February 4, 2009

Analysis and Solutions of the Midnight Regulations Phenomenon

Key materials
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Summary

The term “midnight regulations” describes the last-minute regulations promulgated at the end of presidential terms, especially during transitions to an administration of the opposite party. Although the problem is perennially highlighted in the press, few satisfactory solutions to the phenomenon have been proposed. We review previously tried solutions to the midnight regulation problem and propose a possible solution.

Our Findings

  • The paper confirms a positive relationship between the midnight period—the three months between Election Day and Inauguration Day—and regulatory output.
  • The main reason for the phenomenon is that outgoing administrations use midnight regulations to extend their influence into the future, especially when the presidential party is about to change hands.
  • This is a very effective strategy. Repealing last minute rules can be a very costly process and new administrations do not have many options to deal with this problem.
  • This phenomenon is problematic because it is the result of a lack of presidential accountability during the midnight period. It has also been described as undemocratic and unseemly.
  • Another problem is that the sudden increase in the number of regulations promulgated in a given period is likely to overwhelm the institutional review process that serves to ensure that new regulations have been carefully considered, are based on sound evidence, and can justify their costs.

Recommendations

  • The most common solutions to the midnight regulations problem include steps that an incoming president can take to undo his predecessor’s last minute actions such as the use of the Congressional Review Act.
  • Our solution tries to mitigate the negative effects of midnight regulations by changing the incentives on the outgoing administration. We suggest that the best way to address this particular problem is to place a cap on the number of economically significant regulations OIRA can review during a given period.