Type and Number of Federal Regulations
In the Office of Management and Budget's (OMB) 2000 Report to Congress on the Costs and Benefits of Federal Regulations, OMB defines the three widely recognized categories of federal regulations as: social, economic, and process.
Social regulation seeks to benefit the public interest in one of two ways. It prohibits firms from producing products in certain ways or with certain characteristics that are harmful to public interests such as health, safety, and the environment. Examples would be OSHA’s rule prohibiting firms from allowing in the workplace more than one part per million of Benzene averaged over an eight hour day, and the Department of Energy’s rule prohibiting firms from selling refrigerators that do not meet certain energy efficiency standards.
Social regulation also requires firms to produce products in certain ways or with certain characteristics that are beneficial to these public interests. Examples are the Food and Drug Administration’s requirement that firms selling food products must provide a label with specified information on its package and Department of Transportation’s requirement that automobiles be equipped with approved airbags.
Economic regulation prohibits firms from charging prices or entering or exiting lines of business that might cause harm to the economic interests of other firms or economic groups. Such regulations usually apply on an industry-wide basis (for example, agriculture, trucking, or communications). In the United States, this type of regulation at the federal level has often been administered by independent commissions such as the Federal Communications Commission (FCC) or the Federal Energy Regulatory Commission (FERC). This type of regulation can cause economic loss from the higher prices and inefficient operations that often occur when competition is restrained.
Process Regulation impose administrative or paperwork requirements such as income tax, immigration, social security, food stamps, or procurement forms. Most costs to businesses result from program administration, government procurement, and tax compliance efforts. Social and economic regulation may also impose paperwork costs due to disclosure requirements and enforcement needs. These costs generally appear in the cost for such rules. Procurement costs generally show up in the federal budget as greater fiscal expenditures.[/p
How Many Federal Regulations are There?
According to the Office of the Federal Register, in 1998, the Code of Federal Regulations (CFR), the official listing of all regulations in effect, contained a total of 134,723 pages in 201 volumes that claimed 19 feet of shelf space. In 1970, the CFR totaled only 54,834 pages.
The General Accountability Office (GAO) reports that in the four fiscal years from 1996 to 1999, a total of 15,286 new federal regulations went into effect. Of these, 222 were classified as "major" rules, each one having an annual effect on the economy of at least $100 million.
While they call the process "rulemaking," the regulatory agencies create and enforce "rules" that are truly laws, many with the potential to profoundly effect the lives and livelihoods of millions of Americans. What controls and oversight are placed on the regulatory agencies in creating the federal regulations?
Control of the Regulatory Process
Federal regulations created by the regulatory agencies are subject to review by both the president and Congress under Executive Order 12866 and the c.
Executive Order 12866, issued on Sept. 30, 1993, by President Clinton, stipulates steps that must be followed by executive branch agencies before regulations issued by them are allowed to take effect.
For all regulations, a detailed cost-benefit analysis must be performed. Regulations with an estimated cost of $100 million or more are designated "major rules," and require completion of a more detailed Regulatory Impact Analysis (RIA). The RIA must justify the cost of the new regulation and must be approved by the Office of Management and Budget (OMB) before the regulation can take effect.
Executive Order 12866 also requires all regulatory agencies to prepare and submit to OMB annual plans to establish regulatory priorities and improve coordination of the Administration's regulatory program.
While some requirements of Executive Order 12866 apply only to executive branch agencies, all federal regulatory agencies fall under the controls of the Congressional Review Act.
The Congressional Review Act (CRA) allows Congress 60 in-session days to review and possibly reject new federal regulations issued by the regulatory agencies.
Under the CRA, the regulatory agencies are required to submit all new rules the leaders of both the House and Senate. In addition, the General Accounting Office (GAO) provides to those congressional committees related to the new regulation, a detailed report on each new major rule.