A Lame Duck’s Last Stand
2017-01-07 · Guest: Sam Batkins (American Action Forum) · 47:23
Midnight regulations and the administrative state
Bob Zadek and Sam Batkins discuss the proliferation of “midnight regulations” in the final days of the Obama administration. They explore the legal mechanisms of the regulatory state, the delegation of power from Congress to unelected agencies, and the challenges the incoming Trump administration faces in attempting to deregulate through the Administrative Procedure Act and the Congressional Review Act.
Topics: Midnight Regulations, Regulatory State, Administrative Procedure Act, Congressional Review Act, Executive Power, REINS Act, OIRA, Deregulation, Article I, Article II
Speakers:
- Bob Zadek – Host
- Sam Batkins – Director of Regulatory Policy at the American Action Forum
- Caller (Nick) – Drug development scientist
George Washington and the Constitution [00:00]
Bob Zadek: Hello everyone, welcome to the Bob Zadek Show, the only live libertarian talk radio show on the air all weekend. Thanks so much for listening. I am your eponymous host, Bob Zadek. 424-BOB-SHOW to join my conversation at any time. 424-BOB-SHOW. That is the phone number from anywhere in the United States.
2017, new year, about to have a new president. I thought I’d start off the show with looking back in history on this day, January 8th, 1790. Our first president, George Washington, was inaugurated into the presidency. He was inaugurated—he gave his inaugural speech in New York City. That’s where the capital was for a very brief period of time. During that address, George Washington congratulated those assembled and those who would read about his speech later about successfully ratifying the Constitution and forming a new government.
Gosh, it gives me goosebumps just to think about it. Just to put it in perspective, at the time the Constitution was ratified, only 11 of the 13 colonies ratified. Who were the holdouts? Rhode Island was a holdout; they joined a bit later. And North Carolina was the last state. They held out because they were disappointed that the Constitution didn’t have a Bill of Rights. With Madison’s promise that there would be a Bill of Rights once Congress was assembled, North Carolina agreed to ratify the Constitution. The government was formed. Washington was inaugurated January 8th, 1790. And in two weeks, we will have, 45 presidents later, giving an inaugural address.
Introducing Sam Batkins and the Regulatory State [01:12]
Bob Zadek: With that perspective, I’d like to introduce our guest this morning. I’d love to welcome, and I’m happy to welcome, Sam Batkins. Sam is a director of regulatory policy at a wonderful organization and important organization called the American Action Forum. Sam has written extensively on today’s subject, which is the regulatory state in general, and something which you all in the next hour will learn to fear: something called “midnight”—oh, how sinister that sounds—midnight regulations. Sam, thanks so much for joining us this morning.
Sam Batkins: Thanks so much for having me.
Bob Zadek: Now Sam, you have written extensively and care a great deal, as I do and probably many of our listeners or most of our listeners do, about regulation—I can’t even say the word without getting a bit angry—regulation, the regulatory state, and most specifically to today’s topic is the subject of midnight regulations.
Now, I guess in early civics classes in high school, students are taught that laws are made by the legislature. Once laws are passed under the rules of the legislative bodies, the executive has to approve the law—that is, sign the law into effect—and then we have laws. So we have laws given to us or written by legislators, approved by the president, and that’s who governs us. And if we don’t like our laws, the remedy in our democratic republic, the remedy is to vote out the rascals who enacted those laws.
But it’s not quite that simple. Americans are governed by what is in effect laws, but these laws have not been enacted by anybody we even know about, let alone voted for or approved. Now, tell us about that topic, the 30,000-foot view of regulations. What are these regulations? Who passes the regulations? And are they laws enacted by unelected legislators, making a lot of what we learned in high school and college not quite accurate?
Sam Batkins: Yeah, the difference between high school civics and reality is often pretty stark when you think about it. Last year, regulators approved roughly 3,600, I believe, federal rules. Of those, roughly 100 are considered “major,” which is another way to say that they impose an annual economic impact of at least $100 million or more.
