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Published: Wed, 18 Oct 2017 00:00:00 -0400

Last Build Date: Wed, 18 Oct 2017 19:55:15 -0400


45 Percent of Americans Say There Is Too Much Government Regulation of Business

Thu, 12 Oct 2017 15:50:00 -0400

(image) A new Gallup Poll reports that "for the 12th year in a row, more Americans say there is 'too much' government regulation of business and industry than say there is either 'too little' or 'the right amount.'" More specifically: Forty-five percent say there's too much, 23 percent say too little, and 29 percent say things are just right.

While the streak is unbroken, this is down from the 2011 peak, when 50 percent believed there was too much regulation. Among Republicans, 68 percent now believe regulation is too high; only 20 percent of Democrats do.

I'm with the 45 percent. A study last year from the Mercatus Institute estimated that since 1980, federal regulations have slowed growth so much that economy is 25 percent smaller than it could have been. That means American per capita income is $13,000 lower than it would have been otherwise.

And federal regulators aren't the only impediments to betterment. State and local rules, such as licensing laws and land use controls, make it hard for Americans to leave low-productivity regions to enter booming job markets. One recent study calculated that without the excessive zoning restrictions U.S GDP would have been 8.9 percent higher, which translates into an additional $8,775 in average wages for all workers.

In January, President Donald Trump signed an executive order requiring that for "every one new regulation issued, at least two prior regulations be identified for elimination." Some reports do suggest that the Trump administration has significantly slowed the federal regulatory juggernaut, whereas others point out the difficulty in making such assessments.

None of this means it is impossible for a regulation to provide more in benefits than it cost. But the data strongly suggest that we're well past the point of diminishing returns.

Trump at 9 Months: 'The Least Regulatory President of All'

Mon, 02 Oct 2017 16:15:00 -0400

The most underreported story (except here at Reason!) about President Donald Trump's White House nine months in has been his administration's concerted effort to slow down, block, roll back, and reform the regulatory state. Given that, in the wake of serial Obamacare-repeal failure, Trump has arguably reached the pen-and-phone stage of his presidency 51 months before his predecessor did, you'd think that taking a poleaxe to the executive branch would receive more attention. But the man does have a knack for generating headlines far afield from the monotony of governance. The end of the fiscal year over the weekend gives us a chance to step back and do some counting—or better yet, let the regulation-obsessives over at the Competitive Enterprise Institute do it for us. There, CEI Vice President for Policy Clyde Wayne Crews has put together a piece, "Red Tape Rollback Report: Trump Ends Fiscal Year as America's Least-Regulatory President Since Reagan," that if anything is guilty of headline understatement. Consider: Compared to Obama at this time last year, Trump's [Federal Register] page count is down 32 percent so far in his first year. […] In nine months, the Trump administration has issued 2,183 rules. Obama issued 2,686 rules in the corresponding time period in 2016. Trump's tally represents an 18 percent decrease. Significant rules issued, generally those with an impact of $100 million or more, are down an astonishing 58 percent compared to Obama. Trump's agencies issued 116 significant final rules during his first nine months, while Obama's issued 274 over the corresponding nine-month period in 2016. And that doesn't count the rules currently being cooked up: Trump's overall proposed rules in the pipeline are far below any of his predecessors […] They are down a down 28 percent compared to the corresponding time frame from Obama's final year. Trump: 1241, Obama: 1737. Note that Trump's "significant" proposed rules are drastically below any predecessor. They are down 77 percent compared to Obama. Trump: 65, Obama: 290. Bolding in the original, which is filled with hyperlinks to further resources, and can be found here. Earlier this year I wrote a cover story on the prospects of Trumpian deregulation. Since then some of the will-he/won't-he signs that regulatory reformers were anticipating have come up positive. But as the recent Jones Act wavering, trade saber-rattling, and infrastructure-investment reversal illustrate, the 19th century protectionism that deregulation types were also fretting about in my article is always a threat to overwhelm the gains made by deconstructing and reshaping the administrative state.[...]

