What's New from the GW Regulatory Studies Center
2/9/16 - Forbes Opinion: How Much Will Climate Change Rules Benefit Americans?, by Susan E. Dudley, Art Fraas, Ted Gayer, John Graham, Randall Lutter, Jason F. Shogren, & W. Kip Viscusi
2/9/16 - Should Federal Regulatory Agencies Report Benefits to Americans from Mandated Reductions in Greenhouse Gas Emissions?, a letter to the National Academy of Sciences, by A. Fraas, R. Lutter, S. Dudley, T. Gayer, J. Graham, J. Shogren, & W. Viscusi
2/5/16 - Science Magazine Letter, Social cost of carbon: Domestic duty, by Art Fraas, Randall Lutter, Susan Dudley, Ted Gayer, John Graham, Jason F. Shogren, W. Kip Viscusi
2/4/16 - NEWS: The Hill, Window on Obama regs closing, quoting Susan E. Dudley
2/3/16 - Regulation Digest, Vol 5 No 5
2/3/16 - Commentary: Senate Shows Continuing Interest in Regulatory Reform, by Sofie E. miller
2/1/16 - NEWS: Bloomberg BNA, OIRA Wish for 2016: An Orderly Regulatory Process, quoting Daniel R. Pérez
1/27/16 - Regulation Digest, Vol 5 No 4
1/26/16 - Commentary: Countdown To Midnight On The President's Regulatory Priorities, by Susan E. Dudley
1/26/16 - Forbes Opinion, Obama Officials Prepare For The Regulatory Stroke Of Midnight, by Susan E. Dudley
New Commentaries from the George Washington University Regulatory Studies Center
Senate Shows Continuing Interest in Regulatory Reform
Countdown To Midnight On The President's Regulatory Priorities
Looking Ahead to Regulation in 2016
President Obama’s Regulatory Output: Looking Back at 2015 and Ahead to 2016
Are Chemical Risk Assessment and Benefit-Cost Analysis Compatible?
Insights on South Korea’s Public-Private Partnership for Regulatory Reform
Herding Genetically Engineered Animals to Market
Missed Opportunity for EPA to Cut Back Renewable Fuel Standard
Midnight Rules: A Comparison of Regulatory Output Across Administrations
2/3/16 - Regulation is one of the primary vehicles by which federal policy is made, and it affects every household, employee, and business in the U.S. Recognizing this fact, the Senate Homeland Security and Governmental Affairs Committee recently released a report featuring practical regulatory reforms submitted by the GW Regulatory Studies Center and others. This commentary includes our recommendations for improving regulatory analysis, retrospective review, congressional oversight, and judicial review.
1/26/15 - Regulatory activity tends to surge in the final year of a presidential administration. Significant legislation from Congress is unlikely, and regulations are one of the few tools available for outgoing executive branch officials wanting to leave a legacy. The last three months in particular have historically seen a flurry of “midnight regulation” before a new president is sworn in. In an effort to get ahead of that rush, OIRA Administrator Howard Shelanski recently sent a memo to executive agencies asking them to adhere to their regulatory agendas.
1/20/16 - Although Congress will not likely enact new legislation in President Obama’s final year in office, regulatory agencies are a different matter. Federal agencies like DOE, EPA, FDA, and OSHA plan to issue several important final rules in 2016, including new energy efficiency standards, e-cigarette rules, and exposure levels for crystalline silica. This commentary examines some of the most noteworthy regulatory actions to expect from federal agencies in 2016.
1/12/16 - In 2015, President Obama’s executive agencies issued 62 economically significant rules—those defined in Executive Order 12866 as likely to have “an annual effect on the economy of $100 million or more,” making last year the second most active regulatory year of his presidency. Many of these rules focused on his regulatory priorities. This commentary looks back at the number of regulations published in 2015 and ahead to 2016, evaluating the President’s activity in the context of regulatory output of previous administrations.
1/6/16 - Executive Order 12866 requires benefit-cost analyses for all regulations; in many cases these economic analyses rely upon risk assessment for critical inputs. Usually this is not a problem; in principle, risk assessment and benefit-cost analysis are perfectly compatible. But benefit-cost analysis and chemical risk assessment have not had a happy history together. The problem can be traced to some specific practices that historically have characterized chemical risk assessments, and that are widely accepted within that community.
12/21/15 - Representatives from Korea’s Public-Private Joint Regulation Advancement Initiative (PPJRAI) recently concluded their visit to the United States, where they met with regulatory experts from both the public and private sectors in Washington, D.C. This public-private initiative constitutes an important part of Korea’s efforts to build on its successful history of regulatory reform and improve the market-oriented features of its regulatory system.
