Many of these recommendations cut across public policy domains and could be implemented through a variety of executive or legislative actions. In some cases, permutations of these reforms could be developed and implemented on a policy-specific basis by individual authorizing committees or federal departments and agencies.
1. Regulatory Budgeting
Regulatory budgeting is an idea whose time has come. Many U.S. states have successfully implemented a regulatory budget, proving this simple regulatory planning and management tool works. Many foreign governments have likewise employed a regulatory budget, proving regulatory budgets are feasible on a national scale. In 2017, at the beginning of his administration, President Trump established the first U.S. federal regulatory budget, and again, it worked.
Over all four years of the Trump Administration, federal departments and agencies offset new regulatory costs by reducing or eliminating old regulatory costs. On net, agencies reduced hundreds of billions of dollars of regulatory costs. These cost reductions were often achieved by making regulatory programs more efficient, by cutting down on the amount of paperwork necessary to comply, or by cutting back on rules that were outdated, inconsistent, unnecessary, or unduly burdensome or restrictive. Few thought the goal was attainable, but year after year it was achieved by employing the simple yet effective federal regulatory budget.
There are multiple ways to reestablish a regulatory budget. As was done in 2017, it could be established through presidential measures like Executive Order 13771 and 13777. It may also be helpful to incorporate it in the President’s fiscal budget. It could also proceed through legislation, such as the REG Budgeting Act, which stitches the regulatory budget into the Unfunded Mandates Reform Act (UMRA) of 1995. Legislation like this would help to institutionalize and make permanent a federal regulatory budget.
2. Regulatory Accountability
The Regulatory Accountability Act (RAA) includes numerous improvements to the notice-and-comment rulemaking process that federal departments and agencies use to develop and issue new rules. For example, the RAA would require agencies to indicate whether contemplated new rules are required by statute or are within the discretion of the agency. It would also require agencies to indicate whether an identified problem might be better addressed by rescinding a rule or law rather than adding an additional layer of regulation. Agencies would have to consider reasonable alternative solutions to contemplated rules.
For the most economically important rules, the RAA would require additional procedural safeguards like early public participation through the comment process and a requirement that agencies adopt only those rules that maximize net benefits within the scope of the statutory provision authorizing the rule.
The RAA was one of the first pieces of legislation introduced in and passed by the House in 2017 (the 115th Congress’s H.R. 5). The legislation includes a wide range of good-government regulatory process reforms that lawmakers should continue to prioritize.
3. Reducing Unfunded Mandates on State and Local Governments
The Unfunded Mandates Reform Act (UMRA) requires federal departments and agencies to avoid imposing unfunded mandates on state governments, local governments, and the private sector, but unfortunately UMRA does not get implemented and enforced as robustly as possible. One likely reason for this problem is that the regulatory analysis required by UMRA is typically satisfied by conducting analysis for other purposes, such as for purposes of Executive Order 12866 review. UMRA deserves its own stand-alone analysis so state and local governments (not to mention Congress and the public) can more readily see if they are in fact being forced to pay for unfunded mandates.
Steps like the Unfunded Mandates Accountability and Transparency Act (UMATA) would help to address statutory and practical implementation gaps in UMRA. It would require agencies to conduct more fulsome UMRA analysis, develop and consider real alternative solutions, and select the regulatory pathway that maximizes net benefits within specific statutory frameworks.
4. Guidance Reform
Consistent with the recommendation of many independent scholarly bodies, President Trump took multiple steps to reform federal agency guidance practices. Unfortunately, many of those steps have since been reversed. For example, President Trump imposed the simple requirement that federal agencies post all current guidance on a single website to make it easier for the public to locate and follow that guidance. Steps like that should not be controversial, yet again, they were overturned without explanation by President Biden. These reforms could be reinstituted through measures like Executive Order 13891 and 13892. They could also be made permanent through bills like the GOOD Act.
