A big push to cut reglatory red tape
02/06/17 Filed in: Regulations
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The economic cost of government regulations is about $2 trillion per year by some estimates, and many regulations are needlessly stringent or even unnecessary. Rolling back some existing regulations and slowing the issuance of new ones could provide a solid boost to economic growth, and unlike cutting taxes wouldn’t risk increasing the deficit by reducing tax revenues.
SAFE’s ideas on draining the regulatory swamp were spelled out some time ago: Regulatory common sense requires eternal vigilance, 11/22/10; Dear EPA: shape up or ship out, 11/29/10. Here’s a quick recap:
A generalized assault on government regulations would be pointless; let’s identify the major problems and work on them. To this end: (1) sell the problem of overregulation conceptually before offering solutions, (2) seek “quick hit” results to build support, (3) attack programs or agencies that are seriously out of line, (4) hold leaders responsible (not just the administrative agencies), and (5) be flexible and pragmatic, as there is “more than one way to skin a cat.”
Six years on, the problem has gotten worse, but a new administration has made a good case that excessive regulations are one of the primary obstacles to job creation and faster economic growth. Consider this excerpt from “bringing back jobs and growth,” a memo posted on the White House website, which is consistent with things the president has said on multiple occasions.
As a lifelong job-creator and businessman, the president also knows how important it is to get Washington out of the way of America’s small businesses, entrepreneurs, and workers. In 2015 alone, federal regulations cost the American economy more than $2 trillion. That is why the President has proposed a moratorium on new federal regulations and is ordering the heads of federal agencies and departments to identify job-killing regulations that should be repealed.
Congressional Republicans have also expressed support for rolling back regulations, so the political stage may finally be set for some constructive action. A review of the current state of play follows.
I. Options – Much of the increase in regulatory burden that occurred during the Obama administration was accomplished by the executive branch, often without congressional support. This simplifies rollback of policy changes that were made, as administrative action is typically easier to arrange than legislation, but doesn’t mean such changes will necessarily be quick or easy.
#EXECUTIVE ORDERS - If the change was made by an executive order, the new president can simply countermand the previous order. See, e.g., Presidential memo: Mexico City Policy, 1/23/17, which reinstated a Bush 43 era ban on the use of foreign aid money to fund or encourage abortions.
#REGULATIONS - Regulations issued by administrative agencies after public notice and consideration (at least theoretically) of comments can be changed by issuing new regulations. However, this normally entails publication of a proposed regulation followed by a period for public comments and a hearing on the matter before a final regulation is issued. The process takes months, during which defenders of an existing regulation can marshal public opinion in favor of their position, file lawsuits in opposition to the proposed changes that at a minimum will result in further delays, etc.
Consider, for example, the plans of environmental groups to fight proposed policy changes re programs to force reduction in carbon emissions in the name of combatting manmade global warming. Environmentalists gear up, strategize for Trump war, John Siciliano, Washington Examiner, 12/12/16.
First, the groups plan to use increased litigation to hold the new administration to task. [A representative] said the federal court system will be "one of our most potent weapons" when the Trump administration "tramples our environmental laws or sacrifices our public lands to the fossil fuel industry." The environmental groups are already in court defending the Environmental Protection Agency's Clean Power Plan, the Obama administration's signature climate change regulation, which Trump has vowed to repeal.
Second, [they] will be lobbying their case on Capitol Hill and using the Senate to hold up Trump's Cabinet appointees and urging Democrats to make use of the filibuster to stop anti-environmental laws and the administration's repeal agenda, say officials with the groups.
#LEGISLATION - If an existing policy was established by Congress, new legislation must be enacted to make a change – which can be a laborious, drawn-out process. Even if one party controls both houses of Congress and the White House, as Republicans currently do, action may still be blocked by a filibuster in the Senate (with support of 41 senators). And if new legislation is enacted, lawsuits can be filed with the objective of blocking or delaying its implementation.
#INTERNATIONAL - Special considerations may apply in the case of the provisions of international compacts entered without congressional approval, e.g., the Paris Climate Agreement. Global warming alarmists go overboard, 12/14/15. Although a new administration could effectively disown this agreement, as the president appears likely to do, there would predictably be shock waves from the other countries involved.