But in terms of who enforces them, it’s sort of the usual suspects that I think many listeners are probably familiar with: the Environmental Protection Agency. Congress over the years has delegated a lot of power to EPA, which is one reason why EPA is a fairly powerful regulatory agency. And then from there, you have your typical alphabet soup of regulators from FCC to SEC to CFTC to CFPB. So I think if you were to just count up all of the regulators—and I think we did this once—I think it’s something like 52 different regulatory agencies at least, and that’s excluding sub-agencies.
Delegation and the REINS Act [03:11]
Bob Zadek: Now you mentioned an important noun: a “regulator.” What is a regulator? How did they get the power to regulate? They are not legislators. So what gives them the power to enact what is in effect—what feels to me like—a law, but yet they were not lawmakers? How does this all work? How did they come to be?
Sam Batkins: Sure. When you think of a regulator, I generally think of anyone in an independent regulatory agency—so one of those commissions that I talked about—or someone within a cabinet agency who has the ability to take the power delegated to Congress. For example, I think many of you are familiar with Obamacare or the Affordable Care Act. In that law, there were thousands of different delegations to “the Secretary should,” “the Secretary may.” So all of that broad, open-ended power with regard to the Affordable Care Act gives regulators sort of incredible authority to interpret and then carry out their own will through regulation.
Bob Zadek: In other words, legislators could have enacted not only the law but all of the rules that are necessary to carry out the law. They could have done that, but they didn’t. And the very important verb that you used, a verb that is crucial to understanding today’s topic, is “delegation.” In other words, we elect a legislator, and a legislator doesn’t do what he has been elected—i.e., hired—to do, which is pass laws. But he says, “You know, life is kind of complicated, and I’ve got a life too. So I will not do what I am empowered to do by the Constitution, but I will delegate, I will give that power to somebody else that my voters have never even met.”
So the whole area of delegation is itself—I’d like to use the word—questionable, because the Constitution gave specific power to specific bodies. And it didn’t necessarily allow those people with that power to give it to somebody else who wasn’t elected. So we have long since taken for granted the propriety of delegation, but should we have? And isn’t the delegation where it all starts?
Sam Batkins: Yeah, definitely for the most part. And when you think, thankfully now Congress is starting to realize that it has delegated a lot of power, which is why it’s trying to actually take back some of the power now. They’ve introduced legislation called the REINS Act, which—if folks are familiar with tortured acronyms in Congress—it stands for Regulations from the Executive in Need of Scrutiny. And that would allow Congress to approve regulations—
Bob Zadek: By the way, that includes every one. Everyone is in need of scrutiny.
Sam Batkins: Yes, that’s true. But these would be any major regulation, again $100 million or more, would have to go through Congress first. Because Congress delegated the power initially, but sometimes that might have been 30 or 40 years ago. But now Congress can go back to the well and get a chance to review the regulation before it actually has the effect of law.
INS v. Chadha and the Legislative Veto [05:00]
Bob Zadek: But they couldn’t do that without another statute. After all, what the Lord giveth, the Lord can taketh away—not that I’m willing to bestow Lord-like powers upon the legislator—but can’t they just take it back? Take back the power?
Sam Batkins: Well, I mean, they can try through legislation. But part of this is the result of a Supreme Court opinion, INS v. Chadha, where at one time Congress had what was known as the “legislative veto.” So they could veto certain executive actions. And the Supreme Court found that that violated the Presentment Clause, and in effect that Congress was lawmaking without the executive. So whenever you’re going to do anything to overhaul the administrative state, the regulatory state, you’re going to need Congress, the executive, and even the courts to some extent.
Bob Zadek: That’s a big deal. This is Bob Zadek. I’m talking with Sam Batkins. We are talking about the regulatory state, the mess we’re in now, how we get out of it. 424-BOB-SHOW for questions to Sam or myself. We’ll be back in one really short minute. Please stay tuned.
