R egu l at ion 9 S p r i n g 20 0 1

M e r c a t u s R e p o r t s : C O M M E N TA R YM e r c a t u s R e p o r t s : C O M M E N TA R Y

Reversing MidnightRegulationsBy Susan E . DudleyMercatus Center

President bill clinton’s final months inoffice were marked by a flurry of regulatory activ-ity that generated an unprecedented volume of newrules and regulations for American businesses, cit-

izens, and state and local governments. Like Cinderella leav-ing the ball, many of Clinton’s 7,000 presidential appointeeshurried to issue last-minute “midnight” regulations before theyturned back into ordinary citizens at noon on January 20th.

Clinton officials’ sharp increase in regulatory output isnot an anomaly; as Mercatus researcher Jay Cochran showedin his recent paper “The Cinderella Constraint: Why Regula-tions Increase Significantly During Post-Election Quarters,”sudden bursts of regulatory activity at the end of a presiden-tial administration are systematic, significant, and cut acrossparty lines. But the magnitude of Clinton’s activity has set anew record. The Clinton administration published 26,542pages of regulations in the Federal Register this past November,December, and January. That eclipses President Jimmy Carter’s20-year record for most pages published in the last threemonths of an administration, and represents a 51-percentincrease over Clinton’s average volume during the same peri-od in the previous three years.

Some of these new regulations may have been developedcarefully over many years, and only just now emerged fromthe procedural pipeline. But others were hurried into effectwithout the usual checks and balances, perhaps to avoidscrutiny by the incoming Bush administration. These latterregulations may cater more to special interests than the pub-lic interest.

RECONSIDERING MIDNIGHT REGULATIONSdepending on a rule’s stage in the regulatorydevelopment process, different options are available to theBush administration and Congress to evaluate and possiblyoverturn Clinton’s midnight regulations.

For rules that are under development, and for which finalaction has not been signed by an agency head, the administra-tion can refrain from publishing them until incoming officialshave examined their merits. On January 29, 1981, for example,President Ronald Reagan issued a moratorium on Carter-initi-ated regulations that were still under development.

Some regulations may be signed in the final week of an out-going administration, but due to backlogs or last minute sig-natures, are not published in the Federal Register before a newadministration takes office. Clinton, when he took office on

January 20, 1993, pulled back several such regulations fromthe Federal Register. The withdrawal of these unpublished rulessurvived subsequent court challenge. Similarly, in a memo-randum dated January 20, 2001, Bush White House Chief ofStaff Andrew Card directed all agencies to withdraw Clinton-originated regulations sent to the Federal Register but notyet published.

The Card memo also directed agency heads to “postponethe effective date of [recently issued but not yet effective]regulations for 60 days to ensure that the President’s appointeeshave the opportunity to review any new or pending regula-tions.” Despite a delay in the effective date, once a final reg-

ulation has been published inthe Federal Register, the onlyunilateral way an administra-tion can revise it is throughnew rulemaking under theAdministrative ProcedureAct. Agencies cannot changeexisting regulations arbitrar-ily; instead, they must firstdevelop a factual record thatsupports the change in policy.

While the new adminis-tration’s options for over-turning final regulations areconstrained, Congress canexpeditiously disapproverecently issued rules undert h e 1 9 9 6 Cong r e s s ion a lReview Act (cra). All rulesissued after July 13, 2000, arecurrently eligible for con-gressional disapproval underexpedited procedures. The

cra defines rules broadly so as to include all final regulations,interpretive rules, statements of policy, and guidance docu-ments issued by either independent or cabinet agencies.

Although over 20,000 rules have been submitted to Con-gress under the cra since it was enacted in 1996, not one hasbeen disapproved. Largely, this is because the president couldveto any congressional move to disapprove a rule written bythe president’s administration. Congress would then have tomuster a two-thirds majority to override the veto.

The next few months present a unique opportunity forapplying the cra. Beginning in early February, Congress has60 legislative days (House) or session days (Senate) in whichto pass a joint resolution of disapproval for midnight regu-lations. During this briefly open window, the veto threat isdiminished, since the president whose administration issuedthe regulations is no longer in office.

Some of these newregulations may havebeen developed care-fully over many years,and only just nowemerged from theprocedural pipeline.But others were hur-ried into effect with-out the usual checksand balances.

Susan E. Dudley is a senior research fellow at the Mercatus Center. She canbe contacted by E-mail at susan@dudley.net.