Archive | Regulation

New Executive Order on Regulatory Harmonization

Yesterday the White House released a new Executive Order on “Promoting International Regulatory Cooperation.” The stated purpose of the E.O. is to encourage the harmonization of regulatory requirements to simplify regulatory compliance, reduce costs for transational companies and facilitate international trade. As OIRA Administrator Cass Sunstein explains in a White House release:

The new Executive Order will promote American exports, economic growth, and job creation by helping to eliminate unnecessary regulatory differences between the United States and other countries and by making sure that we do not create new ones.

As I discuss in an op-ed in today’s Wall Street Journal, the order makes clear that in eliminating such differences, we will respect domestic law and will not compromise U.S. priorities and prerogatives. Even while insisting on those priorities and prerogatives, we can eliminate pointless red tape. Today’s global economy relies on supply chains that cross national borders (sometimes more than once), and different regulatory requirements in different countries can significantly increase costs for companies doing business abroad. As the President’s Jobs Council recently noted, international regulatory cooperation canreduce these costs and help American businesses access foreign markets. Such cooperation can also help U.S. regulators more effectively protect the environment and the health and safety of the American people.

Sunstein also made the case for the E.O. in the WSJ, providing an example of the sort of harmonization the Administration has in mind:

Today’s action builds on many other administration efforts to eliminate unjustified regulatory costs and to reduce burdens by promoting international regulatory cooperation.

One example: The U.S. has long required employers to use warning symbols to inform employees of potential safety hazards. Other nations require warnings, too, but in many cases they mandate the use of different symbols. The result of the disparate requirements is to


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When Rent Control Becomes A Taking (Bis)

In March, Ilya had this interesting post on Harmon v. Kimmel, 11-496, a case the Supreme Court is now considering that presents the question whether New York’s system of rent regulation effects a taking of private property without compensation.

The Court as a whole considered the case for the first time at last Friday’s Conference.  (It was originally on for the December 9 Conference, but on December 5, at least one of the Justices asked the respondents — who had waived their right to file a brief in opposition — to file a response.)  The Court has relisted it for this Friday’s Conference, suggesting that at least some of the Justices are taking a close look at it.  The briefs in the case are available through the link above. […]

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Nearing the end of the search for the non-existent limiting principles

With the Supreme Court probably voting on the constitutionality of Obamacare (a term the President proudly embraces) on Friday, the health control law’s academic friends are diligently attempting to do what the entire United States Department of Justice could not do after two years of litigation: articulate plausible limiting principles for the individual mandate. Over at Balkinization, Neil Siegel offers Five Limiting Principles. They are:

1. The Necessary and Proper Clause. “Unlike other purchase mandates, including every hypothetical at oral argument on Tuesday, the minimum coverage provision prevents the unraveling of a market that Congress has clear authority to regulate.” This is no limitation at all. Under modern doctrine, Congress has the authority to regulate almost every market. If Congress enacts regulations that are extremely harmful to that market, such as imposing price controls (a/k/a “community rating”) or requiring sellers to sell products at far below cost to some customers (e.g., “guaranteed issue”) then the market will probably “unravel” (that is, the companies will lose so much money that they go out of business). So to prevent the companies from being destroyed, Congress forces other consumers to buy products from those companies at vastly excessive prices (e.g., $5,000 for an individual policy for a health 35-year-old whose actuarial expenditures for health care of all sorts during a year is $845).

So Siegel’s argument is really an anti-limiting principle: if Congress imposes ruinous price controls on  a market, to help favored consumers, then Congress can try to save the market’s producers by mandating that disfavored consumers buy overpriced products from those producers.

2. The Commerce Clause. “The minimum coverage provision addresses economic problems, not merely social problems that do not involve markets.” This is true, and is, as Siegel points out, a distinction from Lopez (carrying guns) and Morrison (gender-related […]

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Pool Closed? Blame the ADA

Just in time for spring break, hotels are scrambling to comply with new federal regulations requiring the installation of pool lifts to ensure disabled access to pools, hot tubs and spas in advance of a Thursday deadline, USA Today reports.  Failure to comply could result in fines of up to $55,000.  From the report:

Hoteliers must have pool lifts to provide disabled people equal access to pools and whirlpools, or at least have a plan in place to acquire a lift. If they don’t, they face possible civil penalties of as much as $55,000.

There are about 51,000 hotels, according to the American Hotel & Lodging Association, and most have pools.

The lifts are required by regulations made in 2010 stemming from the Americans With Disabilities Act, a civil rights law that bans discrimination based on disability.

