The impact that flawed and too many federal regulations has had on the economy and job creation in both U.S. large and small businesses alike was the subject of a new critical report from the House Committee on Oversight and Government. The committee held a hearing on the report on Wednesday.  Rep. Darrell Issa (R-CA), the committee’s chairman, said he called the hearing to scrutinize government agencies and the federal regulatory process.

President Obama issued an executive order in January ordering federal agencies to determine whether their rules are duplicative, out-modeled, or overly burdensome, but agencies in this administration have “gone in the opposite direction,”  Committee Chairman Issa said.

In its report, the committee found that the number of proposed rules have increased from 2,044 in 2009 to 2,439 in 2010. Employment at regulatory agencies has climbed 13 percent since Obama took office, and the number of staff working on regulatory matters is on schedule to increase at a rate of 10,000 new employees per year in 2011 and 2012, Chairman Issa said.   According to the report, there are 219 economically significant regulations in the pipeline, which if finalized, will each impose costs of $100 million or more annually to the U.S. economy.    In total, the report states, the Obama administration has imposed 75 new major regulations costing more than $380 billion over 10 years.  The proposed GIPSA rule was one of several regulations of particular concern discussed during the hearing.

The report highlights the GIPSA regulation in particular for USDA’s failing to conduct a proper economic analysis of its proposed rule in violation of Executive Order 12866.  Under that executive order, agencies are to conduct a cost-benefit analysis in cases where the rule is determined to be significant.  The report pointed out that, in reaction to three private studies and more than 60,000 public comments, GIPSA finally agreed to conduct a more “rigorous”  cost-benefit analysis.

It was also pointed out at the hearing that USDA’s chief economist recently testifying at another  congressional hearing said the rule is being reclassified as “economically significant.”  This designation is important, the committee report said,  “because it heightens the required analysis; the fact that rule was improperly classified at its inception likely impacted the scrutiny originally applied to it.”  Accordingly, those in the agriculural sector have requested that that GIPSA reopen the rule for public comment after the new economic analysis is complete.

Robbie LeValley, co-owner of Homestead Meats, was among the witnesses testifying at the hearing.  saying that the proposed GIPSA rule will bring to a halt all the innovation and progress, especially in genetics, that the beef industry has worked so hard to do to bring better, more desirable products to consumers.  She also pointed out the insecurity that the regulation brings regarding legal definitions not clearly defined  and the underlying threat of lawsuits makes producers less likely to expand and continue to be innovative.

Committee Chairman Issa asked Cass Sunstein, administrator in the Office of Information and Regulatory Affairs at the Office of Management and Budget, whether or not USDA would reopen the comment period in light of the new economic analysis.  Sunstein responded by saying “It is fundamentally important for economic analyses to be available for public view.”

Chairman Issa also expressed concern that parts of the proposed GIPSA rule include issues that had been considered and subsequently rejected by Congress during the 2008 Farm Bill.  Sunstein acknowledged that, unless authorized by the underlying statute, regulating beyond congressional intent “is a serious problem.”