Commentary Archive

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2014: The Regulatory Year in Review

December 30, 2014

This commentary highlights ten important final rules U.S. federal agencies issued in 2014, from the Volcker Rule to Tier 3 and everything in between. Although the agencies predict each rule will offer substantial public benefits, each rule also has considerable expected costs, some of which outweigh the benefits.

Susan Dudley presenting

The Utility of Humility

December 09, 2014

What effect do regulations have on economic growth and well-being? In the United States, there is growing concern that our regulatory system has gone beyond the rules needed for an efficient, competitive market. Because of this concern, fundamental change is needed, the foundation of which must be greater humility. Without a counterfactual, it is impossible to know what a more restrained regulatory environment would have meant for economic growth and well-being, but available evidence suggests that the benefits of a simpler regulatory system that is targeted at problems that cannot be solved by other means could have enormous benefits for us and future generations.

Susan Dudley with Senator Portman

Reducing Regulatory Barriers to Transatlantic Trade

December 01, 2014

Regulatory systems that "promote competitive markets, secure property rights, and intervene to correct market failures rather than to increase state influence" are not only more conducive to greater economic growth and public welfare within countries, but they can support international trade and investment. As our economies become more global, and the EU and U.S. work to reduce tariffs and explicit trade barriers, regulations are emerging as more important and significant barriers to trade. Not only can poorly designed or conflicting regulations inhibit transatlantic trade and investment, but differences in regulatory policy and procedural approaches may continue to challenge economic partnerships between the EU and U.S. The success of the Transatlantic Trade and Investment Partnership (T-TIP) thus depends on strengthening EU-U.S. regulatory coherence, and reducing regulatory barriers to transatlantic trade and investment.

Sofie E. Miller

What's New in the Fall 2014 Regulatory Agenda?

November 24, 2014

The Fall 2014 Unified Agenda identifies 3,415 regulatory actions at different stages of development. Of these, 629 have recently been completed, and 465 are long-term. The Agenda classifies the remaining 2,321 as active regulatory actions. Interestingly, of the 599 regulatory actions listed in the Agenda for the very first time, over 40 percent are listed as Final or Completed rules, of which 11 were economically significant. This means the public didn't get notice of the rules in the Unified Agenda until it was too late to participate in the rulemaking process, even for rules that would incur more than $100 million annually in costs or benefits. This finding is consistent with our analysis of the Spring 2013 Unified Agenda, indicating a troubling pattern of lack of agency notice that could inhibit public participation. The fact that more than 40 percent of all first-time listed regulatory actions were already finalized or completed means that the public wasn't given appropriate notice of regulators' intentions, and likely had little chance to participate in the rulemaking process.

silhouette holding briefcase, umbrella

Are Internships the New 'Pathway' Into the Federal Government?

November 17, 2014

In today's competitive economy, internships have become an increasingly integral—and even necessary—part of most students' efforts to prepare for the workforce. For those of us looking to pursue a career in public service, however, one critical employer has been noticeably absent from the intern-hiring trend: the federal government. But thanks to the government's relatively new Pathways Programs, current students and recent graduates may now find it a little easier to land a full-time job in the federal government. Pathways is designed to "promote employment opportunities for students and recent graduates in the Federal workforce," through three individual programs, each of which provides for the possibility of full-time employment upon successful completion.

Interim Final Rules

Interim Final Rules Over Time: A Brief Empirical Analysis

September 25, 2014

Although there are well known benefits associated with public participation during the pre-promulgation stage, interim final rulemaking represents an important mechanism through which agencies can respond to exigent circumstances, such as natural disasters or impending statutory or judicial deadlines, much more expediently than would otherwise be possible. To evaluate whether IFRs have become more common in recent years or otherwise exhibit clear trends of interest, we examined OIRA’s executive order review data on all significant final rules published by executive branch agencies between 1994 and 2013. While there is no clear directional trend over time, on average, IFRs represent 20.3% of all significant final rules published during the period in question.

New Study by NAM

New study finds federal regulation costs over $2 trillion per year and disproportionately affects small businesses

September 10, 2014

The costs of regulation, both individually and in the aggregate, are notoriously hard to measure. Unlike the direct costs of government programs, which are tracked through the fiscal budget, there is no mechanism for keeping track of the off-budget costs imposed by regulation. Thus, to get a clearer picture of the impact of regulations, it is important to examine those impacts through different lenses using different measurement tools, even though none of those approaches is perfect.

