November 19, 2008

Midnight Regulations Phenomena And Regulatory Review

Jerry Brito

Former Senior Research Fellow

Veronique de Rugy

George Gibbs Chair in Political Economy

The midnight regulation phenomenon has been well documented. The reasons behind it range from the desire of the outgoing administration to extend its influence into the future to the opportunity to impose costs on the incoming administration. But regardless of the rationale, the high political costs faced by a new administration to overturn those last minute rules makes it an effective strategy for the outgoing administration to project its influence beyond its term.

The debates surrounding midnight regulations have been fierce during the last few transitions of power. Not only do midnight regulations raise issues concerning accountability, but they also seem to be at odds with a democratic process. During the midnight period the regulatory review process is seriously weakened. As we have seen, at the end of each administration--and especially between administrations of opposite parties--there is a dramatic spike in regulatory activity without a corresponding increase in the resources available to the Office of Information and Regulatory Affairs (OIRA). If the number of regulations OIRA must review goes up significantly, and the man-hours and resources available to it remain constant, we can expect the quality of review to suffer.

Several solutions have been tried in the past such as delaying the effects of new rules and rescinding unpublished rules by using the 1996 Congressional Review Act. However, these solutions have proven to be quite ineffective. To discuss these problems and address the proposed solutions to this important issue, two of the Mercatus Center's Senior Research Fellows, Jerry Brito and Veronique de Rugy, present an insightful look on midnight regulations and their consequences.