of 2,796 new regulations this year, which would be nearly 1,000 fewer rules than the usual total.
    • Last week, 1,157 new pages were added to the Federal Register, after 1,242 pages the previous week.
    • Currently at 13,467 pages, the 2015 Federal Register is on pace for 68,710 pages.
    • Rules are called “economically significant” if they have costs of $100 million or more in a given year. Five such rules have been published so far this year, none in the past week.
    • The total estimated compliance cost of 2015’s economically significant regulations ranges from $647 million to $700 million for the current year.
    • Fifty-five final rules meeting the broader definition of “significant” have been published so far this year.
    • So far in 2015, 111 new rules affect small businesses; 19 of them are classified as significant. 

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