Death by a Thousand Regulations: The Biden Administration’s Campaign to Bury America in Red Tape

House Committee on Oversight & Accountability

Death by a Thousand Regulations: The Biden Administration’s Campaign to Bury America in Red Tape

Wednesday, June 14, 2023

Topline

• Republicans argued that the Biden Administration’s regulations are burdensome, costly, and harmful for small businesses and consumers.
• Democrats warned of the damages caused by past deregulation and affirmed that effective regulations protect Americans and promote a strong economy.

Witnesses

• Anthony P. Campau, Principal, Clark Hill Public Strategies
• Casey Mulligan, Professor in Economics, University of Chicago
• Adam J. White, Co-Executive Director, The C. Boyden Gray Center for the Study of the Administrative State, George Mason University Antonin Scalia Law School
• Sally Katzen, Professor of Practice and Distinguished Scholar in Residence, New York University School of Law

Opening Statements

Chairman James Comer (R-Ky.)

In his opening statement, Comer alleged the Biden Administration is transforming America without a clear delegation from Congress by pushing out regulations that fundamentally change American life.

He said the Trump Administration implemented substantial reforms to limit regulatory overreach, which produced great economic success. Comer criticized President Biden for stripping away Trump’s regulatory reforms and replacing them with historic levels of new red tape. He concluded that the Biden Administration’s radical, costly, and burdensome agenda is bad for consumers and business.

 

Ranking Member Jamie Raskin (D-Md.)

In his opening statement, Raskin noted that most Americans support government regulation across a wide range of industries and activities, including auto safety, food and drug inspections, occupational safety, and health rules. He explained that the regulatory process is opaque, noting regulated industries and their well-paid lobbyists have been able to capture the regulatory bodies that are supposed to regulate them. Raskin criticized Republicans for using the government to regulate what kind of health care Americans can access, what kinds of books we read, and what students learn about history, concluding that Republicans are pro-regulation to advance their ideological agenda.

 

Raskin discussed how the GOP does not support railway safety regulation, anti-pollution rules, and occupational and mine safety rules, noting that while Democrats believe regulation must be used to serve the public interest and common good, Republicans want corporate CEOs and industry lobbyists to dictate the regulatory process. He explained that President Biden’s regulatory modernization plans promote efficiency and fairness. Raskin concluded that well-funded corporations should no longer have outsized influence on regulations because they have the time and resources to bombard federal officials.

 

Testimony

Anthony P. Campau, Principal, Clark Hill Public Strategies

In his testimony, Campau said that from 2000 through 2016, the annual trend was for regulatory costs to grow by $8.2 billion each year, noting the total cost of new regulations across the federal government decreased for the first time in decades in 2017. Campau explained that this dramatic turnround was made possible by a set of reforms that significantly improved the overall regulatory environment. He said those measures included: providing more public transparency on regulations under development; improving agency guidance practices, including by making it easier to find guidance; providing more opportunities for public engagement in the rulemaking and guidance processes; developing and sticking to a regulatory budget; conducting a retrospective review of older standards; encouraging the use of rigorous benefit-cost analysis in an ever larger universe of actions; and ensuring regulatory policy was anchored in the best reasonably available, public-facing information. Campau explained that since many of these reforms were implemented by executive orders, they have since been rolled back. He concluded by warning that the federal government is now issuing rules at a record pace and at a record cost.

 

Prof. Casey Mulligan, Professor in Economics, University of Chicago

In his testimony, Mulligan said the rules finalized by the Biden Administration through the end of 2022 imposed costs of nearly $10,000 per household, $1,300 more than the burden of the Obama Administration rules during the comparable timeframe. He cited the common misconception that regulation is primarily about keeping the air and water clean, explaining that less than one-third of federal rules are environmental rules, with most regulations centering on business rules. Mulligan warned that if the Biden Administration’s rulemaking pace accelerated as it did during the Obama years, the eight-year regulatory cost total would be almost $60,000 per household. He concluded by warning that it’s a mistake to think that people are not affected by a regulation if it doesn’t apply to their company or restricts a product they don’t buy.

