Regulation without Representation

Harriet M. Hageman

Hageman & Brighton, P.C.

June 15, 2012

Current Financial Climate

Federal Government Debt Over $ 15.779 trillion dollars (6/13/12) $ 50,000 per citizen $ 138,000 per taxpayer Increases approx. $ 3.9 billion every day

U.S. Federal Spending as of May, 2012 (appropriated and spent): $3,651,577,063,000

110th Congress (01/07 to 01/09) increased debt by $1.957 trillion 111th Congress (01/09to 01/11) added $3.22 trillion to the

overall debt. More than the first 100 Congresses combined.

Three Branches of Government

Executive (President, Governor)

Legislative (Congress, State Legislatures)

Judicial

Statutes vs. Regulations – A Primer Statutes – Legislative Branch

Endangered Species Act National Environmental Policy Act Clean Air Act Clean Water Act

Regulations – Executive Branch (President, Governors) Developed by the agencies

The “Real Governing Class”

Congress vs. Regulation In 2009, Congress passed

125 bills; over 3,500 Regs adopted by Fed Agencies

In 2010, Congress passed 217 bills; 3,573 Regs adopted by Fed Agencies

In 2011, Congress passed 81 bills; 3,807 Regs adopted by Fed Agencies (6.5% increase over 2010)

Almost 66,840 Final Rules issued since 1995

Nerd Gas – just one example

Nerd Gas has 209 total employees.

129 Federal, State, County and City agencies touch their companies.

Federal Red Tape Army Corps of Engineering BLM Census Bureau Consumer Finance Protection Bureau Department of Housing and Urban Development (Federal Housing Administration) Department of Labor Department of Veterans Affairs EPA Equal Employment Opportunity Commission Federal Aviation Administration (FAA) Federal Deposit Insurance Corporation (FDIC) Federal Emergency Management Agency (FEMA) Federal Housing Finance Authority as Receiver for Fannie Mae and Freddie Mac Federal Reserve (HMDA Data reporting) Federal Unemployment Internal Revenue Service (IRS) National Mortgage Licensing System

Federal Red Tape, cont. Federal Emergency Management Agency (FEMA) Federal Housing Finance Authority as Receiver for Fannie Mae and Freddie Mac Federal Reserve (HMDA Data reporting) Federal Unemployment Internal Revenue Service (IRS) National Mortgage Licensing System U.S. Department of Agriculture (Rural Development Administration) U.S. Department of Education U.S. Department of Labor U.S. Department of the Interior U.S. Department of Treasury U.S. Department of Veterans Affairs U.S. Forest Service U.S. Internal Revenue Service United States Department of Agriculture (Rural Development Administration) USDA

State Red Tape Alaska Department of Natural Resources Colorado Department of Labor and Employment Colorado Department of Revenue Department of Transportation in nearly every Western U.S. state Illinois Department of Revenue Minnesota Department of Revenue Nebraska Child Support Payments Center Lincoln, NE Nebraska Department of Revenue North Dakota Department of Employment North Dakota Department of Health North Dakota Office of State Tax Commissioner Nuclear Regulatory Commission Port Authority: Texas (Houston), Louisiana, Seattle, Alaska State Collection & Distribution Unit Las Vegas, NV State of Texas Child Support State of Wyoming State of Wyoming Office of State Lands & Investments University of Wyoming

State Red Tape, cont.

Various State Income Tax Agencies Wyoming Board of Control Wyoming Business Council Wyoming Department of Banking Wyoming Department of Child Support Wyoming Department of Employment Wyoming Department of Environmental Quality Wyoming Department of Insurance Wyoming Department of Labor Wyoming Department of Revenue Wyoming Department of Transportation Wyoming Department of Workforce Services Wyoming Employment Department Wyoming Game & Fish Department

State Red Tape, cont.

