Transcript Regulatory Policy in the United States

U.S. Office of Management and Budget
Office of Information and Regulatory Affairs
From Cutting Red Tape to
Maximizing Net Benefits
Alexander T. Hunt
U.S. Office of Management and Budget
Challenges on Cutting Red Tape
Rotterdam, The Netherlands
March 1, 2007
The U.S. Experience with Cutting Red Tape
 A Long History.
 OMB has been reviewing agency paperwork burdens for over 64 years.
 Regulatory Review and Analysis.
 Regulatory analysis is necessary to address all regulatory impacts.
 Lessons.
 What we have learned.
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Office of Management and Budget
 Assists the President in the development and
implementation of budget, program, management, and
regulatory polices.
 Develops the President’s annual budget submission to Congress.
 Assists the President in managing the Executive Branch, developing the
Administration’s position on legislation before Congress and executing the law.
 Provides high quality regulatory analysis.
 Role of the Office of Information and Regulatory Affairs
 OIRA was established by the Paperwork Reduction Act of 1980, partially in
response to the explosion in regulation that occurred in the 1970s and earlier in
the U.S.
 OIRA manages and coordinates Federal rulemaking, and oversees Federal
information management, statistical policy, and information technology policy.
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Paperwork Reduction Over the Years
 Federal Reports Act of 1942
 Commission on Federal Paperwork
 Paperwork Reduction Act of 1980
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The Paperwork Reduction Act
 The Paperwork Reduction Act (PRA) is intended to
improve the quality and practical utility of information
required by the Federal government, and reduce
paperwork burden on the public.
 The PRA requires each agency to seek and obtain OMB
approval before collecting information from ten or more
members of the public.
 Agencies are not to conduct or sponsor the collection of
information unless it has been approved by OMB.
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Measuring Administrative Burdens
 Time to read instructions, gather records, complete response,
and submit information to agency.
 Seek public comment.
 Itemize burden by program, by forms, and other criteria.
 The Individual Taxpayer Burden Model.
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OMB Regulatory Review

Presidential Executive Order 12866

Executive Order 12866 on Regulatory Planning and Review governs OMB’s
oversight of agency rulemaking, requiring OMB review of “significant”
agency regulatory actions.

Agencies submit draft significant regulations (both proposed and final) to
OIRA for an up-to-90-day review before publishing them.

OIRA reviews 500-700 proposed and final regulations per year—those we
determine to be significant—out of about 8,000 that are issued.

About 70-100 of the regulations reviewed are “economically significant”
(over $100 million per year in economic effects).

During our review, we examine the RIA and the regulation and make
suggestions to improve both the RIA and the rule’s cost-effectiveness and to
make sure that it comports with the Executive Order’s principles and the
President’s priorities.

If the agency refuses to make changes or needs more time to make the
changes, we can return the rule to the agency for reconsideration.
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Regulatory Analysis
 EO 12866 requires agencies to conduct regulatory
analysis for “economically significant” regulatory
actions.
 Costs or benefits greater than $100 million annually.
 OMB has had guidelines for regulatory analysis since the
1980s.
 Revisions were made in 1996, 2000, and “Circular A-4” was issued in 2003.
 The Guidelines were developed in a rigorous and open
manner.
 Subject to public review and comment.
 Interagency review process.
 Reviewed by a panel of leading academic experts in economics, decision
science, public health, and law.
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What is a Good Regulatory Analysis?

A good regulatory analysis will answer these three
questions (and do so in a transparent manner):
(1) What is the need for the proposed action?


Market failure or other social purpose.
Federalism and global considerations.
(2) What are the alternative regulatory options?
(3) What are the benefits and costs of the proposed action
and the primary alternatives?



Benefit-cost analysis (BCA)
Cost-effectiveness analysis (CEA)
Uncertainty analysis
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General Analytic Issues
 Define the scope.
 Evaluate impacts on the US over a sufficient time horizon.
 International effects may be examined, but reported separately.
 Identify the baseline.
 The world without the proposed action; usually not identical to the world that
exists today.
 Consider the effects of existing regulations and market decisions.
 Identify and evaluate alternatives.
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General Analytic Issues (cont.)
 Non-quantifiable impacts.
 Consider a threshold or break-even analysis to evaluate their significance.
 Consider distributional effects.




Industrial sector, small businesses
Demographic groups (income, race, gender, age)
Geography
Time (future generations)
 Ancillary benefits and countervailing risks.
 Transparency and reproducibility of results (adhere to
requirements for information quality and peer review).
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Results: Costs and Benefits of Major Rules
(1992-2005)
$90
Costs
Benefits
$80
$70
$50
$40
$30
$20
$10
$0
Year
2005
2004
2003
2002
2001
2000
1999
1998
1997
1996
1995
1994
1993
-$10
1992
Billions of 2001 dollars
$60
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Lessons Learned
 Analysis of administrative and regulatory requirements should
be as comprehensive as possible.
 An effective regulatory program should ensure that impact
analysis is conducted to promote efficiency.
 Rigorous analytic standards must be enforced through strong
centralized oversight.
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References
 Paperwork Reduction Act of 1995:
www.archives.gov/federal_register/public_laws/acts.html#pra
 Executive Order 12866 – Regulatory Planning and Review (October 4,
1993): www.whitehouse.gov/omb/inforeg/eo12866.pdf
 OMB guidance to agencies on Regulatory Analysis (September 17,
2003): www.whitehouse.gov/omb/circulars/a004/a-4.pdf
 2006 Final Report to Congress on the Costs and Benefits of Federal
Regulations
www.whitehouse.gov/omb/inforeg/2006_cb/2006_cb_final_report.pdf
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Questions
Alex Hunt
(202) 395-7860
[email protected]
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