Mercatus and Midnight Regs

The Mercatus Center is out with a new report focused on midnight regulations -- the last-minute regs pushed through by Presidents even as their successor’s inaugural parade reviewing stand is being constructed on the front stoop of the White House. President Bush and his political appointees at regulatory agencies are making considerable use of their midnight hour, working to adopt new regs that would weaken the Endangered Species Act, make it harder for women to get reproductive care, keep truckers behind the wheel for 14 sleep-defying hours a day, make it easier to get a permit to mine uranium on the edge of the Grand Canyon, weaken protections against toxic chemicals in the workplace and so much more. (For a frightening list of the Administration’s last-minute regulating, visit ProPublica’s impressive compilation.) In fairness to the Bush Administration, the Clinton Administration did something very similar. To be sure, the Clinton rush was aimed at adopting protective regulations, while the Bush rush is about making life easier and more profitable for businesses whose operations cry out for stricter regulation. But Bush is not the first to put the post-election period to such use. In 2001, Mercatus Research Scholar Susan Dudley chastised the Clinton regulatory rush: “Like Cinderella leaving the ball, many of Clinton’s 7,000 presidential appointees hurried to issue last-minute ‘midnight’ regulations before they turned back into ordinary citizens at noon on January 20th.” Dudley subsequently went to work for the Bush Administration as head of the White House Office of Management and Budget’s Office of Information and Regulatory Affairs (OIRA). That’s the job often referred to as “regulatory czar,” and her task -- at least until 11:59:59 on January 20, 2009, is to rush through as many midnight regs as she can. Let’s just say she’s gotten over her concerns about Cinderella, and is getting the most out of her glass slipper time. But her former colleagues at Mercatus continue to inveigh against midnight regulations. In truth, that’s not much of a strain for Mercatus, since they’re no fans of regulation in general, no matter what figurative time of day they’re adopted. Their new report offers up a novel proposal, however. Noting that midnight regs make it difficult for OIRA to give due consideration to regulations, Mercatus scholars Jerry Brito and Veronique de Rugy propose that regulatory agencies should be restricted to only a fixed number of regulations subject to OIRA review. They write:

In theory, an agency should be allowed to regulate as much as it needs to, as long as there is good economic analysis that justifies the need. The OIRA review process is the check that helps ensure sound economic analysis of significant regulations. Therefore, a less restrictive and more politically feasible solution to the midnight regulations problem is to cap the number of significant regulations an agency is allowed to submit to OIRA during a given period. Because OIRA has up to 90 days to review significant regulations, a rolling 90-day window might be an appropriate period. That is, an agency would be allowed to submit no more than X number of significant regulations for review in any 90-day period.

Note first that the driving force for the proposal is the desire to allow OIRA the opportunity to do a full review of proposed regulations, while keeping a tidy inbox. The rush of regulations at the end of an Administration makes it difficult for OIRA to keep up, the authors observe, and that makes for mediocre review. So, we can solve the problem by not regulating so much, or as they suggest a little later, increasing OIRA’s staffing so that it can have even more resources available to stymie meaningful protections for health, safety, the environment and more. Second, note that regulation is worthwhile in the authors’ view only if there is good economic analysis to justify it. That’s exactly how Mercatus wants us to understand the regulatory process -- as an exercise in economics and in protecting business. And that view is reflected in its scholars’ support for the kind of cost-benefit analysis practiced by President Bush and several of his predecessors -- one that commonly overstates the costs (to, say, polluters to not pollute the air) and understates the benefits (to, say, humans who like to breathe clean air, but who might survive for many years on dirty air). Mercatus and industry would like us to imagine that cost-benefit analysis is nothing more than an even-handed totting up of the pluses and minuses. But the process has been tilted against much needed protections for quite some time, and Mercatus would like to keep it that way. Finally, the proposal is offered up as an antidote to midnight regulating. But as stated, it would impose a rolling 90-day cap on regulatory proposals that would apply throughout an Administration -- again, for the stated purpose of keeping OIRA’s workload manageable. And once such a cap is instituted, it’s not hard to imagine a conservative Administration ratcheting it down, thus creating yet another barrier to badly needed regulation to protect Americans from a variety of harms at home, on the roads, on the job and elsewhere. So, let's give Mercatus credit for a creative approach. Unfortunately, the effect of the plan would be to make OIRA even more powerful than it already is, while straitjacketing regulatory agencies. OIRA’s already too powerful, routinely exercising questionable authority over regulatory decisions that, by statute, belong to regulatory agencies not White House staff. The last thing we need to do is to give OIRA yet another weapon. The core problem with President Bush’s midnight regulations is not that they’re offered up as time is winding down on his Administration, as annoying as that is, nor is it that they force OIRA to burn a little midnight oil. It’s that, on the merits, they’re destructive to health, safety, the environment and more. OIRA’s involvement during the Bush years has exacerbated that problem. Giving it more authority to trump the judgment of the substantive experts at the regulatory agencies with the politically driven judgment of White House staff is exactly the wrong answer.