#CRA - Finally, there is the possibility of expedited congressional reversal (simple majority, no filibusters) of previously approved regulations under the Congressional Review Act. The provisions of the CRA have been understood to cover regulations issued in the last 6o working days of the previous Congress (dating back to June 2016 as many days were taken off in that election year). Reversing rule by regulation, Wall Street Journal, 11/17/16.
Republicans can now use this mechanism to kill the Treasury Department’s misguided effort to punish businesses that Treasury thinks might move their headquarters overseas. Other potential targets include a pending IRS rule to raise estate-tax collections and a Commodity Futures Trading Commission proposal to strip regulated companies of their due-process rights to challenge federal demands for information. Mr. Obama’s agencies have also been moving rules on truck emissions, fracking, food labels and more on the expectation that President Hillary Clinton would protect them. All of these could be quickly killed.
But there is a limited window of opportunity. The Obama administration issued 145 regulations between Election Day and Inauguration Day; CRA reversals must normally occur within 60 working days after a final regulation was published in the Federal Register; and such reversals must be presented on an individual regulation (versus batch) basis with specified time allowed for debate.
The foregoing may help to explain the seemingly pointless use by Senate Democrats of all procedural options available (including boycotting committee votes on nominees) to delay the confirmation of most of the president’s high level appointments. Democrats’ Trump cabinet delays may save Obama’s regs, Susan Crabtree, Washington Examiner, 2/3/17.
•Democrats have justified the delays as necessary to allow a full vetting of Trump's key nominees, many of whom are wealthy businessmen and women with complicated and extensive financial holdings. But they are also celebrating an added benefit of potentially salvaging some of Obama's midnight regulations.
•"There's a 60-day clock that's running and the longer that that clock can run on a CRA [then] that gives from, our point of view, a better chance [to survive] for these regulations that are worthy, and we think that's a good thing," Sen. Tom Carper, D-Del., a member of the Environment and Public Works Committee, told reporters Thursday.
It seems that the CRA may be a more potent tool for clawing back targeted regulations than was thought initially, as the 60-day period may be tolled if the responsible agency failed to advise Congress of a regulation being adopted. Accordingly, some regulations adopted years ago may remain vulnerable to expedited repeal by a simple majority vote.
Kimberly Strassel of the Wall Street Journal publicized this point in a January 26 column and credited Todd Gaziano of the Pacific Legal Foundation for its discovery. The latter has expressed appreciation for the publicity and reported a flurry of follow-up inquiries. WSJ columnist strongly endorses PLF idea to kill bad regulations, Todd Gaziano, pacificlegal.org, 1/27/17.
The initial response to the column has been enthusiastic and positive. I’ve been fielding some very encouraging calls today from Senators and Representatives who want to make the most of this option. When my phone stops ringing, I’m going to follow up with a short article explaining why the CRA allows Congress to consider and overrule any regulation, guidance document, or any other rule that was not previously reported to Congress. This is our way to help make America freer again.
(As some readers may recall, SAFE arranged a talk by Mr. Gaziano to the Retired Men’s Luncheon Club in 2015, which proved very informative and was well received. Keeping government in line, SAFE newsletter, Spring 2015.)
SAFE subsequently joined in a coalition letter urging liberal use of the CRA provisions. Over 50 groups to Congress: Use the Congressional Review Act (CRA) to overturn Obama regulations, 1/30/17.
We therefore applaud your already announced resolutions of disapproval under the CRA, support their timely passage, and urge additional efforts to use the CRA to bring as much permanent regulatory relief to the American people as possible.
II. Action – Much has happened since the election, and a significant regulatory rollback now seems to be in the making. Here’s a rundown.
#PERSONNEL - Several of the president’s key nominees would have an apparent predisposition to redirect the organizations they were being asked to lead, e.g., Scott Pruitt as Director of the Environmental Protection Agency and Betsy DeVos (a school choice advocate) as Secretary of Education. Trump to name Scott Pruitt, Oklahoma attorney general suing EPA on climate change, to head the EPA, Chris Mooney et al., Chicago Tribune, 12/7/16.
Big government fans don’t seem to be pleased. Thus, Senator Chris Coons has complained of nominees who “have dedicated their careers to undermining, suing or challenging the agency [they would be] charged with running." Delaware US senators tee off on Trump nominees, Matthew Albright, News Journal, 1/30/17.
