There was a fair amount of activity across the pages of the Federal Register last week in terms of both regulatory volume and overall impact. All told there were a dozen rulemakings with some quantifiable economic effect. The most notable action of the week was a proposed rule from the Internal Revenue Service (IRS) seeking to establish the protocols for how digital assets get reported for tax purposes. Across all rulemakings, agencies published $1.7 billion in total costs and added 6.2 million annual paperwork burden hours.  

REGULATORY TOPLINES 

• Proposed Rules: 42 
• Final Rules: 65 
• 2023 Total Pages: 60,468 
• 2023 Final Rule Costs: $85.2 billion 
• 2023 Proposed Rule Costs: $361.8 billion 

NOTABLE REGULATORY ACTIONS 

The most significant rulemaking of the week was the proposed rule from IRS regarding “Gross Proceeds and Basis Reporting by Brokers and Determination of Amount Realized and Basis for Digital Asset Transactions.” The rulemaking seeks to build out the tax compliance framework for digital assets and virtual currency transactions. It “would require brokers, including digital asset trading platforms, digital asset payment processors, and certain digital asset hosted wallets, to file information returns, and furnish payee statements, on dispositions of digital assets effected for customers in certain sale or exchange transactions.” Between the start-up costs involved in a processor establishing a reporting apparatus that complies with IRS’s requirements and the ongoing costs involved in reporting each transaction going forward, the administrative burdens attached to this proposal add up to nearly 6.1 million hours of paperwork and $386 million in costs annually (or nearly $1.2 billion across the three-year window in which paperwork requirements are approved).  

TRACKING THE ADMINISTRATIONS 

As we have already seen from executive orders and memos, the Biden Administration will surely provide plenty of contrasts with the Trump Administration on the regulatory front. And while there is a general expectation that the current administration will seek to broadly restore Obama-esque regulatory actions, there will also be areas where it charts its own course. Since the AAF RegRodeo data extend back to 2005, it is possible to provide weekly updates on how the top-level trends of President Biden’s regulatory record track with those of his two most recent predecessors. The following table provides the cumulative totals of final rules containing some quantified economic impact from each administration through this point in their respective terms. 

The Biden Administration actually saw its final rule cost total tick downward slightly last week. The main reason for this was an Environmental Protection Agency (EPA) rule that allows for greater flexibility in how affected entities test for and monitor polychlorinated biphenyls. EPA estimates that the rule’s changes provide roughly $15 million in annual savings, or $206 million in present value over a 20-year period. For the other administrations, there was virtually no movement under Trump, while Obama-era costs and paperwork shot up by $753 million and 13 million hours, respectively. A National Labor Relations Board rule (that was subsequently struck down in court) requiring employers to post notifications of employees’ bargaining rights providing the bulk of those increases.  

THIS WEEK’S REGULATORY PICTURE 

This week, the National Transportation Safety Board (NTSB) could use a hand in developing some of its potentially important legal definitions. 

Source: Photo by Raymond Eichelberger on Unsplash 

Last Thursday, NTSB published a pair of advanced notices of proposed rulemaking (ANPRM) pertaining to railroad and pipeline accidents. The rulemakings themselves do not actually establish any new requirements or standards and are largely requests for more information given both: A) how they are at the most preliminary stage of the regulatory process and B) that NTSB’s mission is more investigative than regulatory in nature. The information the Board is soliciting could be significant since it goes to the heart of whether they end up investigating particular incidents. 

As the Board notes in citing the Independent Safety Board Act of 1974, it is charged with investigating railroad and pipeline incidents that result in “substantial property damage” (and, on the pipeline side: “significant injury to the environment”). The problem, however, is that: “the agency’s regulation has neither a definition nor threshold for the terms ‘significant injury to the environment’ or ‘substantial property damage.’” These seem like fundamental questions to resolve.  

Such a process is not as straightforward as one might presume though. For the railroad side, the NTSB contemplates thresholds set by the Federal Railroad Administration (which regulates the nation’s railroads) and the Federal Transit Administration (which regulates various modes of public transit) as examples. It also notes that there could be complicating factors, such as the potential need to make “a distinction between public railroads and private railroads reporting thresholds.” On the pipeline side, it notes: 

The NTSB recognizes that pipeline regulations are more complicated and extensive than what can be realistically covered in this ANPRM as there are various Federal regulations addressing hazardous liquid and natural gas pipelines. Federal agencies with such regulations include the United States Coast Guard (USCG), the Department of Interior (DOI), and the Pipeline and Hazardous Materials Safety Administration (PHMSA). 

Each ANPRM poses roughly a dozen questions for the public seeking further input. Given the impact and notoriety of the derailment incidents from earlier this year, one assumes that there will be sizeable interest in weighing in on these issues. Those that wish to do so have until October 30 to provide comment.

TOTAL BURDENS  

Since January 1, the federal government has published $446.9 billion in total net costs (with $85.2 billion in new costs from finalized rules) and 172.5 million hours of net annual paperwork burden increases (with 15.4 million hours in increases from final rules).