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.

New Executive Order To Enforce the Trump Regulatory Reform Agenda

Today, President Trump signed a new executive order (EO), Enforcing the Regulatory Reform Agenda. This executive order calls for each covered agency to appoint a regulatory reform officer who will be responsible for ensuring agency compliance with all executive orders on regulatory review, including the January 30th Executive Order 13771, Reducing Regulation and Controlling Regulatory Costs. The new EO also calls for the formation of a regulatory reform task force within each covered agency, chaired by the regulatory reform officer (unless the agency head determines otherwise), which will develop a candidate list of existing regulations to be repealed, replaced, or modified. Each covered agency is to focus on existing regulations that (1) eliminate jobs or inhibit job creation; (2) are outdated, unnecessary, or ineffective; (3) impose costs that exceed benefits; (4) create a serious inconsistency or otherwise interfere with regulatory reform initiatives; (5) are inconsistent with the Information Quality Act, particularly the data “reproducibility” standard; (6) derive from presidential directives or executive orders that have subsequently been rescinded or substantially modified. OMB is to issue guidance on this new executive order to federal agencies within the next 60 days.

Analysis

Although it is not explicit, it can be inferred that the goal is to reform regulation while increasing net benefits to the public. Lack of clarity on this point, however, can be expected to draw critical reviews from proponents of regulation. For example, by citing the Information Quality Act and its reproducibility standard, the EO will draw attention to EPA regulations that control small particulate matter—these regulations impose large costs but even larger estimated health benefits.

The “net zero” incremental cost goal of the January 30th executive order has spurred interest by regulated entities to identify particularly onerous rules for elimination. The EO requires each task force to (1) seek such information from the public for its consideration and (2) send its recommendations to the agency head.

Significant competition can be expected among regulated entities and organized interest groups as they compile long lists of regulations to be eliminated. Most of the items on these lists will not be acted upon because of limited bandwidth by the agencies and/or because the proposal is not “reform-ready,” especially if a reform that fits into one category (e.g., eliminates jobs) conflicts or doesn’t align with another category (e.g., costs exceed benefits) or EO requirement.

Pareto Policy Solutions recommends a focus on reforms that will reduce costs without diminishing public benefits because such reforms will rise to the top of the agency’s priority list and be looked upon most favorably by the Office of Management and Budget, which will oversee these agency efforts. Such reforms focus on outdated, duplicative, or ineffective regulatory requirements; requirements imposed uniformly on a sector without regard to the performance of the regulated entity; and reforms that will otherwise maximize net social benefits as informed by cost-benefit analysis comporting with EO 12866 and OMB Circular A-4. 

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