Mar 20, 2018

Five Steps to Improve Decision-Making at Independent Regulatory Agencies

Jerry Ellig Former Senior Research Fellow

Not all regulatory agencies are designed in the same way. Many independent regulatory agencies lack some of the basic decision-making processes that executive branch agencies (like the Environmental Protection Agency) use.

Why it matters: Like any important decision, implementing regulations involves a number of trade-offs, and the right institutional safeguards can ensure regulators are focused on solving real problems at reasonable costs.

How regulators can do a better job

  • Avoid “ready-fire-aim” rulemaking, in which decisions are made first, and then economists are expected to produce a benefit-cost analysis that supports those decisions. 
  • Ensure the independence of economists (and other analysts) and give them incentives to conduct objective analysis. For example, have economists work in a separate office or bureau, and make sure they are not supervised by the policy staff who write the regulations that the economists will evaluate. 
  • Establish agency-wide standards for regulatory impact analysis that outline the topics that the analysis must cover and establish expectations for quality. 
  • Explain how the economic analysis affected decisions about the regulation. 
  • Invite the Office of Information and Regulatory Affairs to review the regulations and the accompanying analysis, just as it does for executive branch regulations. 

Read more: Why and How Independent Agencies Should Conduct Regulatory Impact Analysis

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