Federal regulations—rules that are authorized by Congress but written by executive 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 like shall, must, may not, prohibited, and required, in the US Code of Federal Regulations. The effect of those regulations adds up. A recent study found that, if the number of regulatory restrictions had been held at its 1980 level, 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 regulation fall disproportionally on the least well off.
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 uniformly across the country, every state is not impacted equally by the regulations. By counting the individual regulatory restrictions on each industry and weighting them by their importance to each state, the FRASE index measures the relative force of federal regulation on each state’s private sector.
According to the 2017 edition of the FRASE index, Illinois experiences the 24th highest impact of federal regulation on its private sector. With a score of 1.01, the impact of federal regulation on Illinois industries was 1 percent greater than its impact on the nation overall. A FRASE index 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 Illinois’s constant-basis scores over time, can be found in table 1.1
|FRASE Score (Constant Basis)||1.1||1.16||1.18||1.21||1.28||1.27||1.4||1.51||1.51||1.58||1.57|
Key Industries in Illinois
Illinois’s FRASE score is driven by the federal regulations levied on the state’s most prominent private-sector industries. The top five industries (by contribution to the state’s FRASE score) are shown in Figure 1.
The industry that contributes the most to Illinois’s FRASE score is Chemical Products Manufacturing. Chemical Products Manufacturing makes up 2.8 percent of Illinois’s private sector. With 95,568 estimated relevant restrictions in 2015, regulations on Chemical Products Manufacturing account for 9.4 percent of Illinois’s FRASE score. The top regulators of Chemical Products Manufacturing are shown in Figure 2.
Regulators, however, can have an effect on more than one industry, and can therefore impact Illinois’s private sector in multiple ways. Figure 3 shows the five agencies that contribute the most to Illinois’s FRASE score through the regulations they produced (affecting all industries). The single agency with the largest impact on Illinois’s economy is the Environmental Protection Agency, which accounts for 28.3 percent of the total federal regulatory impact on Illinois.
The landscape of federal regulations can change from year to year, as can the makeup of a state’s economy. As such changes occur, residents of affected states may have to learn new sets of regulations or deal with different regulators. Using the FRASE index, Illinois citizens and policymakers can consider the impact of federal regulation in their state and determine whether that impact is adequately represented in the current debate about regulatory and legislative impact accounting.
The constant-basis FRASE score measures the impact of Federal Regulation on a state relative to the United States as a whole in 1997. The current-basis FRASE score measures the impact of Federal Regulation on a state relative to the United States in the year of the score.↩