With just days before the deadline, some hotels are considering shutting their pools or whirlpools to avoid penalties or possible lawsuits.

Cato’s Walter Olson has more here. […]

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House Passes REINS Act, President Promises Veto

Yesterday, the House passed the REINS Act on an almost exclusively party-line vote, 241-184.  All the House Republicans voted for the bill, as did four Democrats.  Thought the bill passed the House, it’s not about to be enacted into law.  The Senate is unlikely to take up the bill and President Obama has promised to veto the REINS Act should it somehow reach his desk.

My posts on the REINS Act are indexed here. […]

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Going Off the Rails Against the REINS Act

Today the House of Representatives is expected to vote on the REINS Act, a bill to enhance political accountability over regulatory decisions. The bill has two essential features. First, it bars new “major” regulations (those anticipated to cost more than $100 million annually) from taking effect unless approved by both houses of Congress. Second, it creates an expedited review process that forces each house to vote on each major rule. So while requiring Congressional approval, REINS prevents members of Congress from ducking their responsibility to vote yay or nay.

REINS is a controversial bill, in part because it effectively limits the delegation of broad regulatory authority to federal agencies, but to read some critics, REINS would usher in an anti-regulatory armageddon. While I support the legislation, for reasons detailed in these posts (and summarized in this NRO piece), I recognize that there are reasonable arguments to be made on the other side. What’s so interesting watching this debate, however, is how many opponents refuse to make them, relying instead on inaccurate and fanciful characterizations of the bill. It’s telling when opponents of legislation are unable or unwilling to describe it accurately when making their case.

To take one example, US PIRG’s Ed Mierzwinski argues that the REINS Act would lead to unsafe toys on the market and emasculate the CPSC.

One bill, the REINS Act, would not only allow but require congressional meddling in the implementation of all public health and safety rules. A single member of Congress, at the behest of some powerful special interest or campaign contributor, could block the public database, block science-based lead standards for children’s products, block crib safety rules or any number of protections that provide a safer consumer marketplace.

The idea that REINS would allow a single member of Congress […]

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The FDA’s Unhealthy Salt Obsession

Is too much salt bad for you?  That used to be the conventional wisdom, but more recent scientific research has suggested the emphasis on salt is misplaced.  No matter.  As Walter Olson notes, the Food and Drug Administration appears to be moving ahead with plans to force gradual reductions in the salt content of processed foods.  Among other things, the FDA is concerning the adoption of federal targets for gradual salt content reductions to wean consumers from their taste for salt.  But reducing salt content will do more than alter food’s flavor.  It can affect texture and perishability as well.  Surely the FDA has better things to do than obsess over the salt content of processed foods.  But if the FDA persists, I suppose it just means these (no relation) will get more use. […]

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Misguided Case for Regulatory Moratorium

In today’s WSJ, Senator Susan Collins (R-ME) explained why she has introduced legislation that would impose a one-year moratorium on the promulgation of new major rules — those regulations anticipated to cost more than $100 million per year — while exempting emergency and deregulatory measures. Such legislation ” is a common-sense solution that would help create jobs,” Sen. Collins wrote, yet the examples of regulatory excess she cites don’t much help her make her case.

Sen. Collins op-ed opens with a storied example of regulatory excess:

Last year, the Food and Drug Administration issued a warning to a company that sells packaged walnuts. Believe it or not, the federal government claimed the walnuts were being marketed as a drug. So Washington ordered the company to stop telling consumers about the health benefits of walnuts.

It is true that the FDA sent a warning letter to Diamond Food in 2010 accusing the company of marketing walnuts as a drug by highlighting the potential health benefits of omega-3 fatty acids. But adopting a regulatory moratorium would not do anything to help Diamond Food, nor prevent the FDA from taking similar actions in the future. As the FDA made clear, the warning letter was based upon Diamond Food’s alleged violation of existing regulations already on the books. No new rules, major or otherwise, were necessary for the federal government to go after Diamond Food’s marketing claims, and a regulatory moratorium would not keep the FDA at bay going forward.

The other alleged example of regulatory excess cited by Sen. Collins is the EPA’s proposed rule governing emissions from industrial boilers.

Meanwhile, the Environmental Protection Agency proposed a new rule on fossil-fuel emissions from boilers that—by the EPA’s own admission—would cost the private sector billions of dollars and thousands of jobs. The owner


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EPA Postpones Another Air Rule

Two weeks ago, President Obama asked EPA Administrator Lisa Jackson to shelve plans to tighten the National Ambient Air Quality Standard for ozone, leaving any reconsideration of the current standard until 2013. This past week, the EPA announced it was delaying the planned release of proposed regulations to control greenhouse gas emissions from power plants under the Clean Air Act. This is the second time EPA has delayed publication of these rules.

