December 12, 2014

Regulatory Impact Analysis: The Cornerstone of Regulatory Reform

Key materials

Congress has a diverse array of proposed regulatory reforms vying for attention, from targeted reforms aimed at providing relief to small businesses to broadbased reforms of the rulemaking process. Setting priorities will be a challenge, but the common objective is clear: solving more problems at a lower cost with fewer regulations.

To ensure that this happens, decision makers must understand the likely consequences of regulations before they propose them. Therefore, any effective regulatory reform must require agencies to first conduct a complete analysis of regulatory proposals and their alternatives before they write proposed and final regulations. For this reason, comprehensive regulatory impact analysis (RIA) is the cornerstone of regulatory reform.

THE GOAL: SOLVE MORE PROBLEMS AT LOWER COST WITH FEWER REGULATIONS

In general, the only way we improve our standard of living is by improving productivity—that is, achieving more with less. This principle applies to government as well as to families and business firms. Regulatory reform should enable regulatory agencies to solve more problems at lower cost with fewer regulations. Presidents of both parties have articulated this goal in the past when proposing requirements to guide executive branch regulatory review:

• President Carter’s Executive Order 12044 directed that regulations “shall achieve legislative goals effectively and efficiently. They shall not impose unnecessary burdens.”1

• President Reagan’s Executive Order 12291 was intended in part to “reduce the burdens of existing and future regulations, increase agency accountability for regulatory actions . . . and insure well-reasoned regulations.”2

• President Clinton’s Executive Order 12866, which currently governs regulatory planning and review, stated that the American people deserve “a regulatory system that protects and improves their health, safety, environment, and well-being and improves the performance of the economy without imposing unacceptable or unreasonable costs on society.”3

• President Obama’s Executive Order 13563 articulated the same goals as Executive Order 12866 and added that the regulatory system “must measure, and seek to improve, the actual results of regulatory requirements.”4

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