From Rhetoric to Action

Republican presidential nominee Mitt Romney has promised to restrain the cost and scope of federal regulation if elected president.  Early campaign ads pledge a President Romney that would take immediate steps to relieve regulatory burdens on the economy.  His campaign promises a “day one” executive order that would direct federal agencies “to immediately initiate the elimination of Obama-era regulations that unduly burden the economy or job creation” and to cap “annual increases in regulatory costs at zero dollars.”  Romney has also pledged that he would reverse various Obama Administration regulatory initiatives and seek Congressional repeal of the Patient Protection and Affordable Care Act (“ObamaCare”), the Dodd-Frank financial sector law, and Environmental Protection Agency authority to regulate greenhouse gases under the Clean Air Act.

Romney clearly recognizes that federal regulations can hamper job creation and slow economic growth, and he promises to be less supportive of new regulatory initiatives than President Obama.  While the number of new federal regulations has not increased much faster than it did under President Bush, the number of high-impact, major rules has jumped significantly, and more regulatory initiatives are on the way.  The Dodd-Frank law alone requires federal agencies to initiate hundreds of new rulemakings in coming years.

A President Romney may have a difficult time turning his rhetoric of regulatory reform into reality.  His campaign materials overstate the extent to which the President may dictate federal regulatory policy.  Many regulatory initiatives, including many of those Romney has blamed for slowing economic growth, are the result of statutory mandates enacted by Congress.  There’s little a President can do about such things on his own.  Even where executive agencies have discretion, repealing or revising existing regulatory measures is not so easy.  The laws governing administrative procedure hamper the ability of federal agencies to turn quickly on a dime and would force a Romney administration to devote substantial political capital to change the trajectory of existing initiatives.

Citing estimates that place annual regulatory costs in excess of $1.5 trillion per year, Romney calls for the imposition of “regulatory caps” on federal agencies to prevent any net increase in regulatory costs. In practice, this would require an agency to identify existing regulations for reform or repeal before it could adopt any new ones.  It’s a clear and simple way to control regulatory costs, but perhaps too simple.  As already noted, many new regulations are required by existing statutes.  In other cases, agencies may be constrained in what they may consider when developing a new rule and offsetting the costs of a new regulation by reducing the costs of another may well be off the table. While intra-agency prioritization is the sort of problem a regulatory cap could address, it would not address the larger problem of prioritization across agencies, nor does it account for the distribution of regulatory costs.  It’s one thing to cap those costs that, say, consumer protection rules ultimately impose on consumers, but quite another to limit the costs of a rule that protects one group against the wrongful or risk-enhancing behavior of another.

Romney is not only concerned about the costs of regulation, but also a perceived lack of accountability of federal regulatory agencies.  Although federal agencies only have that regulatory authority delegated to them by Congress, Romney has claimed that “federal agencies today have near plenary power to issue whatever regulations they see fit.”  Further, while recognizing that executive branch agencies are “nominally controlled” by the President, he avers that “in actual practice agencies are frequently able to act autonomously with little or no presidential oversight.”  Romney’s solution to these problems is to require formal legislative approval of major regulations (those with an economic impact greater than $100 million per year), as would basically be required under the proposed REINS Act.  As I have explained previously on The Regulatory Review, such a law would enhance congressional accountability for its regulatory delegation.  Here, as elsewhere, the viability of Romney’s plan is largely dependent upon congressional cooperation.  Should Congress fail to enact such a reform, Romney pledges to issue an executive order barring agencies from issuing new major rules without congressional assent, but such an order could not overcome existing statutory obligations to regulate, such as those contained in Dodd-Frank, the Affordable Care Act, or the Clean Air Act.

The ultimate success of a Romney presidency at lowering regulatory burdens and redirecting regulatory policy would largely depend on the extent to which such an Administration would be willing to devote political resources to this effort, as opposed to others.  Centralized control and oversight of federal regulatory agencies through the White House is more effective when the regulation-watchers in the Office of Information and Regulatory Affairs have clear White House support.  Further, insofar as much of what Romney says he wants to do requires legislative action, much of the Romney regulatory agenda would be in Congress’ hands.  Of course, whether or not a Romney Administration could make substantial progress toward enacting candidate Romney’s regulatory reform proposals, there’s no question a Romney presidency would move regulatory policy in a new direction.

Jonathan H. Adler is the Johan Verheij Memorial Professor of Law and Director of the Center for Business Law and Regulation at the Case Western Reserve University School of Law.