December, 2008

For Whom the Bell Tolls: The Midnight Regulation Phenomenon

Summary

In this Mercatus Policy Series, Senior Research Fellows Veronique de Rugy and Jerry Brito provide an extensive analysis of midnight regulations. In addition to examining the motivations and

Summary

At the end of a presidential term, one way an outgoing administration can extend its influence into the future is by promulgating what are known as “midnight regulations.”  These last-minute regulations are enacted after an election and before Inaugural Day.  The vast number of regulations that are passed during this period overwhelms the institutional review process that serves to ensure that new regulations are carefully considered, based on sound evidence and justified costs.

This Policy Primer discusses the problems associated with midnight regulations, examines a number of previously tried solutions, and finally suggests that the best way to address this issue is to cap the number of economically significant regulations that can be reviewed during a given period.

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.

Our 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.

Citation (Chicago Style):

Brito, Jerry and Veronique de Rugy. "For Whom the Bell Tolls: The Midnight Regulation Phenomenon." Mercatus Policy Series, Policy Primer No. 9. Arlington, VA: Mercatus Center at George Mason University, December 2008.