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Dec
15

The cornerstone of regulatory reform

From: The Hill

By Jerry Ellig and Richard Williams

When the 114th Congress assembles in January, members will have a plethora of proposed regulatory reforms on their plate. These plans range from required congressional approval for major regulations to stronger judicial review standards. Setting priorities will be a challenge, but one reform can lay a crucial cornerstone—statutory regulatory analysis standards for all regulators.

Regulatory expertise requires the discipline to conduct quality economic analysis. In order to get a good result from regulations, it’s important to use good inputs before writing them. Unfortunately, federal regulatory analysis is poor at best. If it were better, agencies could solve more problems at lower costs with fewer regulations.

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Judicial review is necessary to enforce statutory analysis requirements. Judicial review gives stakeholders an opportunity to challenge regulatory impact analyses that are incomplete, use poor science or are obviously designed to support a decision made before the analysis even began. Statutory analysis requirements provide courts with a more detailed record of why and how agencies are regulating and the guideposts necessary to assess agency compliance with their statutory authority and obligations. For example, the Securities and Exchange Commission has statutory language that courts have interpreted to require benefit-cost analysis of certain SEC regulations. After losing several court cases due to insufficient analysis, the SEC issued new staff guidance on regulatory analysis based on the principles executive branch agencies must follow.

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