Sixty Years Since the Administrative Procedure Act: Necessary Improvements

Jerry Ellig, Ph.D.Richard A. Williams, Ph.D.

An Unfulfilled Promise

“Our regulatory system must protect public health, welfare, safety, and our environment while promoting economic growth, innovation, competitiveness, and job creation.”

— President Barack Obama Executive Order 13563

Solve more problemsat lower costwith fewer regulations.

Presidents have tried repeatedly…

“This Order is intended to improve the quality of Executive Agency regulatory practices” -Jimmy Carter

Agencies must not issue a regulation unless the potential benefits to society “exceed the potential costs to society.” -Ronald Reagan

“The American people deserve a regulatory system that works for them, not against them…. We do not have such a regulatory system today.” -Bill Clinton

“Always consider costs and reduce burdens for American businesses and consumers when developing rules;” -Barrack Obama

Presidents have tried repeatedly…

“This Order is intended to improve the quality of Executive Agency regulatory practices” -Jimmy Carter

Agencies must not issue a regulation unless the potential benefits to society “exceed the potential costs to society.” -Ronald Reagan

“The American people deserve a regulatory system that works for them, not against them…. We do not have such a regulatory system today.” -Bill Clinton

“Always consider costs and reduce burdens for American businesses and consumers when developing rules;” -Barack Obama

Regulatory Analysis: The Cornerstone

1. Problem

2. Alternative Solutions

3. Benefits and Costs

4. Success Defined

Reality – Decision Making in the Dark

1. Analyses often non-existent or poor quality

2. Analysis frequently not used – ready-fire-aim

rulemaking

3. Outcomes often poorly defined and rarely reported

Average Quality of Analysis - Fails

Ready, Fire, Aim Rulemaking

64% of economically significant regulations proposed in 2008-12 provided no explanation of how the agency used any part of the analysis.

Why analysis matters

FDA - Proposed rule for animal food:

$13-17 million benefits, $87-129 million costs

Mercatus Comment - Apply to pet food only:$12-15 million benefits, $6-9 million costs

Is analysis

enough?

Elements of Reform

• Statutory mandate to perform analysis

• Judicial review

• Advance notice with analysis of problem and alternatives

• Formal hearings for substantial rulemakings

• Mandatory reporting of regulatory outcomes

CHECKS AND BALANCES

Solve more problemsat lower costwith fewer regulations.

Bridging the gap between academic ideas and real-world problems