September 30, 2016

Three Facts about Midnight Regulations

Jerry Ellig

Former Senior Research Fellow

First, some midnight regulations are rushed. 

Second, haste makes waste.

And finally, third, some midnight regulations are not rushed—but they’re still far from perfect.

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The House Judiciary Committee recently approved the “Midnight Rules Relief Act,” which would allow Congress to disapprove multiple regulations adopted in the final year of a presidential administration with a single vote. Proponents see the measure as a way for Congress to rein in regulations that have been rushed through at the last minute. Opponents deny that regulations issued at the end of a president’s term are rushed at all.

The late Sen. Daniel Patrick Moynihan (D-N.Y.) famously noted, “Everyone is entitled to his own opinion, but not his own facts.” Here are three facts about midnight regulations that should not be obscured by partisan or ideological wrangling:

First, some midnight regulations are rushed.

In 2008, the G.W. Bush administration proposed 29 economically significant, prescriptive regulations. Economically significant regulations are those with economic impacts of $100 million or more annually. Prescriptive regulations are regulations that contain mandates or prohibitions (as opposed to budget regulations, which implement spending programs).

Almost one-quarter of these regulations qualify as rushed. They were proposed after June 1, 2008, and became final between Election Day and Inauguration Day. The timing of these regulations violated the administration’s own self-imposed deadlines that were intended to prevent midnight regulations.

Second, haste makes waste.

The Mercatus Center’s Regulatory Report Card demonstrates that the Bush administration’s rushed midnight regulations were accompanied by less thorough and less transparent analysis than Bush regulations finalized before Election Day in 2008.

Consider, for example, the midnight regulation requiring all federal contractors to use the e-verify system to check employment eligibility. The accompanying analysis asserts that e-verify will lower costs for employers, then makes the contradictory assumption that no contractors would use e-verify in the absence of a regulation requiring them to do so. It considers no significant alternatives to requiring all contractors to use the system. It calculates the cost of using e-verify, but presents no estimate of benefits. Overall, the analysis reads like a document cobbled together after the fact to support a decision the administration had already made.

But poor analysis of rushed regulations plagues administrations of both parties. The Obama administration proposed 14 economically significant, prescriptive regulations in 2012. Half of these were proposed after June 1 and could have been midnight regulations if the election had turned out differently. These regulations also had less thorough and less transparent analysis than other regulations proposed by the Obama administration.

And finally, third, some midnight regulations are not rushed—but they’re still far from perfect.

Another 20 percent of the Bush administration’s regulations proposed in 2008 were finalized between Election Day and Inauguration Day but proposed prior to June 1. These regulations were arguably less rushed and somewhat more carefully vetted. The Regulatory Report Card finds that the analysis accompanying these regulations was slightly better than the analysis accompanying the rushed midnight regulations but still less thorough than the analysis of non-midnight regulations.

Evidence from the Obama administration suggests that midnight regulations may not have lower-quality analysis if they have been produced under normal timelines rather than rushed. During its first four years, the Obama administration proposed 26 economically significant, prescriptive regulations prior to June 1, 2012 that were not finalized by Election Day 2012 and thus could have become midnight regulations. The thoroughness of analysis for these regulations was about the same as for regulations finalized before the midnight period.

Given these realities, it would be inaccurate to conclude that all midnight regulations have equally poor analysis. Bundling all midnight regulations together for an up-or-down vote risks throwing the baby out with the bathwater.

But that’s not what the Midnight Rules Relief Act does. The language of the legislation simply allows Congress to strike down more than one regulation with a single vote; it does not require that all midnight rules be included in one vote. Thus, it lets Congress target the midnight rules that members believe are insufficiently justified by evidence.