against them. Firms may be blacklisted for violation of any federal regulation, including labor standards, but may also face blacklisting for an administrative complaint even before charges are ever filed or evidence is heard.

HHS Medical Privacy Regulations

HHS has established guidelines that health plans (insurance companies, HMOs, etc.), health care providers (doctors, hospitals, etc.) and payment clearinghouses must follow to "protect the privacy of individually identifiable health information maintained or transmitted in connection with certain [health-related] transactions." HHS issued its final version of the rule on December 28, 2000.

HHS estimates the 10-year discounted costs of the rule at more than $11 billion, while our estimates place the long-run costs at closer to $25 billion - including nearly $4 billion in start up compliance costs alone. Laying aside considerations of cost, HHS has identified no net social benefits that can be expected to flow from the rule. (Those values HHS classifies as social benefits are in fact more properly accounted for as transfers.)

EPA's Regulation of Arsenic in Drinking Water Systems

EPA has recently announced its intention to reevaluate a final rule published on January 22, 2001, that would have lowered the allowed level of arsenic in public drinking water systems from 50 micrograms per liter (μg/L) to 10 μg/L. This is a very positive step, because, although arsenic poses acute risks at high doses, it is a naturally occurring substance for which health risks have not been observed at the levels found in U.S. drinking water systems. EPA had justified the new standards using evidence of cancer risk from high arsenic doses in Taiwan and Chile. The data from these countries, however, may significantly overstate the risk of arsenic ingestion in the U.S., particularly since U.S. studies found no statistical evidence of arsenic risks.

EPA's Toxic Release Inventory, Lead and Lead Compounds

The Toxic Chemical Release Inventory (TRI) rule lowers reporting thresholds for lead and lead compounds from 25,000 or 10,000 lbs. down to

100 lbs. If a facility manufactures, processes or uses more than 100 lbs. of lead or lead compounds per year, it would now be subject to annual TRI reporting requirements.

Despite extensive information on these chemicals, the reporting thresholds are not based on any quantitative analysis of the magnitude of releases that will be accounted for under different thresholds, nor the risks posed by releases. EPA recognized this, but only after it issued the final rule did it refer the rule to its Science Advisory Board for review.

Under the rule, facilities must identify the number of pounds of lead "released" into the environment. The term "released" refers not only to chemicals that are transferred off-site as waste or routinely or accidentally released on-site into the air, land or water, but also to chemicals that are recycled or treated. A reviewer of the TRI data cannot easily ascertain whether a "release" reflects responsible management and recycling, emissions allowed by regulation, or accidental spills; so, data on pounds of chemicals released, as provided by TRI, fail to provide communities relevant data on risks that may be present.

Congress recently used its authority under the Congressional Review Act to disapprove the ergonomics regulation. This is the first time this authority has been used to overturn a regulation. One can argue that the Congressional Review Act is uniquely suited to addressing poorly reasoned rules when there has been a change in administration, since during any other circumstance, a President is more likely to veto the Resolution of Disapproval for a regulation promulgated by his own appointee.

We applaud this Committee for considering whether other midnight regulations should be overturned. Regulations are a hidden tax, where the cost of the program is imposed through mandates. The agencies proposing these mandates, and imposing this indirect tax should ensure that the program's or regulation's benefits as well as its costs and effects are understood, measured, and discussed. Regulations pushed through at the end of an administration's term, when Congressional oversight is unavailable, can result in potentially costly mandates that may do little to solve an identified problem.

Attachments

A. Average Regulatory Volumes During the Post-Election Quarter

B. "The Cinderella Constraint: Why Regulations Increase Significantly During Post-Election Quarters" also found at www.regradar.org/cochran.html

C. "Midnight Regulations: Options for Evaluation" also found at: www.regradar.org/options.doc

D. The following Mercatus Center Public Interest Comments can be found at www.Mercatus.org:

EPA's Heavy-Duty Engine and Vehicle Emission Standards and
Highway Diesel Fuel Sulfur Control (RSP 2000-16)

USDA's Forest Service Roadless Area Conservation Draft
Environmental Impact Statement (RSP 2000-14)

HHS's Standards for Privacy of Individually Identifiable Health
Information (RSP 2000-5)

EPA's National Primary Drinking Water Regulations: Arsenic Rule (RSP 2000-18)

EPA's Toxic Release Inventory Reporting of Lead and Lead
Compounds (RSP 1999-13)

EPA's Proposed changes to the Total Maximum Daily Load (TMDL)

Program and to the National Pollution Discharge Elimination

(NPDES) and Water Quality Standards (WQS) Regulations
(RSP 2000-1)

DOL/OSHA's Proposed Ergonomics Program Standard (RSP 2000-6)

RegRadar

To download the complete study in Microsoft Word format, please click here.

The Cinderella Constraint:

Why Regulations Increase Significantly During Post-Election Quarters

Jay Cochran, III
October 9, 2000

Introduction

In a 1981 series of articles, the Washington Post and New York Times reported
on a phenomenon then labeled as "midnight regulations," which referred to an
unusual increase in regulatory volumes during the interregnum - i.e., as the
Carter Administration gave way to the Reagan Administration. The daily volume
of rules during the waning days of the Carter Administration (as approximated
by page counts of the Federal Register) was running three times higher than
normal compared to the same period during non-election years. Was the Carter-
Reagan transition an anomaly or was it simply a more obvious manifestation of
a regulatory tendency that has existed in post-War administrations? This paper
summarizes a longer study [Microsoft Word download] that develops one
answer to that question.

Far from being unique, our analysis below suggests that the experience during
the Carter-Reagan transition varied perhaps in magnitude but not in pattern
from the norm for regulatory output during most post-election periods. Since
1948, the long-run tendency is for regulations during the post-election quarter
to increase nearly 17 percent (16.8 percent) on average over the volumes
prevailing during similar periods in off-election years. (A simple averaging of the
raw data-without controlling for economic, election year, and partisan effects-
yields the result that regulations increase during the post-election quarter
between 25 and 32 percent.)

Upon first observation, one might incline toward a partisan explanation of the
phenomenon; however, as will be described below, partisanship provides an
insignificant contribution toward explaining midnight regulations. Therefore, if
partisan differences do not explain an increased propensity to regulate, why
might we expect the output of rules increase detectably during post-election
quarters?

Why Do Midnight Regulations Occur?

In the study that underpins this paper, we test the straightforward hypothesis
that a combination of preferences and institutional parameters (i.e., constraints)
combine to produce the effect referred to as Midnight Regulations. In fact, we
suggest that the periodically binding constraints in the executive branch are
chief contributors to the phenomenon. That is, since Cabinet officers and agency
heads often turn over even after a successful re-election, and must turn over
after two terms in office (or following a defeat), these administrators face a
limited and known term in office constraint.

In more colloquial terms, as the clock runs out on an administration's term in
office, would-be Cinderellas (i.e., the President, Cabinet officers, and agency
heads) work assiduously to promulgate regulations before they turn back into
ordinary citizens at the stroke of midnight. Executive branch term limits in these

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