12/17/15 - The US Food and Drug Administration’s (FDA’s) recent decision to approve a genetically engineered salmon for human consumption bodes well for people interested in cheaper fish that are rich in omega three fatty acids. This commentary explores what could either be a new era of innovative animal biotechnology or continuing stagnation.
12/16/15 - EPA’s newest renewable fuel standard rule mandates the production of over 18 billion gallons of renewable fuel in 2016. Unfortunately, this biofuel mandate is bad news for the environment and for American consumers: the past decade has provided evidence that mandated ethanol production could be creating more carbon dioxide emissions than gasoline and polluting waterbodies via nitrogen fertilizer runoff. The latest final RFS rule was a missed opportunity for EPA to slow the growth of biofuel mandates that increase pollution without accomplishing important environmental goals.
12/1/15 - As Presidential administrations wind down during their “lame duck” period, their final three months between Election Day and Inauguration Day is usually accompanied by a flurry of last-minute regulatory activity known as the Midnight period. This last-minute increase has direct implications for the quality of review that the Office of Information and Regulatory Affairs (OIRA) is able to provide.
Latest Research from the GW Regulatory Studies Center
Should Federal Regulatory Agencies Report Benefits to Americans from Mandated Reductions in Greenhouse Gas Emissions?
In a letter to the National Academy of Sciences on its project, "Assessing Approaches to Updating the Social Cost of Carbon," a group of prominent regulatory economists argues that federal regulatory analysis should compare domestic regulatory benefits to domestic costs. The current government approach of reporting only the global benefits of reducing carbon emissions neglects that duty. The letter recommends that the panel adopt a dual approach that refocuses regulatory impact analysis of climate regulations on domestic benefits, while providing for separate reporting of estimated global benefits.
Public Comment on EPA’s Proposed Supplemental Finding that it is Appropriate and Necessary to Regulate Hazardous Air Pollutants from Coal- and Oil-Fired EGUs
EPA fails to show that its MATS is appropriate and necessary to address risks to public health and the environment from hazardous air pollutants. Its preferred approach has methodological problems and does not address the Supreme Court’s direction to balance the harm of the regulation against the good. Its benefit-cost analysis is dominated by co-benefits that are not subject to the statutory authority on which it relies, and that could be addressed more cost-effectively elsewhere. EPA also ignores the fact that the $9.6 billion cost will have large detrimental effects on public health.
Choosing regulatory options that maximize net benefits is a sound principle, but it needs to be applied with an appropriate measure of humility. Regulators may be tempted to think that they can use benefit-cost analysis to determine what is “best” for the economy, and then simply mandate it. The collateral damage to competition and innovation can easily turn an otherwise well-intentioned rule into an economic disaster. Regulatory specification of a particular technology can be especially damaging when the technology is proprietary, because then the law may simultaneously lock out competitors and lock in customers.
Public Comment on OMB’s 2015 Draft Report to Congress on the Benefits and Costs of Federal Regulations
The Office of Management and Budget’s 2015 Draft Report to Congress provides information on costs and benefits for certain final rules issued between FY 2004 and FY 2014. The Report provides the public valuable information both on estimates of the effects of major executive branch regulations, and also on OMB’s focus and priorities. This comment offers recommendations for improving regulatory impact assessments, writing rules to encourage retrospective review of regulations, and the use of “private benefits” to justify energy efficiency standards.
The regulatory environment in which firms interact can hinder or contribute to the creation and early stage growth of new businesses as well as to the innovation process within a market. This document reviews the literature that explores the empirical relationship between regulation and innovation and regulation and entrepreneurship, focusing on the effects of regulatory quality across countries. The thematic analysis conducted in this literature review indicates that institutions matter for economic activities and that regulation, as an important part of the institutional environment, is a central aspect of the ecosystem for innovation and entrepreneurial engagement.
Public Comment: EPA’s Proposed Rule: Federal Plan Requirements for Greenhouse Gas Emissions From Electric Utility Generating Units
This Public Interest Comment, filed last year in response to EPA’s proposed Clean Power Plan, addresses the relative merits of a “mass-based” or “rate-based” emissions trading program in state plans required by EPA’s rule. This same question has arisen again in the context of EPA’s development of Federal Implementation Plans (FIPs) that might be imposed on noncomplying states. The comment (which has now been filed in the FIP rulemaking) concludes that a rate-based trading program, similar to the EPA’s successful program for trading lead in gasoline in the 1980s, has compelling advantages over a mass-based program.