[Break]
Major Rules and the Congressional Review Act [07:12]
Bob Zadek: Welcome back to the Bob Zadek Show, the only live libertarian talk radio show on the air all weekend. Proudly and always the show of ideas, not attitude. Thanks so much for listening to my conversation this morning with Sam Batkins. Sam is the director of regulatory policy at the American Action Forum. Sam has spent a good part of his career studying, worrying about, and trying to undo, or at least have us understand, the pickle we are in with the regulatory state. Sam, thanks so much for joining us this morning.
Now Sam, in the area of regulations, while many of us libertarians sort of—the little short hairs in the back of our neck kind of stand up whenever any new law is passed or regulation, because any regulation is per se a deprivation of liberty, and liberty is not free, it’s hard-earned, and we hate to give it up. So with that introduction, regulations have another profound downside, which is they’re not free. And there is a cost. And you had mentioned in your introductory comments the concept of “major regulations” or “major rules.” And that’s not just your nickname for it, but major rules are special. What’s special about major rules that we ought to pay a little more attention to them? And what is a major rule?
Sam Batkins: Sure. Well, like you mentioned, I didn’t just make it up on the fly, but it’s in statute. It’s in what’s known as the Congressional Review Act, which is again one of those pulling back of some of the delegated powers. But that defines a major rule as any regulation that has an economic impact of at least $100 million. Sometimes they’re billions. And it would significantly increase prices or affect competition.
Dispersed Costs and Stealth Regulation [08:39]
Bob Zadek: So in other words, there is an attempt at—it may be a good faith effort at—objective evaluation of the cost of a regulation. And some, indeed many regulations, do have a cost which is quite meaningful. And one of the reasons that there is not more of an uproar, besides the fact that we have become shell-shocked and used to regulations, is that there is this concept of dispersed costs. When you say a regulation—and what’s the cutoff for a major rule? $100 million?
Sam Batkins: $100 million. Which in a big economy, for a particular industry, that’s not—
Bob Zadek: $100 million is a big number. But to Sam and Bob, it may cost us four cents a year. And we’re not going to storm the Bastille for four cents. Maybe for eight cents, but not four. So therefore, there isn’t more of an outcry because it’s stealth. Nobody really feels it. It’s just there. We are told that it happened, but it’s a total abstraction that doesn’t have any effect upon our life. And that’s one of the reasons, I think, that the regulatory state can thrive and can enact so many major rules with so little uproar, because people just don’t feel the pain.
So we have major rules. Now what’s the significance? How is a major rule under the Congressional Review Act different? What’s special about it and how is it treated differently?
Sam Batkins: Sure. So it typically will go through the White House for review, through this little-known office called the Office of Information and Regulatory Affairs, or OIRA. And it goes through that office and they will review the rule, they’ll review the benefit-cost analysis, they will pass the rule around other agencies for them to get an opportunity to review the regulation. And typically with major rules, you’re going to get far more public comments, more public interest than you would in some random airworthiness directive for your 737 that you’re going to Seattle for.
Bob Zadek: So major rules get a little more attention. And when they get attention, assuming that Congress is unhappy with this major rule, does it have certain control devices that it doesn’t have for, if there is such a thing, a minor rule?
Sam Batkins: Sure. With major rules and to some extent non-major rules, minor rules, it can, as I mentioned through the Congressional Review Act, rescind a regulation without filibuster in the Senate. And that’s something that is going to happen once President-elect Trump is inaugurated. You’re going to get these quote-unquote “resolutions of disapproval” for some of the major regulations that Obama has implemented in the last six months, the so-called “midnight period.”
Defining Midnight Regulations [12:26]
Bob Zadek: So now we get to the good stuff. Now we get to what a lot of voters have been looking forward to, which is the next administration, the Trump administration, undoing some or much of what Obama has done that this voting body objects to. And the show is about midnight regulations. Now what is a midnight regulation as opposed to a twilight regulation or a daylight regulation, if those are the alternatives? I don’t know if there’s a Washingtonian term for twilight regulations, but what are midnight regulations? Why are we talking about midnight regulations right now on January 8th?
