“America’s current shortage of baby formula is a crisis created, in significant part, by the failures of government policy aimed at protecting domestic companies from foreign competition.
But rather than sweep aside the rules and regulations that have contributed to this mess, the Biden administration and Congress are gearing up to address a problem created by industrial policy with…more industrial policy. We’re now weeks into the crisis, but the best response that our political leaders have been able to muster is an attempt to use public resources to duplicate the market response that would have solved (or at least eased) the mess if it had merely been allowed to operate. The entire saga is a sad and infuriating commentary about the entirely predictable failures of central planning.
Take the White House’s latest idea for addressing the shortage as a perfect example. On Wednesday, President Joe Biden announced plans to send military aircraft to Europe—”Operation Fly Formula,” as the White House is calling it—to bring back formula for American parents.”
“The baby formula shortage isn’t the result of there not being enough planes to transport baby formula from Europe to the U.S.; it’s the result of the federal government making it nearly impossible to transport baby formula from Europe to the U.S.
As Reason’s Elizabeth Nolan Brown explained earlier this week, the Food and Drug Administration’s (FDA) rules that prohibit many baby formulas made in Europe from being imported to the U.S. have nothing to do with health or nutritional safety issues. Often, those brands are banned because they fail to meet the FDA’s labeling requirements.
In addition, the U.S. imposes huge tariffs—technically tariff-rate quotas, which are designed to make it completely unprofitable to import more than a small amount of a certain product—on imported formula. Those tariffs exist for no reason other than to protect domestic formula manufacturers and the American dairy industry that supplies them. As a result, about 98 percent of the formula sold in the United States is produced here as well.”
“Rather than moving to ease those regulations, however, the House of Representatives approved a bill on Wednesday that throws $28 million at the FDA to “boost the part of the workforce focused on formula, as well as FDA inspection staff,” according to CBS News. As if the FDA deserves to be rewarded for its incompetence and over-regulation of baby formula. This crisis demands less from the FDA, not more.”
““The oil and gas industry has millions of acres leased … they could be drilling right now, yesterday, last week, last year,” Biden said last week. “They are not using them for production now. That’s their decision.”
For its part, industry has not leapt to expand drilling.
The major public oil and gas companies that drive much of the United States’ activity are holding themselves back with uncharacteristically miserly capital expense plans, returning cash to investors instead of drilling new wells. Officials with some companies say they are also facing bottlenecks for equipment, rigs and labor.
When it comes to public lands and waters, though, oil and gas companies have accused the White House of not truly supporting their industry and aiming to curb production.
Ryan McConnaughey, spokesperson for the Petroleum Association of Wyoming, said the Biden administration has a “playbook” for federal development: “delay, distract and deflect.”
“It doesn’t come as much of a surprise that the Biden Administration’s approval of APDs [applications for permit to drill] has plummeted,” he said.
Kathleen Sgamma, president of the Western Energy Alliance, said the political focus on the drilling permits and leases already held by industry is a red herring from the White House.
“Just because Acme O&G isn’t using a permit right away doesn’t mean that ABC O&G doesn’t need one for a well it’s planning to drill now,” she said. “If the federal permitting situation weren’t so inefficient and fraught with political interference, companies wouldn’t need to request a large inventory even years in advance.”
If the White House wants drilling to increase, they could ease regulatory requirements and speed up permitting, she said.
The permitting showdown is the latest of many disagreements over the federal oil program under Biden. When Biden came into office last year, he paused oil and gas leasing on federal lands and last fall published a report criticizing the program as antiquated and deferential to industry.
The leasing moratorium was overturned by a federal judge, but leasing has been slow to resume — and bogged down in continued legal wrangling. The outlook for new leasing in 2022 remains in limbo as Interior has said it will be difficult to move forward after a Louisiana federal judge blocked the use of an interim climate metric.
Meanwhile, Interior is developing regulations on oil and gas that will increase royalty rates and bonding requirements on federal leases, as well as impose new methane rules.
But the administration has also taken heat from environmental groups for focusing on these regulatory reforms rather than aggressively working to retire the oil and gas program.
Fossil fuels developed on federal lands, including coal, are responsible for as much as a quarter of the country’s downstream carbon dioxide emissions, according to the U.S. Geological Survey, a statistic that’s underscored criticism of continued drilling from environmental groups and climate activists.
Aaron Weiss, deputy director of the environmental group Center for Western Priorities, said the Biden administration has continued to “rubber stamp” drilling approvals.
“Even under Biden, 96 percent are getting approved versus 98 percent under Trump,” he said.