Identifying Regulations Affecting International Trade and Investment: Better Classification Could Improve Regulatory Cooperation
Early notice of upcoming regulations that are likely to affect international trade and investment helps U.S. citizens and companies as well as our trading partners. The U.S. has tasked its regulatory agencies with flagging such rules in the semiannual Unified Agenda before they are issued. We compared the number of rules that agencies flagged as likely to have an international impact from 2008 through 2014 with the number of rules we identified, based on our criteria, that were likely to have such an impact. Agencies are currently identifying less than 30% of these rules.
Through a series of Executive Orders, President Obama has encouraged federal regulatory agencies to review existing regulations and to “modify, streamline, expand, or repeal them in accordance with what has been learned.” Learning from experience is an important part of a healthy regulatory process, so multiple government guidelines instruct agencies to incorporate retrospective review plans into their proposals during the rulemaking process. Our latest research finds that, despite these guidelines, agencies are not planning prospectively for ex post analysis of their rules.
Although state resistance to federal mandates is a prevalent characteristic of contemporary American federalism, little is known about the factors that separate resisting states from states that do not oppose federal policy. This article examines state resistance through a framework that classifies public policies by salience and complexity and identifies societal interests and government officials who are hypothesised to influence policy making on issues of varying types. These hypotheses are investigated in the context of state resistance to four federal laws – the Patient Protection and Affordable Care Act, No Child Left Behind Act, Help America Vote Act and REAL ID Act. The results of the statistical analysis demonstrate the centrality of the characteristics of citizens, elected officials and specialised interest groups in conditioning state resistance to federal mandates. These results suggest that state resistance can be characterised as a strategic response to federal mandates that varies systematically across types of public policies.
Public Interest Comment on EPA and NHTSA's Proposed Rule: Greenhouse Gas Emissions and Fuel Efficiency Standards for Medium and Heavy-Duty Engines and Vehicles – Phase 2
Contrary to claims, EPA and NHTSA’s proposed standards to regulate greenhouse gas emissions and fuel efficiency for medium and heavy-duty engines and vehicles is not “a win-win-win.” The agencies’ RIA forecasts large benefits, mostly in the form of private fuel savings but, fails to recognize that competitive markets are far better informed, and far better motivated, to pursue these fuel savings efficiently. The net effect will be higher costs, not savings. Other external benefits might be used to justify the standards, but an honest RIA would acknowledge that these come at a price.
The Senate Homeland Security & Government Affairs Committee held a hearing on Thursday September 16, at which they asked Susan Dudley to provide expert input on six regulatory reform proposals scheduled for markup. Her testimony complimented the Committee on the constructive, bipartisan reforms, which if passed, could bring about real improvements in regulatory procedures and outcomes. She offered detailed comments on each bill, of which three focus on evaluating the effects of existing regulations and modifying them as appropriate, and three focus on enhancing analytical procedures conducted before new regulations are issued.
Effective environmental policy depends on reliable scientific information and transparent policy choices; it is challenged not only when science is politicized, but also when policy is “scientized.” This paper suggests that current practices scientize policy and threaten not only regulatory outcomes, but the credibility of the scientific process. Using a case study of the procedures by which the Environmental Protection Agency sets National Ambient Air Quality Standards under the Clean Air Act, it illustrates some of the perverse incentives involved in developing regulations, and offers possible mechanisms to improve those incentives and resulting policy.
Over the past decade, regulations setting energy efficiency standards have proliferated. These rules account billions of dollars in annual regulatory benefits, but the Department of Energy relies on private benefits and benefits to residents of other countries to justify the standards, contrary to typical benefit-cost analyses. This paper examines the composition of benefits resulting from DOE’s energy efficiency rules 2007 – 2014, and finds that these rules don’t pass a traditional cost-benefit test when relying on traditional analytical assumptions.
The New European Better Regulation Agenda: Changes and Potential for Improving the U.S. Rulemaking Process
On May 19, 2015, the European Commission published a new agenda to improve the EU's regulatory processes by increasing the scope and quality of regulatory assessments, expanding transparency and consultation, and seeking to work with other European entities. These changes may be useful for other countries in their efforts to improve regulatory governance. Based on the European initiatives, some possible actions for improving the U.S. rulemaking process are: i) increase input from stakeholders on the impacts of existing regulations through a well-established platform that formalizes a constant dialogue between federal government, states, and stakeholders; and ii) provide an online program to comment on the stock of regulations as complement of the consultation process.
This review of regulatory procedures in the EU and US suggests that each values good regulatory practices, such as transparency, public consultation, and regulatory impact analysis, but emphasizes them to different degrees at different stages in the regulatory process. Particularly for regulations that address human health risks, both jurisdictions should be more transparent regarding the uncertainties surrounding estimates of regulatory outcomes and the effect of key assumptions on those estimates. A transparent process for evaluating regulatory effects ex post could also improve regulatory analysis and outcomes.