Trump Administration Blocks an Obscure Regulation, Hysteria Ensues

Thu, 10 Aug 2017 09:25:00 -0400

Witness the fevered reaction to the Trump administration's decision to drop mandated screenings for sleep apnea—a disorder that can interrupt sleep and contribute to fatigue—among train engineers and truck drivers. "We don't want train engineers with undiagnosed sleep apnea, who actually hold lives in their hands," thundered Senate Minority Leader Chuck Schumer (D–New York) at a hastily convened press conference. "It's very hard to argue that people aren't being put at risk," fretted former Federal Rail Administration head Sarah Feinberg. The pearl-clutching continued in the media. "How asleep should truck drivers be on the job?" asked The Atlantic. "Experts: Lives at risk if no sleep tests for train engineers." was the Associated Press headline. The panic amongst the political class in Washington is standard for even the most minor regulatory rollback proposed by the Trump Administration, underscoring the daunting political difficulty of major reform. It also points up the ridiculousness of the hysteria. For starters, Tuesday's decision did not eliminate any regulations. Nor did it eliminate any proposed regulations. The Department of Transportation under the the Obama Administration had been considering regulations on mandated sleeping disorder screenings for rail and truck operators. The Trump Administration ended that study. So when Rep. Sean Patrick Maloney (D–New York) says that "getting rid of this rule takes us backwards for no reason, and it's just plain stupid", he's talking about a rule that doesn't exist. Maloney also obscures the fact that the problem the non-existent rule is supposed to address is itself nearly non-existent. According to Federal Railway Administration data, there have been 86 rail accidents caused by sleeping employees since 1975—that's 42 years—resulting in two deaths and 80 non-fatal injuries. The National Transportation Safety Board (NTSB) considers the number slightly higher saying, "sleep apnea has been in the probable cause of 10 highway and rail accidents investigated by the NTSB in the past 17 years," including the 2013 crash of a Metro-North Railroad train in New York, caused by a dozing engineer which killed four people. The NTSB condemned Tuesday's decision to not go forward with sleep apnea regulation as well. The NTSB concedes that while sleep apnea might be a "probable cause" in many of these accidents, it is rarely the sole cause. Nor does it make a convincing case that more regulations in the form of mandated sleep apnea screenings by employers would have prevented many of these accidents. In 2001, for instance, untreated sleep apnea of an engineer and insufficiently treated sleep apnea of a conductor was blamed for a two-train collision in Michigan that resulted in the deaths of two crewmembers. That the conductor was already being treated for sleep apnea suggests that screening for sleep apnea was not the problem. At the time of the crash, the untreated engineer was working his seventh consecutive 12-hour graveyard shift, something that might have made anyone a little sleepy. The call for more regulation also ignores the voluntary steps taken by the rail and trucking industries to combat fatigue among their employees. Trucking associations and government regulatory boards from both the U.S. and Canada have created the North American Fatigue Management Program for managers, drivers, and spouses and family members of truck drivers. Their website includes a return-on-investment calculator for measuring the money saved from implementing anti-fatigue measures. The rail industry has taken similar measures according to a June 2017 report from the American Association of Railroads, including individual companies encouraging confidential sleep disorder screenings, and increasing minimum off-duty hours for employees. The same report cautions against one-size-fits-all fatigue regulation, saying "not every countermeasure is appropriate for every railroad, or even for different parts of the same railroad, because circum[...]

Deregulation and Market Forces Can Lower Pharmaceutical Prices

Fri, 28 Jul 2017 09:15:00 -0400

In the rollout of their "Better Deal" program this week, Democrats identified high prescription drug prices as a major challenge facing America and proposed new regulations to rein them in. Their diagnosis is spot on, but their prescription is backwards. The way to roll back pharmaceutical prices is to deregulate and rely on market forces. But for that to happen, both Democrats and Republicans will have to resist the pharmaceutical lobby, which benefits from the status quo and is very generous with its donations. In 2015, spending on prescription drugs totaled $325 billion, or roughly $1,000 for every person in the U.S. according to federal data. Pharmaceutical spending rose by 9 percent from 2014 to 2015, far outstripping the growth of the GDP. Drugs in the U.S. often cost more than twice as much as they do in other developed countries. A 28-day supply of Humira costs a whopping $2669 on average here, according to the International Federation of Health Plans. The same supply costs $822 in Switzerland, $1253 in Spain, and $1362 in the United Kingdom. In a free market, such price differences are normally arbitraged, but the pharmaceutical market is anything but free. Federal law generally prohibits drug importation, so there is no legal way to ameliorate the international price gap. The pharmaceutical lobby (no surprise) opposes congressional efforts to legalize drug importation. Drug companies argue high prices offset the high costs of developing new drugs. A 2014 Tuft's study estimated the average cost to bring a new drug to market at $2.6 billion, much of it devoted to complying with the FDA's labyrinthine clinical trial process. Since 1962, when Congress empowered the agency to evaluate efficacy as well as safety, the FDA's trial regime has steadily become more onerous. The Bush Administration and Congress accelerated pharmaceutical price inflation by adding prescription drug coverage to Medicare in 2003. Legislation that added the costly new benefit included a "noninterference clause" that banned Medicare from negotiating prices with pharmaceutical companies. This places the government at a serious disadvantage with foreign governments that negotiate, putting a lid on their expenditures. Empowering the government to do anything is frightening for free market advocates, but consider this: when drug companies are selling to Medicare beneficiaries, they are essentially acting in the role of government contractors. It is in the taxpayers' best interest to allow the government to secure lower prices for the goods and services it purchases. In a normal market, consumers can act to limit prices by foregoing consumption or choosing less costly substitutes (like generic drugs or over-the-counter medicines). But since most prescription drug costs are covered either by the government or private insurance companies, consumers don't have much of an incentive to exercise these options. In this system of third party payment, drug consumers are insulated from the true cost of the pharmaceuticals they buy and those costs supported by taxpayers. This cost shifting can be reduced by increasing drug copayments and making them a percentage of a drug's retail price. Another way to lower drug costs is to increase competition. Right now, pharmaceutical companies are shielded from competition by patents and exclusivity periods. Even when drugs lose FDA monopoly protection, the FDA continues to effectively limit competition by delaying approval for generic alternatives, as Reason's Ronald Bailey recently reported. Patents are normally defended as a necessary incentive for drug price innovation, but if FDA approval costs were lower, this incentive could be reduced – by, for example, shortening the life of pharmaceutical patents. Further, many pharmaceutical patents are dubious at best, conferring monopoly privileges to "me too" products that aren't legitimate innovations. AstraZeneca's patent for Nexium is a classic example of this abuse. After making a fortune[...]

