Reformers dust off plans to review stale rules

By Arianna Skibell | 02/07/2017 06:49 AM EST

The Eisenhower Executive Office Building, within the White House complex, houses the Office of Management and Budget workers responsible for scrutinizing federal rules.

The Eisenhower Executive Office Building, within the White House complex, houses the Office of Management and Budget workers responsible for scrutinizing federal rules. Photo by Lea Shanley, courtesy of Wikipedia.

For years the National Milk Producers Federation, along with Republican lawmakers, pleaded with U.S. EPA to exempt dairy farmers from regulations aimed at controlling oil spills.

"Oil," as defined by the Clean Water Act, includes petroleum and edible substances. Because of milk’s butter fat content, EPA in 1973 included it in the rule mandating a host of safety measures.

When the Obama administration moved to review the standard, Republicans accused EPA of wanting to regulate spilled milk. The agency shot back, saying it wanted to give farmers what they had long been demanding.


During his 2012 State of the Union address, President Obama said: "We got rid of one rule from 40 years ago that could have forced some dairy farmers to spend $10,000 a year proving that they could contain a spill — because milk was somehow classified as an oil."

Reformers point to the spilled milk rule as the poster child for an absurd system in desperate need of a makeover. There are scores of federal mandates that are antiquated or ineffective, they argue, and the Trump administration and Congress can make them disappear through their push against red tape.

"In the scheme of things, that’s kind of a minor rule," Wayne Crews, vice president of policy at the conservative Competitive Enterprise Institute, said about the spilled milk brouhaha. "But it’s an example of a little bit too much enthusiasm in the agencies."

During a CEI-backed briefing for congressional staff last week, academics and policy wonks presented an array of reforms and proposals for reviewing old rules.

Jerry Ellig, senior research fellow at the free-market Mercatus Center at George Mason University, stressed the importance of looking back.

"We need stronger requirements for retrospective analysis after [rules] have been adopted," he said.

In an apparent attempt to combat a regulatory sickness described by CEI President Kent Lassman as "MEGO" — My Eyes Glaze Over — Ellig illustrated his point with an old vaudeville joke.

"Do you smoke after sex? I dunno, I never checked," he quipped. "Agencies never check."

Obama agreed that the agency should review and update rules. He signed two executive orders to that effect.

"We should have no more regulation than the health, safety and security of the American people require," Obama said in 2011. "Every rule should meet that common-sense test."

But critics say the former president’s team was more interested in promulgating new rules than killing old ones. Now, with a Republican-controlled Congress and White House, reform advocates want to test plans that have been gathering dust inside think tank filing cabinets.

President Trump has already established a regulatory budget through executive order. Much like a fiscal blueprint, it creates a spending cap for rules. It’s an idea that has been around for three decades (E&E Daily, Jan. 31).

Trump last month also announced implementation of a regulatory "pay-go" system, in which agencies have to trash two rules for every new one.

The United Kingdom and Canada have executed the system with varying degrees of success, but the United States has never attempted it nationwide. For it to succeed, scholars say, robust review of rules is necessary.

BRAC-like panel

Sam Batkins, director of regulatory policy at the American Action Forum, asked in a recent blog post: "Does President-elect Trump leave retrospective review in the hands of cabinet agencies, or task other governmental bodies such as the Congressional Budget Office or the Bureau of Economic Analysis with the job of reviewing more than 170,000 pages of past rules to determine candidates for rescission?"

He said, "Regardless of who is in charge, a functioning regulatory budget depends upon a robust retrospective review effort."

Crews floated the idea, which has been around for quite some time, of implementing a review team similar to the Base Realignment and Closure Commission established in 1988 to sidestep pork barrel politics in closing down military bases.

"This is one of the ideas that has bipartisan support," Crews said, pointing to backing from Maine independent Sen. Angus King, who caucuses with Democrats.

Adam White, research fellow with the Hoover Institution, said he liked the BRAC Commission idea. At the same time, he said agencies reviewing their own rules would help them learn from their mistakes.

"The best value would force agencies to look at the times they got it right and the times they got it wrong," he said. "They would learn more modesty to reform the rulemaking process. It would teach agencies to become more open to outside suggestions."

Stuart Shapiro, a former Office of Information and Regulatory Affairs (OIRA) aide who served under both Presidents Clinton and George W. Bush, said a BRAC-style commission would be challenging.

"It would be difficult," he said during an interview. "To do it responsibly would require more money and more resources."

Industry reviews

Richard Pierce, a distinguished law professor at George Washington University, said regulated companies, groups and individuals are the best source of knowledge about burdensome and outdated rules.

"OIRA should encourage regulated firms to send to OIRA nominations of rules that the firm believes to be obsolete or unduly burdensome, along with reports that document the burdens imposed by each rule," he said.

"If OIRA agrees with the regulated firm’s characterization of the rule as obsolete or unduly burdensome, OIRA should direct the agency responsible for the rule to begin the process of rescinding or amending the rule."

Ellig, who sat to Pierce’s left during the Hill briefing, said that in light of his physical position, he would counter with a left-leaning policy position.

"I don’t trust corporations to identify regulations not working in all cases," Ellig said.

He said many regulations require substantial upfront costs. Once a business is in compliance, it is unlikely to ask for reconsideration. Ellig said firms were more likely to submit rules for repeal that have ongoing costs.

White floated a proposal that he said would increase accountability within the rulemaking process. He said major rules, those that have an economic impact of more than $100 million, simply need more process.

"There needs to be something more than notice and comment rulemaking," he said.

White proposed that instead of trashing the Chevron doctrine — a Supreme Court standard that pushes judges to defer to agency interpretations of law — Congress should instead use it as an incentive.

If agencies follow a more rigorous rulemaking process for major regulations, lawmakers can grant them Chevron deference in litigation.

"We’re trying to urge a middle ground here," he said.

Retroactive review legislation

Sens. Heidi Heitkamp (D-N.D.) and James Lankford (R-Okla.) proposed the "Smarter Regulations Through Advance Planning and Review Act," S. 1817, in the past Congress. It would require agencies to write rules in a way that facilitates better retroactive review.

The legislation would require rules to spell out their purpose and ways to measure progress. The lawmakers, ranking member and chairman of the Homeland Security and Governmental Affairs Subcommittee on Regulatory Affairs and Federal Management, say such steps don’t often happen now.

A 2014 study from George Washington University’s Regulatory Studies Center found that 36 percent of a sample of 22 high-priority proposed rules included quantifiable metrics to measure whether they were meeting goals.

Crews later noted that while the panelists at the CEI briefing had differing views about reform, some more enthusiastic than others, they all agreed on the necessity for better reviews.

Crews floated the idea of codifying Obama’s executive orders on review. "Something like that might be one of the touchstones where something happens this year," he said.