Regulation without
Representation
Harriet M. Hageman
Hageman & Brighton, P.C.
June 15, 2012
Current Financial Climate
 Federal Government Debt
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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
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Endangered Species Act
National Environmental Policy Act
Clean Air Act
Clean Water Act
 Regulations – Executive Branch (President,
Governors)
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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
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0
Congress
Federal Agencies
Nerd Gas – just one example
 Nerd Gas has 209 total employees.
 129 Federal, State, County and City agencies
touch their companies.
Federal Red Tape
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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.
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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
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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.
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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
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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
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Dodd/Frank
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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 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
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.
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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
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These costs do not include:
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Obamacare
Dodd/Frank financial “reform”
Recent EPA Regulations
Regulatory Costs cont.
 2008 Regulatory Costs – nearly twice as
much as all individual income taxes collected
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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
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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
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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
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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”
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(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)
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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
$9.6 billion
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The cost of the rule exceeds the benefits
by between 1,600 and 19,200 to 1.
According to the EPA: It is “its most
expensive rule ever.”
Electrical Rates to Skyrocket
 2015 Capacity Auction
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$ 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
$8972 per household
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Cost of conventional energy – 5% of that
amount ($ 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
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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
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79% drop from the 2,499 leases issued in FY2005
 First two years of the Obama Administration
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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
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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”
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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
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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
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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