Trimming back the “regulatory thicket”

For small businesses, regulation vies with taxes as the most complained-of public policy issue. Commonly, however, no one regulation is singled out as causing most of the problem: it’s more the cumulative and interactive hassle of various burdens, especially as a company grows or tries to enter new markets or take on new functions. The Federalist Society has launched a “regulatory thicket” project aimed at shedding light on the problem. Among its products so far: an overview paper by Anastasia Boden et al.; a paper on how the thicket operates in one urban jurisdiction, the District of Columbia [Yesim Sayin Taylor]; a video on how it affects an Oregon couple’s home-based telecommunications services firm; and a teleforum with Brooks Rainwater and Luke Wake.

A related op-ed [Braden Boucek and Luke Wake, Real Clear Policy] notes that reformers often appeal to state legislators, with ideas such as sunset laws and regulatory impact statements for new legislation. But other actors can be involved too:

One especially interesting proposal that has been tried in Arizona with success is giving people a way to challenge regulations in court when they needlessly burden the right to earn a living. That way lawmakers are not the sole party able to bring about reform.

State governors are also in a position to help trim the regulatory thicket in many cases. Governors might follow Canada’s success in controlling the growth of regulation by requiring government agencies to eliminate regulatory impositions for every new mandate. President Trump’s executive order to eliminate two regulations for every new regulation is another instructive example. Likewise, state legislatures might assign the task of reviewing and eliminating regulation to a special commission.

One Comment

  • Part of the “regulatory thicket” is the extreme lawlessness of regulators. Regulators often envision how a statutory scheme should work, rather than how it actually works, and then use the coercive power of exams and fines to ram through that vision. The problem, of course, is often the law. And, if you challenge them, you had best be prepared for the vindictiveness that inevitably follows. State agencies are often really bad. They are often ignorant of basic legal principles and of the statutes and regulations they administer. Guidance documents are often poorly-written and not well thought out (e.g., they conflict with the statute or the regulations or both).

    One of the tools in the tool box ought to be a regulatory death penalty–meaning that if an agency so abuses its power that it cannot be trusted not to be vindictive on a going forward basis, then it simply cannot examine the regulated entity. Let’s look at the NY State attempts to go after the NRA—it is painfully obvious that it is retaliating against the NRA–so why should an agency that is supposed to follow the law have any power over anyone.

    On a related note, we saw all of this in plain sight—look at the CFPB, when Cordray was first “appointed”–the appointment was patently illegal, yet he exercised power over his fellow Americans. We all knew it–yet, his actions during that illegal time period had force. Why should anyone respect the law given the flouting of the law by POTUS and a powerful agency? Banks, a key target of the CFPB, were put in a spot where they could not challenge CFPB because the OCC would pound them. What does that say about those who ran the OCC? How can they be trusted to do anything right if they effectively barred banks from challenging the authority of the CFPB when Cordray was illegally running it?

    One measure of how far we’ve departed from traditional rule of law thinking is to do a thought experiment—what if the OCC came out and said, “You know what, it appears that the appointment of Cordray was illegal–the OCC will not take any regulatory action against any financial institution that wishes to challenge the CFPB’s authority over it.” That actually should have been de rigeur—but the fact that such a position would be unthinkable shows how far we have sunk.