 

Adam J. White, Co-Executive Director, The C. Boyden Gray Center for the Study of the Administrative State, George Mason University Antonin Scalia Law School

In his testimony, White noted that agencies are announcing vast new regulatory programs that are unprecedented and unmoored from the agencies’ actual statutory powers, adding that agencies seem increasingly keen to leverage regulatory uncertainty, particularly in matters requiring agency permits or approvals. He said the Supreme Court has undertaken several decisions to make administration more lawful and less unsteady, citing the Major Questions Doctrine as an important judicial tool for limiting agency adventures. White noted the Roberts Court’s recent decisions in key regulatory cases are helping to make administration steadier in an increasingly unsteady era. He urged Congress to modernize its laws, reduce or recalibrate its grants of power and discretion to the agencies, and rephrase those laws in terms of current circumstances. He added that Congress could legislate generally applicable limits on agency regulatory powers, setting threshold limits beyond which an agency rule would require newly explicit authorization by legislation. White concluded that Congress should consider modernizing the procedural and judicial constraints on agencies.

 

Prof. Sally Katzen, Professor of Practice and Distinguished Scholar in Residence, New York University School of Law

In her testimony, Katzen noted that while criticizing regulations and red tape is a popular applause line, whenever individuals in focus groups are asked to identify which regulations should be repealed, they don’t have an answer. She explained that Americans don’t want to repeal regulations that keep them safe and healthy. Katzen said no agency is a free agent, adding that the Biden Administration is at or below the level of regulatory actions undertaken by its Republican predecessors.

She cited the February 2023 Medicare Advantage final rule issued by the Department of Health and Human Services that focused on measures to reduce overbilling will reduce the drain on the Medicare Trust Fund, to the benefit of all qualifying seniors. Katzen also discussed the August 2022 FDA final rule authorizing the sale of hearing aids over-the-counter rather than solely by prescription, which made hearing aids more readily available at dramatically lower costs, and pointed to these examples as inarguably good rules that enhance our health, safety, and prosperity. She warned that de-regulation can have disastrous effects, citing the recession in 2008 caused by the de-regulation of the banking industry,

the death of workers in plants and in coal mines from lax enforcement of safety regulations, the disproportionate death of patients in nursing homes during the COVID pandemic, and the recent spate of railroad derailments as examples. Katzen concluded that while regulations may restrain certain activities, they enhance our liberty to enjoy life and prosper.

 

Question & Answer

Dodd-Frank

Rep. Kelly Armstrong (R-N.D.) argued that while Dodd-Frank was never supposed to apply to small businesses, it is putting them out of business because they don’t have the resources to comply with Dodd-Frank.

Rep. Glenn Grothman (R-Wisc.) asked if White agreed that big business likes regulation because it forces out the little guy. White said yes, noting he was struck by the leaders of big banks who said Dodd-Frank kept competition from small banks at bay. Grothman said the banking industry is a great example of regulation harming small business, to which White replied that regulation forces consolidation.

Rep. Byron Donalds (R-Fla.) said big players and the Fortune 500 companies, especially in the financial industry, don’t care about regulations. Donalds explained that asked representatives from big banks about getting rid of Dodd-Frank, noting he believes Dodd-Frank is the worst regulatory framework ever created because it made the big banks bigger. He said big banks don’t want to get rid of Dodd-Frank because it is eviscerating small banks.

Donalds noted the CFPB is trying to enact Section 1071 of Dodd-Frank to increase reporting requirements for financial institutions, and asked if the CFPB extends itself to overregulate companies across the entire economic system. Katzen said no, adding that the CFPB has done remarkably well.

Donalds replied that the CFPB is unconstitutional.

Comer said Dodd-Frank created a situation where banks are too big to fail.

 

Pending Legislation

Rep. Virginia Foxx (R-N.C.) asked if the reforms in her Unfunded Mandates Accountability and Transparency (UMADA) Act would lessen the burden of future rules and regulations. Campau and Mulligan both answered yes, and White affirmed that it would be beneficial for Congress to set these analytical standards for agencies, noting the UMADA Act would be a good check and balance on the agencies.

Foxx asked if any aspects of UMADA were implemented by the Trump Administration. Campau said yes, noting the Trump Administration tried to expand and strengthen the role of analysis and implemented some of the bill’s transparency components.

Rep. Shontel Brown (D-Ohio) asked about the impacts on public health if a single chamber of Congress had the power to block a regulation, noting this would happen if Republicans passed the REINS Act. Katzen said it would be a nightmare.

Rep. Summer Lee (D-Pa.) asked if the REINS Act would undermine the expertise of agencies and bring undue political pressure into the rulemaking process. Katzen said absolutely.

