Of all the executive orders issued by President Obama, one of the most important is one most people never knew existed: Executive Order 13563 – Improving Regulation and Regulatory Review .
In the order, the president requires federal agencies to perform a “retrospective analysis” of existing regulations to evaluate their efficiency and effectiveness:
(a) To facilitate the periodic review of existing significant regulations, agencies shall consider how best to promote retrospective analysis of rules that may be outmoded, ineffective, insufficient, or excessively burdensome, and to modify, streamline, expand, or repeal them in accordance with what has been learned. Such retrospective analyses, including supporting data, should be released online whenever possible.
(b) Within 120 days of the date of this order, each agency shall develop and submit to the Office of Information and Regulatory Affairs a preliminary plan, consistent with law and its resources and regulatory priorities, under which the agency will periodically review its existing significant regulations to determine whether any such regulations should be modified, streamlined, expanded, or repealed so as to make the agency’s regulatory program more effective or less burdensome in achieving the regulatory objectives.
This executive order was issued four years ago—in January 2011. So how is that evaluation process going?
In 2014, the George Washington University Regulatory Studies Center launched a yearlong effort to evaluate high priority proposed rules to “determine whether it was designed in a manner that would make its outcomes measurable ex post.” Unfortunately, their findings are not at all surprising:
While agencies commonly use prospective evaluation to estimate what the effects of their regulations will be (typically in the form of a benefit-cost analysis), they do not typically use this analysis to measure the effects of their rules after implementation, or to design their rules to aid retrospective review.
In other words, the agencies claim that regulations will have all sorts of benefits to the public—yet they rarely explain how those benefits will be measured or whether they will be considered at all.
In fact, as the study found, the regulations often don’t even address the problems they are supposed to fix:
[W]hile many agencies successfully identified a problem that their regulation was intended to address, in many cases the problem identified was not related to the rules the agency proposed. For example, in many of DOE’s proposed energy efficiency standards, the department identifies inadequate or asymmetric information about potential energy savings as the problem to be addressed.
However, the standards themselves do not address information provision in any way; instead, these rules ban products from the marketplace. In such cases, either DOE has identified the wrong problem, or DOE’s problem is not addressed by its standards. Both cases are worrying, and impede the purposes of retrospective review by disconnecting the actual effects of a rule from its intended (or stated) purpose.
The same issue arose in the evaluation of an EPA rule establishing greenhouse gas (GHG) emission standards for new power plants. The problem that EPA identified was the threat GHG emissions pose to the American public’s health and welfare when they contribute to climate change. However, EPA’s analysis assumes that no additional coal-fired power plants will be built, in which case the rule poses no costs and no benefits to the public.
This assumption presents some difficulty for evaluating the success of EPA’s rule, and contradicts some of the outcomes that EPA states will result from its standards. For example, if this assumption is correct, then the rule will not result in any reduction in CO2 emissions from coal-fired or natural gas-fired power plants. This is problematic because the entire reason EPA proposed the rule was to address these stationary source emissions, and if market factors are already addressing these emissions satisfactorily, there is no remaining problem for this standard to address.
This would be a problem even if federal regulations didn’t impose any costs on society. But they do—and the cost are enormous. The officially reported regulatory costs as reported by the Office of Management and Budget (OMB) total up to $128.7 billion. However, the real costs of regulation is impossible to know since, as the Nobel-winning economist James Buchanan has said, “Cost cannot be measured by someone other than the decision-maker because there is no way that subjective experience can be directly observed.”
Determining the good from the bad in regulation is not just a duty of good governance but also a moral obligation. We aren’t merely wasting money on bad regulations, we are wasting resources that could be used to improve the lives of all citizens. And that’s too high a price to pay.
(Via: The Week)