October 23, 2017

The Impossibility of Comprehending, or Even Reading, All Federal Regulations

In 1970, an ambitious, if perhaps slightly insane, regulatory compliance officer could have actually read all federal regulations in slightly less than a year. In 2016, it would require 3 years, 177 days, and 10 hours to read through them all. The figure below illustrates how federal regulations have consistently grown over the past three-and-a-half decades. As the number and length of regulations have grown, so have the complexity and the difficulty associated with understanding and following what amounts to one of the largest instruction manuals ever assembled.

The US Code of Federal Regulations—the annually published set of books containing all federal regulations currently in effect—contained 35.4 million words in 1970. A person could read the entire code in just a few days short of a year, assuming he or she read 250 words per minute, 40 hours per week, 50 weeks per year.Share this

Fast-forward to 2016, the last year for which we have data, and the task becomes more than three times as difficult. Regulatory accumulation, or the tendency for rules to be piled on top of rules, has caused the stock of rules to grow for three-and-a-half decades. By 2016, there were 104.6 million words of federal regulation on the books, about 195 percent growth over 1970, with a corresponding increase in reading time of almost two years. 

Regulatory accumulation is not a benign phenomenon. It has unintended consequences, including slower economic growth, reduced employment opportunities, and disproportionate harm to low-income households. Unless Congress and federal agencies address this growing stockpile, regulation will stifle innovation and entrepreneurship. At some point—and we may be there already—there may be so many rules that following the rules may itself distracts people from addressing real risks. A behavioral analysis of regulatory compliance published in 2011 explained that

"the overall size, complexity, and style of the regulatory system can change costs and benefits. . . . [R]egulations can have a different effect when the entire system is viewed as a whole rather than as a collection of isolated pieces. For example, a regulation mandating a warning label for some real but minor risk may, when viewed in isolation, provide benefits. However, that additional warning might distract consumers from more important warnings and thus, when taken as part of the whole system, increase risk."

The problem of regulatory accumulation can be solved. An independent commission could be charged with evaluating older rules for functionality to help clear away some of the obsolete, duplicative, or otherwise undesirable regulations. For new rules, a system of legislative impact accounting—where new regulatory legislation is informed by estimates of the likely effects of the regulations it creates—could help force both Congress and agencies to be more cognizant of the consequences of regulatory interventions and prevent the problem from getting this big again.