Sam Batkins: Sure. Well, it’s because we’re in the supposed midnight period. So you can imagine Cinderella rushing to her carriage before it turns into a pumpkin. President Obama is issuing a lot of regulation before his administration turns into President Trump’s. So midnight regulations broadly are just anything after Election Day and before the next president is inaugurated. So it’s basically that almost three-month period during the transition when presidencies are typically very active in regulating. We mentioned the founding already. John Adams actually had what was called the Midnight Judges Act of 1801, which gave rise to arguably the most important Supreme Court opinion of all time, Marbury v. Madison. So this notion of rushing whether it’s judges out the door in 1800 or regulations out the door in 2017, this is why we broadly call it sort of the midnight period.
Bob Zadek: So presidents don’t go quietly into the night at the end of their term. They don’t just pack it up. Although you mentioned Adams, Adams was so angry at losing to Jefferson, he didn’t even stay around for the inauguration. He was on a coach going home. He was pretty disappointed. But presidents do not go quietly into the night. And now midnight regulations, they are somewhat rushed through. Therefore, one can make certain assumptions about the cost and the quality of this flurry of activity called midnight regulation, that perhaps is less true about twilight or daytime regulations. They are more dangerous, perhaps more destructive, perhaps not as well thought out. And that’s why midnight regulations are more important than other regulations.
So we’re going to go to break in about a minute, Sam, but just to pique the interest of our listeners—and we’ll take some callers when I come back from break—but just to pique the interest, why are midnight regulations worthy of greater scrutiny than the regulations that happen during the normal operation of a presidential term?
Sam Batkins: Sure. Well, when you think about midnight regulation, just take a broad look at what the Obama administration did in 2016, where they averaged roughly about 45 rules out of the White House every month. Last December, this most recent December, that figure was close to 100. It was 99 rules. So you have to ask yourself: was this doubling of regulatory output, was it done because of policy, because of good public policy, or was it done because of politics, because President-elect Trump won? And I think we’re pretty confident the answer is probably the latter and not the former.
Bob Zadek: And therefore they are deserving of and ought to get greater scrutiny. And that greater scrutiny is exactly what I and Sam will do after the break. Please stay tuned. This is Bob Zadek. I’m talking with Sam Batkins of the American Action Forum. We’ll be back to discuss Obama’s midnight regulations. You’re not going to be happy in two short minutes.
[Break]
Caller Nick on Innovation and Regulation [21:09]
Bob Zadek: Welcome back to the Bob Zadek Show, the only live libertarian talk radio show on the air all weekend. Proudly and always the show of ideas, not attitude. Thanks so much for listening. 424-BOB-SHOW to join my conversation with Sam Batkins. Sam is with the American Action Forum. We are discussing the regulatory state in general and Obama’s flurry, intense flurry, of new, expensive, burdensome, obnoxious, annoying, quasi-unconstitutional—what other invectives can I throw out?—midnight regulation, and what the Trump administration has the power to do to undo those regulations if it is so inclined. Sam, thanks so much for joining us.
Now Sam, before we get into the topic again, I’d like to hear from one caller if I may. Nick, welcome to the show this morning. You’re on the line.
Caller (Nick): Hey Mr. Zadek, how are you, sir?
Bob Zadek: Hi Nick, how are you? What’s on your mind this morning?
Caller (Nick): Hi Mr. Batkins. So I’m a drug development scientist. I want to talk about regulation. About two points, sir. The greatest cost of development now is Phase 3 trials—70% of your budget. The last drug I developed, $400 million. $300 million of that was directly related to the passage of, you know, the Doyle Act back in the 70s, right? If you look statistically at it, no change between if you didn’t do the Phase 3 or if you did it. And then most people, you know, get their news from the press, and the press really doesn’t understand statistics, you know, so they just kind of talk about it. So huge amounts of money are spent in stifling innovation.
There was an article in The Economist: if you’re in Europe and you have something innovative, hide it in your suitcase and come to America. That’s exactly what they said. It’s because of all the regulations in Europe. There’s no innovation in Europe. It’s either done by the government underground or it’s not done by the private sector. That’s the first comment.