We would argue, however, that an outsider with independent views may be an excellent choice to head an agency that has gotten “too big for its britches.” See, e.g., Dear EPA: shape up or ship out, 11/29/10.
In short, only direct and specific action could bring about real change in the EPA’s approach. Thus, the president [then Barack Obama] might announce disappointment with the direction that the EPA has been taking and nominate a new administrator with industry experience and different priorities. Not that we expect this to happen, but it would have an impact.
Although the confirmation process has been slowed by delaying tactics, most of the president’s nominees will apparently be confirmed. (The vote on Betsy DeVos will be very close, and the secretary of the Army nominee has withdrawn.) Democrats prove powerless to stop Trump’s cabinet, James Antle, Washington Examiner, 2/3/17.
#PRESIDENTIAL ACTIONS – In addition to reversing previous presidential actions, as aforesaid, the president has used his own actions as a signaling device by identifying perceived problems and tasking designated officials to consider solutions.
•Executive order: Resuscitate previously blocked pipelines. A new application has been submitted for the Keystone XL Pipeline, which will presumably be approved and completed expeditiously now the president has essentially signed off on the project. As for the Dakota Access Pipeline, the only significant holdup is building a one-mile section under a lake – the work should proceed quickly now unless opponents can stop it by legal action. The Dakota Access pipeline reportedly about to get final approval, fortune.com, 2/1/17.
•Executive order: Reducing regulation and controlling regulatory costs, 1/30/17. A regulatory cap is imposed for the remainder of fiscal year 2017; agencies proposing new regulations must propose twice as many old regulations for elimination. Starting in fiscal year 2018, there is to be a budget for incremental costs of new regulations to be administered by the Office of Management and Budget (OMB).
Prediction: The 1/30/17 executive order may have symbolic value, but it’s not likely to accomplish much. Agencies will soon learn how to game the new system, and the main result will be more nonproductive paperwork for government bureaucrats.
• Executive order: Core principles for regulating the United States financial system, 2/3/17. A series of “Core Principles” is enumerated, e.g., “prevent taxpayer-funded bailouts” and “foster economic growth and vibrant financial markets through more rigorous regulatory impact analysis that addresses systemic risk and market failures, such as moral hazard and information asymmetry.” The Secretary of Treasury is directed to consult with other members of the interagency Financial Stability Oversight Council and report to the president within 120 days (and periodically thereafter) about the extent to which existing laws, treaties, regulations, etc. are promoting the Core Principles and how matters could be improved.
•Presidential memo: Fiduciary duty rule, 2/3/17. “One of the priorities of my administration,” it is stated, “is for Americans to be able to make their own financial decisions” and build personal wealth to meet major life needs, e.g., buy homes and save for their retirements. The Secretary of Labor is directed to review whether the DOL’s Fiduciary Duty Rule “may significantly alter the manner in which Americans can receive financial advice, and may not be consistent with the policies of my Administration.” And if any problems are identified, the Secretary is directed to “publish for notice and comment a proposed rule rescinding or revising the Rule, as appropriate and as consistent with law.”
Conservatives have cheered the last two actions as a down-payment on scaling back regulations issued under the Dodd-Frank Act. Such regulations have flooded financial firms with new restrictions and reporting requirements, with smaller firms being particularly hard hit. Note that many of the Core Principles that are enunciated were adapted from the Financial CHOICE Act, a bill that House Financial Services Chairman Jeb Hensarling (R-Texas) has proposed to replace large parts of Dodd-Frank. Trump’s executive orders on financial regulation are a great first step, Norbert Michel, dailysignal.com, 2/3/17.
#CONGRESSIONAL REVIEW ACT – If the goal is to repeal a significant number of burdensome regulations, much work remains to be done. Nevertheless, it’s encouraging that two bills of this nature were passed by Congress and sent to the president late last week. Congress moves to rescind two Obama-era energy regulations, Amy Harder & Dave Michaels, Wall Street Journal, 2/3/17.
•Repeal of an SEC rule that requires energy companies to report (in public filings) payments to foreign governments for the right to develop oil, natural gas and mineral assets. This rule was finalized in June 2016, although an earlier version was issued in 2010 and resulted in years of litigation.
