Death By Government Regulations

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Remarks by Harry C. Alford, President and CEO, National Black Chamber of Commerce

 

Introduction

Thank you. I appreciate being invited to speak with you today.

This is a critical time for our country. 

For the first time in recent memory, it may be possible to take positive action to curb the onslaught of regulations and fundamentally reform the regulatory process—but this opportunity may not last.

And failing to act has serious consequences. 

Our future growth and personal freedoms will be jeopardized if we allow the nation to continue to be run by activists, obstructionists, and groups with narrow interests that don’t represent the greater public good.

The Impact of Our Rapidly Expanding Regulatory Landscape

As we sit here, the cumulative mass of regulations imposed by federal agencies grows larger and larger, produced by a system that is nearly unaccountable to the people and institutions that must comply.

Let me stress that regulations are not a bad thing, in and of themselves.

They provide the rules of the road that businesses need to be able to operate.

They help keep workers safe, our food, air, and water clean, and protect us in thousands of ways so that we can live longer, healthier lives.

Our modern society could not function without some rules. 

But many of our rules are overly complicated and impossible to comply with. There are simply too many rules, and many cost much more than they deliver.

The increasing size, scope, and complexity of regulations now threaten to exceed our ability to understand and comply with them.

Take the Waters of the U.S. rulemaking, for example. Although the Environmental Protection Agency assured the public the rule was simply a change in a definition, businesses, farmers and landowners came to realize that the rule will put their land under federal control, rather than state regulation.

The rule would have disastrous consequences for construction and maintenance projects, as well as day-to-day activities like farming, ranching, and forestry.

The Waters of the U.S. rule is one of the largest federal land grabs in our lifetime, and EPA shrugged it off as just a change in a definition.

Likewise, the Federal Communications Commission’s now-withdrawn set-top box rule would have hit the cable industry hard and created widespread disruptive effects on copyright, licensing, and commercial agreements in the entertainment industry—possibly harming minority companies that provide content.

The problem isn’t just that regulations are big and complex; agencies now crank them out one on top of the other, without pausing to see if a rule did its job before imposing another, more stringent one. 

For example, EPA regularly imposes new air quality standards long before communities can comply with current ones and without really knowing if a new standard is needed.

The Costs and Impact of Regulations

The price tag for existing regulations—not the mega-rules that were finalized in the past three years—amounts to more than $2 trillion a year, according to a 2012 study conducted for the National Association of Manufacturers.

That’s about the size of Canada’s GDP.

Household ultimately get hit with thousands of dollars of regulatory compliance costs in the form of higher costs for goods and services.

Small businesses, who cannot readily pass their increased costs to their customers, are forced to absorb those costs or go out of business.

These regulations also impose a cost to our personal freedoms.  Thanks to our administrative state, our ability to make important choices is becoming limited.

From choosing a doctor to selecting a place to build a home, regulations tell us what we can and can’t do.  Regulations even tell us what kind of light bulb we can buy.

How is America affected by all of these rules?

The French political scientist and historian Alexis de Tocqueville once said that the centralized regulatory state

“covers the surface of society with a network of small complicated rules, minute and uniform . . . [people] are rarely forced by it to act, but they are constantly restrained from acting; such a power does not destroy, but it prevents existence . . . ‘til the] nation is reduced to be nothing more than a flock of timid and industrious animals, of which the government is the shepherd.”

The modern-day regulatory state often prevents companies from acting, discourages them from investing, and creates an environment where regulatory risk blots out the entrepreneurial spirit.

Fixing the Regulatory Process

The problem with our regulatory system is not just the number or complexity of rules, or the tremendous costs they carry, but the rulemaking process that allows so many rules to be made so easily.

The current regulatory system shuts out affected parties and average citizens as deals are made between activists and agency officials behind closed doors. 

The agencies use cherry-picked data and unfounded assumptions to push their agendas forward.

The vast majority of legal restrictions affecting Americans are not passed by Congress after thoughtful deliberations, but are issued by unelected bureaucrats through an expedited rulemaking process.

For large, complex rules, public comment periods of 30 or 60 days are simply too short to digest the rule, analyze its impact, and offer thoughtful comment.

Even when stakeholders comment, agencies often focus only on supportive comments, downplaying adverse comments and ignoring concerns about how a rule will impact jobs, growth, and economic freedom.

To make matters worse, agencies often allow “sue and settle” agreements—a sweetheart deal between a government agency and a likeminded interest group.

