"The American people deserve a regulatory system that works for them, not against them: a regulatory system that protects and improves their health, safety, environment, and well-being and improves the performance of the economy without imposing unacceptable or unreasonable costs on society; regulatory approaches that respect the role of State, local, and tribal governments; and regulations that are effective, consistent, sensible, and understandable. We do not have such a regulatory system today."
-President Clinton, Executive Order #12866
Economically Significant Rules
An "Economically Significant Rule" is a rule or regulation that has "an annual effect on the economy of $200 million or more" or that "adversely affects in a material way the economy, a sector of the economy, productivity, competition, jobs, the environment, public health or safety, or State, local, or tribal governments or communities.”
Economically Significant Rules ("ESR") can be useful to track from a federalism point of view because they help distinguish between rules that have a comparatively large effect on states from rules that have a lower impact. A new rule governing fireworks displays, for example, does not have the same effect on the balance of power as a new rule prohibiting the sale of gas powered vehicles.
Changes in 2023
The definition and threshold for what constitutes an economically significant was changed in April 2023. Following Executive Order 14094, the threshold for a “significant regulatory action” is now raised from $100 million to $200 million in annual impact.
Trends
In the last decade, there has been a 70%+ increase in the use of Economically Significant Rules, across parties.The following graph presents a raw count of ESR by presidential year from 1981-2022, using the previous threshold of $100 million:
Economically Significant Rules by Agency
The following dashboard presents a breakdown of Economically Significant Rules across major agencies from 1981-2022.
Types of Rules
Since 1976, when the Federal Register first began itemizing and counting, 204,802 final rules have been issued. Rules come in many types. The following chart tracks the major categories of rules from "Economically Significant" to "Major" to "Substantive" to "Significant" and "Other Significant" rules:
ESR Significant Rules in Context
The following chart presents a ratio of ESR as a portion of other (Major and Substantive) rules from 1997 - 2022:
Final Rules Published
When a rule is classified as a final rule, it means that it has already gone through the revision and review process with OIRA. Once it is published in the Federal Register, the new rule will go into effect after a wait period of 30-60 days.
Proposed rules are published in the federal register to allow those interested in participating in the rulemaking process to provide critical feedback. This provides the agency the opportunity the ability to address concerns, and show proposed changes or modifications to existing rules.
In 2017, President Trump's administration proposed 1,834 rules, the lowest count on record since 1997:
Takeaways
Economically significant regulations are a special category of "significant regulations" (Crews 2023, p. 4). ESR rules have at least $100 million of economic impact, and are useful to track from a federalism point of view because they help distinguish between regulations that have a larger impact from ones that are small or routine.
Economists and other scholars track ESR because it helps to understand "disparities and similarities across presidential administrations" as well as their "cumulative approaches to implementing regulatory policy" ("Reg Stats": https://regulatorystudies.columbian.gwu.edu/reg-stats).
Although imperfect as a measure, Economically significant rules are seen as an important metric in analyzing the size and scope of the regulatory state. It is seen as a more useful metric than others for drawing comparisons between different kinds of "regulatory output" over time. Many rules are routine, or have a much lower impact, and are "not likely to help characterize an administration’s regulatory priorities" (Regulatory Studies Center).
One key advantage of ESR for understanding federalism is that this measure has been consistent since 1981. The threshold changed in 2023. While the new threshold of $200M may produce inconsistencies in future analysis, there may not be a material difference. Most ESR have an annual cost of over $1 billion per year.
In the last decade, there has been a 70%+ increase in the use of Economically Significant Rules, across parties.
From 1997 to 2021, there has been an approximately 28.95% decrease in the number of final rules published. Similarly, proposed rules have trended down. From 1997 to 2021, there has been an approximately 27%.32 decrease in proposed rules
In 2017, President Trump's administration proposed 1,834 rules, the lowest count on record since 1997.
According to Crews (2023, p. 5) the Biden administration proposed 332 economically significant rules. This count of Biden's "regulatory pipeline" far outstrips usage of ESR during the Obama years. They also represent at "27 percent increase over the gross count of 261 in Trump’s final calendar year of 2020."
Recommended Sources
2023 "Ten Thousand Commandments: An Annual Snapshot of the Federal Regulatory State": https://cei.org/wp-content/uploads/2023/11/10K_Commandments.pdf
Regulatory Studies "Reg Stats": https://regulatorystudies.columbian.gwu.edu/useful-measure-regulatory-output
Authors:
Johana Linford, Andy Bibby