And then the second comment. I’m getting ready to go work on certain—looking at gene variants, translational medicine. So I’m sitting here looking at all the regulations in America, 27 in EU—the EU, oh my gosh, there’s so many over there. How are you supposed to get a sample from somebody and hold it, right, and write some kind of consent form that’ll characterize future use with the current regulations? You can’t. It’s impossible, right? People want to have these amazing—people want innovation into our day-to-day lives, but we’re stifled by regulation because the myth on the street is this: if you don’t have regulation, you’re going to die. Where does that myth come from? Who—that’s my question, really. And I’ll listen off the air. You guys take care of yourselves.
Bob Zadek: Thanks a lot, Nick. Now of course, Sam, Nick makes of course an excellent point that regulation and innovation are like the snake and the mongoose. They fight each other to the death. And one of the downsides besides the cost that you will be talking more about and you have talked about is the fact that regulations are enacted in a bit of a silo. The regulator doesn’t see, nor are they required to see, the effect on the economy, the effect on the country. Only the effect on that tiny little jurisdictional area they care about. And there’s not much—so the regulator is doing something that perhaps makes sense, perhaps, in the minuscule section of the economy in which the regulator operates, but it makes no sense in the big picture. So what is there—how—what is the control, and maybe it is the cost-benefit analysis, where we make sure that a regulator overzealously guarding its tiny area is harming the country or the economy as a whole?
The Planner’s Dilemma [25:31]
Sam Batkins: Sure. Cost-benefit analysis certainly helps. And again, I think a robust comment from the public helps as well. Because there’s an economist at GW, Brian Mannix, who talks about what you touched on, which is the “planner’s dilemma.” That whether it’s us or whether it’s a regulator, when we’re involved in something, sometimes for a year, two years, then everything makes sense to us within the four corners of this document that we’ve created or this project that we’ve come up with.
But of course, there’s going to be so many “unknown unknowns” out there. And whether it’s innovation or rising prices, these unknown unknowns eventually become known to the public in terms of higher prices, reduced wages, reduced payroll, or lower profits. And those are the effects of regulation. And to give regulators some credit, they’re really difficult to predict. And when sometimes some of these regulations, they’re predicting out 30 years. And they’re not soothsayers. They’re just like us. They work in Washington, D.C. But they can’t predict the future that accurately, especially 30 years in the future.
Bob Zadek: Sam, if they work in Washington, D.C., they are by no means “just like us.” I totally reject your assumption, but we’ll allow you one misstatement per show, don’t worry about it. Now Sam, so here we have a new administration, profoundly different it appears in everything about its orientation with the Obama administration. So what exactly—as I said in the beginning of the show, many in the voting public, those people who pay attention to what’s going on in D.C. and politics, they kind of assumed, as I think I had been assuming until I prepared for this show and read your writings, I just assumed, well, if regulator A can do something, regulator B can say, “Okay, it’s a new ballgame, I’m rejecting that,” and this is the new EPA and we’re undoing everything. But explain to us how it works when a new administration, determined to undo a lot of the prior administration—and I’m only focusing about regulations, not about laws—what is the process and how daunting or undaunting is the procedure for undoing a prior administration’s burdensome regulations? Think Department of Energy, Department of Defense perhaps, and certainly EPA and CFPB—although CFPB is independent and there’s not going to be much turnover there. What’s the process like to undo regulations? Is it a piece of cake? Is it impossible? Where do we stand on that?
The Administrative Procedure Act and Undoing Rules [28:33]
Sam Batkins: Well, it’s definitely not a piece of cake in any sense. It is, to use your word, daunting. And you’d think it would be relatively easy to undo what your prior did, and elections after all are supposed to have consequences. But to undo a regulation, you need to go through the same process through what’s called the Administrative Procedure Act to undo a regulation, the same process you use to implement the regulation. So you’re going to have to formulate a proposed rule, you’re going to have to come up with evidence and reasons why you want to undo the rule, you’re going to have to go through a comment period where the public can send you angry or nice comments, you’re going to have to go through interagency review, send the rule to the White House, and then publish it.
