11.Final rules are codified in the Code of Federal Regulations, which is annually updated.12.In addition to formal rules, agencies often use guidance, or informal documents such asletters and manuals, to clarify official regulations.13.Since the days of Theodore Roosevelt presidents have sought, with mixed success, toexercise control over regulatory agencies.
Congress also tries to exercise control over regulators. Its committees hold oversight hearings to question them. In 1996 it passed the Congressional Review Act giving itself the authority to block major new rules from going into effect with a resolution of disapproval. The resolution must pass by a majority in both the House and Senate and be signed by the president.C.Federal courts have the power to review agency decisions when cases are brought byregulated parties.1.Under the Chevron doctrine courts tend to defer to agency rulesthat are based on reasonable interpretations of statutes.2.Congress has given federal courts the power to strike down agency actions that are arbitrary, capricious, unconstitutional, beyond agency jurisdiction, or unsupportedby evidence.
D.Benefits and costs of regulation are difficult to measure. No precisecalculation of its overall net benefit (or cost) exists.1.Costs are heavy. Compliance costs were estimated as high as $1.2 trillion in 2009.Federal agency budgets totaled $45 billion in 2009. Other costs of regulation such as slowedinnovation are less quantifiable but still high.2.Benefits are also great. A review of major regulations for which benefit-cost studies hadbeen made between 1998 and 2008 showed that benefits exceeded costs by a huge margin. Unmeasured benefits such as prevention of corruption, disease control, and lessened workplace discrimination are great.
3.Regulation varies widely around the world.4.Poor countries tend to impose heavier regulation on business. Heavier regulation raisescosts, invites corruption, and lowers productivity.5.Rich countries regulate business less and engage in ongoing regulatory reform.6.Developed countries engage in continuous regulatory reform to improve the businessenvironment.
IV.The Metrolink Train Accident – What is it about?This case involves a collision between a Metrolink commuter train and a Union Pacific freight train near Los Angeles. 24 passengers and the engineer of the commuter train were killed. Soonafter, California’s two U.S. senators pushed a bill through Congress requiring enormously expensive equipment to automatically control trains. This equipment increases safety, but its costs far exceed its benefits. The main question raised by the case is whether the regulation is worth it. According to the benefit-cost calculations of regulators it is not.
1. What were the causes of the Metrolink accident?The Metrolink engineer was distracted by texting. According to the National Transportation Safety Board, the “probable cause” of the collision was “failure of the Metrolink engineer to observe and appropriately respond to the red signal . . . because he was engaged in prohibited use of a wireless device . . . that distracted him from his duties.” The NTSB also found that “lack of apositive train control system” was a “contributing” factor. If such a system had existed, it would have stopped the train at the red light, allowing the Union Pacific freight train to switch off on thesiding.