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Regulation without Representation

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

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Regulation without Representation

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  1. Regulation without Representation Harriet M. Hageman Hageman & Brighton, P.C. June 15, 2012

  2. 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.

  3. Three Branches of Government • Executive (President, Governor) • Legislative (Congress, State Legislatures) • Judicial

  4. 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

  5. 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

  6. Nerd Gas – just one example • Nerd Gas has 209 total employees. • 129 Federal, State, County and City agencies touch their companies.

  7. 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

  8. 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

  9. 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

  10. 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

  11. 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

  12. 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)

  13. 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

  14. 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

  15. 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

  16. Have We Gone Crazy cont. • Declaration of Independence…………….1300 words • U.S. Govt. Regs on Cabbage Crop Insurance …………………………………3500 words • U.S. Constitution (w/ 27 Amend) ………7,818 words • U.S. Govt. Regs on Special Rules for Experimental Populations of T and E Wildlife and Plants ……...over 36,000 words

  17. 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.

  18. 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”

  19. 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

  20. 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”)

  21. 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.

  22. 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

  23. 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)

  24. 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

  25. EPA Regulation of Carbon • “No significant impact on reducing global GHG emission growth” • (American Council for Capital Formation)

  26. EPA Spying on Citizens • Drone use in Nebraska and Iowa • Drone use for enforcement of “CWA”

  27. 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)

  28. 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

  29. 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).

  30. 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

  31. 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

  32. 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.”

  33. 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.

  34. 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

  35. 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.

  36. 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

  37. 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

  38. 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

  39. 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

  40. 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.

  41. 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

  42. 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

  43. 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

  44. What can you do? • Demand a Legislative Solution • Participate • Participate • Participate • Participate • Participate

  45. 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

  46. 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

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