Most businesses cannot make plans without making predictions about what their regulators will do. Some have argued that this task has been complicated by the fact that old regulations are rarely repealed, even as new ones are added, making for overlapping requirements and outdated regulations.
The Business Roundtable has protested that it “is all too rare that agencies ask whether the original problem a regulation was issued to address has been solved or could be addressed more cost-effectively.”
Congress has heard these complaints. Bills with bipartisan sponsorship that would create an independent commission to recommend the repeal of antiquated rules are proceeding through both the House of Representatives and Senate.
But this is a case where the cure is dubious and the disease exaggerated.
The bills – the Regulatory Improvement Act of 2014 and the Searching for and Cutting Regulations that are Unnecessarily Burdensome (Scrub) Act of 2014 – would create a commission to look for obsolete or outdated regulations.
Both bills would make the commission a creature of Congress, and they would create a list of regulations for repeal by a statute, subject to a single up or down vote. That is similar to how Congress exercises its authority over trade or the way it has, in the past, voted to close military bases.
Certainly, there can be a way to ensure that obsolete regulations that add little benefit but plenty of burdens are curtailed. But these proposed rules, which would create gridlock and pose constitutional problems, may not even be necessary.
The gridlock problem lies in the fact that agencies have already been asked to perform these sorts of reviews by President Obama. A second process would add to these burdens by requiring agencies to defend their old rules against the inquiry of an outside commission. Indeed, rule-making has – since two famous Supreme Court cases decided over 30 years ago – become a matter of ever longer justifications for rules, ever more critical comments from regulated industries and ever more elaborate responses. Retrospective review only adds to the problem of regulatory gridlock, without clearly solving it.
The constitutional problem lies in the separation of powers issues posed by a commission whose members are appointed by Congress reviewing the work of the executive branch. The Scrub Act, in particular, gives the commission powers to unilaterally stay regulations – a move that would be especially problematic.
Furthermore, the agencies this commission would be reviewing know their rules better than anyone. They promulgated them, after all, so it is not particularly clear why they would not be in the best position to amend or repeal the ones that are not serving their needs. If one branch of government is already on the case, creating a new agency to perform the same function – but under the control of a separate branch – looks dubious.
Finally, it is unclear that new laws are necessary. There is a difference between laws on the books and the rules that regulators devote time and effort to enforcing. No American wants the United States to become the equivalent of India’s license raj, where government officials stymie business innovation through the permitting process.
But Congress itself has outmoded laws on the books regulating problems solved long ago. It has not put the repeal of laws that no longer matter high on its agenda because it has better things to do. By the same token, agencies may not wish to go through the procedurally demanding process of repealing rules that could be considered outmoded.
After all, businesses in a given regulated industry know they do not have to worry about those long-abandoned rules. The growth in size of the Code of Federal Regulations has not been matched by an increase in personnel at regulatory agencies, so regulators pick and choose where to focus their enforcement efforts.
Banks, for example, know that regulators will spend more time worrying about compliance with new capital requirements than focusing on old – and largely repealed – limits on the regions in which banks can operate.
At some point, the regulatory landscape may become such a thicket that an independent commission or inflexible requirements like “one rule in, two rules out” are the only means to make progress on the problem of regulatory ossification.
But right now, the solutions look worse than the disease.