Patience Is Still a Virtue in the Regulatory Process

Focusing solely on the cost of regulatory delay ignores the public benefits of thorough analysis, disclosure, and oversight.

The upcoming confirmation hearing for George Mason University law professor Neomi Rao, President Trump's nominee to head the Office of Information and Regulatory Affairs, will likely showcase some pundits' perennial concern that analytical requirements, executive branch review, and judicial decisions have slowed regulation-writing to a crawl since the 1970s.

Before repeating this seductively simple claim, senators would be wise to review some basic facts, and consider whether, even if true, this is a bad thing or just a byproduct of a thoughtful process.

Like rumors of Mark Twain's death, tales of a decades-long regulatory slowdown have been greatly exaggerated. And for the important regulations, investing some extra time is exactly what we should be doing to make sure we get the decisions right.

For decades, the president's executive orders on regulatory analysis and review have reflected a bipartisan consensus: Agencies should have certain critical pieces of information in hand before they make regulatory decisions. These include an understanding of the nature and cause of the problem the agency seeks to solve, a set of reasonable alternative solutions, and estimates of the benefits and costs of each alternative. Currently, OIRA reviews regulations and the accompanying analysis from executive branch agencies to help ensure that they have done their homework.

Regulatory reform legislation currently being discussed by Congress would write these types of requirements into law and allow courts to review whether the required analysis meets minimum standards. If implemented properly, such reforms could instill greater accountability and lead to higher-quality regulation.

Critics have long contended, however, that analytical requirements, executive branch review, and judicial review have unnecessarily "ossified" the regulatory process. In biological terms, ossification is the process in which tissue hardens into bone. In regulatory terms, it is the idea that a fluid, adaptable process has morphed into something rigid and ineffective.

Several years ago, University of Richmond law professor Noah Sachs testified before the House Judiciary Committee that "the rulemaking process has become inordinately complex, time-consuming, and resource-intensive" due to procedures and analytical requirements added by executive orders and statutes. Additional analytical requirements in proposed regulatory reform legislation would make the regulatory process "completely dysfunctional," he claimed.

But the facts suggest that Professor Sachs' fears are overstated. Regulation has grown substantially during the period when ossification supposedly made it harder for agencies to regulate.

Proponents of the ossification thesis often cite the late 1970s as the beginning of the regulatory slowdown. However, the number of restrictions in the Code of Federal Regulations has almost doubled since then, from about 600,000 to more than 1 million in 2014. Similarly, the number of pages in the Code of Federal Regulations increased from 70,792 in 1975 to 171,943 in 2015. And in 2015, regulatory agencies issued 81 major rules and 2,272 other rules. These figures make regulatory agencies' allegedly ossified bones look mighty limber.

Several scholarly studies also cast doubt on the severity of the slowdown. An empirical study by Jason and Susan Yackee compared the time it took the Department of Interior to finalize regulations during two time periods: 1950-1975 and 1975-1990. They found that while rules took longer in the latter period, most were still finalized within one year after they were proposed and 90 percent were finalized within two years—a much quicker rate than suggested by those claiming that the system has ossified.

Likewise, Stephen M. Johnson found that most Environmental Protection Agency rules issued between 2001 and 2005 were finalized within 1.5 to 2 years after they were proposed.

Research by Cary Coglianese and others also questions whether the courts have stymied a significant number of EPA rules. Here evidence suggests that judicial review seems to block "EPA from taking action in only about [0.5] percent of all rulemakings."

This is not to say that rules are never delayed or obstructed by analytical requirements, OIRA review, or judicial review. There are examples of highly controversial rules that have been delayed. And it is certainty possible that today, the most significant and far-reaching rules are subject to more scrutiny and delays than average regulations.

But why shouldn't they be?

Focusing solely on the cost of regulatory delay ignores the public benefits of thorough analysis, disclosure, and oversight.

Currently, agency attempts to discover these essential pieces of information often fail. As a result, we get regulations that don't solve real problems, or do so only at very high cost. Those who claim that more careful analysis and oversight would make society worse off by forestalling the adoption of necessary regulations assume that regulatory agencies already know things that cannot be known until a high-quality analysis is conducted.

If senators want to make good use of their time at Professor Rao's confirmation hearing, they'll ask how she plans to make regulation smarter—not faster.