Reinventing Rationality: The Role of Regulatory Analysis in the Federal Bureaucracy.
Increased awareness of consumer and environmental problems bred a wave of governmental rules and regulations in the 1960s and 1970s. Fearing the economic consequences of these regulations, many within the affected industries and in academia called for "regulatory reform Regulatory Reform concerns improvements to the quality of government regulation.
At the international level, the "OECD Regulatory Reform Programme is aimed at helping governments improve regulatory quality -- that is, reforming regulations that raise unnecessary obstacles to ". The reformers argued that federal agencies were ignoring the economic burdens of their regulations. With Reagan's election in 1980, the federal rulemaking process was modified to assure that federal regulations met the test of economic efficiency. Known as regulatory analysis, McGarity examines how this new approach affected rulemaking in the early Reagan years in five federal agencies. From these experiences he assesses the strengths and weaknesses of regulatory analysis and offers his insights on its future use and potential.
In Part I McGarity outlines the development of regulatory analysis within the federal government. A month after taking office, Reagan signed Executive Order 12,291 which required all federal agencies to undertake a Regulatory Impact Analysis In many countries, a Regulatory Impact Analysis or Regulatory Impact Assessment (RIA) is a document created before voting a new regulation. Its role is to perform a detailed evaluation of the potential impacts of this new regulation and establish whether it would have the (RIA (Rich Internet Application) A Web-based application that approaches the speed and elegance of a local application. An RIA may refer to a browser-based application that uses AJAX or another enhanced coding technique. ) for all "major" rules. The executive order placed the burden of proof on each agency to demonstrate that its proposed rule passed the cost-benefit test. This emphasis on regulatory analysis offered a significant departure from the traditional rulemaking process. In the traditional approach, technical experts rely on intuition and experience to develop remedies to highly complex problems in which accurate information is either inadequate or nonexistent non·ex·is·tence
1. The condition of not existing.
2. Something that does not exist.
non . Rules are developed that accommodate as many interest groups as possible in order to reduce resistance to the proposed rule. Labelled techno-bureaucratic rationality by McGarity, this approach identifies rules that will survive the inevitable political and legal challenges as well as those which are enforceable. On the other hand, regulatory analysis attempts to identify all regulatory options, quantify the societal costs and benefits of each option, and thereby solve the regulatory problem in a systematic and objective manner. Only those regulatory actions in which the net social benefit can be clearly demonstrated are to be taken. Rules that achieve the remedy in the most cost-effective manner are chosen. As McGarity suggests, this approach affected the selected remedies as well as the kinds of regulatory issues to which agencies gave future consideration.
In Part II, McGarity uses five case studies to examine the regulatory conflicts that arose between the traditionalists and the new regulatory analysts. These detailed case studies include the EPA EPA eicosapentaenoic acid.
n.pr See acid, eicosapentaenoic.
n. , OSHA OSHA
Occupational Safety and Health Administration, a branch of the US Department of Labor responsible for establishing and enforcing safety and health standards in the workplace. , NHTSA NHTSA National Highway Traffic Safety Administration (US government) (National Highway Traffic Safety Administration The National Highway Traffic Safety Administration (NHTSA, often pronounced "nit-suh") is an agency of the Executive Branch of the U.S. Government, part of the Department of Transportation. ), and FSIS FSIS Food Safety and Inspection Service
FSIS Food Safety Information System (of Malaysia)
FSIS Fixed-Size Importance Sampling
FSIS Functional Support Information Systems
FSIS Fire Support Interface Specification (Food Safety and Inspection Service The United States Department of Agriculture's Food Safety and Inspection Service (FSIS) is charged with ensuring that all meat, poultry, and processed egg products in the United States are safe to consume and accurately labeled. ). Often, the conflict pitted the agency proposing the rule against the OMB OMB
Office of Management and Budget
Noun 1. OMB - the executive agency that advises the President on the federal budget
Office of Management and Budget , which now had the power to veto all major regulations through its review of agency RIAs. The conflict also put different departments within the agency at odds with each other as each side attempted to influence the agency's proposed rule. From these case studies, McGarity identifies both the virtues and weaknesses of regulatory analysis in practice. Its virtues include its ability to identify policy options, its increased sensitivity to small business concerns, its explicit identification of information gaps and underlying assumptions, and its mitigation of political considerations. In practice, regulatory analysis is limited by the paucity of reliable data, the bias that results from the increased difficulties in quantifying the benefits of regulation, its lack of consideration for the distributional effects of proposed solutions, and the subjectivity of the analysts, who must provide the assumptions and values on which the analysis is based.
In Part III, he examines the different methods in which agencies have attempted to incorporate regulatory analysis into their rulemaking processes. He identifies five models: the hierarchical model In a hierarchical data model, data are organized into a tree-like structure. The structure allows repeating information using parent/child relationships: each parent can have many children but each child only has one parent. , the outside advisor model, the team model, the adversarial model, and the hybrid model. He provides case studies of each model. He analyzes each of the models as to how well it permits the regulatory analyst to perform seven functions, including information analyst, justifier of the decision, policy communicator, options identifier, institutional skeptic, advocate for efficiency, and influential participant in the agency's policymaking pol·i·cy·mak·ing or pol·i·cy-mak·ing
High-level development of policy, especially official government policy.
Of, relating to, or involving the making of high-level policy: . Arguing that there is no best model for all agencies, he identifies the conditions that make some models more appropriate than others.
In Part IV he discusses the review functions provided by OMB and, to a lesser extent, the courts. As he suggests, the impact of OMB has been significant. More than elsewhere in the government, regulatory analysis in OMB assumed the goal of stemming the flow of federal regulations. As such, OMB was involved in many highly visible fights with federal agencies during the 1980s. As these conflicts frequently centered over such issues as the level of acceptable risk and whether one should use best case or worst case scenarios in determining the efficient solution, these fights reflected ideological rather than technical differences. While OMB lost several of these high profile fights, McGarity believes that OMB exerted a much broader influence as agencies proposed rules that would better accommodate the OMB's objections.
The book represents an exhaustive and generally well balanced treatment of regulatory analysis. The attention to actual case studies is exemplary. The depth and detail of this book as well as its use of bureaucratic acronyms will daunt daunt
tr.v. daunt·ed, daunt·ing, daunts
To abate the courage of; discourage. See Synonyms at dismay.
[Middle English daunten, from Old French danter, from Latin the casual reader. He is equally willing to exhibit the excesses and drawbacks of its practice as he is its successes and strengths. However, in arguing for the future role of regulatory analysis, I believe that he is more willing to overlook its drawbacks than I. Far too frequently, numerical data Numerical data (or quantitative data) is data measured or identified on a numerical scale. Numerical data can be analysed using statistical methods, and results can be displayed using tables, charts, histograms and graphs. is perceived as far more objective and authoritative than is justified by the values and assumptions that underlie the data. While it can be convenient to collapse moral, political, and economic issues into a formula, it is rarely wise to do so. Yet, the book is a solid work and a necessary read for those who are interested in understanding the decisionmaking process that is forging the social regulation emanating from the federal government.