Capitol Building

Should we really be speeding up new regulations?

Howard Shelanski, the president’s choice to head the Office of Information and Regulatory Affairs (OIRA), recently testified at his Senate confirmation hearing. He said one of his top priorities would be to “ensure that regulatory reviews at OIRA occur in as timely a manner as possible.”

On its face that seems like a worthy aim, especially given the fact that, as Environment & Energy News notes, more than half “of the 142 proposed rules that agencies have submitted for review by OIRA have been held for longer than the 90 days allowed by executive order.”

And it would be consistent with the White House’s desire to speed up permitting reviews for big infrastructure projects, even if their approach to reviewing the proposed Keystone XL pipeline and natural gas export applications falls short of their professed goals.

Still, it occurred to me that rather than focusing on how to make government rulemaking faster, Mr. Shelanski and others in the administration could spend more time considering the overall burden of new regulations on the economy.

To get a sense of what I am talking about, consider the draft 2013 Report to Congress on the Benefits and Costs of Regulations released by the Office of Management and Budget in April. It provides a snapshot of the federal government’s regulatory activity over the 2012 fiscal year.

That snapshot is not a pretty picture for our economy, for investing, or for job creation.

To prove the point, check out this report from the Regulatory Studies Center at George Washington University. Researchers there studied the cost of new federal regulations issued during the first terms of each of the last three presidential administrations.

“By the [Obama] administration’s own estimates, the rules it issued in FY2012 alone imposed more costs on the economy than all the rules issued during the entire first terms of Presidents Bush and Clinton, combined,” according to Susan Dudley, the center’s director.

Naturally the White House is not highlighting this fact, choosing instead to promote the supposed economic benefits it claims stem from these regulations.

Call me skeptical.

In fact, as Ms. Dudley points out, the numbers cited by the White House are the product of some highly questionable arithmetic.

The simple fact is that regulating for regulating’s sake doesn’t do anybody any good.

Take the Environmental Protection Agency’s proposed Tier 3 gasoline sulfur rule. A new study prepared by the international consultancy ENVIRON for the American Petroleum Institute shows that the new regulations would provide little environmental benefit but will cost consumers and industry billions of dollars.

It makes one wonder what the point is, especially considering the fact that most of the sulfur in gasoline has already been removed thanks to the Tier 2 rule. Since that rule went into effect in 2004, the sulfur content in gasoline has been reduced by 90 percent. An API official called the new rule “a good example of the theory of diminishing returns,” and of that I am not skeptical.

Given how the economy – especially job creation – is still in weak shape nearly five years after the financial crisis of 2008, perhaps the senators at Mr. Shelanski’s confirmation hearing should have been asking him to further extend the time it takes to issue new regulations, not speed it up.


  • Worth a deeper look...