Wyoming New Hire Reporting Center

Wyoming Office of State Lands Wyoming Oil & Gas Commission Wyoming OSHA

Wyoming Secretary of State Wyoming State Emergency Commission

Wyoming State Engineer's Office Wyoming State Historic Preservation Officer (SHPO) Wyoming Unclaimed Property Division Wyoming Unemployment Wyoming Workers and Safety Compensation Division

Redundant Redundancy

EPA (federal); DEQ (state)

Dept of Transportation (federal and state)

Dept of Education (federal and state)

Dept of Labor (federal and state)

Dept of Agriculture (federal and state)

Regulations – Costly and Contradictory Redundancy Federal Regulations - Examples

Clean Water Act Endangered Species Act National Forest Management

State Regulations Enforcement of the Clean Water Act Game and Fish Regulations Management of State Forest Lands

Federal Cost to administer and police the regulatory enterprise: $ 55 billion dollars per year

Number of federal regulatory employees: 291,676; up 17% under Obama

Agency “interpretation” of Statutes

EPA interpretation as described by U.S. Supreme Court in Rapanos v. U.S.

JP Morgan – Recent loss of $ 2 billion Dodd/Frank

White House Position: Regulations not finalized; so trading that resulted in the loss not prohibited.

Either the trades were illegal or were not; regulations shouldn’t be used to legislate.

Health-care law – power of Secretary of Health and Human Services

Examples of Regulatory Overreach – have we gone crazy? Pythagorean Theorem……………………..24 words

First Amendment to the U.S. Const….......45 words

Lord’s Prayer ……………………………….66 words

Archimedes’ Principle……….....................67 words

10 Commandments …………………….. 179 words

Gettysburg Address………......................286 words

Have We Gone Crazy cont.

Declaration of Independence…………….1300 words

U.S. Govt. Regs on Cabbage CropInsurance …………………………………3500 words

U.S. Constitution (w/ 27 Amend) ………7,818 words

U.S. Govt. Regs on Special Rules for ExperimentalPopulations of T and E Wildlife and Plants ……...over 36,000 words

Have We Gone Crazy cont.

The federal worker-safety laws include some 4,000 rules dictating precisely what equipment shall be used and how facilities are built. Embarrassingly self-evident: stairways shall be lit by

“natural or artificial illumination.” Under a recent federal directive, the number of

health-care reimbursement categories will soon increase from 18,000 to 140,000, including 21 separate categories for “spacecraft accidents” and 12 for bee stings.

We are crazy

New HHS Regulation:

“Administrative Simplification: Adoption of Authoring Organizations for Operating Rules and Adoption of Operating Rules for Eligibility and Claims Status”

Hidden (indirect) Costs and Regulatory Burdens: The Real Definition of a Crises

1992-Regulation Costs: $ 400 billion 2001-Regulation Costs: $ 843 billion

2005-Regulation Costs: $ 1.1 trillion

2008- Regulation Costs: $1.75 trillion These costs do not include:

Obamacare Dodd/Frank financial “reform” Recent EPA Regulations

Regulatory Costs cont.

2008 Regulatory Costs – nearly twice as much as all individual income taxes collected 2009 Americans paid $ 989 billion in income

taxes 2012 income taxes – Over $ 1.1 trillion

Income tax rate must be disclosed No similar requirement for costs of

regulations Unless have an “impact” of $ 100,000,000.00

or more (defined as “economically significant”)

Regulatory Costs cont.

Given 2011’s actual Gov’t. spending of $3.598 trillion dollars, the regulatory “hidden tax” ($1.75 trillion in 2008) stands at an unprecedented 48.7% of the level of federal spending itself (actual % is higher).

In absolute terms, the U.S. Gov’t is the largest government on planet earth.

Regulations and deficits each exceed $ 1 trillion per year.

Regulatory Costs, cont.

Regulatory costs exceed all 2009 corporate pre-tax profits of $ 1.317 trillion.

Regulatory costs dwarf corporate income taxes of $198 billion.

Regulatory costs absorb 11.9% of the U.S. GDP (estimated at $14.649 trillion in 2010)

Combining regulatory costs with federal FY 2011 outlays of $ 3.598 trillion reveals a federal gov’t whose share of the entire economy now reaches 36%.

