US Regulatory Process, Actors and History

US Regulatory Process, Actors and History
James Broughel
Program Manager, Regulatory Studies Program
Mercatus Center at George Mason University
Virginia, USA
Government Regulatory Players in the US
• Congress
• Executive branch agencies
• Independent agencies
• Advisory agencies (competition policy, small
• Federal courts
• State and local governments
Administrative Procedure Act (1946)
Requires that agencies go through a
notice and comment process open to
all members of the affected public,
both U.S. and foreign.
Before agencies can issue a final regulation, they must respond to
the public comments, make sure that the final regulation is a
logical out-growth of the proposal and the public record, and is not
arbitrary or capricious.
Then (1946)
Now (2013)
Executive Branch Rulemaking
Office of Management and Budget
Office of Information
and Regulatory Affairs
• Prepares president’s budget submission
• Oversees management of the executive branch
• Oversees regulation, reviews Regulatory Impact
Analyses (RIAs)
Brief History of Presidential Regulatory Review
• Nixon (1971): Quality of Life review
• Ford (1974): Economic analysis if impact > $100
• Carter (1978): Regulatory Analysis Review Group
• Reagan (1981): E.O. 12291
Presidential Regulatory Review (cont.)
• Bush I: Continued Reagan
executive order
• Clinton EO 12866 (1993)
• Bush II: Continued E.O. 12866
• Obama: Reaffirmed E.O. 12866
Independent Agency Rulemaking
Other Procedural Changes
• Unfunded Mandates Reform Act (1995) requires analysis of
“major” regulations (mandate exceeding $100 million annually)
• Regulatory Flexibility Act: Requires analysis of effects on small
• Legislative mandates in specific laws (Consumer Product
Safety Commission, Securities and Exchange Commission)
• Transparency requirements [Sunshine Act (1976), Paperwork
Reduction Act (1980), Data Quality Act (2001)]
Problems with the Current Process
• No mechanism for holding Congress accountable
after it passes a law
• Analysis is often poor in quality and not used (Report
• Agency face poor incentives
• No easy way of eliminating rules that are obsolete,
redundant or failing
Regulatory Reform Proposals
Congressional approval of new regulations
Require regulatory analysis by statute
Commission of experts to eliminate outdated or
obsolete regulations/programs
Require Congressional Approval
Goal: Make Congress accountable for costs of
Possible Implementation:
Require Congress to vote affirmatively for each
major regulation
Require Regulatory Analysis by Statute
Goal: Improve quality and use of regulatory
Possible Implementation:
Require judicial review
Benefits exceed costs (EO 12291) vs. benefits justify
costs (EO 12866)
Include independent agencies
Eliminate Obsolete Regulations
Goal: Reduce existing stock of regulations
Possible Implementation:
Commission of experts
Bipartisan Congressional committee
Enhanced regulatory review process
• The APA was a good start, but hasn’t been updated in 60
years, and was meant for another era
• When ex ante analysis is done poorly, this leads to
problematic rules
• Agency incentives means little retrospective analysis so
problematic rules persist
• Agencies have monopoly on analysis, and agency
incentives lead to creation of more and more rules
• No easy way of eliminating failing rules