President Obama's hyperactive regulators went on hiatus in 2011 to get
through Election Day. Now with his second term secure, they're about to make up
for lost time and then some.
The government defines "economically significant" rules as
those that impose annual costs of $100 million or more, and the Bush, Clinton
and Bush Administrations each ended up finalizing about 45 major rules per year.
The average over Mr. Obama's first two years was 63 but then plunged to 44 for
2011 and 2012 so far. The bureaucracies didn't slow down. They merely postponed
and built up a backlog that is about to hit the Federal Register.
We'd report the costs of the major-rule pipeline if we had current
data. But the White House budget office document known as the unified agenda
that reveals the regulations under development hasn't been published since fall
2011. The delay violates multiple federal laws and executive orders that
require an agenda every six months, so we thought readers might like a rough
guide to the regulatory flood that is about to roll through the economy.
• Health care. It begins with the Affordable Care Act, which has
been in hibernation because it was the largest campaign liability. Since
Election Day, the Health and Human Services Department has submitted a raft of
key health rules for White House review that it has been sitting on for months.
Hiding the details
paid off politically but also undermined ObamaCare's already slim prospects for
success. Ahead of the law's go-live date of October 2013, states and industries
will have less than a year to prepare to meet the new mandates.
Three of the rules
were released right before Thanksgiving, so insurers are only now about to
learn how they'll design and price coverage, since one new rule defines
"essential benefits" they must include. Another deals with limits on
how premiums can vary from person to person based on risk.
The most important
void is ObamaCare's "exchanges," the clearinghouses where millions of
individuals and small business will receive subsidized coverage. HHS hasn't
said how they must be set up and function in practice, with the exception of
"guidance" documents that make vague suggestions but don't have the
force of law and are likely to be revoked. HHS is all but begging states to run
the exchanges but hasn't clarified what they'd be signing up for.
Amid opposition
from most of the 30 Republican Governors, many of whom are telling the feds to
run an exchange on their behalf, HHS also hasn't laid out how this federal
fallback will work. Other complex rule-makings will decide who is eligible for
the exchanges, how Medicaid rules will change after the Supreme Court's
ObamaCare ruling, and the future of Medicare Advantage's private coverage
options.
• Financial services. According to a Davis-Polk analysis, only 133 or
33.4% of the 398 rule-makings the law firm estimates Dodd-Frank requires have
been finalized. The law is ambiguous and other reviews suggest the figure could
be closer to 500. As of November 1, some 132 rules haven't even been proposed,
while the government has failed to meet 61% (or 144) of Dodd-Frank's legal
deadlines.
Regulators are now
finalizing rules on bank stress testing and capital and margin rules for the
swaps markets, but there are still many costly items on the to-do list. Major
uncertainty comes from the rolling exercise to determine which businesses are
"systemically important," aside from the largest banks that have already
been designated as too big to fail. This review never ends.
Also on the docket
is an effort to define "qualified mortgages," which will change
lending and capital standards. Elizabeth Warren's Consumer Financial Protection
Bureau, having been invested with unaccountable powers, will now decide what
financial products and services are "abusive," a political term of
art with no legal meaning. Then there is the pending Volcker Rule to limit
proprietary trading at big banks, whose draft ran to 298 pages and asked 1,347
questions.
• Energy. In the lead-up to November, the Environmental
Protection Agency stood down under White House pressure, delaying rules for
ozone air quality and industrial boilers, and deferring carbon standards. Now
EPA chief Lisa Jackson has the run of the place.
She will resume
the Administration's anti-carbon agenda through "new source performance
standards," which will set greenhouse gas emissions for new power plants
so low as to prevent their construction. Look for this early in 2013.
She'll follow with
standards for "existing" sources that make coal-fired plants
uneconomic to run. Inside of a decade, Ms. Jackson may wipe out what used to
make up more than half of U.S. power generation. Environmentalists will write
books about it, even if her agenda has received almost no public scrutiny or
debate.
The oil and gas
industry is also targeted, hydraulic fracturing (fracking) in particular. The
EPA has already issued a rule on shale production emissions and has one coming
on diesel fuel in fracking. The Interior Department is promulgating rules on
fracking on federal lands, and other rules can't be far behind, probably using
the pretext of drinking water under the Clean Water Act.
The EPA's sleeper
issue is the National Enforcement Initiatives agenda, which is designed to use
the agency's existing legal powers for inspections, requests for information,
penalties and so forth to make new de facto rules. The EPA now blackmails
businesses into "super compliance," or settlements far more stringent
than the law requires, or else risk years of expensive litigation.
• Economic potpourri. The National Labor Relations Board, the Equal
Employment Opportunity Commission, the Occupational Safety and Health
Administration and the Office of Federal Contract Compliance Programs are
teaming up to rewrite employment, labor and workplace law. The FCC and the FTC
are doing the same for the tech industry and Silicon Valley via investigations,
audits and "oversight." The Agriculture Department is going after
"illegally harvested plants." The Consumer Product Safety Commission
has its eyes on . . . table saws.
***
Having come close
to losing re-election because of a weak economy, Mr. Obama now keeps saying
"our top priority has to be jobs and growth." This new regulatory
flood will increase costs and uncertainty and make that priority that much
harder to achieve.
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