Viewed together, these decisions suggest the Obama Administration is making a conscious effort to moderate its regulatory policy, particularly in the environmental area. If so, why would this be? Could it possibly make political sense for the Obama Administration to acquiesce to GOP attacks on environmental protection? After all, as Ann Carlson noted at Legal Planet, environmental protection remains popular,and polls suggest relatively few Americans believe environmental regulation costs jobs (though it can).

It is inconceivable that the Obama Administration believes that these moves will placate Tea Party opposition or win plaudits from across the aisle. But that’s not the point. Nor is aggregate popular opinion on these questions particularly relevant to the political calculus. Rather, as I noted in comments to Ann Carlson’s post, what matters are the views of marginal voters and, in particular, marginal voters in politically significant states. That is, the opinions of moderates and independents in Ohio, Pennsylvania and West Virginia matter more than the views of environmental activists in San Francisco or Washington, D.C.

Viewed in this light, the political rationale of these decisions is easier to understand. Insofar as these moves are politically inspired, it would appear the aim is to placate those potential constituencies in battleground states most sensitive to the costs of new and impending environmental regulations. Think coal and power company unions, small businesses in […]

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The IRS Wants to Give Tax Credits for Health Insurance Purchases Beyond Those Provided for in the ACA

The Internal Revenue Service is beginning to promulgate regulations to implement the tax-related provisions of the Affordable Care Act (aka “ObamaCare”). A proposed rule issued last month provides that eligible taxpayers may receive tax credits for the purchase of qualifying health insurance plans established by states under Section 1311 or by the federal government under Section 1321. The only problem is that this is not consistent with the actual text of the statute passed by Congress.

ACA Section 1401 provides that eligible taxpayers may receive income tax credits for purchase of insurance “through an Exchange established by the State under Section 1311.” Section 1311 calls upon states to establish health insurance exchanges. It does not provide for the federal government to create health care exchanges. Rather, a separate provision of the act, Section 1321, provides that if a state does not “elect” to create an exchange that meets federal requirements, the federal government shall then “establish and operate” an exchange. Thus, under a plain reading of the text, the ACA only provides for tax credits for state-run exchanges, and if states fail to create exchanges, there are no tax credits for insurance bought on a federally run exchange.

This is potentially significant for several reasons. The individual mandate requires all Americans to purchase health insurance. Even if the mandate is successful at reducing adverse selection, health insurance premiums are still expected to rise due to other provisions in the law.   Higher premiums could make it difficult for many Americans to comply with the mandate. For this reason, Congress not only called upon states to create exchanges, it also authorized tax credits to offset the cost of health insurance premiums for those with incomes between 100 and 400 percent of the poverty level.   But if these tax credits are only available […]

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Jobs vs the Environment One More Time

The New York Times tries to provide some perspective to the renewed debate over the economic effect of environmental regulation, and the effect of regulation on jobs in particular.  The story was prompted by President Obama’s decision to ask Environmental Protection Agency Administrator Lisa Jackson to withdraw a proposed revision of the National Ambient Air Quality Standard for ozone.  Business groups and many local government officials cheered the move; environmentalist groups were dismayed.

Part of the problem in evaluating the costs of regulation is that there have been few systematic studies of such costs after regulations are imposed.

“Regulations are put on the books and largely stay there unexamined,” said Michael Greenstone, an economist at the Massachusetts Institute of Technology. “This is part of the reason that these debates about regulations have a Groundhog’s Day quality to them.”

Mr. Greenstone has conducted one of the few studies that actually measure job losses related to environmental rules. In researching the amendments to the Clean Air Act that affected polluting plants from 1972 and 1987, he found that those companies lost almost 600,000 jobs compared with what would have happened without the regulations.

But Mr. Greenstone has also conducted research showing that clean air regulations have reduced infant mortality and increased housing prices, and indeed many economists argue that job losses should not be considered in isolation. They say the costs of regulations are dwarfed by the gains in lengthened lives, reduced hospitalizations and other health benefits, and by economic gains like the improvement to the real estate market.

