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Research & Commentary: Two New Regulatory Reform Ideas for West Virginia

October 9, 2018

In this Research & Commentary, Matthew Glans discusses two regulatory reform ideas for West Virginia that would dramatically slow the growth of its' bureaucracy.

In September, West Virginia legislative leaders gathered to discuss some of the most important issues for the next legislative session, and regulatory reform was at the top of the list.

At the meeting, West Virginia Lt. Gov. Mitch Carmichael identified the redundancy in the number of state boards and commissions as a key reason for potential regulatory reform, according to The Fairmont News. “West Virginia has 230 boards and commissions,” Carmichael said. “The average state in America has about 60. What we have in West Virginia are these bureaucratic institutions that have implemented rules without going through the legislative process. We need to reform that.”

Across the United States, state and federal bureaucracies have dramatically increased in size and scope over the past few decades. As a result of this regulatory metastasis, businesses across the United States have been negatively impacted, and overall economic growth and job creation have been impeded.

In fact, the U.S. economy has been slowed on average by 0.8 percent per year since 1980 due to the cumulative effects of regulation, according to a 2016 study by the Mercatus Center at George Mason University. The study estimated that, if the regulatory burden placed on the economy had been held constant at levels observed in 1980, the U.S. economy would have been about 25 percent larger than it was in 2012.

Two reforms that West Virginia should consider that have already been approved in other states are the “Housecleaning Bill” passed in Arkansas and the REINS Act implemented in Wisconsin.

Sponsored by Rep. Jim Dotson (R- Bentonville) and signed by Republican Gov. Asa Hutchinson in March 2017, the Housecleaning Bill requires all state government agencies to review and assess every rule within their purview and make recommendations about burdensome rules that should be eliminated. During the review process, nearly 3,400 rules and regulations were inventoried, reviewed, and assessed. In a September news conference, Hutchinson announced that the state had approved over 800 outdated and unnecessary rules and regulations for repeal.

The Housecleaning Bill creates a consistent ongoing review process of all state regulations by dividing them into 6 groups. One of the groups regulations would come up for sunset every 4 years unless extended by the legislative for another period of time.

To limit and monitor the introduction of new regulations, West Virginia should also consider following Wisconsin’s lead in passing the Regulations from the Executive in Need of Scrutiny (REINS) Act. The Wisconsin REINS Act aims to limit the growth of state regulations and bureaucracy by requiring the legislature to give final approval to any regulation that has an economic impact of $10 million or more within the first two years. Republican Gov. Scott Walker signed the Wisconsin REINS Act on August 9, 2017.

Under the REINS Act, a legislative agency that proposes a regulation costing more than the $10 million threshold must modify the rule to lower its cost, pull back the proposed rule, or ask the Joint Committee for Review of Administrative Rules (JCRAR) to introduce a bill to authorize the rule. JCRAR is also empowered to request a public hearing earlier in the rule-making process and call for an independent review of the proposed regulation’s economic impact.

The REINS Act gives legislators the authority to limit the power of unelected bureaucrats while leaving agencies appropriate flexibility to implement new regulations. It is important to remember the REINS Act does not prevent agencies from making new regulations; it is designed to ensure that new rules with a major impact on the economy face scrutiny by elected officials, who are accountable to the voters.

The REINS Act would pair perfectly with the Housecleaning Bill to give West Virginia the tools needed to limit the scope and power of government. Other states should also consider these measures, and many more, to rein in government overreach.

The following documents examine regulator reform in greater detail.
 

Ten Thousand Commandments 2017
http://cei.org/10KC
“Ten Thousand Commandments” is the Competitive Enterprise Institute’s annual survey of the size, scope, and cost of federal regulations, and how the U.S. regulatory burden affects American consumers, businesses, and the economy. Authored by CEI Vice President for Policy Clyde Wayne Crews, Jr., it shines a light on the large and growing “hidden tax” of America’s regulatory state.

Evaluating the Quality and Use of Regulatory Impact Analysis
https://www.heartland.org/publications-resources/publications/evaluating-the-quality-and-use-of-regulatory-impact-analysis
Jerry Ellig of the Mercatus Center at George Mason University assesses how well executive branch agencies conduct regulatory analyses. “The Regulatory Report Card reveals that the quality and use of regulatory analysis by federal agencies do not live up to the standards articulated in executive orders and guidance the Office of Management and Budget has created for agencies. The average Report Card score for recent regulations barely exceeds 50 percent,” Ellig wrote.

