The Daily Dish
April 28, 2022
Congress and the Regulatory State
Eakinomics has regularly flagged the costly rulemaking of the Biden Administration – notably a first-year record of over $200 billion in burdens imposed on the private sector – and the potential for even more explosive costs as its ambitious agenda runs into legislative gridlock. In a new paper, Dan Bosch points out that this may spur a desire for Congress to intervene and control the costs of rulemaking. What are its options?
First, it could reform the rulemaking process. It could choose to do so at the margins by modernizing the Regulatory Flexibility Act (RFA), a four-decade-old law designed to ensure that agencies consider the impacts of their rules on small entities – primarily small businesses – that are disproportionately affected by regulatory burdens. Bosch notes: “The strength of this type of RFA reform is that it would substantially improve a policy that has produced results in reducing unnecessary regulatory costs. Despite the RFA’s loopholes, the SBA Office of Advocacy found that in fiscal year 2021 alone the law helped save $3.2 billion in costs on small entities, and billions more in previous years.”
Alternatively, Congress could wholesale revise the Administrative Procedure Act (APA), a 1946 law that established such rulemaking tenets as publication of proposed and final rules in the Federal Register and public notice-and-comment requirements. “Over the last decade, the Regulatory Accountability Act (RAA) has represented the most comprehensive and serious effort, passing the House of Representatives in multiple Congresses. The RAA would revise the definition of a ‘major’ rule and create a new tier of rule called ‘high-impact.’ Major rules would be defined primarily as those with an annual economic impact of $100 million, and high-impact rules as those exceeding $500 million (with those thresholds updated for inflation every five years).”
The second category of options is to remove some regulations, either by creating an independent commission to do so, or, for example, by dropping all rules that were suspended during the COVID-19 public health emergency on the grounds that they proved unnecessary.
The final category is to directly involve Congress in the rulemaking process. One way to do so is to give it a final say on certain rules before they are allowed to go into effect. “The most well-known of these ideas is the Regulations from the Executive in Need of Scrutiny (REINS) Act. Simple in its design, the REINS Act would require major rules – as determined by the Government Accountability Office – to be approved by Congress before they could take effect.”
Eakinomics’ favorite, however, is for Congress to establish regulatory budgets – the total amount by which an agency can increase the burden on the private sector in any year. Recall that the Trump Administration imposed such budgetsthrough executive authority and reduced the annual burdens imposed by a factor of roughly 10. The Biden Administration has since eliminated the budgets. Congress could impose such annual budgets statutorily. This would accomplish the goal of limiting the cost of the regulatory state without involving Congress in the minutia of executive branch business and potentially slowing the process.
A vigorous debate over the future of the regulatory state seems like a reasonable forecast. Now is the time for Congress to sort through its options.
Fact of the Day
The U.S. labor force is 3.5 million workers short of where it would have been in the absence of the COVID-19 pandemic if labor force participation had continued along previous trendlines.
