The growing cost of regulations has been hidden from the headlines behind the fiscal cliff, but they should not be ignored.  Typically, regulations are sent to the White House, reviewed for one to two months, and then sent back to the agency for comments and publication. 

Current law generally dictates that a regulation should not be at the White House longer than 90 days.However, as demonstrated below, more than 80 percent of all currently reviewed “regulatory actions” have been at the White House for more than 90 days.  The Office of Information and Regulatory Affairs (OIRA) admits 84 percent of EPA rules have been delayed and 100 percent of energy regulations have, for some reason, been under review for more than 90 days. 

Moreover, the recent election season has created a bottleneck of “economically significant” regulations (those with an impact on the economy of $100 million or more).  To compare the current regulatory build-up at the White House, the American Action Forum looked at similar trends during re-election years, notably 2004.  During the first ten months of 2012, the administration reviewed 352 regulations, and the average review time for significant regulations was 72 days. Compare to 2004, when the White House reviewed more regulations, 515, and the average review time was only 34 days for economically significant rules.  Prior administrations have reviewed more rules in half of the time.

 

 

There are 25 significant rules at the White House now, 9 of which have been there since 2011, and dozens of other rules scheduled for publication this fall that have been held back for any number of reasons.  One plausible scenario is politics.  Many of the pending regulations are controversial, expensive to implement, and could reinforce the perception that the Administration “over-regulates.”

For example, the Affordable Care Act (ACA) created two rulemakings mandating that vending machines and restaurants display nutritional information.  The proposed version of the menu labeling regulation was expanded to include grocery stores and virtually all food service chains.  The total cost for these two pending ACA rules is more than $1.1 billion, with 1.4 million paperwork burden hours.  Both rules are scheduled for release this month.    

 

What is notable about this list is that many of the regulations are far past their scheduled release date, and in the case of some rules, past their statutory deadlines.  For example, a proposed rule requiring “Sound for Hybrid and Electric Vehicles” has a statutory deadline of July 5, 2012, but the regulation remains at the White House.  There is no indication how much “artificial vehicle sound” devices will cost automobile manufacturers.  The public won’t know until the administration publishes the proposal.

In addition, there are four economically significant energy conservation proposals.  New standards for walk-in freezers, lamps fixtures, refrigeration equipment, and manufactured housing could cost billions of dollars.  However, there is no publicly available information on possible costs, but the average burden of other recent conservation rules is $876 million. 

There is a great deal of uncertainty with many of these cost estimates.  Part of the problem is simple: transparency.  Under the Regulatory
Flexibility Act (RFA), the White House must release a “Unified Agenda” of all federal rulemakings twice a year.  The RFA notes, “During the months of October and April of each year, each agency shall publish in the Federal Register a regulatory flexibility agenda.”  To date, the administration has not released even one agenda in 2012.  Congressional leaders have noted that this violates the RFA, but there is little legal recourse. Senator Rob Portman sent a letter to the White House in August requesting an answer for the missing regulatory agendas but congressional leaders have yet to receive a legitimate reason for the delays.

Beyond a simple schedule of possible rulemakings, the White House has been coy about the costs and benefits of recent regulations.  In March, then-Administrator Cass Sunstein issued a draft “Report to Congress on the Benefits and Costs of Federal Regulations.”  A final, updated version has yet to be released, and according to White House information, a final report is typically released in the summer.  This only fuels more speculation as to why the White House would “hide the ball” on its regulatory agenda.

There are some hints that a post-election regulatory binge is already on the schedule.  The Department of Health and Human Services (HHS) recently released two regulations implementing the Affordable Care Act.  The rule for pre-existing conditions will cost $80 million during its implementation and new essential health benefits rules will cost $8.5 million.   

Possible Employment Impacts

For the regulations that do have proposed versions, the associated paperwork burden is 37.6 million hours.  To put this in perspective, a productive work year is 2,000 hours.  Thus, the pending proposals could force 18,839 full-time employees into the role of paperwork compliance.  A business complying with these new burdens could either: 1) lose productivity by filing federal paperwork instead of normal business functions, or 2) hire compliance officers whose sole job would be to comply with new requirements.

Conclusion

In 2010, President Obama stated, “We have put in place the toughest ethics laws and toughest transparency rules of any administration in history.”  The White House touts transparency, but for an unknown reason, refuses to follow explicit laws on regulatory transparency. 

At more than $100 billion, the potential regulatory bill for the lame duck session is already significant.  There are doubtless benefits associated with these regulatory overhauls as well, but the public doesn’t have a fair opportunity to see the costs or benefits of these proposed rules.

The lame duck Congress must deal with the fiscal cliff; there is no reason they should also confront a $100 billion regulatory cliff.