Pareto Policy Solutions, LLC

advancing innovation through smart regulation

Pareto Policy Solutions, LLC is a policy analysis and advocacy firm committed to advancing sustainability through “smart” regulation: regulation that rewards, and does not penalize, superior performance.  Often, such actions leverage advances in science and technology and make the regulatory program itself more effective as well as more efficient.

EPA Seeks To Eliminate Old Regulations

In a Federal Register notice on Monday, March 9th, the U.S. Environmental Protection Agency (EPA) announced it is seeking public nomination for regulations that have outlived their usefulness.  Nominations are due by April 8th.

This announcement is part of a continuing effort by all federal agencies to develop plans to retrospectively review old regulations.  This exercise, required under President Clinton’s Executive Order 12866 but long ignored until President Obama took office, seems to be gaining renewed momentum at the same time the new, Republican-controlled Congress is making regulatory reform a top priority.

The EPA notice directs the public to focus on regulations that impose ongoing/recurring costs to business.  The announcement provides examples of the kinds of regulations where streamlining makes sense:  regulations imposing paperwork reporting that could be replaced by electronic reporting, regulations that are duplicative across federal agencies or across federal and state regulatory agencies, and regulations that could be improved through advanced monitoring techniques.

A focus on advances in science and technology is the sine qua non of the Obama Administration’s retrospective review efforts to date.  My recent review of the EPA, OSHA, and FDA plans shows that nearly 50% of the 75+ listed changes relate to this topic; examples include OSHA’s plan to update its permissible exposure limits based on new science, FDA’s plan to allow a new technology for breast cancer screening, and EPA’s action to scrap a requirement for vapor recovery devices on gasoline pumps.

Historically, technological advances in measurement/monitoring have led to improvements in both the efficiency and effectiveness of regulatory programs:  for example, the advent of continuous emissions monitoring systems (CEMS) technology is responsible for the cost-effective reduction of sulfur dioxide from power plants via pollution trading. The phase-out of substances that destroy the stratospheric ozone layer (creating the worrisome ozone “hole” over Antarctica) has been wholly successful due to advances in science (including a Nobel Prize in chemistry) and technology (ground and satellite monitoring).

EPA is not the only federal agency seeking public input on regulations for retrospective review.  On March 3rd, the Occupational Safety and Health Administration (OSHA) published a notice seeking public nominations.  But unlike the EPA notice, the OSHA notice does not specify a preference for regulations imposing recurring costs on businesses.  It is likely that other federal agencies are also making similar announcements.

President Obama issued Executive Order 13563 in January 2011.  The order required all covered agencies to develop plans for retrospective review.  These agencies issued final plans by August 2011.  On May 10, 2012, the President issued Executive Order 13610, which required periodic reporting and updating of retrospective review plans.  In February, White House officials held a series of meetings with business groups and public interest groups seeking input on improving its efforts at retrospective review.  The spate of recent agency announcements reflects a concerted effort by the White House to (1) require each covered agency to update its plan and (2) target regulations that affect business and that can be streamlined using advances in science and technology. 

It is likely these efforts will result in increased cost savings for regulated entities.  The EPA announcement says the Administration’s goal is to achieve total savings of $20B in the near-term through retrospective review. 

Are the reforms enough to satisfy a Republican-controlled Congress hungry to reign in regulatory agencies?  It seems unlikely that Republican leaders will lessen their zeal for regulatory reform legislation, but Democrats may feel comfortable enough with the Obama initiative to refrain from signing on to reform bills, providing a veto-proof cover for a President that has, to date, opposed legislation to reform the regulatory process. 

The surprising winner of the regulatory reform political debate may be the business community in general, and the small business community in particular.  They have a window of opportunity to identify regulatory impediments and an Administration eager to help them.  The ball is now in their court.  Their challenge is significant: to identify changes to regulations that significantly reduce compliance burden without alienating the President’s base, which is decidedly pro-regulation. 

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