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,