Day 3: An Introduction to Regulations and Solutions

Regulations are expensive (national total regulatory costs for 2011 came out to $1.752 trillion)1. In economics, there is no such thing as a free lunch. Laws designed to protect consumers and the environment cost money both to enforce and in terms of lost economic activity. That’s not to say that any and all regulations are not worth it, but that there are always some tradeoffs. The tradeoffs between human health and pollution, for example, vary over time and by both individual and culture.

But, that doesn’t mean that all regulations are created equal or that we can’t come to some decisions about the necessity or lack thereof in terms of certain government regulations.

Currently, New Mexico lacks requirements for review of new regulations and rules, and although the state Administrative Procedure Act is still in place (who’s purpose was to impose procedural duties for agencies that chose to opt in), it has failed to be self-enforcing on agencies2. Due to the absence of a centralized review process, agencies may or may not use their own procedures such as the use of legal council review, internal review committees, and economic analysis3.

In 2005 the Small Business Regulatory Advisory Commission (SBRAC) was created to review regulations that might have been unnecessary. Unfortunately the commission has not met for years, and according to Administrative Law Division Director John Martinez, "Less than 10 rules were actually reviewed by the SBRAC in the short time that they met regularly. During that time period, over 800 rule actions took place."4

Several of New Mexico’s neighbors have developed procedures of regulatory review that should be noted. Colorado’s "Department of Regulatory Agencies" reviews regulations and presents all cost-benefit analyses to the public, allowing for further participation concerning the review process5. Arizona’s "Governor’s Regulatory Review Council" regularly hosts "seminars for agencies on rule writing, periodic reviews, and the preparation of impact statements"6. Utah has both the "Governor’s Office of Planning and Budget" as well as the legislature’s "Administrative Rules Review Committee" that work collaboratively in the regulatory review process7. None of these mentioned processes are perfect, and all are need of improvement, but the unfortunate reality is that New Mexico is still very far from any of these modest review mechanisms.

New Mexico desperately needs a strong, centralized regulatory review process. By implementing such a measures and allowing for a cost-benefit analysis to be provided to the public, exposing undue regulations and furthering government transparency. A regulatory review process which would grant rescission powers to the governor in order to repeal unfair or unjustified rules would certainly help to remove the numerous arbitrary burdens which New Mexican businesses face today.

New Mexico’s Neighbors:

Texas: Currently, Texas lacks a single, centralized regulatory review process. There do exist individual legislative subcommittees, but these groups rarely use their authority to review rules. Overall, the situation in Texas is very similar to New Mexico.

Arizona: Arizona has what is known as the "Governor’s Regulatory Review Council" (GRRC) which does play a more active role in the review process than the state’s largely inactive legislative review committee. It appears that the GRRC, which is a slight improvement from New Mexico’s abject lack of controls, contains shortfalls as well, such as too narrow of distributional analysis (viewing small business impacts while ignoring public benefits etc.)

Colorado: Colorado has the "Department of Regulatory Agencies" which reviews proposed rules submitted by various agencies. The cost-benefit analyses are provided for public use which is certainly a plus concerning transparency. One issue that needs improvement is the State’s legislative review provisions which can "leave regulations in a state of limbo for up to a year"8.

Oklahoma: Oklahoma currently has both executive and legislative forms of regulatory review, but reviews often arrive too late during the rule making process and lack the analysis of benefits. The executive review process lacks transparency as well as consistency.

Utah: Utah has both the "Governor’s Office of Planning and Budget" as well as the legislature’s "Administrative Rules Review Committee" that work with agencies throughout the review process. Utah has also fared well concerning transparency due to the "Division of Administrative Rule" Website. Although the process is much more effective than New Mexico’s, Utah’s focus on compliance costs while neglecting benefits is an area that needs improvement.






6GRRC, Council Seminars,



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One Reply to “Day 3: An Introduction to Regulations and Solutions”

  1. Regulatory Reform is a valid part of continuing government and should be in place permanently. This Rio Grande Foundation project is a valiant effort but in many ways shows a great naivity about both the purpose of government and the functions of government. Disclaimer, I am a retired State of New Mexico employee and have written regulations as well as participated in past government Regulatory Reform efforts. Over the years, in both state and federal governmental efforts, there have been some good attempts and some doomed from the start to fail. But the key to understanding regulations is that they are an attempt to clarify what is not specified in law by Congress or our own N.M. State Legislature. Very often regulations are made by boards and commissions who are political animals of their own making. They are contributors to political campaigns and receive appointments on this basis; not necessarily on how much they know about an industry or how much they care about good government. So their self interest is to protect their own industry to regulate or eliminate competition in the market place by a consensus of those engaging in that business. They do make it harder to break into the industry.