Does Donald Trump Have Anything to Do With Constitutional Conservatism?

Thu, 13 Jul 2017 13:17:00 -0400

One of the more interesting, depressing, and still-unresolved questions about the Republican Party in the era of Donald Trump is whether the limited-government philosophy that seemed to animate the Tea Party's ascendance in 2009-2010 is still an active thing. (See the bottom of this post for several links which poke at the issue from various angles.) The question has implications for all kinds of policy questions—from the health care debate, where the Senate's Tea Party caucus currently form the hinge-point on which the legislation balances, to forthcoming debates on taxes, budgets, debt ceilings, surveillance, Russian investigations, and more. Given the wariness with which many libertarians treat the Trump presidency, it came as a surprise for some to read this Politico magazine headline from Tuesday: "Is Trump a Conservative? Mike Lee Says Yes." For instance, Cato Institute Vice President David Boaz in the piece expresses surprise at Lee's assessment: "It seems to me it's pretty obvious that Trump is not a conservative," Boaz said. He prefers to describe Trump as "a scary authoritarian, nationalist, protectionist cronyist." […] Boaz doesn't think there's any way to reconcile Trump with small-government conservatism. […] "One question for intellectual conservatives," Boaz said, "is, 'Have you become such partisans that you've forgotten how to be intellectuals?'" So how does Lee, a senator who on multiple occasions has expressed revulsion at Trumpism, make the constitutional-conservative case for a president he never endorsed? I asked him that Monday, in a Sirius XM interview tied to the release of his new book, Written Out of History: The Forgotten Founders Who Fought Big Government, in the form of soliciting his response to the theory from libertarian-leaning Rep. Thomas Massie (R-Kentucky) that more than philosophy, Tea Party voters "were voting for the craziest son of a bitch in the race. And Donald Trump won best in class, as we had up until he came along." Lee's response pointed heavily to Trump's record on deregulation: Look, the fact is that the wave that swept Donald Trump to power was motivated to a significant degree by people who share these principles, by people who are wanting to restore constitutionally limited government. A good part of "draining the swamp" necessarily entailed identifying those areas in which the federal government has overreached, and identifying respects in which we have violated these twin structural protections in the Constitution, the vertical protection we call federalism, and the horizontal protection we call separation of powers. And so whether we want to call it this or that, whether we acknowledge it as an effort to restore constitutionally limited government or not, that is in fact what it is. And that is in fact going to be what saves our republic from the accumulation of power that's been occurring in Washington over the last 80 years. More from the interview: MW: Although with the exception of deregulation−which is a very important exception in this presidency that isn't getting a lot of ink right now just because there's so many other things to talk about−you don't hear a lot of that kind of talk from the president himself. He's not talking a lot about separation of powers, not talking a lot about devolving power, and that kind of thing. Or am I just missing it? ML: Well, I think it's impossible to extricate federalism from separation of powers. In other words, when he talks about over-regulation, whether he uses these terms or not, he's really referring to the two-step process by which power has been taken from the American people. First it's been taken from them at the state and local level and moved to Washington, and secondly it's been handed over by elected lawmakers to unelected, unaccountable bureaucrats. President Trump recognizes that there's something wrong there, he's trying to restore that balance. And even though he doesn't speak necessa[...]

Trump Is Right: Regulation Is Massively Slowing Down and Boosting the Costs of Modernizing Infrastructure

Mon, 12 Jun 2017 12:55:00 -0400

(image) "The government-wide average for completing a full environmental impact statement . . . is just 4.6 years," whined Center for American Progress infrastructure specialist Kevin DeGood in the Washington Post. My immediate response was "just 4.6 years!" DeGood was reacting to President Donald Trump's dramatic gesture last week when he dropped binders of an environmental assessment report "costing $24,000 per page" that had been compiled in order to obtain approval for building a stretch of highway in Maryland.

"These binders on the stage could be replaced by just a few simple pages," Trump said. "These binders also make you do unnecessary things that cost millions and millions of dollars, and they actually make it worse."

Environmental reviews have dramatically slowed the creation and modernization of roads, bridges, energy production, water supply, and airports. For example, the Obama administration used environmental reviews by the State Department as an excuse to prevent for six years the construction of the Keystone XL pipeline to transport oilsands crude to the U.S. Gulf Coast. (The Trump administration approved it in March.) Similarly, environmental reviews have delayed the building of the Cape Wind offshore wind energy project for 16 years and counting.

