Who knew? New Jersey is a leader in red tape reform | Opinion

Posted Dec 08, 2020

By James Broughel



Last month, the New Jersey Assembly voted overwhelmingly to approve a regulatory reform measure that now heads to the Senate. The new bill is notable for its bipartisan, 72-1 support at a time when deep rifts divide Democrats and Republicans nationally. Whether or not it passes, it’s a groundbreaking idea in a state that’s already a national leader in some respects on red tape reform.

Assembly bill 4810 would create a Government Efficiency and Regulatory Review Commission to review all rules proposed and adopted by state agencies, as well as executive orders issued by governors. This bipartisan commission would focus on analyzing how policies impact New Jersey’s economy and where the costs of regulations exceed their intended benefits.

Establishing a commission to review regulations is an enormously proactive step. Most states, including New Jersey, have a process for vetting new regulations. The public is notified when a new regulation is coming and has an opportunity to provide feedback. Rules in New Jersey are also required to have an economic impact statement, among other forms of analysis. These procedures ensure that regulations receive some minimal level of scrutiny before they become binding on the public.

Once enacted, however, regulations in most states receive very little scrutiny. That is a problem when regulations become outmoded. For example, many states require pharmacists to run their pharmacies from on-site, but more recently (especially in light of the pandemic), states like Idaho are finding it’s possible for them to safely consult patients and oversee staff efficiently via video conferencing technology.

That’s where New Jersey’s regulatory reform bill would come in. It could change the current paradigm by creating a permanent body whose explicit function is reviewing regulations on an ongoing basis and making annual recommendations about where reforms are needed.

New Jersey already has an impressive regulatory system in some ways. For example, it is one of only a few states that has a regulatory sunset process — regulations automatically expire seven years after implementation. The sunset helps ensure that rules that have become outmoded can eventually find their way to the regulatory graveyard, instead of remaining on the books and holding back innovation for decades.

In the past, one-off efforts like former-Governor Christie’s red-tape reduction program have also spurred some meaningful review. But those reviews were not institutionalized, in the sense that tasking a commission to comb through thousands of pages of rules was the exception, rather than the ongoing rule.

Regulators often view their job as a writer of rules for the rest of us to follow. Once they finish crafting one, it’s on to the next. That’s understandable, but at some point, the economy is like a dam that breaks under the enormous weight of the pile of regulations spilling over it. At the federal level, there are nearly 1.1 million restrictions (encoded orders like “shall” or “must”) in the regulatory code. Recent estimates suggest that these slow national growth by a little under one percentage point annually. That may not sound like much, but over time it adds up to trillions of dollars.

Meanwhile, the average state has about 135,000 restrictions. (We don’t know New Jersey’s numbers because the state outsources its code to a private company.) A4810 could help break the vicious cycle of ever-growing codebooks cluttered with outdated laws by creating a permanent institution focused on regulatory relief.

Now is actually the perfect time to consider reforms like this. With a pandemic raging, governors across the country, as well as regulators in Washington, D.C., have been racing to waive or suspend regulations on pharmacists, hospitals and drug makers. No one wants our trained medical professionals hamstrung by bureaucracy in an emergency. Not surprisingly, states like Pennsylvania are considering legislation of their own to continue suspending regulations that may have hindered the pandemic response.

New Jersey may not have a reputation for fostering a business-friendly regulatory environment. But it has gotten some things right in the past and deserves credit. The Garden State now looks poised to pass some historic regulatory reforms. Other states would be wise to take notice and follow its lead.

James Broughel is a senior research fellow with the Mercatus Center at George Mason University.

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published this page in News and Politics 2020-12-09 02:48:15 -0800