US Regulations Under Intense Scrutiny in the Search for Efficiencies

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Government sharpens pencils looking for efficienciesOMB sharpens pencils looking for efficiencies

Budget constraints, high under-and-unemployment and recent bailout legislation are high among the many driving forces for policy makers to eliminate waste, fraud, abuse and duplicity in government programs.  Across the U.S., lawmakers continue to seek ways to streamline operations without upending essential public programs and services.

Last month the White House Office of Management and Budget (OMB) released their 2011 Report to Congress on the “Benefits and Costs of Federal Regulations and Unfunded Mandates on State, Local, and Tribal Entities.” The Report summarizes estimates by Federal regulatory agencies of the monetized benefits of major regulations over the last ten years.

Which Regulations are being reviewed?

Between fiscal years 2001 and 2010, largely during a republican presidency, Federal agencies published over 38,000 final rules in the Federal Register. OMB reviewed 3,325 of these final rules under Executive Order 12866. Of these OMB-reviewed rules, 540 are considered major rules, primarily due to their anticipated impact on the economy (i.e., estimated benefits or costs were in excess of $100 million in at least one year).

Rules with the highest benefits and the highest costs, by far, come from the Environmental Protection Agency and in particular its Office of Air. More specifically, EPA rules account for 62 to 84 percent of the monetized benefits and 46 to 53 percent of the costs. The rules that aim to improve air quality account for 95 to 97 percent of the benefits of EPA rules.

OMB Emphasis

As regulations are receiving increased scrutiny for their impact on the economy, OMB is responding and in the future their  Reports to Congress will emphasize:

  1. regulatory decisions and priority-setting should be made in a way that is attentive to the importance of promoting economic growth, innovation, job creation, and competitiveness.
  2. agencies should promote retrospective analysis of existing significant rules, with careful exploration of their actual effects and, when appropriate, consideration of steps to streamline, modify, expand, or repeal them.
  3. agencies should accompany all economically significant regulations with (1) a tabular presentation, placed prominently and offering a clear statement of qualitative and quantitative benefits and costs of the proposed or planned action, together with (2) a presentation of uncertainties and (3) similar information for reasonable alternatives to the proposed or planned action.
  4. agencies should carefully explore how best to treat non-quantifiable variables and should continue to use “breakeven analysis” when quantification is not possible, with such analysis defined as the specification of how high the non-quantifiable benefits would have to be, in order for the benefits to justify the costs.
  5. agencies should consider the use of cost-effectiveness analysis for regulations intended to reduce mortality risks, and should specifically consider the development of estimates for the “net cost per life saved.”
  6. agencies should bring rulemaking into the twenty-first century by promoting public participation and transparency through the use of Regulations.gov and other technological means.
  7. in order to promote trade and exports, and thus to increase job creation, agencies should promote regulatory cooperation initiatives with key trading partners.

It’s Time for Business to Step Up

If the 15 Federal government agencies adhere to OMB’s guidance in the future, it is possible to strike a balance between government safeguards and allowing U.S. businesses to prosper.  With the U.S. government seemingly beginning to do its part, it’s time that US businesses and investors begin doing their part to get our economy back on track by investing in research and entrepreneurial innovations and technology, hiring people and continuing to maintain their more formalized internal checks and balances in order to avoid more major corporate scandals.

With years of experience on the inside of the federal government, Cansler Consulting is an experienced lobbying firm that can use our expertise in agriculture, economic development, federal budget, trade negotiations, and our relationships on Capitol Hill to help you influence federal policy makers and regulators.

A copy of the complete White House Office of Management and Budget report may be obtained at: http://www.whitehouse.gov/sites/default/files/omb/inforeg/2011_cb/2011_cba_report.pdf.

Tim Cansler
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