Along these lines, another simple step that could be taken to improve agency guidance practices would be to include a regulatory identification number (RIN) on guidance. By adding a RIN, guidance would be included in the underlying regulatory management database controlled by the General Services Administration (GSA) and the Office of Information and Regulatory Affairs (OIRA) within the U.S. Office of Management and Budget (OMB). The documents would be easier to locate, organize, analyze, and review centrally at OIRA when appropriate. Such reviews could also help to ensure other requirements, such as those imposed by the CRA and Executive Order 12866, are satisfied.
At present, regulatory actions styled as guidance or other less formal actions often evade centralized review and thus fail to comply with certain statutory and executive branch requirements because they are not systematically marshalled into a uniform system for processing. The imposition of a RIN for guidance could be accomplished through Executive Branch policy changes or legislative action.
5. Congressional Review Act – Executive Branch Reform
The Congressional Review Act (CRA) is best known as a mechanism for reviewing and overturning new federal regulations, but the statute also includes important requirements on the Executive Branch that could be more fully developed and utilized. Specifically, the CRA requires OIRA to review and determine whether each new “rule” – which is defined broadly – has $100 million or more of annual economic effects.
Historically, that review has been carried out through office-to-office discussions and engagement, and in recent times it has started to become institutionalized through OMB guidance and the like. There is, however, much more that could be done to improve OIRA’s institutional ability to conduct those reviews, make transparent the associated economic analyses, and ultimately provide Congress more ability to conduct its reviews.
For example, OIRA’s existing regulatory management system, which is already used for a range of statutory and executive-policy reviews, could be augmented with an additional feature that would facilitate CRA reviews. As with the existing features of the information management system, agencies would upload rules for review (ensuring pertinent analysis is included), and then OIRA would conduct and conclude reviews accordingly. This would ensure Congress and the public would have more reliable, reviewable economic analysis on new rules, including those of independent agencies and what may otherwise be styled as guidance or other documents that currently evade ordinary centralized regulatory review.
6. Improving Information Quality in Rulemakings
Many federal regulations are informed by scientific or technical information. It is, accordingly, extremely important that such information be accurate, transparent, and verifiable. Agencies should only rely on the best information and evidence when developing regulatory actions. Agencies should likewise publish the models, methodologies, and sources of information used when regulating, and they should do so in a way that is easy for the public to locate and review.
Measures such as the Information Quality Assurance Act, which recently passed the House with overwhelming bipartisan support, would help to make these core good government process improvements.
7. Congressional Review Act – Legislative Branch Reform
The CRA allows Congress to review and overturn new rules through passage of a special joint resolution of disapproval, which then must be signed by the President. The CRA has been used by past Congresses and Presidents of both parties to overturn new rules. It is a critical tool for Congress to preserve Article I powers and limit administrative action.
Thus far, however, CRA resolutions have only been used to overturn rules one at a time, limiting its utility. The CRA should be reformed to permit Congress the ability to review multiple rules at once, perhaps grouped by agency, subagency, program, or area of policy. Measures such as the Midnight Rules Relief Act would accomplish that goal.
8. Benefit-Cost Analysis – Depoliticizing Regulatory Impact Analysis
For decades, across administrations of very different philosophical and policy preferences, new regulations have been developed using the consistent, neutral, and transparent set of analytical principles articulated in OMB Circular A-4. By imposing consistent analytical discipline, those principles have given policymakers in the Executive Branch the information they need to make informed judgments. They have not bound agencies to a particular course of action. Rather, these standards informed the decision-making process on which course of regulatory action to pursue.
Recently, against the recommendation of many distinguished, independent experts in the field (see, for example, this joint letter and these peer-review comments), those longstanding neutral features of benefit-cost analysis were replaced with highly partisan features that help to ensure regulatory analysis supports the current administration’s policy priorities. For example, it adds extra weight to preferred policy choices (e.g., climate change policies). This changes the outcome of analyses by changing the way analytical baselines are set, and generally increases the role of subjectivity and decreases the role of objectivity.