In a terrific Washington Post column, George Will cites a 2015 study by the the nonpartisan reform coalition Common Good headed by attorney Philip K. Howard. The Common Good "believes individual responsibility, not mindless bureaucracy, must be the organizing principle of government." The report, "Two Years Not Ten Years: Redesigning Infrastructure Approvals, asserts:

Red tape is not the price of good government; it is the enemy of good government. Time is money: America could modernize its infrastructure, at half the cost, while dramatically enhancing environmental benefits, with a two-year approval process. Our analysis shows that a six-year delay in starting construction on public projects costs the nation over $3.7 trillion, including the costs of prolonged inefficiencies and unnecessary pollution. This is more than double the $1.7 trillion needed through the end of this decade to modernize America's infrastructure.

Even if it the Common Good report's estimate were half of what it calculates, it would still represent an enormous amount drag on economic growth and job creation. President Trump's impulse to dramatically streamline the regulatory approval process is sound, but whether his administration can pull it off remains to be seen.

Trump's Pick for 'Regulatory Czar' Ain't Bad

Wed, 07 Jun 2017 14:20:00 -0400

Neomi Rao, the president's pick to run the Office of Information and Regulatory Affairs (OIRA), went before the Senate Committee on Homeland Security and Government Affairs today. Her testimony suggests that she'll bring a much-needed seriousness and professionalism to her office—and to an administration that til now has pursued deregulation in a rather haphazard and erratic way. OIRA is responsible for vetting regulations to prevent duplication or contradiction and to ensure that the rules are in line with legislative intent. Rao repeated throughout the hearing that she wants to bring stronger oversight to independent agencies, and that deregulation requires cost-benefit analysis to ensure that it actually reduces the regulatory footprint. This squares with what Rao has advocated as a legal scholar at George Mason University's Center for the Study of the Administrative State, which she founded. She has harshly criticized the excessive delegation of powers to independent agencies, a practice that she says undermines "individual liberty by allowing for the expansion of the administrative state outside the Constitution's requirements for accountability." For Rao, handing over lawmaking authority to organizations like the Consumer Finance Protection Bureau—whose abuses and unaccountability Reason highlighted here—doesn't just allow lawmaking to occur outside the Constitution's constraints on the legislative branch. It encourages individual lawmakers to seek policy changes by influencing these agencies. "Delegation gives members a way to exercise power and control outside the cumbersome and difficult process of enacting legislation," Rao wrote in a 2015 article. Rao also contends that these agencies unconstitutionally limit the executive branch's independence by depriving the president of the power to remove agency heads. And as she mentioned in her committee hearing, she wants to subject rules made by these agencies to cost-benefit analysis—a process from which they are currently exempt. Surprisingly, both Democrats and Republicans at today's committee hearing reacted supportively to Rao's views. Sen. Heitkamp (D–S.D.) said she looked forward to working with Rao on subjecting independent agencies to more scrutiny and on abolishing unnecessary rules. More than one former head of OIRA agrees. "Her legal scholarship and expertise will be invaluable as she works to make sure agencies respect the boundaries of delegated authority," said Susan Dudley, OIRA chief under George W. Bush. Clinton-era OIRA director Sally Katzen called her "clearly a smart and qualified choice to fill the post." The only major critiques of Rao have come from activists opposed to virtually any scrutiny of the government's regulatory powers. Robert Weissmen, the president of Public Citizen, warned in April that Rao might "give corporations a free hand to pollute and pilfer, poison and profiteer." The Daily Kos called her nomination "the end of everything good." In fact, Rao has written that "Congress retains wide latitude to establish administrative agencies and create regulatory duties." She's far from a firebreathing anti-government warrior, but she seems likely to display a constitutionally grounded approach to regulatory oversight. As Reason's Matt Welch has pointed out, that might be the best libertarians can hope for right now: With the Trump presidency in an ongoing state of crisis management, and his legislative agenda foundering at best, these largely under-the-radar regulatory slowdowns and positive reforms may prove to be the most tangibly useful aspects of his White House tenure. [...]

Trump’s Repeal of a Welfare Drug-Testing Regulation Backfires (Thankfully)

