Mercatus Toolkit: Effectively Analyzing and Commenting on Regulations
WHAT IS A REGULATORY IMPACT ANALYSIS AND WHY IS IT IMPORTANT?
Each economically significant rule must be accompanied by a regulatory impact analysis (RIA), in which the agency is supposed to assess whether the rule is needed, identify options for solving the relevant problem, and measure the benefits and costs of each of those options. Ideally, this analysis has influenced the proposed rule.
The Office of Information and Regulatory Affairs (OIRA) plays an important role in overseeing the agency analyses and should be viewed as a resource for stakeholders. For the rules that OIRA reviews, numerous changes often take place to help ensure that the analyses are correct and are used to inform the decision. OIRA does not just look at agency analyses; it also looks at comments from those with an interest in the rulemaking. Therefore, public comments about regulatory options, benefits, and costs can have a significant impact on the final rule.
In a recent Mercatus study, public policy professor Stuart Shapiro found that comments based on economic arguments are more than twice as likely to elicit agreement from agencies as comments related to a rule’s legality. When agencies agree with comments, they are likely to make changes to regulations based on the information provided in the comments. When they disagree, OIRA may play a role in making changes. Close scrutiny of agency RIAs is essential to ensure that regulations will achieve their intended results and that rules provide the most benefits to society at the lowest cost to consumers and regulated entities.
Every year, executive branch agen- cies publish dozens of economically significant regulations—each of which is expected to affect the economy by at least $100 million in a single year. These regulations will have far-reaching economic consequences that are rarely fully anticipated. People affected by regulation can use economics to better understand the ripple effect of regulatory decisions and how to make their input into the regulatory process more consequential.
KEY MERCATUS CENTER TOOLS FOR ANALYZING REGULATIONS
The Mercatus Center has created several tools to help analyze proposed regulations and develop comments that can make the economic consequences of regulation clearer to agencies.
The Mercatus Center’s Regulatory Cost Calculator is a practical tool allowing those affected by regulation to assess direct and indirect costs of individual proposed regulations. Better information on costs provides a clearer picture of the potential consequences of a proposed rule on regulated entities, consumers, and society more broadly. Armed with this information, those affected by regulatory policy (e.g., firms, states, trade organizations) can have a stronger voice in the rulemaking process and in educating legislators, the media, and the public-policy community. Visit mercatus.org/regcostcalculator for the list of questions used to identify the full range of costs.
Public comments on proposed regulations can generate a positive dialogue with regulators, especially when comments highlight areas for improvement and are backed by sound economic analysis. For this reason, the Mercatus Center has published a guide to writing comments that are informed by economic analysis. A careful critique of a proposed regulation may reveal that the rule is less effective or more costly than it needs to be, that a different approach is needed, or even that regulating is completely unnecessary. A well-researched comment can persuade the agency, the Office of Information and Regulatory Affairs, or Congress to use a different approach.
RegData is a revolutionary database that quantifies federal regulation over time, across indus- tries, by public law, and by regulator. RegData significantly improves upon previous methods of measuring regulation: it works by searching the Code of Federal Regulations and counting the number of restrictions and the likely targets of those restrictions. Among other advantages, users can look within a particular industry or regula- tory agency to study the degree of regulatory ac- cumulation with unprecedented clarity. RegData can also demonstrate the potential overlap of regulations by revealing how numerous agencies may simultaneously target the same industry. When a specific act of Congress precipitates a change in regulations targeting an industry, RegData offers an excellent tool to visualize the regulatory effect of that public law.