Weiss downplayed the impact of the permitting slowdown on industry, arguing that the number of permits issued doesn’t have an immediate correlation to industry’s ability to drill and that companies frequently allow permits to expire without being used. His organization counted 8,000 permits that oil companies had not used or had allowed to forfeit between 2016 and 2021.
“A slight dip in approvals makes no difference at all because APDs and available leases have never been a bottleneck,” he said.
With oil and gas companies exercising “fiscal discipline” to please investors, that’s even more the case, he said.”
“roughly 80 homeless people who live in the upstate community, and who have few options for escaping the dangerously frigid weather.
About half of those people could be housed on the second floor of a building owned by the city’s Free Methodist Church, where 40 empty beds sit ready to welcome people in from the cold.
Stopping that from happening are Gloversville’s zoning officials, who say that the commercial zoning of the church’s property and its downtown location prohibit it from hosting a cold weather shelter. Those empty beds will have to stay that way.
“The situation is dire up here and the city just refuses to let us open,” says Richard Wilkinson, the pastor of Gloversville’s Free Methodist Church. “It’s heartbreaking knowing there’s people out there.””
“Residents of Fort Mill, South Carolina, had to wait 18 long years for construction to start on a hospital that state regulators determined in 2004 was necessary—and then proceeded to hold up in an absurdly long legal battle that eventually went all the way to the state Supreme Court.
Hopefully, that saga won’t ever be repeated.
The state Senate voted 35–6 on Tuesday to repeal most of South Carolina’s Certificate of Need (CON) regulations that require hospitals and other health care providers to obtain permission from the state before expanding facilities, buying new equipment, or offering new services. Often, those regulations gave de facto veto power to existing providers, which lobby health policy bureaucrats to block the approval of new competition.
That’s exactly what happened in Fort Mill, where plans for a new 100-bed hospital were tied up for more than a decade and a half, in part because a rival hospital wielded the state’s CON laws in an attempt to block the new facility, as Reason previously reported.”
“If the bill becomes law, the Charleston Post and Courier reports, it would clear the way for 28 projects that are currently tied up in legal battles despite having won preliminary CON approval. Another 34 projects awaiting review by the state’s Department of Health and Environmental Control would be able to proceed as well. The paper estimates that those delayed projects represent more than $1 billion in health care investment in the state.”
“that doesn’t include the loss of projects that never materialized in the first place.”
“As part of his emergency order issued when COVID-19 first struck in March 2020, Gov. Henry McMaster (R) suspended enforcement of CON regulations—making South Carolina one of several states to do so because of the pandemic. When it became obvious that the sky wasn’t falling in the absence of those rules, some state lawmakers rightly began to question whether they were needed in the first place”
“Having utterly failed to end the marijuana black market in California, lawmakers have decided to backslide into the drug war by increasing fines on those who operate outside of the state’s very costly and tightly regulated legal cannabis system.
California will begin 2022 not just by increasing taxes on legal marijuana cultivation but also by introducing new fines against anybody “aiding and abetting” any unlicensed dealers in the state.”
“California’s implementation of recreational cannabis regulations, authorized by the passage of Proposition 64 in 2016, has been a massive mess. The ballot initiative allowed for municipalities to decide whether to allow cultivation and dispensaries, and two-thirds of them still refuse to do so despite the public vote. The state levies high cultivation and excise taxes that are escalated further by local sales taxes in any municipality that does allow for dispensaries to open up shop.
The result has been price and availability issues so severe that experts estimate that between two-thirds and three-quarters of all marijuana purchases take place through unlicensed dealers, which means that the state isn’t getting its share of the revenue. The problem is so severe that the editorial board at the Los Angeles Times recently acknowledged that high taxes for goods fuel black markets.”
“Beginning this year, federal food-labeling laws require products made with genetically modified ingredients to carry a label saying they are “bioengineered.” But short of requiring extra work and costs for food makers and manufacturers, the law is likely to lead to little change.
Research suggests that consumers won’t alter their behavior based on mandatory disclosure of genetically modified organism (GMO) food products.
“In the presence of existing voluntary non-GMO labels, mandatory labeling did not have any additional effect on demand,” wrote researchers from Cornell University, the University of Massachusetts Amherst, and the University of Wisconsin-Madison in a November 2021 paper. “Our findings suggest that voluntary non-GMO labels may already provide an efficient disclosure mechanism without mandatory GMO labels.””
“Many of the meat-industry problems the Biden administration identifies as in need of fixing are very real. For example, the administration says meat prices are through the roof. That’s true. The administration says the meatpacking industry is highly consolidated, with just four giant companies responsible for slaughtering and processing nearly 7 out of every 8 pounds of beef (and slightly lower amounts of pork and poultry) we eat every year. That’s true, too. (It was also largely true 20 years ago and 100 years ago.) The Biden administration has also argued large meatpackers have been busy “raising prices, underpaying farmers—and tripling their profit margins during the pandemic.” Also true.