Fri, 26 May 2017 16:13:00 -0400

The 1996 Congressional Review Act, which gives Congress a limited time window after a regulation is implemented to repeal it, was successfully used just once in its first two decades in existence. That all changed in the first half of 2017, as a GOP-led Congress took advantage of a new, actively deregulatory Republican president to roll back a total of 14 late Obama-era rules. Eyeballing the list (and also consulting Reason's work on the specific bills; on which see more below), only one of the CRA repeals stuck out at me as facially unfortunate: the rollback of a 2016 Labor Department rule defining which occupations that states can drug-test for (as authorized by the Middle Class Tax Relief and Job Creation Act of 2012) when disbursing federal unemployment insurance. The qualifying jobs, according to Bloomberg, were mostly "limited to the transportation and pipeline industries, as well as jobs that require carrying a gun or were already legally mandated to have drug tests, such as nuclear plant staff." Republicans like Sen. Ted Cruz (R-Texas) found the list too limiting, and therefore "yet another instance of executive overreach by the Obama administration." Republicans do love their drug-testing of welfare cases (individual welfare, mind you, never the corporate variety), regardless of the constitutionality or efficiency. Why, just look at how much fun it is! Another one heads to President Trump's desk. This legislation allows states to have drug testing to receive federal unemployment benefits. — Paul Ryan (@SpeakerRyan) March 19, 2017 Or maybe not. According to a perceptive and somewhat complicated piece by Bloomberg's Josh Eidelson, the CRA repeal actually "takes away some limited [drug-testing] authority states already had." How? Because the 2012 law let states test people suited for jobs specified by federal regulations, now that those regulations have been scrapped, there are no jobs for which states are able to test for drugs. Before Congress revoked Obama's rules, states could have tested aspiring pipeline operators and commercial drivers; now they can't. In other words, congressional Republicans went after the enacting interpretation, while kinda-sorta forgetting the underlying legislation that they themselves wrote. If you don't want the Labor Department making rules, don't pass in your laws language like "an individual for whom suitable work (as defined under the State law) is only available in an occupation that regularly conducts drug testing (as determined under regulations issued by the Secretary of Labor)." There's a lesson here, one that's shot through my June cover story on Trump's deregulatory efforts. The executive branch can do (and already has done) quite a bit of regulatory rollback on its own, but the whole reason you have not just regulations but the agencies writing and enforcing them is that Congress has made laws instructing the federal bureaucracy to do stuff. You can eliminate the Department of Education, but that won't stop the federal government from sloshing money toward public schools in the absence of rewriting legislation from the 1960s. It's easy for a legislator to throw stones at an out-of-control bureaucracy (or more fruitful yet, nobly guide his or her constituents through all the red tape); much harder to undo what Congress has already done. So what's next on drug-testing unemployment recipients? Unless Congress gets off its duff, "States will get to impose broader testing requirements only if the Labor Department goes through its own formal rule-making process to issue stricter regulations," Bloomberg concludes. That process takes roughly one to three years. But even then, there's a catch that likely few people in the Trump administration had thought through: [T]he 1996 review act bans an agency whose regulation has been voided from enacting any new regula[...]

Report: Regulation ‘Has Essentially Ground to a Halt’ Under Trump

Mon, 22 May 2017 17:31:00 -0400

Is Donald Trump really turning out to be a deregulatory president? And is his gimmicky kill-two-regs-for-each-new-one executive order (which, I've come to find out, is known as the "Stossel Rule") actually making a dent in the administrative? Yes to both, argues an article today in Bloomberg BNA. The evidentiary nut: Since President Donald Trump was sworn into office Jan. 20, just 39 rules have been submitted for review to the Office of Information and Regulatory Affairs (OIRA), the agency that reviews all significant federal regulations. There are currently 16 pending agency actions. By comparison, the administration of fomer President Barack Obama had submitted 118 rules by the same point in the president's first year, according to the database. When I was interviewing libertarian regulation types for the June cover story, not a single one treated the two-for-one guidance as a serious deregulatory tool. "It is a fake solution to a very real problem," Ike Brannon, a Bush-era official at the Office of Information and Regulatory Affairs, told me. "It's so easy to conceive of how the EPA could game 'two rules out for one rule in': You pass a whole bunch of half-million-dollar rules, and those are the rules you take off." Even the anti-deregulation hysterics in the media weren't getting too worked up about that particular rule. But that judgment may have been premature. According to the Bloomberg BNA piece, the requirement throws up a significant obstacle because it seeks not just a numerical swap but an offset on regulatory costs going forward. Since environmental regs in particular tend to front-load the compliance burden on companies, it'll be hard to find enough existing rules (whose main costs have already been swallowed) to zero out the front-end costs of whatever new regulation is being proposed. "And that's why, in my view, the two-for-one executive order really is not meant as a two-for-one trade at all, but instead just as putting the brakes on new regulations," former Department of Interior deputy assistant secretary Amanda Leiter said at an American Bar Association administrative law roundtable last week. More in that vein: Andrew Grossman, partner at Baker & Hostetler LLP and adjunct scholar at the Cato Institute, agreed that the executive order raises an expressly deregulatory agenda and is a "stunningly blunt" tool. "But that's the point," Grossman said. "Genteel regulatory review hasn't really gotten us anywhere. So let's just be clear about what it is that we're trying to achieve. Less regulation." Score one for the Stossel Rule! Another leading indicator that deregulatory types told me to look out for was Trump's pick to head up the Office of Information and Regulatory Affairs (OIRA), which applies (at least in theory) cost-benefit analyses to new regulations. So who did he end up choosing? Neomi Rao, a former law clerk for Clarence Thomas and founder of the Center for the Study of the Administrative State at George Mason University's Antonin Scalia Law School. Can't deconstruct the damn thing if you don't study it first. Here's the Denver Post sounding the alarm: In articles and congressional testimony, Rao also has advocated limiting the authority of federal agencies to draw up rules in areas left ambiguous by legislation. She has said that Congress must spell out clearly what it wants agencies to do. Critics, however, say that when it comes to technical regulations, lawmakers lack the expertise to write detailed regulations the agencies are better equipped to draw up. Rao has called on the courts to review the judicial principle known as Chevron deference, which leaves it up to agencies to interpret ambiguously worded statutes to fulfill legal mandates. "Deference is one consequence of Congress leaving a significant interpretive space for administrative agencies," she sai[...]