Rep. Maxwell Frost (D-Fla.) said the REINS Act would allow members of the majority to kill regulation without ever voting on it, adding that the bill is a power grab from Republicans who have no experience on these complex issues and a gift to big corporate lobbyists.

Rep. Eleanor Holmes Norton (D-D.C.) asked how the REINS Act would impact the public comment process for regulations. Katzen noted the REINS Act would leave the matter solely in the hands of Congress and eliminate public participation.

Raskin said the REINS Act would allow tiny factions to throw a monkey wrench into everything the government is doing.

 

Republican Arguments Against Regulations

Rep. Pat Fallon (R-Texas) said Republicans are for reasonable regulation, noting that states like Texas and Florida are booming because they understand there needs to be a balance between the environment and business.

Fallon asked about the downstream impacts of excessive regulations Mulligan pointed to higher prices. Fallon asked if increased regulations have a disproportionate impact on small businesses, to which Mulligan noted regulations often prohibit new entries into the market.

Rep. Gary Palmer (R-Ala.) said that overregulating businesses is causing us to lose entrepreneurship and capital investment.

Donalds explained that in March 2022, the Department of Labor began to scrutinize all 401k plans that include the opportunity to invest in cryptocurrencies. He said the Department is telling businesses who invest in 401k plans for their employees that they can’t invest in cryptocurrencies. Donalds asked if this is overregulation. White said yes.

Rep. Tim Burchett (R-Tenn.) asked if Congress ceded too much of its decision-making power to federal agencies. White said yes. Burchett asked if this has eroded public trust in our government, and White said yes.

Rep. Pete Sessions (R-Texas) asked how rules or regulations cause unintended and harmful consequences. Campau said paperwork is the area where most regulatory reform dollars can be found.

 

Democratic Pushback

Rep. Gerry Connolly (D-Va.) called the hearing intellectually dishonest and said it served as confirmation bias.

Rep. Dan Goldman (D-N.Y.) questioned whether Republicans would learn from the devastating impacts their deregulations have had on the economy, citing the 2008 financial crisis and recent bank failures.

Rep. Alexandria Ocasio-Cortez (D-N.Y.) said the hearing is astonishing, and criticized Republicans for trying to rollback airline regulations, including the rule regulating the number of hours that pilots must train before they are licensed.

Rep. Cori Bush (D-Mo.) said giant corporations like Walmart, Amazon, Microsoft, and Exxon will cut corners to save pennies, noting that if we rely on these industries to self-regulate, we will end up with more public health crises. She argued that federal regulations keep our communities safe and our financial system strong, noting President Trump’s banking deregulations contributed to recent bank failures.

Lee asked why Congress has historically granted agencies broad discretion in their rulemaking authority.

Katzen said Congress delegates to the agencies because agencies have the expertise and experience to be able to translate broad objectives into specific requirements and responsibilities.

Rep. Jared Moskowitz (D-Fla.) said the hearing was unserious, and noted the Trump Administration finalized more rules in its last year than any other Administration did in their final year.  He added that Congress must look at red tape and regulations to compete with China but should be focused on real ideas and issues.

Frost asked if White was familiar with the Department of Labor’s Prudence and Loyalty in Selecting Plan Investments and Exercising Shareholders’ Rights rule. White said no. Frost said the Republicans who held a vote to overturn this rule are not experts in securities investments and financial risk.

Rep. Stephen Lynch (D-Mass.) asked Katzen if industry representatives should have a disproportionate or controlling interest when it comes to federal rulemaking. Katzen said they know the implications and should be heard, but so should the beneficiaries. Lynch noted the Trump Administration reversed more than 100 environmental regulations and protections.

Rep. Greg Casar (D-Texas) said the federal government should be able to advance commonsense regulations and called for the end of scorn towards regulations as a whole.

Rep. Melanie Stansbury (D-N.M) noted Trump’s decision to deregulate banks helped contribute to the recent failure of multiple banks, and the deregulation of the transportation sector led to the derailment in East Palestine. She added that Congress’ failure to regulate the safe use of firearms has led to countless mass shootings, while the deregulation of the oil and gas sector during the Bush Administration led to the largest oil spill in the history of the world with BP’s Deepwater Horizon spill. She concluded these kinds of deregulation are dangerous and treacherous.

 

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