May 9, 2019

Idaho Repeals Its Regulatory Code

James Broughel Senior Research Fellow

Something rather remarkable just happened in Idaho. The state legislature opted to—in essence—repeal the entire state regulatory code. The cause may have been dysfunction across legislative chambers, but the result is serendipitous. A new governor is presented with an unprecedented opportunity to repeal an outdated and burdensome regulatory code and replace it with a more streamlined and sensible set of rules. Other states should be paying close attention.

The situation came about due to the somewhat unconventional nature of Idaho’s regulatory process. Each year, the state’s entire existing body of regulations expires unless reauthorized for an additional year by the legislature. In most years, reauthorization happens smoothly, but not this year.

Instead, the legislature wrapped up an acrimonious session in April without passing a rule-reauthorization bill. As a result, come July 1, some 8,200 pages of regulations containing 736 chapters of state rules will expire. Any rules the governor opts to keep will have to be implemented as emergency regulations, and the legislature will consider them anew when it returns next January.

Governor Brad Little, sworn into office in January, already had a nascent red tape cutting effort underway, but the impending regulatory cliff creates some new dynamics. Previously, each rule the governor wanted cut would have had to be justified as a new rulemaking action; now, every regulation that agencies want to keep has to be justified. The burden of proof has switched.

The new scenario creates multiple touch points when rules could end up on the cutting room floor. First, when regulations expire on July 1, many will not be refiled. Second, the public will have the opportunity to comment on regulations that are resubmitted. In some cases, public hearings are likely to take place, presenting another opportunity to reshape, and cut, some regulations. Finally, when the legislature returns next year, it will need to pass a reauthorization bill for those regulations Governor Little’s administration wants kept. Even more red tape can be trimmed then.

Of course, many regulations serve a justified purpose. The challenge for the Little administration will be to hone in on those rules that add costs disproportionate to any benefits produced, whilst preserving and perhaps even strengthening any rules that are working well.

The Idaho case also highlights the power of sunset provisions—or automatic expiration dates built into laws or regulations. In the past, academic research has found that sunset provisions are sometimes ineffective. Legislatures and agencies often readopt regulations without much thought. To work well, sunsets may need to be structured such that large swaths of rules expire simultaneously, with reauthorization responsibilities falling to the legislature rather than regulators. Sunsets are perhaps most useful when rules are allowed to lapse and then forced back through the rulemaking process all over again. That way they can be subjected to public scrutiny, cost-benefit analysis, and perhaps even court challenges.

The main constraint now facing Idaho state agencies is time—they could use more of it. Regulators have just two months to decide which rules should stay and which should go. With more time, they might be able to tweak and modernize those regulations deemed necessary; instead, many rules may simply be readopted without changes.

Nevertheless, whether intentionally or not, Idaho deserves credit for advancing the frontier of regulatory reform in a new and innovative way. Any state without a sunset provision should consider setting one up, modeled after the Idaho approach. Forcing a fresh start by repealing the entire regulatory code may be the newest arrow in the red tape cutter’s quiver. Time will tell whether Governor Little and company’s aim is true.

Photo credit: The White House/flickr

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