Rand Paul's REINS Act Finally Makes It to Senate Floor

Wed, 17 May 2017 17:32:00 -0400

A Senate committee vote on Wednesday is a new high water mark for a long-sought-after regulatory reform proposal. Further progress, though, might be unlikely. The U.S. Senate Homeland Security and Governmental Affairs Committee approved the REINS Act (the acronym stands for "Regulations from the Executive in Need of Scrutiny"), sending the bill to the Senate floor for the first time. While the REINS Act has cleared the House several times in recent years—most recently in January—this is the first time the proposal has been approved by a vote of any kind in the Senate. Sponsored by Sen. Ran Paul (R-Kentucky), the REINS Act would require every new regulation that costs more than $100 million to be approved by Congress. As it is now, executive branch agencies can pass those rules unilaterally, and even though those major rules account for only 3 percent of annual regulations, they are the ones that cause the most headaches for individuals and businesses. Passage of the REINS Act would also require Congress to review all existing regulations that surpass the $100 million threshold. Since there's no clear accounting of how many such rules exist, assessing the landscape would be a necessary step before reforms could be enacted. "For too long, an ever-growing federal bureaucracy has piled regulations and red tape on the backs of the American people without any approval by Americans' elected representatives," Paul said in a statement Wednesday. "The REINS Act reasserts Congress' legislative authority and would continue the historic progress we have made this year to curb the damaging effects of overreaching regulations." While the committee vote is a win for the legislation, another bill also approved by the same committee on Wednesday is a more likely vehicle for regulatory reforms this year. Clyde Wayne Crews, the vice president for policy at the Competitive Enterprise Institute, a free market think tank that favors regulatory reform, tells Reason that he doesn't expect a floor vote on Paul's bill this year—though he admits it's difficult to predict anything in Washington. Still, regulatory reformers have hope in the form of the Regulatory Accountability Act, which would codify several executive branch mandates requiring cost/benefit analyses on new rules. It would also require executive agencies to do more after-the-fact reviews of the consequences of their regulations and would apply the same cost/benefit measures to things that aren't technically regulations but do much of the same thing, like when the FAA issues "guidance" on drone rules, for example. The Regulatory Accountability Act does not go as far as the REINS Act, but "it helps pave the way for more substantial reforms in the future," says Crews. What of President Donald Trump's promise to reshape the federal regulatory state—to bring about the "deconstruction of the regulatory state," as White House adviser Steve Bannon promised in March? "It's not that," says Crews. "The administrative state will be just fine. It won't solve every problem, but it might allow our descendants to do so." With Congress likely to spend the next several months on hearings concerned with the firing of James Comey and other hearings seeking to find his replacement as director of the FBI, the entire legislative agenda for 2017 has been disrupted. Health care and tax reform will likely be pushed off until the fall, and the federal budget still has to be passed too. In that environment, getting the REINS Act to the floor of the Senate might be a bigger accomplishment than it initially seems, even if it moves no farther.[...]

Will Donald Trump Be the Most Deregulatory President Ever? New at Reason

Tue, 16 May 2017 09:53:00 -0400

(image) If it is a day ending with the letter "y," there is probably some all-consuming media controversy involving President Donald Trump. But underneath the headlines and tweetstorms, the Trump administration, and even a normally reluctant Congress (at least to some degree), has already teamed up make the biggest dent in the federal regulatory state we've seen during the 21st century. And if the GOP manages to follow through with other planned reforms, Trump may challenge the deregulatory records of even Ronald Reagan and Jimmy Carter

This threatened deconstruction of the administrative state has put many libertarian think tankers in the dissonant position of rooting hard for one aspect of a presidency they otherwise root against, and dusting off their knowledge of how much the executive branch can do on its own to peel back agencies that Congress willed into existence. As Matt Welch writes in Reason's June cover story, "Washington's regulatory reformers, largely sidelined for the past quarter-century, are infiltrating the halls of federal power and attempting to engineer the most ambitious executive-branch overhaul in at least three decades."

On the day of Trump's [address to a joint session of Congress], I paid a visit to the Competitive Enterprise Institute (CEI), a libertarian nonprofit focusing on regulatory issues, to speak with Myron Ebell, director of the institute's Center for Energy and Environment. Ebell had been the Trump transition team's point man at the EPA, a personnel selection witheringly characterized by former League of Conservation Voters official Daniel Weiss as "like picking Colonel Sanders to protect your chickens." So what can libertarians expect from the Trump administration? "I think," Ebell says, "he could be the most serious deregulatory president ever."

The Deregulator?

