The Mighty Waves of Regulatory Reform: Regulatory Budgets and the Future of Cost-Benefit Analysis

In the past 70 or 80 years, there have been three “waves” of reforms to the process of creating and managing U.S. federal and state regulations. The first wave began in 1946 with the passage of the federal Administrative Procedure Act, after which states went on to pass and formalize their own administrative procedures. The second wave began decades later in the mid-1970s, ushering in the era of cost-benefit analysis reforms for regulations. This article focuses on the third wave of regulatory reforms that appears to be sweeping the nation and includes a prediction that the next wave may include a return to some unsettled issues from the past.

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OIRA’s Expanded Review of Tax Regulations and Its Surprising Implications

Executive Order 12866 describes U.S. policy on regulatory planning and review. It directs agencies to identify the nature and significance of the problem they are trying to solve with regulation, to identify alternative solutions, to assess the quantifiable and non-quantifiable costs and benefits of each alternative, and then to choose the option that maximizes net benefits to society, taking into account distributional effects and other considerations. That policy, which has governed U.S. regulation for several decades, is managed by the Office of Information and Regulatory Affairs (“OIRA”). It is also subject to several exemptions. In April 2018, the U.S. Department of Treasury and the Office of Management and Budget signed a historic memorandum of agreement narrowing one of those exemptions. The memorandum expands the number of Internal Revenue Service regulatory actions for which the Service must comply with Executive Order 12866. This action moved tax rules out of the “presidential tax-policy blind spot.” This article offers a close study of that memorandum of agreement and reveals six striking features that not only affect tax regulation, but also offer intriguing possibilities for (1) scholarly understanding of OIRA as an institution and (2) the future of regulatory review of independent regulatory agencies, which are currently exempt from OIRA review.

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Restoring Internet Freedom as an Example of How to Regulate

Thomas Lambert’s How to Regulate urges regulators to diagnose the extent and causes of the problems they seek to solve and consider the benefits and costs of alternative solutions. It also warns that government officials are affected by the incentives and knowledge constraints they face, and regulations should be designed to mitigate this problem. The Federal Communications Commission’s Restoring Internet Freedom order provides examples of these principles in practice. In its assessment of blocking, throttling, paid prioritization, and other general business conduct of broadband providers, the order first utilized economic research to identify the extent and causes of the underlying problems the FCC sought to solve, then selected alternative solutions tailored to address the problems. In deciding whether to classify broadband as a Title I information service or a Title II telecommunications service, the FCC took note of regulators’ incentives under Title II to extend regulation to include regulation of prices, unbundling requirements, and other types of regulation that the FCC had imposed on telecommunications carriers in the past. Reclassifying broadband under Title I reduced the risk of expanded regulation that would expropriate broadband firms’ sunk investments.

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Madison and Shannon on Social Media

The Internet has changed speech, and our traditional understandings of speech regulation are struggling to adapt. This article argues that the Internet has tipped the quantity of information that individuals are exposed to beyond the point which they are able to meaningfully process. This article draws from a range of fields— from Information Theory, to cognitive psychology, to informatics—to provide both empirical and theoretical support for the idea that there is a limit to how much information individuals can meaningfully process and that we have surpassed that limit. This argument poses a direct challenge to bedrock First Amendment concepts such as the marketplace of ideas and the mantra that “the best response to bad speech is more good speech.”

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Regulation: A View from Inside the Machine

This is a transcript of the keynote address virtually delivered by Hester M. Peirce at the symposium “Protecting the Public While Fostering Innovation and Entrepreneurship: First Principles for Optimal Regulation,” hosted at the University of Missouri School of Law on February 8, 2019. The transcript of this address was initially published on the official website of the Securities and Exchange Commission; it has been lightly edited to ensure readability and formatting continuity.

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Regulatory Reform at the State Level: A Guide to Cutting Red Tape for Governors and Executive Branch Officials

This article provides recommendations for governors and other executive branch officials to consider when implementing regulatory reform. Studies have shown that regulatory reform is needed because of the substantial impact on the economy, consumers, and businesses. Recent technological advances have allowed regulations to be quantified by a metric known as regulatory restrictions, which counts uses of “shall,” “must,” “may not,” “prohibited,” and “required.” Quantifying regulatory restrictions allows for comparison of the regulatory scope between states. State-level regulatory reform directed by governors has primarily occurred in three waves following elections in 1994, 2010, and 2016. These reforms have achieved significant results by reducing the number of regulations and saving money that otherwise would have been spent on regulatory compliance.

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Be There In A TIF: What is TIF and Missouri’s Need of Reform

Tax Increment Financing (“TIF”) is an economic development tool used by local municipalities to lure investment to areas that would not normally receive any. The process starts by having a local municipality or developer propose a redevelopment plan for a particular area. This area must fall into a statutory definition to be eligible for TIF and a “but-for” analysis is required, along with a proposal to a TIF commission. They then will move to approve or disapprove the proposal; if approved, the plan can be implemented for a defined duration. During the implementation, the purpose is for the investment plan to create property tax appreciation that will lead to higher tax revenue, thereby justifying the financing method.

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No Such Thing as Partial Per se: Why Jefferson Parish v. Hyde Should be Abolished in Favor of a Rule of Reason Standard for Tying Arrangements

For more than a century, antitrust law has operated under two rules of analysis: rule of reason and per se. In 1984, however, the Supreme Court fabricated a new standard for a particular type of antitrust offense, referred to as the “partial per se” rule. This rule confuses and obscures the analysis taking place in tying arrangements and has no place in American jurisprudence. The rule should be abolished, and in its place, the Court should adopt the rule of reason analysis and elements suggested by Justice O’Connor in the very case from which this “partial” rule originated. By doing so, the Supreme Court will better enable lower courts to make proper decisions, prevent over-deterrence of tying arrangements, and clarify the standards that companies must meet to engage in this business practice.

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The Weinstein Tax: Congress’ Attempt to Curb Non-Disclosure Agreements in Sexual Harassment Settlements

The Tax Cuts and Jobs Act has been hailed by many as both a significant and sensible tax reform. It lowered the U.S.’s notoriously high corporate tax rates while also providing a tax break for many individual Americans. Although this tax reform has its benefits, this article discusses a troubling provision that has not garnered much attention. This particular provision, incorporated into the Internal Revenue Code as § 162(q), does not allow the deduction of settlement or attorneys’ fees in sexual harassment cases when a settlement is subject to a nondisclosure agreement. Although the intention of this reform was to protect victims of sexual harassment, the statutory language actually harms victims in a number of ways. Congress has recognized some of these issues, but unfortunately it does not understand the full scope of the problem. This ultimately leaves victims in harm’s way as efforts to correct the legislation have stalled. This article addresses the three significant problems with § 162(q) and proposes potential solutions.

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When the Hot Stove Goes Cold: The TCJA, Baseball Contracts, and Avoiding an Administrative Nightmare

In 2017, Congress passed the Tax Cuts and Jobs Act, a sweeping tax reform bill which altered huge swaths of the Internal Revenue Code. Among the numerous changes was an alteration to § 1031 of the Code, which defers taxable gains for taxpayers exchanging property with other taxpayers for similar property; more specifically, the Act limited this section to real property.

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