This is where activist groups sue a federal agency and the agency chooses not to fight and quickly agrees to a settlement.

A federal court signs off on the agreement, and the agreement binds the agency.

Through sue and settle key agency choices about how and when to take regulatory action are made in secret.

A Reform Agenda

We need to have a regulatory system that makes agencies accountable to the people, allows the public to meaningfully participate, and upholds the rule of law.

The business community must insist on good governance.

And only by reforming the rulemaking system itself will we achieve that goal.

We know that reform is possible.  In December 2015, after many years of effort, Congress finally passed a law that streamlines the permitting process for energy projects.

Implementation of the FAST-41 Act is ongoing, and promises to make the permitting process for faster and more transparent.

Three pieces of legislation now before Congress are our best opportunities to continue such reform.

They have bipartisan support and the strong backing of the National Black Chamber, as well as many other groups.

First, the Regulatory Accountability Act would modernize the 1940’s vintage Administrative Procedure Act, which governs our federal regulatory process.

The Administrative Procedure Act became law decades before EPA, OSHA, the EEOC, and scores of other agencies were created, well before agencies started issuing rules that cost a billion dollars or more each year.

Although the APA worked pretty well for most of the 70+ years it has been law, it doesn’t force agencies to be accountable when they propose billion-dollar rules like the Stream Protection Rule, or they want to restructure the economy with a rule like the Clean Power Plan rules.

The Regulatory Accountability Act would require more transparency and public participation.

It would require agencies to let the public see the information the agency relies on for the rule.

Agencies would have to show that their rule is really necessary and that a cheaper alternative isn’t available. 

And it would hold agencies accountable for the nature and quality of their data. 

If an agency uses shaky data or makes false assumptions, agencies must be held responsible for failing to do their job right.

For the most important rulemakings, the Regulatory Accountability Act would give the courts the information they need to see if an agency did its job right—or if the agency cut corners, misled the public, or turned a blind eye to problems with its rule.

The Regulatory Accountability Act passed the House on January 13, 2017 by a 235-188.

The second piece of legislation is the Regulations from the Executive In Need of Scrutiny (REINS) Act, which passed the House on January 5, 2017 by a 237-187 vote.

The REINS Act would require any regulation which would have an economic impact of $100 million or more to be approved by Congress and be signed by the president.

If the regulation fails to get these approvals after 70 days, it would become null and void.

The REINS Act and the Regulatory Accountability Act would work in tandem to ensure that major regulations are reasonable and well-supported, and they are acceptable to Congress and the White House.

The third piece of legislation is the Sunshine for Regulatory Decrees and Settlements Act.

Under the Sunshine Act, agencies would have to give the public plenty of notice when they want to settle a lawsuit with outside groups.

Interested parties such as states and affected industries would have a chance to voice their opinions before a deal is finalized.

For industries like utilities, this would have given them an opportunity to object to the Mercury Air Toxics Rule, which promised big reductions in mercury but only delivered additional soot reductions at a cost of nearly $10 billion per year.

For farmers, the Sunshine Act would have given them an opportunity to be at the table when EPA agreed to federalize the cleanup of the Chesapeake Bay.

Another EPA land grab, the Chesapeake Bay sue and settle agreement gave EPA the ability to have a say over development and farming practices in six states and the District of Columbia.

Finally, under the Sunshine Act, a court that would sign off on a settlement agreement or consent decree must be informed about any objections to the settlement received from the public or stakeholders. 

So a court would learn that a settlement agreement between activists and EPA will shut down a utility, causing Native American workers to lose their livelihoods.

Or that a state will have to take funds from other essential programs to pay for new EPA requirements resulting from a settlement negotiation the state was shut out of participating in or even knowing about.

Conclusion

Regulatory reform is ultimately about good government, which leads to a better economy.  If we are to hold on to our personal and economic freedoms—and our character as a can-do nation—we must act now.

If we can get the Regulatory Accountability Act into law, we will have a much better opportunity to slow down the torrent of new regulations that now threaten to overtake virtually every aspect of American’s daily lives.

The first important step is to get engaged, contact your member of the U.S. Senate, and voice your opinion about the importance of passing the RAA and the Sunshine Act.  

Senators need to understand that the RAA passed by a bipartisan House vote in just the second week of this new Congress.  The iron is hot and the Senate to act before the best opportunity in a generation is lost.

I want to thank you again for having me and for the time and energy you have devoted to advancing this important priority.

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