Broken Government: How the Administrative State has Broken President Obama’s Promise of Regulatory Reform

Report documents a flawed, broken process manipulated and exploited in ways that benefit Obama allies

(WASHINGTON) – President Obama recently halted the implementation of a controversial job-killing regulation from the Environmental Protection Agency (EPA), saying he recognized the “importance of reducing regulatory burdens and regulatory uncertainty” in the economy. While the President has spoken about, and even launched an effort to evaluate regulations that create unnecessary burdens, agencies in the Obama Administration have regulated in the opposite direction. Spotlighting these regulatory failures and impacts on job creation is the focus of a newly released report and hearing held today by the House Oversight and Government Reform Committee.

“The federal regulatory process is broken, being manipulated and exploited in ways that benefit allies of the Obama Administration such as environmental groups, trial lawyers, and unions. Regulators have, in too many instances, been willing accomplices in the strategy advanced by outside interest groups to circumvent the oversight and accountability checks in the regulatory process,” Chairman Darrell Issa (R-CA) said.

The report released by Chairman Issa and the Oversight Committee documents a flawed and broken system that punishes job creators and stifles economic growth. Key findings include:

• The number of proposed rules has increased from 2,044 in 2009 to 2,439 in 2010;
• Employment at regulatory agencies has climbed 13 percent since President Obama took office, and the number of staff working on regulatory matters is on schedule to increase at a rate of 10,000 new employees per year in 2011 and 2012;
• The number of full time regulatory employees is expected to reach an all-time high of 291,676 in 2012;
• The Obama Administration has already imposed 75 new major regulations that will cost more than $380 billion over ten years;
• The Administration has 219 economically significant regulations in the pipeline right now—that, if finalized will impose costs of at least $219 billion on the economy over ten years.

In addition, the report outlines numerous examples in the rulemaking process where federal agencies and regulators ignored, circumvented or openly flouted direction given by the President. It spotlighted EPA’s sue-and-settle approach to bypass the process and avoid transparency on a recent lead paint rule with dire consequences for job creators; abuse of the emergency rulemaking process and use of ‘interim final rules’ regarding Obamacare, causing health plans to lose grandfathered status; and, an ‘enhanced review process’ initiated by EPA of a Clean Water Act provision in violation of the Administrative Procedures Act, among others.

“The businesses owners and workers who bear the brunt of these regulations are not Fortune 500 executives, they are main street business owners and workers from around the country,” Issa said. “These firms, their families, suppliers, customers and employees all bear the cost of these new and proposed regulations. For them and businesses around the country, the price is greater than just compliance—it is a hidden tax of uncertainty on our economy,” he added.

Beyond the costs and implications for job creators from regulations, the Oversight Committee report also pointed out that the Office of Information and Regulatory Affairs (OIRA), the federal agency charged with serving as a watchdog over federal rulemaking, has failed to take meaningful action to address the breakdown in the process.

“Thus far, the rhetoric we have seen from the Obama Administration on the issue of regulatory reform has not been matched in deed,” Issa said.

A copy of the Committee’s report is here and testimony and other hearing-related information is available here.