    So this is the environment, now let’s talk about some past efforts. Lt. Governor Jack Stahl (under Gov. Carruthers) had a “Regulatory Reform” effort that showed a certain ignorance of statutory and administrative law, and it consequently failed. It was more about press conferences and the glorification of the Republican Party than it was about results.

    Lt. Governor Casey Luna was tasked with a “Democratic response” to the Stahl efforts by Governor Bruce King and he got sidetracked with being cold shouldered by the old-time King Bureaucrats and he consequently decided to run for Governor and stopped working on the regulatory reform project.

    So in steps political neophyte Gary Johnson and his Lt. Governor Walter D. Bradley and they too decide there is some political hay to be made about Regulatory Reform. Bradley was a multi-term legislator and I thought he would understand what needed to be done. When I met with him, he was mystified that there was an administrative law in the United States and in New Mexico we had a New Mexico Administrative Code. His boss being a strict libertarian believed in the Code of the Wild West (perhaps only shoot first and ask questions later). So needless to say the dozens of Regulatory Reform meetings were a waste of time.

    During this time great strides were being made at the federal government.

    Our best national answer to “Regulatory Reform” would have been to elect Al Gore. I know that we elected “the guy we most would likely have a beer with” George W. Bush and we rejected the stiff caricature of an egg-headed Al Gore, a policy wonk. But while Clinton was doing his thing with Monica, he let VP Al Gore have free rein of government. Clinton gave Gore a marching order to “streamline government” and to provide a laboratory for state and local governments to follow (which Gore posted to the Internet—but there is another joke we can laugh at). If we had elected Gore, he would have cut 300,000 more federal employees and $300 billion more dollars to a total of 600,000 and $600 billion. Gore’s streamlining of regulations and tax simplification would have blown all our minds. He expanded the role of VP more than any other President (Until Bush let Cheney run amok). Gore set up programs that I studied as a state government employee because we need to improve our dysfunctional bureaucracy. The Reinvention of Government Initiative, the Trust Initiative, the Plain English requirement for writing regulations, the Performance Review, Streamlining,—just many, many programs. In three years, they cut 300,000 jobs and $300 billion dollars annually from the budget. Employees were paid bonuses on ideas they had to trim regulations, eliminate red tape and to streaming process. They set up “senior leaders program” where good performers were shuffled into the poorest performing areas and given a bonus if they could “turn-it around.” They created citizen-led committees that oversaw government operations and made quality management recommendations. They created government award programs and grant programs that federal agencies could access for personnel bonuses if they achieved cost savings (like 5% of the cost savings could go to you in a one-time bonus if you saved the 100%). Employees who once were “rewarded” for squandering budget hold-over money from year-to-year (say with bigger offices and new furniture that was unnecessary) were turning it in. 250,000 pages of regulations were eliminated. They created parking lots were citizens could park up front instead of one mile away, they create email citizen complaint lines, One Stop Shop, etc., etc. This was all written up in a 350 page report I have somewhere. All undone by George W. Bush who stopped all the programs and hired an estimated 6-7 million more federal employees through privatization and the creation of Homeland Security. Managers were hired like Michael Brown the Arabian Horse Association President who let Katrina happen at his watch at FEMA. The political hacks they put in like Bill Bennett who got a $14.9 million contract to design a “No Child Left Behind” test (at a per test copy of $250 which is part of a kickback to Bennett, the $8 million dollar a year gambler, when the tests could be photocopied at about a $1 price tag. The Bushes ended the nuclear reclamation program in Russia (started by Bush’s dad) which allowed 25 nukes to fall into the hands of the Russian Mafia. So we went from competence to lunacy in the name of TOO MUCH GOVERNMENT (yet, the federal government expanded to the largest it has ever been under G.W. Bush—it was only GOP lip service).

    The spirit of this Reinvention Program is virtually dead and forgotten. I know of no one talking about it. So electing a Democrat like Obama didn’t get us back on track. Bush took down the “First Government” websites and virtually destroyed the library of reports. The War in Iraq consumed our national interest in becoming a more efficient government. Unfortunately, if we had it in place it could of taken us out of the recession and we wouldn’t be having this posting/discussion to Facebook. Alas…..

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