Projected outlays for 2012 ($ 3.575 trillion) + regulatory costs = EVEN HIGHER SHARE

EPA Regulation of Carbon

Destroy 1.4 million U.S. jobs and cost the economy up to $141 billion by 2014

200,000 American manufacturers could lose their jobs

Historically, $ 1 billion worth of investment = 15,500 jobs

2015 to 2026 average annual impact of carbon regulation would be more than 500,000 jobs, and by 2029 the total economy-wide cost would be close to $7 trillion (roughly ½ of America’s current GDP)

EPA Regulation of Carbon – Wyoming Effects By the year 2020, average annual household income

would decline by b/w $ 894 to $2898 By the year 2030, average annual household income

would decline by b/w $ 3678 and $6707 Wyoming would stand to lose b/w 2,000 and 3,000

jobs by 2020 Wyoming would stand to lose b/w 6,000 and 8,000

jobs by 2030 States GDP would decline by as much as $ 1.4

billion/year

EPA Regulation of Carbon

“No significant impact on reducing global GHG emission growth” (American Council for Capital Formation)

EPA Spying on Citizens

Drone use in Nebraska and Iowa

Drone use for enforcement of “CWA”

Obama’s Executive Order on Regulations Announced in January, 2011: “A government-wide

review of the rules already on the books to remove outdated regs that stifle job creation and make our economy less competitive.”

1 rule repealed last year – spilled milk is no longer considered an “oil spill.”

By Nov., 2011, 508 new rules deemed “significant” – meaning will cost in excess of $ 100 million each (minimum impact: $50,800,000,000)

By December 2, 2011, 760 new rules deemed “significant” (minimum impact: $ 76,000,000,000)

Regulatory Burden 2011 – A Summary Pages of regulations published in the Federal

Register (2011) 53,630 as of 9/10/11 67,036 as of 10/31/11 70,320 as of 11/17/11 75,770 as of 12/2/11

Million hours of annual paperwork burden 65.1 million hours as of 9/10/11 88.2 million hours as of 10/31/11 116.3 million hours as of 11/17/11 119.4 million hours as of 12/2/11

2011 Regulations – Administration Estimates July, 2011 (during “debt-ceiling” debate) -

Administration proposed 229 new rules and finalized 379 rules Agencies’ Estimated Cost: $ 9.5 billion

Administration announced in August that it is considering 7 new regulations that will cost the economy more than $ 1 billion per year.

The Administration estimates that one EPA rule alone will cost the economy between $19 billion and $ 90 billion ($19,000,000,000.00 to $90,000,000,000.00).

Regulatory Burden – January 27, 2012 374 days since Executive Order on

Regulations 0 economically significant rules repealed this

year 44 Rules deemed “significant” $ 7.7 Billion – cost of regulatory burdens from

new rules this year 4456 pages in the Federal Register this year 25.3 million hours of annual paperwork burden

Regulatory Burden – February 17, 2012 395 days since President’s Executive Order on

Regulations 0 economically significant rules repealed this

year 119 Rules deemed “significant” $ 24.3 Billion – cost of regulatory burdens from

new rules this year 9514 pages in the Federal Register this year 44.1 million hours of annual paperwork burden

February 16, 2012 - EPA

The EPA published the Utility MACT (Maximum Achievable Control Technology) rule on Thursday, February 16, 2012. EPA estimates the costs of Utility MACT to be $9.6 billion The cost of the rule exceeds the benefits

by between 1,600 and 19,200 to 1. According to the EPA: It is “its most

expensive rule ever.”

Electrical Rates to Skyrocket

2015 Capacity Auction $ 136 per megawatt

8 times higher than the price for 2012 ($ 16 per megawatt)

Mid-Atlantic Region - $ 167 per megawatt Northern Ohio - $ 357 per megawatt

According to PJM Interconnection (electric grid operator for 13 States): “Capacity prices were higher than last year’s because of retirement of existing coal-fired generation resulting largely from environmental regulations which go into effect in 2015.”