These recent ideological changes to benefit-cost analysis are inconsistent with decades of practice and are not tenable for the long run. A return to analytical neutrality can be accomplished through executive or legislative action, such as a recent legislative instruction to return to the prior analytical framework. Actions like these are worth careful consideration, as benefit-cost analysis plays a vital role in guiding most significant regulatory actions across the Executive Branch.
9. Extending Analytical and Review Standards to Tax Regulations
Unlike the important new rules of other federal departments, tax regulations are generally not informed by the basic good-government practice of regulatory cost-benefit analysis, nor are they typically subject to centralized regulatory review or other standards that govern most other Executive Branch regulations.
In 2016, the Government Accountability Office (GAO) analyzed this anomalous situation and recommended that it be reviewed and reconsidered. Leading administrative law scholars likewise called for it to be reviewed and reformed. The outdated exception for those rules was largely eliminated in 2018. Unfortunately, with no explanation or justification, this good government reform was unceremoniously ended last year, exacerbating the prior idiosyncrasy by giving tax regulators even more autonomy and latitude than they had prior to the 2018 process reforms. The basic process reforms were positive and ought to be reintroduced.
10. Early Participation
When agencies issue new regulations, they are generally required to share proposed versions in advance and seek input from the public. When regulations are particularly complicated, impactful, or novel, it may be helpful to have more than one brief round of public engagement. It may be helpful, for example, to take steps like issuing requests for information or advanced notices of proposed rulemaking, seeking early perspectives, views, and research that can inform agency thinking. Measures like this could be accomplished through executive actions and instructions. They could also be accomplished through legislation such as the Early Participation in Regulations Act.
11. Permit Streamlining
The time and complexities associated with federal and state permitting are frequently reported to be among the most challenging features of regulatory policy. Many executive and legislative branch actions have been taken to make improvements. During the Trump Administration, orders like Executive Order 13807 were used to identify specific bottlenecks and speed up timelines. Bills like the FREE Act, which has been introduced in both the House and Senate, are designed to help streamline the federal permitting process and reduce permitting fees.
12. Reviewing and Updating Delegations of Lawmaking Power to Agencies
Federal regulations are typically written pursuant to a delegation of lawmaking power from Congress to a department or agency. Those delegations can be general, specific, a hybrid, or take other forms. Sometimes, those delegations have been abused because their language has been too unclear or too deferential. Now, following the Supreme Court’s recent decision in Loper Bright and Relentless, which overturned the longstanding judicial practice of deferring to agencies on their interpretations of statutory ambiguities, Congress should reevaluate delegations it has previously given to agencies. Are some of them overly broad? Have those overly broad delegations been used more frequently than other, narrower and more specific delegations? Congress can address issues with federal regulations by revising the authority it has given the agencies to regulate. It can provide more particular criteria and guardrails for decision-making. It can pull back delegations that are no longer needed or are too often misused. Much of this can and should be accomplished within the legislative drafting process.
13. Provide Regulatory Relief for Small Businesses
Small businesses consistently report that the challenge of cumulative regulatory burdens is a top concern. The complexity, cost, and barriers to market entry they impose are simply too much for many small businesses. The Regulatory Flexibility Act (RFA) and the Small Business Regulatory Enforcement Fairness Act (SBREFA) are designed to address these issues, but their implementation and utility are constrained by resource and enforcement limitations.
Measures like the Small Business Regulatory Flexibility Improvements Act would help to address these challenges. The bill would require agencies to conduct and include in new rules a more detailed analysis of small business impacts, and it would require agencies to develop and consider more fully potential alternative solutions that would be less burdensome for small businesses. It would also expand the universe of actions covered by the RFA and eliminate the ability of agencies to waive RFA requirements.
Conclusion
This list of regulatory reform priorities is not exhaustive or definitive, but hopefully it’s a good reference for those who are thinking about potential improvements over the near-medium term.
For Further Reading
• For a quick overview of the regulatory development process, see the EPIC flowchart, “The Regulatory Development Process.”
• Need a quick general overview of rules and regulations? See our “EPIC Explainer: What is a Rule?”
• For more information on the Congressional Review Act, see the “EPIC Explainer: The Congressional Review Act.”