•Repeal of an Interior Department rule, finished in December , which requires tougher standards for coal mining near streams.
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The skirmishes over nominations illustrate an important principle. If members of the minority party take undue advantage of procedural rules to block actions that they can’t vote down, the majority party will ultimately cut them off. Senate GOP suspends rules, advances Trump picks without Democrats, Tom Howell Jr., Washington Times, 2/1/17.
Republicans who lead a key Senate panel suspended their own rules Wednesday and advanced President Trump’s picks to lead the Treasury and Health and Human Services departments unilaterally, saying they had no choice after Democrats boycotted committee votes for a second day in a row.
Similarly, Republicans are determined to confirm appointment of Judge Neil Gorsuch to the US Supreme Court. If the Democrats attempt to block confirmation with a filibuster, then Senate Majority Leader Mitch McConnell will use the “nuclear option” (as then Senate Majority Leader Harry Reid did for all other appointments in 2013) to eliminate filibusters for Supreme Court justices. Thank God for Harry Reid, Charles Krauthammer, Washington Post, 2/2/17.
McConnell can at any moment finish Reid’s work by extending filibuster abolition to the Supreme Court. But he hasn’t. He has neither invoked the nuclear option nor even threatened to. And he’s been asked often enough. His simple and unwavering response is that Gorsuch will be confirmed. Translation: If necessary, he will drop the big one.
If that’s how things come out, we would suggest scrapping the Senate’s filibuster rule rather than retaining a de facto 60% supermajority vote requirement for legislation. There are already several ways to circumvent the filibuster rule, including the budget reconciliation process that is contemplated for GovCare repeal (but won’t necessarily cover the replace provisions) and exceptions under the Congressional Review Act as discussed in this entry.
Technically the filibuster rule could only be changed by a supermajority vote, which wouldn’t conceivably be available, but Senator Reid blew up that constraint in 2013. And to what end is the rule being preserved? In an era of increasingly bitter partisan strife, it is perpetuating gridlock and fostering decline of Congress as an institution. How and why the Senate must reform the filibuster, Rep. Tom McClintock (R-CA), Imprimis, January 2017.
. . . the legislative branch cannot function if one house proves unable to act on major legislation, and the atrophy of the legislative branch drives a corresponding hypertrophy of the executive branch. It is perhaps the single greatest reason for the rise of the imperial presidency in recent decades.
Rather than abolishing the filibuster rule, Rep. McClintock suggests restoring the status quo ante; until 1970, a senator(s) mounting a filibuster was required to hold forth on the Senate floor rather than allowing filibustered bills to be painlessly bypassed. No wonder there have been 1,700 filibusters in the 46 years since 1970, whereas this device was only used about once a year before that.
McClintock’s approach might represent “the best of both worlds,” but it would only be possible with bipartisan agreement – which wouldn’t necessarily be attainable. On balance, we think the most practical course might be to abolish the filibuster and allow all congressional votes to be determined by a simple majority (with the relatively few exceptions specified in the Constitution).
#As a charter school supporter, I’m particularly interested in the battle against changes in the education system. Most people have no idea how ineffective the public schools currently are, or how helpless poor and minority students are when trying to navigate the system. It puzzles me how anyone could favor a "no change" policy. The only certainties in life are death and change. No matter how much one likes a certain technology or culture, it will change. It has to change or it perishes. – SAFE member (MD)
#Re whether Americans want to see an increasingly imperial presidency (as is arguably the result of the current filibuster rule in that it serves to block congressional action): NEVER – SAFE member (DE).
#The recent issue of Imprimis from Hillsdale College, suggests that we go back to the earlier concept regarding the filibuster. Apparently, Mike Mansfield changed Senate rules in the early 70's to enable the Senate to address other issues during a filibuster thus allowing a filibuster to occur without anyone taking a stand addressing the Senate for hours. Since then the number of filibusters skyrocketed. Forcing a Senator to stand on his/her feet for hours on end will drastically reduce the number of filibusters except for those that are really crucial to the opposition. – SAFE member (PA)
Reverting to the old rule would be a big improvement, as is discussed at the end of the entry, but it’s not clear to us how a consensus could be forged to do so.
#The path forward (to drain the regulatory swamp) is clear and only the old guard will block this to help save their worthless jobs. We can use the nuclear option and more. – SAFE director