And then you’re going to get sued. For example, the Clean Power Plan, the rules on greenhouse gas emissions. That rule, which they’re going to repeal, or they’ve said they would, will face litigation. So that Clean Power Plan is going to take at least four years to undo if the administration is serious about it.
Bob Zadek: How long did it take to enact?
Sam Batkins: So to enact, you know, it depends on how long you view the period, but—
Bob Zadek: Now you picked the Clean Power Plan Act. I mean, just by way of an example, you said four years to undo it. How long did it take to do it?
Sam Batkins: It took—if the start was the endangerment finding in 2009, and then it was finalized in 2015. There was a proposed rule in 2014, a 120-day comment period, and then a final rule in August of 2015. So it did take five or six years to do it in the first place.
Bob Zadek: And a lot of person-hours, a lot of people’s hours, which we paid for to get it done, and now it’s going to be undone and we’re going to pay for that as well. We’re paying for a lot of round trips to nowhere, aren’t we, by supporting the regulatory system? We’re going to go to break, Sam, for one more minute. This is Bob Zadek. I’m talking to Sam Batkins. We are talking about the regulatory state, Obama’s midnight regulations. Can it be undone with the stroke of a pen or the dialing of a phone number by Donald Trump? Obama’s famous pen and a phone. I’ll be back in one short minute. Please stay tuned.
[Break]
The Day 1 Moratorium [33:21]
Bob Zadek: Welcome back to the Bob Zadek Show, the only live libertarian talk radio show on the air all weekend. Thanks for being a loyal listener and for listening to us every Sunday. I’m speaking with Sam Batkins today. We are talking about, worrying about, scheming about undoing Obama’s midnight regulations, those regulations passed by the agencies in the executive branch in the waning moments of an administration, probably done with less care, certainly more haste. They are expensive, they are a drain on the economy, and they allow a president to live in the minds and in the lives of us Americans long after the president leaves office. There’s an unpleasant thought.
Sam, thanks so much for joining us. Now Sam, you were explaining to us that it’s clearly a fantasy to expect, if this is what you would like, to expect an incoming president to simply undo the adverse effects of a prior president. That, at least insofar as regulation is concerned, that the regulatory state is pretty firmly entrenched, as are their regulations. And it is a challenge involving lots of human hours and lots of time and, as you mentioned before the break, often litigation, just to undo what the new administration considers to be bad policy. So from a regulatory standpoint, what can we expect to happen in the early days, assuming there’s a will to do so, in the early days of the Trump administration purely from a regulatory standpoint?
Sam Batkins: Sure. Well, on Day 1, you will get, I expect, a memo from Reince Priebus, President-elect Trump’s chief of staff. And that memo will in effect be a regulatory moratorium. And it will say, “If you’ve got rules that are coming to the White House now, don’t send them to us. We’re going to take some time. If you’ve got rules that have been sent for formal publication, pull them back before they have that sort of final stamp of approval. And if you’ve done any rules in the last 30 to 60 days, delay their effective date.” And as a result, what you’ll end up getting is actually the same thing that happened under President Obama when he came in during the transition period. You’ll have a one- to two-month, in essence, regulatory moratorium for major regulations. So for folks who want to celebrate that one- to two-month reprieve, now is your time in January and February.
Bob Zadek: Now you’ve gotten me all excited. What happens 61 days later after that one- to two-month period? Can they, will they stop?
Sam Batkins: Well, that will depend on how the regulatory apparatus of the Trump administration works and how aggressive or tame they want to be on issuing new regulations or moving forward with deregulatory measures. Congress can offer some degree of help as well. The best way to undo a regulation is just to pass a law, because those are unlikely to be struck down in court, whereas this slow regulatory process to undo a rule—but Congress can just say, “We don’t like that rule that the administration did on coal that happened a few weeks ago, what’s known as the Stream Protection Rule, and we’re going to undo it.” And they can undo it without a filibuster in the Senate and President-elect Trump signs it, and that’s it. The rule is gone, mostly forever.
