On Wednesday, the House of Representatives voted to roll back two regulations finalized in the waning days of the Obama administration. One rule is an Interior Department regulation targeting coal mining debris that ends up in steams; another was a financial disclosure rule emanating from the 2010 Dodd-Frank Act. Both rules are under threat because of a little-known law called the Congressional Review Act (CRA) that is about to take center stage.
The CRA allows Congress a limited amount of time to pass a “resolution of disapproval,” i.e., an opportunity to vote down major regulations after they are finalized. This can happen without the usual 60 votes needed to overcome gridlock in the Senate. CRA resolutions tend to be ineffective at overturning rules because they require the signature of the president to become law, and he presumably approves of the rules written by agencies under his supervision. But during presidential transitions where the party in power is switching—as is occurring right now—the CRA can be a powerful tool to target unnecessary red tape.
Two energy efficiency and one fuel efficiency regulations could be atop any list of rules targeted for the CRA chopping block. The two energy efficiency rules set conservation standards for dehumidifiers and battery chargers—these were written by the Department of Energy (DOE). The fuel efficiency standard is for medium- and heavy-duty engines and vehicles—a joint effort from the Department of Transportation (DOT) and the Environmental Protection Agency (EPA).
This entire class of regulation suffers similar problems. They are an especially inefficient means of achieving what should be their primary goal: protecting the environment. Perhaps the worst aspect of these regulations is that their primary benefits, as outlined by the agencies in their cost-benefit analyses, have nothing to do with the environment.
Instead—perhaps because the environmental benefits are so limited—the rules are justified on the basis that consumers and businesses are systematically making mistakes when purchasing energy-consuming devices. When people prioritize product attributes other than energy and fuel efficiency, the agencies behind these rules believe people are not making sound purchasing decisions. As such, the agencies perversely label the removal of a product from the marketplace as a “benefit” rather than a cost.
The DOT and the EPA also allege that market inefficiencies are causing businesses to leave billions of dollars in savings on the table. So, by forcing businesses to undertake costly compliance activities, the industry will actually become more profitable, thanks to a benevolent nudge from regulators. Recent research by the Mercatus Center casts doubt on these kinds of unsubstantiated agency assertions, which lack empirical evidence to support them. But common sense should also tell us that the trucking industry is perfectly capable of maximizing profits on its own without help from regulators in Washington, D.C.
Another odd aspect of these rules is that the agencies’ cost-benefit analyses intermingle environmental benefits that will accrue to foreigners with those that accrue to Americans. Meanwhile, the costs of these rules fall pretty much entirely on Americans. This practice of prioritizing foreign interests over American interests implies very perverse policy outcomes. For example, consider a hypothetical situation in which the top priority of the U.S. military was the security of foreigners rather than Americans. How would our military then behave? Such prioritizing is very much contrary to President Trump’s “America First” agenda that appears to have resonated so much with voters in the last election.
The three regulations identified in this article were selected because they were finalized near the end of the Obama administration, making them subject to CRA review. However, it is possible that dozens of other energy and fuel efficiency regulations rules may also be subject to the CRA. If this is the case, the list of rules targeted for the CRA chopping block could be expanded.
Regulatory expert Cass Sunstein recently referred to former President Obama as “the cost-benefit president.” True, Mr. Obama deserves a lot of credit for emphasizing the importance of analyzing the effects of regulations, especially in the context of reviews of existing regulations. Unfortunately, the poor and misleading analyses underlying energy and fuel efficiency regulations issued during his presidency undermine a legacy of objectively balancing costs and benefits. Congress and President Trump might therefore be doing Mr. Obama a favor by using the authority granted by the Congressional Review Act to strike down regulations that are built on inadequate or disingenuous cost-benefit analysis.