Tue, 16 May 2017 06:00:00 -0400

On December 6, 2016, the Cato Institute, Washington, D.C.'s venerable libertarian think tank, held its first staff meeting since the election of Donald Trump. Normally such office gabfests tend to be "boring" and "routine," says Peter Van Doren, longtime editor of the Cato-published magazine Regulation. But after a presidential campaign that was anything but standard, featuring an improbable victor whom Cato Executive Vice President David Boaz had called "an American Mussolini" in National Review, emotions were running a bit high. Peter Goettler, the cheery investment banker who became president and CEO of Cato in April 2015, took the temperature of the room. Any advocate for limited government can rattle off a list of Trump's demerits—his "know-nothing protectionism" (in Boaz's phrasing), his restrictionist/alarmist views on immigration, his unwillingness to confront the long-term drivers of government spending growth, his occasionally hostile approach to individual rights, his Great Man theories of governance, his carelessness with the truth, and so on. But professional libertarians are accustomed to feeling alienated by mainstream politics, and still manage to get up in the morning. So Goettler wanted to know: Who here can imagine themselves working in the same direction as Trump on those issues he has a chance to get right? A clear majority of the room indicated not me, after which came what Van Doren described as an "intense debate." In the end, Goettler reminded the Catoites to avoid succumbing to the political passions of the moment. "One of the things I said in that meeting," he recalls, "is that your personal Twitter feed is unlikely to change the course of the republic, but your policy work might. So be focused on what counts." Few things have mattered more to libertarian policy activists over the past half-century than deregulation. Rolling back government restrictions on individual and corporate behavior, breaking up state-backed cartels, getting bureaucrats out of the price-setting business, and allowing private entities to compete for services routinely monopolized by government—these have long been fundamental goals of libertarian organizations including Reason Foundation, the 501(c)(3) nonprofit that publishes this magazine and engages in public policy research that promotes choice and competition. The reasons for eliminating federal regulations can be many: Well-intended rules frequently result in harmful unintended consequences, time and money directed to compliance or workarounds could often be better spent elsewhere, and one-size-fits-all decrees from Washington rarely incorporate the kind of local knowledge that individuals and companies possess about how their own business works best. Libertarians have made these arguments early and often to every new president, but since the deregulatory salad days of Jimmy Carter and Ronald Reagan, few administrations have applied these insights into their policy making. But as the initial shock of the 2016 election results gave way to the normal D.C. stuff of transition teams, Cabinet nominees, and policy rollouts, the city's libertarian policy wonks began to rub their eyes and adjust to a surprising new vision: a Trump administration that was stocking up on faces who have long worked to expand freedom by contracting the regulatory state. "I don't think that we ever envisioned that we would be supplying staffers to this semi-free market, semi-populist president," Frayda Levin, board chair of Americans for Prosperity and a Reason Foundation donor, told Politico in December. "But we're happy that he's picking people who have that free market background, particularly because on many issues, he is a blank slate, so anybody with expertise is in an amazing position to s[...]

The Left Is Rebranding Environmental Regulations As Environmental Protections

Fri, 12 May 2017 13:30:00 -0400

"Trump signs order at the EPA to dismantle environmental protections," declares a March 28 headline in The Washington Post. An April 27 article in the Post described an "effort to remove environmental protections." Two days later, another Post article stated that Trump's term in office has "already seen multiple rollbacks of environmental protections." The Post isn't the only publication pushing such language. Here's The New York Times: "President Trump's unfortunate and misguided rollback of environmental protections has led to a depressing and widespread belief that the United States can no longer meet its commitment under the Paris climate change agreement." Here's The Huffington Post: "Environmental Protections Save Lives, Create Jobs And Strengthen The Economy." Here's The New Yorker: "It's clear that we're about to witness the steady demolition, or attempted demolition, of the environmental protections that have been put in place over the past five decades." In each of those instances, the words "environmental protections" could easily have been replaced by "environmental regulations." I'm speaking anecdotally here, but in recent months both mainstream and activist media have seemed to use "environmental protections" more often and "environmental regulations" less. Aristotle defined rhetoric as "the faculty of observing in any given case the available means of persuasion." And one of the chief paths of persuasion, he argued, comes "when the speech stirs their emotions." So which word has more emotional appeal, regulation or protection? Regulation denotes "a law, rule, or other order prescribed by authority, especially to regulate conduct." Protection is defined as "the act of protecting or the state of being protected; preservation from injury or harm." Regulation is coercive, perhaps punitive; protection is warm and fuzzy. As I puzzled over this apparent shift in terminology, my mind naturally turned to the retired Berkeley linguist and cognitive scientist George Lakoff. Lakoff has spent years thinking about how political progressives could become more persuasive with the public. To achieve that, he wants progressives to engage in what he calls "honest reframing." "Reframing is telling the truth as we see it—telling it forcefully, straightforwardly, articulately, with moral conviction and without hesitation," he writes. Lakoff believes that conservatives have been masterful at rhetoric, ah, framing. He cites the phrase "tax relief," which implies that taxes are an affliction and the politicians who favor it are heroes. People on the left, he argues, need to reframe progressive taxation as requiring "those who benefit most should pay their fair share." So I was not surprised to discover that in January Lakoff wrote a short essay titled "The Public's Viewpoint: Regulations Are Protections." He begins by citing Trump's assertion that he intends to "cut regulations by 75 percent, maybe more." Then Lakoff asks, "What is a 'regulation'?" He goes on to assert that from the viewpoint of corporations, "'regulations' are limitations on their freedom to do whatever they want no matter who it harms." (Never mind that killing customers is usually not a good business strategy.) On the other hand, Lakoff claims that the public views a regulation as being "a protection against harm done by unscrupulous corporations seeking to maximize profit at the cost of harm to the public." Lakoff's solution? "Imagine the NY Times, or even the USA Today headline: Trump to Eliminate 75% of Public Protections," writes Lakoff. "Imagine reporters finding out and reporting all over America exactly what protections would be removed." One of his three key takeaways is: "Shift the frame: always say 'protections' instead of 'reg[...]