The Cumulative Cost of Regulations
https://www.mercatus.org/publication/cumulative-cost-regulations
This study for the Mercatus Center uses an economic model that examines regulation’s effect on firms’ investment choices. “Using a 22-industry dataset that covers 1977 through 2012, the study finds that regulation—by distorting the investment choices that lead to innovation—has created a considerable drag on the economy, amounting to an average reduction in the annual growth rate of the US gross domestic product (GDP) of 0.8 percent,” the authors wrote.

Policy Tip Sheet: State Regulations From the Executive in Need of Scrutiny (REINS) Act
https://www.heartland.org/publications-resources/publications/policy-tip-sheet-state-regulations-from-the-executive-in-need-of-scrutiny-reins-act
This Heartland Institute Tip Sheet examines how implementing a state REINS Act would slow the cost of regulation, which has had a dramatic effect on economic growth and job creation.

Taking the REINS on Regulation
http://www.heritage.org/government-regulation/report/taking-the-reins-regulation
James Gattuso of The Heritage Foundation examines the REINS Act and argues that, while it does not solve all of the nation’s regulatory problems, it is a commonsense step in the right direction. “REINS would significantly change the way regulations are imposed. Congress would no longer be able to pass hazy legislation and disclaim further responsibility. By increasing Congress’s accountability for regulatory policy, it would end the shell game for responsibility that Members have long played,” wrote Gattuso.

REINS Act, Aimed at Checking ‘Rogue Bureaucrats,’ On Verge Of Becoming Law
http://www.maciverinstitute.com/2017/06/reins-act-aimed-at-checking-rogue-bureaucrats-on-verge-of-becoming-law/
Brett Healy of the MacIver Institute examined the Wisconsin REINS Act proposal prior to its passage and explained how it would improve the state’s spending practices while encouraging regulatory transparency.

REINing in Regulatory Overreach
https://cei.org/content/reining-regulatory-overreach  
In this article for the Competitive Enterprise Institute, Ryan Young discusses the federal REINS Act and how it would restore the balance between the legislative and executive branches. “The REINS Act, by requiring Congress to reclaim some of its legislative responsibilities from the executive branch, would partially restore this skewed balance of powers. REINS is a modest reform, which, as currently written, would require four or five extra congressional votes per month,” Young wrote.

REINS Act Stalls in the Senate?
http://www.maciverinstitute.com/2016/03/reins-act-stalls-in-the-senate/
Nick Novak of the MacIver Institute examines Wisconsin’s REINS Act proposals from 2016 and how groups within the state reacted to the proposed law.

Placing ‘REINS’ on Regulations: Assessing the Proposed REINS Act
https://www.heartland.org/publications-resources/publications/placing-reins-on-regulations-assessing-the-proposed-reins-act
This article by Jonathan H. Adler of the Case Western Reserve University School of Law examines the  REINS Act and its likely effects on regulatory policy. “It explains why constitutional objections to the proposal are unfounded and many policy objections overstate the REINS Act’s likely impact on the growth of federal regulation. The REINS Act is not likely to be the deregulatory blunderbuss feared by its opponents and longed for by some of its proponents. The REINS Act should be seen more as a measure to enhance accountability than to combat regulatory activity,” wrote Adler.

 

Nothing in this Research & Commentary is intended to influence the passage of legislation, and it does not necessarily represent the views of The Heartland Institute. For further information on this and other topics, visit the Budget & Tax News website, The Heartland Institute’s website, and PolicyBot, Heartland’s free online research database.

The Heartland Institute can send an expert to your state to testify or brief your caucus; host an event in your state, or send you further information on a topic. If you have any questions about this issue or The Heartland Institute’s website, contact Lindsey Stroud, a state government relations manager at The Heartland Institute, at or 312/377-4000.

Article Tags
Regulation
Author
Matthew Glans joined the staff of The Heartland Institute in November 2007 as legislative specialist for insurance and finance. In 2012, Glans was named senior policy analyst.
mglans@heartland.org @HeartlandGR