January 6, 2017

Congress: Hold the REINS until You Get the Facts

Jerry Ellig

Research Professor, George Washington University Regulatory Studies Center
Summary

There is nothing wrong with Congress reasserting control over agency rulemaking. But to do so effectively, Congress itself needs to develop a system for obtaining impartial legislative impact analysis when it authorizes new regulation, reauthorizes existing regulation, or revisits regulations that are about to go into effect.

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Members of the last Congress introduced resolutions to block 25 regulations implemented by the Obama administration during the past two years. More such efforts will likely come as Congress seeks to rein in "midnight" rules imposed between now and Inauguration Day. On Thursday, the House approved a popular regulatory reform bill, the Regulations from the Executive in Need of Scrutiny Act, which would further expand congressional influence over regulation by giving Congress a final say before major regulations can be adopted.

The REINS Act requires that a major regulation cannot take effect unless it is approved by Congress under expedited procedures. A "major" regulation is one that has any economic effect of $100 million or more annually, would lead to a major increase in costs or prices, or other significant adverse economic effects specified in the legislation. Non-major regulations could go into effect without congressional approval, but Congress could use an expedited procedure to repeal them.

Critics contend that Congress should not meddle in regulatory agency decisions, because politics should not override agency expertise. This argument does not hold water, for two reasons.

First, agency experts often fail to consider key questions that should be answered in order to design effective regulations. The Mercatus Center's Regulatory Report Card project evaluated all non-budget regulations with annual economic impacts exceeding $100 million annually that were proposed between 2008 and 2013. Half of the 130 major regulations evaluated in this project were accompanied by no significant evidence demonstrating the existence, size, or cause of the problem the regulation sought to solve. Less than one-fourth of the regulations were accompanied by reasonably strong evidence that the regulation would actually achieve the benefits the agency sought to achieve.

For example, one Department of Agriculture regulation requires inspection of catfish processing plants, even though there was just one salmonella outbreak possibly linked to catfish in the 20 years before the regulation was proposed. The Senate voted in May to block that regulation.

One might forgive expert agencies for skimping on analysis in situations where the agency has little decision-making authority because the statute pretty much dictates the content of the regulation. But Regulatory Report Card data also show that regulatory agencies fail to conduct better analysis when they have greater control and hence could use the analysis to inform their decisions. The quality of the analysis accompanying major regulations is similar regardless of whether a law requires the agency to issue a new regulation or prescribes the form, stringency, or coverage of the regulation.

Either the expert agencies have less expertise than people think they do, or they're doing a poor job of demonstrating their expertise in the analysis that is supposed to inform decisions about major regulations.

Second, the argument that Congress should not revisit regulations assumes that Congress is perfectly capable of making public-spirited decisions when writing legislation that gives agencies authority to regulate, but incapable of doing so when it gives the agencies' regulations a second look. This is obviously a logical contradiction. It is also factually wrong.

Congress often makes key regulatory decisions when it writes statutes that authorize or reauthorize regulations. The current system provides Congress with a flood of information but little structured means to produce high-quality analysis of the problems that regulatory legislation seeks to solve and the benefits and costs of alternative solutions. In the absence of such analysis, Congress is flying blind from the very beginning when it authorizes new regulations.

In December 2015, for example, Congress had to extend the deadline for railroads to implement automated systems that would stop trains to prevent collisions, known as positive train control. Congress imposed this $12.5 billion mandate in 2008 in response to several high-profile train accidents. The committees that wrote the legislation did not seriously consider the extent of the problem, evaluate alternative methods of improving rail safety, or compare benefits with costs. Congress must have a means of getting impartial analysis before creating new regulations.

There is nothing wrong with Congress reasserting control over agency rulemaking. But to do so effectively, Congress itself needs to develop a system for obtaining impartial legislative impact analysis when it authorizes new regulation, reauthorizes existing regulation, or revisits regulations that are about to go into effect.