The NYT story did not provide links to Prof. Greenstone’s research, so I added them above. For those interested in the subject, a third paper by Greenstone looks at the extent to which air quality improvements can be attributed to the […]

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White House Halts New Federal Smog Standards

President Obama today told the U.S. Environmental Protection Agency to set aside plans to tighten the National Ambient Air Quality Standard for ground-level ozone (aka “smog”). The proposed tightening was fiercely opposed by business groups as well as state and local governments, as the latter are charged with developing plans to meet the standards. In addition to the anticipated costs of metting the new standards, opponents pointed out that the EPA is required to review its air quality standards every five years, and would have to review the standards in 2013. The ground-level ozone standard was last revised in 2008, but the Bush Administration did not tighten them as much as environmentalist groups had wanted.

The text of the  President’s statement released by the White House is below the jump. […]

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Market Failure vs. Government Failure

Nobel-laureate economist Gary Becker provides a useful reminder that the existence of widespread “market failures,” such as those that contributed to the financial collapse and subsequent recession, does not by itself justify government intervention. However bad markets may be at times, there’s no guarantee that government will be better. Here’s an excerpt from Becker’s op-ed.

The traditional case for private competitive markets goes back to Adam Smith (and even earlier writers). It is mainly based on abundant evidence that most of the time competitive markets work quite well, usually much better than government alternatives. The main reason is not that individuals in the private sector are intrinsically better than government bureaucrats and politicians, but rather that competitive pressures discipline market behavior much more effectively than government actions.

The lesson is that it is crucial to consider whether government regulations and laws are likely to improve rather than worsen the performance of private markets. In an article “Competition and Democracy” published more than 50 years ago, I said “monopoly and other imperfections are at least as important, and perhaps substantially more so, in the political sector as in the marketplace. . . . Does the existence of market imperfections justify government intervention? The answer would be no, if the imperfections in government behavior were greater than those in the market.” . . .

Government regulations and laws are obviously essential to any well-functioning economy. Still, when the performance of markets is compared systematically to government alternatives, markets usually come out looking pretty darn good.

At one level this argument is self-evident — no set of institutional arrangements operates as well in practice as in theory — but it is regularly forgotten in policy debates. As Becker observes:

The widespread demand after the financial crisis for radical modifications to capitalism typically


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Review of Doug Kysar’s Regulating from Nowhere

I reviewed Douglas Kysar’s Regulating from Nowhere: Environmental Law and the Search for Objectivity for the Spring 2011 issue of The New Atlantis.  Overall, I found Kysar’s book thoughtful, provocative, wide-ranging and well-written, but not persuasive. In many ways, I think Kysar pursues the wrong quarry, and ignores some of the deeper problems in contemporary environmental law. Nonetheless, the book presents many arguments worth considering and engaging.   Here is how the review concludes:

If Kysar’s ultimate concern is for a greater recognition of and reaching toward the environmental values he holds dear, his complaint should be less with CBA and utilitarian calculus than with the centralized regulatory structure in which they are used to impose one-size-fits-all policies. In selecting the wrong target, Kysar embarks on a journey to the wrong destination. Were we to take Kysar’s advice, we would no longer “regulate from nowhere,” but we would still regulate from nowhere good.

The full text of the review has just been made available online here. […]

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Court to Consider Administrative Compliance Orders

The Supreme Court accepted cert on two more cases on Tuesday. One of these cases, Sackett v. EPA, could be quite significant for administrative law. The case arises out of an all-too-typical wetlands regulation dispute. The Sacketts own a lot in a residential subdivision upon which they planned to build a home. After they graded the lot, they were received an Administrative Compliance Order (ACO) from the EPA alleging they had violated the Clean Water Act by filling a wetland without a federal permit and ordering them to commence costly restoration, under threat of substantial penalties. The Sackett’s sought to challenge the ACO, believing that their land does not constitute jurisdictional wetlands subject to federal regulation, but the Clean Water Act does not provide any basis for doing so absent waiting for the EPA to commence a civil action. According to the EPA, what the Sacketts could have done is applied for the permit they believe they do not need, and if their permit application was denied, then challenge the EPA’s jurisdictional determination in federal court. But this is hardly an appealing option, particularly given the substantial costs the permitting process entails. So the Sacketts filed suit in federal court, but the district court and U.S. Court of Appeals for the Ninth Circuit agreed with the EPA that the ACO was not subject to a pre-enforcement challenge.

In agreeing to hear the case, the Supreme Court accepted cert on the following two questions: 1. May petitioners seek pre-enforcement judicial review of the administrative compliance order pursuant to the Administrative Procedure Act, 5 U. S. C. §704? 2. If not, does petitioners’ inability to seek pre-enforcement judicial review of the administrative compliance order violate their rights under the Due Process Clause? While this case focuses on the Clean Water Act’s […]

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