Aug. 14, 2017

How to Judge a Proposed Regulation In Ten Easy Steps

Many important policy decisions are made not by Congress, which often agrees on broad themes and platitudes and little else, but by federal agencies that implement legislation by issuing regulations that set forth lasting enforceable restrictions limiting private activities.

Since a 1981 directive issued by President Reagan, government agencies have routinely conducted benefit-cost analyses of new regulations before issuing them.

Earlier this year, the White House Office of Management and Budget made clear that new regulations issued by Executive Branch agencies, even if deregulatory, are still subject to the same benefit-cost analysis as earlier.

At issue is how to interpret and evaluate such regulatory analyses, which, after all, are developed by staff at the very agency that issues the new rule, are rarely fully reviewable in court, and are not subject to impartial review by any party outside the Executive Branch.

Batten Professor Randall Lutter and 18 other experts have issued guidance in the form of a “top ten” list of suggestions for policy makers who may review the expected benefits and costs of possible new regulations.

These benefit-cost analyses, also known as “regulatory impact analyses,” are “dense and complex documents” that can be “hundreds or even thousands of pages”, according to Susan E. Dudley, head of The George Washington University’s Regulatory Studies Center, who recently wrote about such analyses for Forbes magazine.

“In the simplest terms, the goal of (a regulatory impact analysis, or RIA) is to present information to decision makers to help them to ensure that proposed regulations do more good than harm,” wrote Lutter and his co-authors.

Thus their guide “offers policy makers and other consumers of RIAs 10 tips for asking informed questions when reviewing and interpreting them.”

“We hope that these 10 tips can help” those reviewing proposed rules to “ask appropriate questions of an RIA, understand what the analysis really means, and judge its implications for regulatory policy.”

The study suggests asking: Can the normal interaction between buyers and sellers “achieve an outcome at least as efficient as what government reasonably would be expected to accomplish through regulation?” (The full list of the ten tips is at the end of this story.)

The report, a Consumer’s Guide to Regulatory Impact Analysis: Ten Tips for Being an Informed Policymaker, is here. It appears in the Journal of Benefit-Cost Analysis, and was published online last month. The authors’ teamwork was organized by The George Washington University Regulatory Studies Center.

The authors “hope that these 10 tips can help policy makers and other interested readers to appreciate the value of RIAs, ask appropriate questions of an RIA, understand what the analysis really means, and judge its implications for regulatory policy.”

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