The State of the Art of Regulatory Reform in the US: The OMB 2014 Report

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The Regulatory Right-to-Know Act calls for the Office of Management and Budget (OMB) to submit to the US Congress each year “an accounting statement and associated report” including: (A) an estimate of the total annual benefits and costs (including quantifiable and nonquantifiable effects) of Federal rules and paperwork; (B) an analysis of impacts of Federal regulation on State, local, and tribal government, small business, wages, and economic growth; and (C) recommendations for reform.

The 2014 Report has been recently published by the OMB-Office of Information and Regulatory Affairs (OIRA). In the previous reports OMB recommended a wide range of regulatory and analytic reforms and practices, including retrospective analysis of existing rules; examination of how to conduct and present regulatory impact analyses when necessary inputs are non-quantifiable; use of cost-effectiveness analysis, especially for regulations designed to reduce mortality risks; clear presentation of quantified and non-quantifiable costs, benefits, and distributional effects of proposed regulations and their alternatives; promotion of public participation and transparency through technological means; regulatory cooperation with international trading partners; promotion of economic growth and innovation; empirical testing of disclosure strategies; and careful consideration of approaches to regulation that are informed by an understanding of human behavior and choice.

In the 2014 Report OMB continues to support these recommendations focusing in particular on:

  • The institutionalization of regulatory lookback. OMB expects agencies will progress to more analytically-driven retrospective reviews, where the assessments of existing rules are akin to currently-conducted regulatory impact analyses (RIAs) of proposed and new rules but have the advantage of post-implementation data. Of course, agencies do not have a monopoly on assessing regulatory impacts; outside researchers often seek to estimate such effects. Agencies would, however, examine all or most aspects of a previous cost-benefit analysis, not just the surprising or analytically novel results that would typically receive attention from academic journals. Perhaps more importantly, agencies have the ability to facilitate retrospective analysis at the time when rules are issued. For example an agency could require—as a provision of a rule—the submission of data that would be necessary for assessing that rule’s future effectiveness. An agency could also include regulatory text requiring a retrospective review of regulation, stipulating a plan, establishing metrics to measure effectiveness, and a requiring a decision, by a date certain, of whether the review identifies potentially net beneficial regulatory changes. OMB recommends that agencies pursue retrospective review in a comprehensive fashion—encompassing continual look-back at administrative procedures; thorough cost-benefit analysis of previously-issued, non-administrative regulations; and the incorporation of plans for retrospective policy assessment into rulemaking currently underway.
  • International regulatory coordination. OMB sees international regulatory cooperation as another potentially fruitful area where agencies could consider reviewing, modifying, and streamlining existing regulation in order to avoid unnecessary or inadvertent regulatory differences between the US and its major trading partners.
  • Data openness and public participation. The public can participate in policy-making in a more informed way when the government does not have sole access to the data needed for analyzing the effects of regulations, programs and other policy interventions. OMB has released guidance to federal agencies about how to inventory and publish their data assets, FAQs about how open data requirements apply to federal acquisition and grant-making processes, and a framework for creating measurable goals that agencies can use to track progress. All of this is available on the Project Open Data website, which also features additional case studies and free software tools.

Further, OMB highlights recent developments in its continuing efforts to improve government information quality and transparency, as well as provide a brief update on the 2013 Agency reporting under the Government-Wide Information Quality Guidelines (“IQ Guidelines”) and the Information Quality Bulletin for Peer Review (“Peer Review Bulletin”). The Government-Wide Information Quality Guidelines, issued in 2002 after an extensive public comment process, provide policy and procedural guidance to Federal agencies for ensuring and maximizing the quality of the information they disseminate. The Information Quality Bulletin for Peer Review, issued in 2004 after an extensive public comment process, provides further guidance for pre-dissemination review of influential scientific information.

A summary of responses to comments on the draft 2014 Report is also offered in the final appendix. One public interest comment by James Broughel (Mercatus Center) is available here.

(Fabrizio Di Mascio)