Re-imagine Regulatory Reform

Proposals to reduce and improve the regulatory state

The regulatory state has grown steadily over the last 6 decades. The Code of Federal Regulations is now 18 times longer than it was in 1950. While many of the goals behind these programs and rules are admirable, it’s undeniable that the shear volume of regulation has surpassed the capacity of the regulated to understand. So, how can we improve the efficiency and efficacy of federal regulations? Here are three proposals from the “Drain the Swamp?” forum. What do you think of these ideas? What’s missing from the conversation? Tell us your thoughts on these and other solutions in the comments.

Towards a New Model of Regulation, Philip Howard, Chair of Common Good

The current regulatory system isn’t working for anyone. It’s hard to find a regulatory program that isn’t broken; the only real question is whether it’s broken 25% or 75%. But, the earth has shifted with the last election and for the first time since the 1960s we have an opportunity to re-imagine how government works.

The solution doesn’t lie in the tired debate between regulation vs de-regulation. In an increasingly interdependent world, the demand for government oversight isn’t going to decrease. The regulatory state, in one form or another, is here to stay. Given that, the question becomes why does the current regulatory structure fail at achieving its goals? In part, because nobody designed the current system. It’s an accretion of ideas over the last 80 years, fixes on top of tweaks, just piling on top of itself until there is no coherent structure anymore. Furthermore, the current system is built on the premise that detailed rules can address every conceivable situation and dictate solutions to every conceivable problem.

It’s obvious we’ve past the capacity of central planning to address the needs of society. So, we must build a new regulatory system. This new system must:

1. Shift away from inputs to a focus on results, from command and control towards principles based decision-making. Localities and individuals must be afforded the ability to do things in their own way. The government will continue to safeguard the boundaries of acceptable behavior, but must cease dictating exactly how things should be accomplished;
2. Give people the authority to make decisions, allow them to apply legal principles and goals, and hold them accountable. This doesn’t require that you trust an individual official or bureaucrat. What it requires is that you trust a framework that holds people accountable; and
3. Entirely replace the current regulatory model. This overhaul cannot be done incrementally. Every significant shift in policy and government has been a seismic event; think about the 1860s, the 1930s, and the 1960s. We need an entirely new set of values, based on official accountability and responsibility. Enforcing regulations must be about right and wrong rather than about compliance.

Create a Regulatory Improvement Commission, Will Marshall, President, Progressive Policy Institute (PPI)

To get America back on a high-growth path, we need a well-functioning regulatory system. We don’t have one. Fundamentally, the problem is not that government keeps creating new rules, but that it almost never gets rid of old ones. The remedy is not freezing regulations but continuously updating, streamlining and improving them. Washington is full of agencies that write new rules, but not one institution that is responsible for subtracting old ones. So, we have to create a new entity charged exclusively with pruning old rules.

PPI proposes a new Regulatory Improvement Commission modeled on the military base-closing commission. The RIC would meet periodically, consult with business, individuals, independent experts and interested citizens to draw up a list of regulatory changes and submit it to Congress for an up-or-down vote. Then it would go to the President for signing. This “two-gate” approach would build political trust that the process won’t get out of control, and thereby lay the groundwork for further rounds of regulatory review and revision.

The RIC would not be a permanent bureaucracy. It would be a small body that convenes episodically and relies on staff loaned by Congress and the Executive Branch. Its costs would be negligible. Best of all, it already has bipartisan support; there’s a Senate bill with three Republican cosponsors and a House bill with considerably more.

If the new Administration wants to begin to break the political deadlock in Washington, the RIC provides a ready vehicle. Passing it would give the new administration an early win and help to dispel the “can’t do” pall that’s been hanging over Washington for too long.

Expand the Use of Benefit-Cost Analysis, Paul Noe, Vice-President for Public Policy, Forest and Paper Association

One of the most promising opportunities for the Trump Administration to improve the regulatory process is to dramatically advance the cost-benefit state. While every President from Ronald Reagan to Barack Obama has directed the agencies to base their regulatory decisions on benefit-cost analysis, they often have interpreted their statutes to limit their ability to fully engage in benefit-cost balancing and thus to comply with these directives. Fortunately, recent Supreme Court precedent — Entergy Corp. v. Riverkeeper and Michigan v. EPA — made quite clear that agencies have broad discretion to interpret statutes that are silent or ambiguous on benefit-cost analysis as permitting, not forbidding, this type of rationale regulation. And the logical corollary is that agencies resisting this invitation could leave their regulations vulnerable to an arbitrariness challenge under the Administrative Procedure Act.

The importance of clarifying agency authority to implement statutes through benefit-cost balancing should not be underestimated. The majority of environmental statutes — and I would venture to say the majority of all regulatory statutes — are silent or ambiguous on benefit-cost balancing. Under this Supreme Court precedent, the new Administration could direct the agencies, including independent regulatory commissions, to reexamine their statutory interpretations and implement their statutes through benefit-cost balancing — unless prohibited by law.

There are other promising ideas, and many are nonpartisan. Look no further than the recent “Report to the President-Elect” by the American Bar Association’s Section of Administrative Law and Regulatory Practice, which recommends, among other things: considering a regulatory budget; institutionalizing retrospective review of old rules on the books; reviving OMB’s regulatory review office (OIRA), and extending OMB oversight to independent agencies.