Congressional Deregulation Effort Stalls at Methane Rule Repeal

Wed, 10 May 2017 14:30:00 -0400

Under the Congressional Review Act that enables Congress to roll back any regulations hastily enacted in the waning days of the previous administration, the Republican majority in the House of Representatives and the Senate have repealed 14 regulations, including three major rules. According to American Action Forum, savings from these Congressional resolutions will amount to $3.7 billion in total regulatory costs using federal agency estimates and up to $36.2 billion in possible savings based on outside and industry calculations. Today the Senate failed by a vote of 51 to 49 to repeal a Bureau of Land Management rule issued last November that requires the producers of oil and natural gas on federal lands to reduce the emissions of methane associated with flaring and leaks at their wells and other equipment. Three Republicans - Susan Collins (Maine), John McCain (Ariz.), and Lindsey Graham (S.C.) - voted with all of the Senate's Democrats to reject the repeal legislation. The BLM's rationale for the rule is that by wasting a valuable resource producers are denying taxpayers royalties that would otherwise be collected and that released methane is a potent climate warming greenhouse gas. The BLM estimated that the rule will result in benefits ranging from $209 – 403 million per year and reduce emissions by 180,000 tons per year. The agency predicted that the rule will reduce methane emissions by 35 percent from the 2014 estimates and reduce the flaring of associated gas by 49 percent. Even better, the agency found that the oil and gas industry would actually save between $20 to $157 million per year. In other words, thanks to the wisdom of the bureacrats at the BLM, the oil and gas industry would actually be making more money. However, the churlish hydrocarbon producers didn't appreciate the efforts of the BLM to boost their profits. Instead, the ingrates countered that industry was already acting to reduce methane emissions including a 38 percent decline between 2005 and 2015 for natural gas producers even as production rose by 33 percent, and a 21 percent decline from oil production since 1991. They also pointed out that boosting natural gas production had resulted in lower overall U.S. greenhouse gas emissions as electricity generators switched from coal to methane. In addition, they blamed the BLM's dilatory approval of pipelines for much of the flaring since that blocked companies from capturing and transporting lots of the gas their wells produced. Finally, several states sued the BLM arguing that the agency had overreached its authority by adopting what are essentially air quality regulations. The litigants assert that the Environmental Protection Agency, not the BLM, is statutorily invested with the power to regulate air quality. In a statement after the Senate vote, the Western Energy Alliance expressed disappointment calling the BLM rule, "a vast overreach of Executive Branch authority, as BLM usurped EPA and state authority granted by Congress in the Clean Air Act." The group vows to continue to challenge the rule in the courts and to ask newly appointed Secretary of the Interior Ryan Zinke to order a review of the rule with the goal of rescinding it.[...]

Scott Gottlieb Confirmed as New FDA Commissioner

Tue, 09 May 2017 18:05:00 -0400

(image) Physician, venture investor, and drug industry consultant Scott Gottlieb has been confirmed by the Senate as the new Commissioner of the Food and Drug Administration. Gottlieb takes the helm of the agency that regulates products accounting for about 20 cents of every dollar of annual spending by U.S. consumers, that is, about $2.4 trillion in annual consumption that includes medical products, food and tobacco. The agency regulates medicines, diagnostic tests, medical devices, food safety including those made from modern biotech crops and livestock, food labeling, and tobacco and nicotine products. What the agency's bureaucrats decide has signifcant impact on U.S. economic growth and the livelihoods of Americans.

Gottlieb has long been a critic of the FDA's slow and protracted drug and medical device approval processes. Researchers at the Tufts University Center for the Study of Drug Development have estimated that in 1991 it cost $412 million (2013 dollars) to develop and obtain approval for a new pharmaceutical. Last year, they calculated that it now takes more than $2.5 billion, a six-fold increase.

In an email, Union of Concerned Scientists spokesperson Seth Michaels warned that Gottlieb's confirmation is "yet another example of an appointee whose record raises questions about whether they'll respect science and the public interest." On the other hand, Paul Howard, Senior Fellow and Director, Health Policy at the market-friendly Manhattan Institute issued a statement applauding the appointment. "At a time of both unprecedented scientific opportunity and rapidly evolving public health challenges, Dr. Gottlieb provides the FDA with principled and pragmatic leadership," declared Howard. "His experience as a regulator, practicing physician, cancer survivor, and innovator will help the agency navigate the scientific challenges surrounding drug and medical device development and approval without losing sight of the real-world implications of the agency's decisions for patients struggling with potentially life threatening conditions."

I earlier noted, "While not a radical reformer, Gottlieb clearly has a good understanding of how over-regulation has been slowing down innovation in medicines and foods." Good luck to him as he tries to reform the agency's excessively cautious regulatory culture.