Council on Wage and Price Stability

A Retrospective Review of Regulatory Review Itself

August 26, 2014

An interesting new paper from the Mercatus Center, “The Legacy of the Council on Wage and Price Stability”,[1] takes an instructive look back at the origins of centralized review of federal regulations. While the President has always had the authority to supervise executive branch regulatory actions, there were few formal procedures, and no dedicated professional staff within the Executive Office of the President, until the creation of the Council on Wage and Price Stability (CWPS) in 1974.

bank

Disclosure as a Form of Market-based Regulation

August 18, 2014

Since the recent global financial crisis, there has been a tectonic shift in the policy world towards more onerous regulation of the banking sector, primarily, though not exclusively, through the Dodd-Frank Act. Bank regulators not only have more power given to them through Congress, but also from the increase in power of the Federal Reserve and the other major banking regulators in the U.S (OCC, FDIC, etc.). At the same time, there has been widespread acknowledgement that incentives were at the core of the problem leading up to the financial crisis, but little actual research on what those underlying incentive problems were and how they may be resolved.

Dept. of Energy

How to Improve Retrospective Review and Reduce Regulatory Burdens

July 18, 2014

Through its Regulatory Burden Request for Information (RFI), DOE is seeking comment from the public on how to effectively review its existing regulations, pursuant to Executive Order 13563. In response to this RFI, we filed a comment offering three recommendations to DOE to further its retrospective review efforts.First, DOE should incorporate plans for retrospective review into its economically significant or major rules. Second, DOE should allow enough time between its energy efficiency standards to allow for an effective review of each rule’s effects before issuing updated rules. Third, DOE should use the Herfindahl-Hirschman Index to measure whether its existing energy efficiency standards have had negative effects on competition in the regulated industries.

Funding levels for federal regulatory agencies over time

Tight Budgets Constrain Some Regulatory Agencies, but Not All

July 15, 2014

Each year we examine the President’s proposed Budget of the United States to identify the outlays and staffing devoted to developing and enforcing federal regulations. This “regulators’ budget” report covers agencies whose regulations primarily affect private-sector activities, and expressly excludes budget and staffing associated with regulations that govern taxation, entitlement, procurement, subsidy, and credit functions. This year’s analysis also documents some interesting long-term shifts in regulatory spending patterns, including a trend in which overall outlays devoted to economic regulatory activities, including price, quality, and entry regulation, are increasing at a faster rate than those aimed at social regulatory activities, such as environmental, safety and health issues. This reverses a trend that began in the 1970s away from economic regulation of private-sector activities. This is worth watching because economic theory and empirical evidence suggest that the costs of economic types of regulation often outweigh the benefits.

No smoking sign

Thank You for Not Smoking (e-Cigarettes)

July 08, 2014

The Food and Drug Administration's proposed a rule would deem e-cigarettes (and possibly cigars) to be subject to tobacco product requirements such as ingredient listing, pre-market clearance, free sampling prohibition, minimum age requirement, and limit on sales by vending machines, as well as required health and addiction warning statements. The rule is intended to improve health outcomes by reducing the number of youths and young adults who are exposed to e-cigarettes and cigars. However, there are limited data on the actual impact of e-cigarettes and cigars on health outcomes and addiction patterns. Naturally, there are many unknowns in the proposal, in particular, a lack of evidence specifically about differentiated public health impacts of various tobacco products and of baseline usage patterns and risks. Given the uncertainty and inherent complexity of a regulation such as this one, it is paramount to ensure that the rule is written in a way that allows ex post feedback on whether intended goals have been reached.

Bananas

Review Necessary to Ensure FDA’s Food Transport Rule Actually Drives Results

June 18, 2014

FDA's proposed Sanitary Transportation of Human and Animal Food rule is intended to ensure that food will not become contaminated during the transportation process. Although the rule will cost businesses hundreds of millions of dollars, FDA could not identify any tangible benefits that will result from the regulation. Given the uncertainty of the underlying data used to formulate the provisions of the rule, it is far from clear that the rule will have its intended effect. FDA should commit to using the data it collects during the implementation of the rule to annually review whether the standards are having their desired effect. If the rule is creating unnecessary costs without producing any tangible benefits, some or all of the regulations implemented by FDA could be rescinded.

flags-globe

Going Global- Should benefits assessments include effects on other nations?

June 11, 2014

Recent assessments of climate change policies have shifted from a domestic to a worldwide benefits approach, leading to a substantial increase in the estimated benefits. Examination of the justification of benefits assessments for GHG emission reductions suggests that government officials have gone outside the typical practice for defining the scope of benefits assessment. The justifications offered by the Interagency Working Group on Social Cost of Carbon offer weak justification for this approach. Our review suggests more convincing justification in which explicit reciprocity would justify giving economic standing to citizens of other countries and demonstrable feelings of altruism would justify partial economic standing to citizens of other countries.

Regulatory costs by agency

OMB: Both Costs and Benefits of New Regulations Down in FY 2013

June 03, 2014

Over the weekend, the Office Management and Budget (OMB) released its annual Draft Report to Congress on the Benefits and Costs of Federal Regulations (“the Report”), which provides a window into regulatory activity conducted by federal agencies in Fiscal Year 2013. The Report indicates that the new regulations issued last fiscal year involve lower annual costs and benefits than in FY 2012, and that the Environmental Protection Agency (EPA) is by far the largest contributor to both regulatory costs and benefits in this Report.