Article I vs. Article II [36:57]
Bob Zadek: I wasn’t aware of that, that laws that undo regulations are not subject to the same Senate-created filibuster rules and they can be done with a simple majority in the Senate. I don’t know of any other laws that are subject to that. What’s the background for the Senate being able to pass a law which undoes a regulation with a simple majority?
Sam Batkins: Again, it’s through the Congressional Review Act, which passed, I think, almost unanimously in 1996, back when Democrats and Republicans were on board with some degree of regulatory modernization. But in the text of the legislation itself, it just says these certain resolutions of disapproval are privileged, and the following points of order shall not take effect. So it’s one of those few provisions where it doesn’t require 60 votes in the Senate. Budget reconciliation, which will happen through repeal parts of Obamacare, is also one where you only need 51 votes. But it’s a useful tool for basically the last six months of the Obama administration for Congress to go back and say, “These rules may not be reissued in substantially the same form,” and that’s probably the most effective way to undo a rule because it’s a law as opposed to this plodding, slow regulatory process.
Bob Zadek: What is the relationship between—I’m going to ask a general question and maybe it’s too general to be susceptible to an answer—but what is the relationship between Congress and the regulatory state? Does Congress look upon the regulators as an ally, as the working stiffs who enact, who take care that the laws have appropriate force, or is there resentment? I never understood why Congress was so willing, since they jealously guard so much of their prerogatives, why they were so willing to delegate big chunks of those prerogatives to the unelected regulatory state. Can you help me with that at all?
Sam Batkins: Sure. Well, I think their opinion of them in general depends on which side of the aisle you’re on. I think sitting in oversight hearings throughout the years that Republicans often generally have a somewhat adversarial relationship with President Obama’s regulators, and Democrats generally a somewhat supportive view of President Obama’s regulators. But I think what we’re starting to see now is something that’s pretty exciting from a constitutional perspective. It’s an Article I versus Article II issue. And it’s an area where Democrats should be excited about too.
Bob Zadek: Article I and Article II refer to the Constitution, just so the audience can follow.
Sam Batkins: Yes. Article I, legislative power; Article II, executive power. But Republicans now are starting to realize that they have delegated too much power, and they’re starting to want new initiatives. One is a regulatory budget. So it’s budgeting for regulation just like we budget for fiscal expenditures. And to me, that’s not so much of a left-right issue, it’s an Article I-Article II issue, because Jimmy Carter, believe it or not, talked favorably about a regulatory budget and regulatory modernization. So these are somewhat new times for separation of powers in general.
Cost-Benefit Analysis and Regulatory Budgets [39:03]
Bob Zadek: Now there is an examination—regulations are required to go through a cost-benefit analysis, as I understand it. They are required by statute, and there is for major rules—or there are for regulations those rules. That seems to make sense, even though a law or a regulation might in general, on an objective sense, objectively make sense, it simply might be too expensive. So cost-benefit analysis always makes sense. Is there the same cost-benefit analysis for laws that there are for regulations?
Sam Batkins: Sure. Well, to some extent there is cost-benefit analysis on a fiscal realm. So when Congress passed the Affordable Care Act or Dodd-Frank, they got a sense from a fiscal component how much money was going out under this, how much money was coming in, what was it going to do to affect revenues. But very little discussion of what this would mean for regulation. I think the Congressional Budget Office, which does this analysis, said it would impose significant regulation, but they just didn’t have sort of the apparatus. There is a new move to perhaps create a division within the Congressional Budget Office, sort of a regulatory budget office, that would scrutinize legislation for regulatory implications and would also look at pending or recent regulations to determine their overall macroeconomic effect on the economy.
Bob Zadek: What do you see in the upcoming Republican House, Republican Senate, Republican White House? What do you see? Is there likely to be more regulation or the same regulation except it’s different, or is there likely to be some relief and less regulatory activity in general than in the prior administration?
