US Congress Library by Miguel Suarez, via Flickr

November 24, 2017 Liam Gorman 0Comment

Regulatory reform is a necessary step towards improving the business environment.

The effects of regulations exist all around us, in every product we buy and in the practices of every business we shop at, but they are rarely noticed.

One of the most undervalued pieces of federal policy making is not the ability of Congress to pass a law, but the creation of regulations or rules to enforce the law. The rule-making process can seem unglamorous to many people: it can appear that anonymous bureaucrats are creating dry, inaccessible rules. These rules, however, are some of the most important tools in the federal government’s arsenal as it has a massive effect on regular people’s daily lifestyles. When Congress passes a law, much of the wording is ambiguous and needs further clarification for enforcement. This is where regulation comes in as a federal government tool to purify laws and make it applicable to society. Unfortunately, this tool can be abused by these agencies. Many politicians on the campaign trail criticize the overburdensome nature of the regulatory state, arguing that it inhibits innovation and economic growth, leading to regulatory reform proposals. In reality, it is not this simple. The issue of regulations is that they are multi-faceted and overly complex, but addressing their problems is still very difficult.

There are three main aspects to regulatory reform, and all three are necessary for success. The first is to delay, revise, or even eliminate the previous administration’s regulations. The second is to target and eliminate existing regulations that place an excessive economic burden on the American economy. The third, and most difficult solution, is to create institutional changes to the regulatory process that ensures that all future regulations are both transparent and acceptable to the American people.

Pending Regulations

There are two reasons that an administration may want to delay, revise, or eliminate pending regulations. The first, and most common reason, would be an electoral change in the executive. For example, if a regulation was proposed by an administration in the midnight period (the final days of the administration after Election Day), the new administration may philosophically disagree with the pending regulation. The White House Office of Management and Budget (OMB) has the authority to review all pending regulations and pull or revise them at will. Recently, the Trump Administration has used this tactic for 860 pending regulations — 469 of these regulations are being disregarded completely, and 391 of these are being put aside for re-evaluation.

Separately, Congress has “veto” power over recently verified regulations. This authority — derived from  the 1996 Congressional Review Act (CRA) — gives Congress 60 “in-session” days to pass a filibuster-proof resolution (which only requires 50 votes in the Senate instead of the usual 60) that prevents enactment of the rule. There is one major caveat: the President has to sign the resolution for it to take effect. Today’s unified government, at least on this issue, lends itself to the perfect climate for this type of legislative effort. Thus far, from January to May, Congress passed 14 resolutions to eliminate Obama-era regulations issued at the dusk of the former administration’s stay in power. As the Trump administration has already eclipsed 60 legislative days in office, these regulatory repeals of Obama’s “midnight regulations” can be put to rest.

The second reason an administration may want to eliminate pending regulation, is if rule was proposed by an independent agency, like the Federal Trade Commission (FTC), the Consumer Financial Protection Bureau (CFPB), or the Federal Communications Commission (FCC). These agencies have staggered terms for their administers, thus are often appointed by the previous administration and the overlap in the hiring process can lead to a mismatch between the sitting president and the previous administration’s agenda. There was a CRA resolution passed concerning a regulation proposed by the CFPB as recently as October in the Senate. This resolution was signed by the President on November 1st, which successfully nullified the rule that was set to go in effect in the near future.

Eliminating Existing Regulations

Eliminating existing regulations is both difficult and tedious. The President’s assisting bodies cannot, with the stroke of the pen, alter planned rules coming from an agency, nor can Congress pass a simple resolution eliminating a regulation already in effect (like they can in that 60-day window). For an existing regulation to be eliminated, a new whole rule must be proposed, and it must go through the previous regulation’s approval process. Perhaps the most important regulatory bills was the 1946 Administrative Procedures Act which  mapped the necessary procedure to establish regulations.

They need to propose a rule in the Federal Register for the public to see, must then have a period of public comment, respond to comments from the public, and provide quantitative justifications for creating the rule. This process can take years to complete. If a new agency head has a deregulatory mindset, such as an appointee of the Trump administration, he or she must propose a new justification with new data against the previous rule. The agency would then have to go through the various years-long processes to eliminate these rules. For this to be successful, agencies have to relentless attack regulation in the same vigor the previous administrations implemented them. .

Institutional Changes

Inevitably, a future administration with stronger regulatory tendencies will come to power and will work to undo many deregulatory successes. In the near future, institutional changes will have to take hold if America truly desires a more transparent and accessible government. This is no easy task. For this to work, the regulatory process needs an extensive period of scrutiny for every proposed regulation to ensure its effectiveness. While it is difficult, not all hope is lost. The bipartisan “Regulatory Accountability Act of 2017” provides a great launching pad for meaningful regulatory reform. This bill attempts to drive common citizens into the inner workings of the regulatory process instead of pushing them away from it.

Another example of pending legislation, intended to reform the regulatory process itself, would be the controversial, “REINS Act.” The  REINS act provides another possible avenue for regulatory reform. It ensures that Congress has a check on every proposed rule with a significant impact on the economy. If law, it would vastly change the way regulations are formed, while shifting the rule-making process back to Congress. Regulatory reform is not an easy task, but if citizens truly wish to know what their government is doing, and be able to take an active role in it, regulatory reform is a necessary next step.

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