Pitching Retrospective Review as a Cure for Regulatory Accumulation

Sofie E. Miller
by Sofie E. Miller, Senior Policy Analyst
March 08, 2016

Why do so many regulations fail to accomplish what they intended? In a recent article in the Administrative Law Review, Reeve T. Bull provides one potential answer: because of the public’s perception of what is and is not a public hazard, regulators have an incentive to over-regulate small risks and neglect larger risks. This leads to a situation where ineffective regulations build up over time as the number of new regulations continues to grow.

Bull is correct that retrospective review may be the best way to address this inevitable regulatory buildup, but the path to effective ex post review of regulations has many obstacles. In our response to Bull’s article, Susan Dudley and I diagnose the problem with retrospective review and propose solutions for a system that better serves the public interest.

Growth of Regulation

Since Congress created the first regulatory body almost 130 years ago, the number of regulatory agencies and the scope and reach of the regulations they issue has increased significantly. Every year federal agencies issue thousands of new regulations, which now occupy more than 175,000 pages of regulatory code. Thousands of rules are added each year, but old ones are seldom removed—even if they fail to address worthwhile risks and create public benefits.

This conundrum calls for retrospective review, by which agencies can evaluate the effects their existing rules are having and make changes accordingly based on new information. For almost 40 years, presidents and Congress have directed agencies to consider the effects of regulations once they are in place—but past (and current) efforts are falling short.

The State of Retrospective Review

Although President Obama has issued three executive orders encouraging agencies to systematically review the effects of their rules, agencies have not institutionalized procedures for doing so. The problem may come down to incentives: neither agencies nor regulated parties have a clear motivation to question the results of past rules. Agencies are unlikely to want to admit to past failures (and may prefer to focus on new problems), and businesses that have already adapted to a new regulatory context are unlikely to want agencies to revisit past decisions. In effect, retrospective review has no constituency to promote better outcomes within the system.

One of the biggest hurdles to successful retrospective review of regulations is the simple fact that rules are difficult to review—and especially so because they are not written to facilitate measurement ex post. Under the current system, agencies don’t begin planning for ex post measurement until after a regulation is already drafted, finalized, and implemented. OMB and the academic literature agree: the best time to set up a rule or program for review is at the outset of rulemaking by writing and designing them to facilitate retrospective analysis of their effects. However, our recent evaluation found that agencies are not writing their rules to facilitate evaluation, which hampers future efforts at retrospective review.

Identifying Solutions

Waiting until implementation to plan for retrospective review may leave agencies without the resources and data they need to effectively evaluate their rules.  For these reasons, it is necessary to think prospectively about retrospective review and, to that end, agencies should design their rules to facilitate experimentation and learning from experience, with clear metrics to aid measurement of outputs and outcomes.

The benefit of planning for ex post review at the outset of rulemaking is that it trains regulators to think prospectively about how to measure progress toward a regulatory goal and how to collect data to ensure accurate measurement. This approach also has supporters both in Congress and in the Executive Branch.

Because federal regulation is intended to accomplish such big goals—sometimes at a very high cost—it is important to review the rules on the books to see if they achieve the objectives that agencies claim.   Institutionalizing a requirement for agencies to evaluate whether a regulation’s predicted effects actually materialize would provide a powerful incentive to improve regulatory outcomes. 


See also:

Evaluating Retrospective Review of Regulations in 2014, Sofie E. Miller

The Hill Opinion, Regulations need retrospective review, by Sofie E. Miller

Working Paper: Learning from Experience: Retrospective Review of Regulations in 2014, by Sofie E. Miller

How to Improve Retrospective Review and Reduce regulatory Burdens, by Sofie E. Miller

Retrospective Review: Do Agencies' Proposals Measure Up?, Sofie E. Miller

Retrospective Review of Risk-Based Regulations, Susan E. Dudley

Will EPA’s Retrospective Review Reduce Burdens for the Regulated Public?, by Sofie E. Miller