Federal regulations—rules that are authorized by Congress but written by regulatory agencies and that have the force of law—affect every aspect of our economy. By 2016, there were more than 1.08 million individual regulatory restrictions, which are instances of terms such as shall, must, may not, prohibited, and required, in the Code of Federal Regulations. This buildup of regulations is not benign. A recent study found that, if the number of regulatory restrictions had been held at the level observed in 1980, then by 2012 the US economy would have grown to be about 25 percent larger than it actually was. Other recent research suggests that the costs of regulations fall disproportionately on low-income households.
Federal regulations apply in all 50 states and the District of Columbia. Each state’s economy, however, includes a unique mix of industries, and different industries are affected by different federal regulations. This means that, even though federal regulations apply in every state, the impact of those regulations varies from state to state. The FRASE index measures the relative force of federal regulations on each state’s private sector by counting the individual regulatory restrictions targeting each industry and weighting them by each industry’s importance to a state.
In 2015, North Carolina experienced the 19th highest impact of federal regulations. With a current-basis score of 1.05 , the impact of federal regulations on North Carolina’s private sector was 5 percent greater than the impact of federal regulations on the nation overall. A FRASE score of 1 would mean that federal regulations affect a state to precisely the same degree that they affect the nation as a whole. This information, as well as North Carolina’s constant-basis scores over time, can be found in table 1.1
|FRASE Score (Constant Basis)||1.17||1.18||1.23||1.3||1.32||1.33||1.46||1.49||1.57||1.62||1.63|
The industry that contributes the most to North Carolina’s FRASE score is Chemical Products Manufacturing. This industry makes up 6.9 percent of North Carolina’s private-sector economy. With 95,568 estimated relevant restrictions in 2015, regulations on Chemical Products Manufacturing account for 22.5 percent of North Carolina’s FRASE score. The top regulatory agencies for Chemical Products Manufacturing are shown in figure 2.
Regulatory agencies, however, can affect more than one industry and can therefore impact North Carolina’s private sector in multiple ways. Figure 3 shows the five agencies that contribute the most to North Carolina’s FRASE score through the regulations they produced. The single agency with the largest impact on North Carolina’s economy is the Environmental Protection Agency, which accounts for 32.9 percent of the total federal regulatory impact on North Carolina.
The FRASE index can help North Carolina’s citizens and policymakers consider the impact of federal regulations in their state and determine whether that impact is adequately represented in the current debate about regulation. See the Mercatus Center’s primer on comprehensive regulatory reform for possible improvements to our current regulatory system.
The constant-basis FRASE score measures the impact of federal regulations on a state in a specific year relative to the United States as a whole in the year 1997. The current-basis FRASE score measures the impact of federal regulations on a state in a specific year relative to the United States as a whole in that same year.↩