The Biden administration believes meat prices are sky high due largely to this industry consolidation and lack of competition.”
“the real obstacle that’s preventing ranchers and farmers that utilize these facilities from supplying more meat to more Americans is an outdated federal law that props up the large processors while preventing local meat producers from selling steaks, roasts, and other cuts of meat to consumers in grocery stores, at farmers’ markets, and elsewhere in their communities.”
“farmers and ranchers who want to sell their meat commercially (or for it to be re-sold) in this country must have their livestock slaughtered in USDA-inspected (or state equivalent) slaughter facilities, where an inspector must be present and inspect every animal that’s slaughtered. In order to be sold commercially, meat from those same animals also must be processed (cut into steaks, ground up, cured, etc.) in a USDA-inspected processing facility. There’s a shortage of slaughter and processing facilities available to most small farmers and ranchers, and many plants are owned by a handful of large companies that don’t cater to those farmers and ranchers. As all this suggests, the current system poses a giant hurdle to many small farmers and ranchers.”
“As a fix, the Biden administration proposes, under a wordy header announced this week—the Biden-Harris Administration’s Action Plan for a Fairer, More Competitive, and More Resilient Meat and Poultry Supply Chain—to give $1 billion to smaller meat processors so that they can ramp up their production efforts, which would in theory provide farmers and ranchers with more choices for slaughter and processing. The plan also includes other elements, including “launching a new portal to allow farmers and ranchers to report unfair trade practices by meatpackers.””
“The USDA has been aware of many of the aforementioned problems with its meat-inspection scheme for decades. As I explain in my book, Biting the Hands that Feed Us: How Fewer, Smarter Laws Would Make Our Food System More Sustainable, when the agency commissioned a study 10 years ago to look at ways to streamline these regulations, the authors of the study concluded “that no one with the USDA or . . . working as professionals within the meat industry believe[s] that streamlining regulations will ever occur.”
Righteous pessimism hasn’t stopped people who care about small farmers and the livestock they raise from trying to come up with various fixes. The PRIME Act, a tremendous bill that has repeatedly failed to pass Congress, would, I explained in a piece in the The Hill in 2018, “provide states with the option to regulate livestock slaughter and sale within their borders.” Local solutions exist, too, but the federal government largely ignores or seeks to undermine them. States such as Wyoming and Colorado that have sought to use federal law to foster more local competition have bumped up against threats from overzealous USDA bureaucrats.”
“In a truly rare turn of events, California’s successful approach to legalizing more types of housing is serving as inspiration for reforms elsewhere in the country.
Over the past several years, lawmakers in the Golden State have passed a suite of bills that make it much easier for homeowners to build accessory dwelling units (ADUs), sometimes called granny flats or in-law suites, on their property, while also making it harder for local governments to stop such construction.
It’s proven to be one of the few YIMBY (yes, in my backyard)-inspired zoning reforms that has actually led to more housing being built. Now other states and cities with their own affordability crunches are passing or considering their own ADU deregulations.
Last week, New York Gov. Kathy Hochul, a Democrat, released her 200-page State of the State legislative agenda. Among other things, it took a swipe at local rules that prevent homeowners from turning their garage or attic into a new housing unit.
ADUs “can provide an affordable multi-generational housing option that helps families live closer together,” reads the State of the State book. “Current land use restrictions prevent homeowners in some communities from building ADUs.”
The governor’s agenda says she’ll propose legislation that would require localities to allow at least one ADU on owner-occupied residential lots. This legislation, per the agenda, would also prevent localities from adopting rules that legalize ADUs on paper, but prevent their construction in practice.
That reflects a lesson learned from California’s ADU experience, where state laws allowing homeowners to build a backyard apartment have technically been on the books since the 1980s.
For decades, however, cities were able to stop them from being built by imposing infeasible requirements that they come with off-street parking, be a minimum size, or receive special, discretionary permits in order to be built.
It took the passage of several additional bills between 2016 and 2019 limiting what localities could require of ADUs, and then several lawsuits to actually enforce those new rules, to really kick off new ADU construction.
The results have been pretty amazing so far.”
“To be sure, neither California’s nor New York’s high housing costs are going to be completely solved by more granny flats. But these reforms are an important piece of the puzzle.”
“Complicated local rules, understaffed city departments and slow communication with state regulators have made starting a weed business in California a protracted and risky ordeal. Red tape and paralyzing legal battles are stunting the market’s growth, leaving aspiring entrepreneurs in cities such as Los Angeles, Pasadena and Fresno waiting months or even years for permission to open, often while leasing empty storefronts.”