These are not estimates, projections or computer models; they are actual prices that electrical distributors have agreed to pay.

Europe’s Folly – Why follow such nonsense? Opportunity cost for the UK’s subsidy system

for renewables estimated to be 10,000 jobs b/w 2009 and 2010

Planned offshore wind farm estimated to cost $8972 per household Cost of conventional energy – 5% of that

amount ($ 448.60) Spain’s subsidies for renewable energy

(which increased 5-fold b/w 2004 and 2010) led to the loss of 110,500 jobs

Regulatory Burden - March 30, 2012 437 days since President’s Executive Order 0 economically significant rules repealed this

year 212 Rules deemed “significant” (minimum

impact $21,200,000,000) 19520 Pages in the Federal Register 81.36 million hours of annual paperwork

burden.

Regulatory Burden – April 27, 2012 465 days since President’s Executive Order 0 Rules repealed this year 257 Rules deemed “significant” (minimum

impact $25,700,000,000) 25348 Pages in the Federal Register 85.9 million hours of annual paperwork

burden

Regulatory Burden – May 18, 2012

486 days since President’s Executive Order 4 economically significant rules repealed this

year 299 Rules deemed “significant” (minimum

impact of $29,900,000,000) 29852 Pages in the Federal Register 109 million hours of annual paperwork burden

Costs of Overregulation – Not Just Monetary Destruction of our National Forests

2001 Roadless Rule GAO Reports

Risk of catastrophic forest fires Total # of acres burned as of 06/13/12:

1,012,419 (not all on federal land) Risk of beetle outbreak

Routt National Forest – ground zero

Selective Enforcement

Impact on Oil and Gas Development $1 BLM = $40 in royalty, rent, & bonus revenue

531 leases in FY 2010 79% drop from the 2,499 leases issued in FY2005

First two years of the Obama Administration 76% fewer acres than the first two years of the Clinton

administration 71% fewer acres than the first two years of the Bush

administration

Wyoming Wyoming BLM issued 314 leases in FY 2010, a 61% drop

from the 797 leases issued in FY2005 Since FY2008, 90% of offered parcels have been protested

Real Crisis – remains largely unrecognized Regulatory burden at local, state and federal

level Regulatory burdens are creating “fuel poverty”

Destroying our economic freedoms and the ability for our next generation to prosper

Our ability to protect our environment is dependent upon our economic prosperity

If we destroy our economy we cannot educate our young people, provide necessary services, etc.

Balanced Approach is Critical

When the government directs its resources to doing things it should not be doing, it becomes incapable of doing those things that it should

A government that is closest to the governed is more responsive and accountable to the people that it was established to serve Converse is also true Regulation w/out representation cannot work

Real Solutions

Regulation must be radically simplified

Individual accountability must replace bureaucratic micromanagement

Mandatory sunsets

Small entities must be regulated differently

Source: Philip K. Howard, Common Good

Additional Solutions

Change the timing of when regulations are drafted and become effective

Ensure Congressional and Legislative oversight for proposed regulations (mandatory review before they become effective)

Require Congressional/Legislative approval before any regulation costing in excess of $_______ be implemented

NEVER PAY A REGULATOR BY THE HOUR

What can you do?

Demand a Legislative Solution

Participate Participate Participate Participate Participate

Wyoming Conservation Alliance and Colorado Resource Alliance What is it? Why did we create? Our Goals:

To increase participation in the federal and state regulatory process

To disclose what is happening in this Country To educate the public on what regulations are,

their impact, and the manner in which they undermine our Republic and our entire structure of Government

To work with organizations such as WEA

QUESTIONS OR COMMENTS?

Harriet M. Hageman Wyoming Conservation Alliance Colorado Resource Alliance Hageman & Brighton, P.C. 222 East 21st Street Cheyenne, Wyoming 82001 (307) 635-4888 hhageman@hblawoffice.com

Source documents and citations available upon request