Sam Batkins: I can pretty much guarantee that there will be less regulation than there was in 2016, because President Obama is about to break his own record for major regulation. He issued 100 in 2010—100 regulations with at least $100 million in impact. He’s likely to issue more than 100 in 2016; the official tally is sort of still slowly crawling in. But President-elect Trump has pledged to remove two regulations for every new rule. That’s sort of a formal regulatory budget that’s actually happening right now in the United Kingdom. So unless something catastrophic happens or there’s a massive swing in thought, I think you can pretty much assure yourself that there will be fewer regulations issued in 2017.
Bob Zadek: Sam, as we go to our last break, you have put a spring in my step. Thank you so much. We’re going to close the show when I come back on a very high note. This is Bob Zadek. I’m talking to Sam Batkins. Sam is with the American Action Forum. We are discussing Obama’s regulations and relief is in sight. Please stay tuned as we continue the good news when we come back after one short minute.
[Break]
Sub-Regulatory Guidance and “Dark Matter” [42:48]
Bob Zadek: Welcome back to the Bob Zadek Show, the only live libertarian talk radio show on the air all weekend. Thanks for being a loyal listener and for listening to us every Sunday. I’m speaking with Sam Batkins today of the American Action Forum. We are discussing the regulatory state and the somewhat rosy prospects for the next four years, at least insofar as burdensome regulations are concerned.
Now Sam, I would like to spend just a minute or two on something which sounds wonky, but it’s important and the audience ought to know about it. And that’s “sub-regulatory guidance,” which came about somewhat famously—I learned about it when there was this “Dear Colleague” letter sent out by the Department of Education, which we should not even have, but we do, to colleges and universities, which caused all of this attention—clearly too much attention—to an alleged rape culture and to prosecution and punishment of sexual offenses without due process. So tell us, if you will, about this “Dear Colleague” letter in specifics and these sub-regulatory guidances in general.
Sam Batkins: Sure. Sub-regulatory guidance has been referred to by Wayne Crews, who studies regulation as well, as sort of “regulatory dark matter.” You know, everyone can see major rules under Dodd-Frank or the Affordable Care Act; those are evident, sometimes they’ll get press hits. Sub-regulatory guidance can take the form of a tweet, a “Dear Colleague” letter, an angry letter to a for-profit university or school warning them that their funding might be cut if they don’t do X, Y, and Z. And it doesn’t go through the same procedures. It doesn’t go through the White House for interagency review. The public doesn’t have an opportunity to comment on it.
And we saw a lot of sub-regulatory guidance with enforcement of the Affordable Care Act, where they say, “Well, we’re just going to delay the employer mandate. We’re not going to take public comment on that. We’re not going to follow the Administrative Procedure Act. We’re just going to do it through a memo posted online at 11:00 before the July 4th holiday.”
Bob Zadek: And so, but the problem is when you are in a regulated activity and you get a letter or a tweet from your regulator, you tend to perk up because they have their finger on your jugular vein, and therefore you pay attention. So these “Dear Colleague” letters almost have the force of law and they are taken quite seriously, although there’s no control over them.
Closing and American Action Forum [45:59]
Bob Zadek: So Sam, we have a minute to go and you’ve done great work at AAF. Tell us about the AAF, what your mission is—we have about a minute and a half—and how folks can follow the work of AAF and of your writings.
Sam Batkins: Sure. We’re online at americanactionforum.org. And my work is pretty available through Twitter as well as the website. My Twitter handle is @SamBatkins. But the American Action Forum is a center-right think tank that was founded in 2010 that’s dedicated to doing a lot of what I’m doing: sort of uncovering everything that you see in the regulatory state, promoting free market and libertarian ideals, and really just trying to inform the public of everything that happens in Washington and even proposing new solutions for some of the problems that we’ve had for decades.
Bob Zadek: And Sam, I want to thank you on behalf of my audience and all of our friends out there for the great work that AAF does. And just for my friends out there, if you are interested in the regulatory state, please listen to my shows on September 4th, 2014, when I discussed this issue with Philip Hamburger. Also, we discussed President Obama on January 3rd, 2016 show. You’ll enjoy both of those. Thanks so much for listening. I’ll see you next Sunday.