January 18, 2011
President Obama on Tuesday ordered a governmentwide review of federal regulations in an effort to improve or potentially repeal outdated, burdensome and inefficient rules that could be stifling private sector job growth.
The White House released an executive order establishing the administration's central regulatory strategy for protecting the health and safety of Americans while also preserving a capitalistic, free market economy.
The order, first announced by Obama in a Wall Street Journal op-ed on Tuesday, calls for a review of significant agency regulations that may no longer make sense.
"Where necessary, we won't shy away from addressing obvious gaps: new safety rules for infant formula; procedures to stop preventable infections in hospitals; efforts to target chronic violators of workplace safety laws," Obama wrote. "But we are also making it our mission to root out regulations that conflict, that are not worth the cost, or that are just plain dumb."
For example, Obama pointed to an Environmental Protection Agency rule, eliminated last month, that portrayed saccharine, the artificial sweetener often used in coffee, as a dangerous chemical. The Food and Drug Administration considers saccharin safe to consume.
The order instructs agencies to develop a plan within the next 120 days to periodically review their significant regulations to determine whether any should be modified, streamlined, expanded or repealed. The plans, along with any supporting data, should then be publicly released, Obama wrote.
Agencies should examine rules that could be "outmoded, ineffective, insufficient or excessively burdensome, and to modify, streamline, expand or repeal them in accordance with what has been learned," the order states.
The directive builds on a 1993 executive order President Clinton signed.
In a morning conference call with reporters, a senior administration official explained that the initiative, which has been a year in the making, was about creating a regulatory approach that "protects the public and promotes job growth."
In a White House blog post, Office of Management and Budget Director Jack Lew wrote, "We believe that it is particularly critical now, as our economy continues to recover and create new jobs, that our regulatory strategy be as evidence-based, predictable, cost-effective and carefully targeted as possible to enable American businesses to continue to grow and innovate."
In addition to reviewing existing regulations, the administration also charted a new path to guide the establishment and implementation of new rules.
When establishing future regulations, agencies must first determine whether the benefits justify the potential costs and whether they impose the least possible burden on the public at large. Proposed rules must be open for public comment for 60 days as well as coordinated and harmonized with other similar regulations and driven by objective scientific evidence. Agencies also should consider factors that are difficult to quantify, such as human dignity, fairness and equity.
Alternative approaches to direct regulation also should be considered, Obama wrote, including providing economic incentives to encourage certain behavior -- such as user fees or marketable permits -- or providing clear information that would enable citizens to make their own choices.
And in a subtle but important change in the way regulations are crafted, the administration instructed agencies to spell out performance objectives in new rules, rather than specifying the behavior or type of compliance that regulated entities must adopt.
The White House also released two governmentwide memos aimed at ensuring that regulations are open, transparent and flexible for small businesses.
In the first memo, Obama directed agencies to make compliance and enforcement data easily accessible, downloadable and searchable online. Priority should be afforded to information that is most useful to the general public.
"Greater disclosure of regulatory compliance information fosters fair and consistent enforcement of important regulatory obligations," the memo said. "Such disclosure is a critical step in encouraging the public to hold the government and regulated entities accountable."
Agencies will have 120 days to develop plans to implement the memo's directives. The federal chief information officer and chief technology officer will make the data available to the public in a centralized platform such as the federal website Data.gov. Senior officials also must develop policies to share and disseminate the data across agencies.
The other memorandum encourages agencies to consider ways to reduce the regulatory burden on small businesses. The senior administration official noted that federal regulations can impose disproportionately high burdens on small businesses that might lack the resources of their larger counterparts.
"This [memo] should be great news for small businesses," the official said.
Before introducing a new regulation, agencies must consider regulatory flexibilities for small businesses, including extended compliance dates, differing requirements for large and small firms, simplified reporting requirements, and partial or total exemptions. Agencies must provide written justifications when regulators do not employ one of these alternatives, the memo said.
The regulatory review received praise from some House Republicans who have been harsh critics of the administration's job creation strategy.
"I applaud President Obama for joining what must be an effort that stretches beyond ideological entrenchments to identify the regulatory impediments that have prevented real and sustained job growth in the private sector," said Rep. Darrell Issa, R-Calif, chairman of the House Oversight and Government Reform Committee. "The anti-business policies of the past have hurt job creators, small and large. It's in the interest of every American that we create a modern, regulatory environment that fosters economic growth and makes U.S. companies globally competitive."
Sen. Mark Warner, D-Va., expressed support for the initiative and suggested the administration go further by embracing an earlier proposal by Warner to eliminate one existing regulation for every new one created.
But others said the changes are too little and too late. The nonprofit Competitive Enterprise Institute, which advocates for free markets and limited government, said in a statement the number of rules being considered by federal agencies has "surged" from 4,041 at the end of 2009 to 4,225 in early 2011, including those related to carbon emissions, net neutrality, and the health care and financial reform bills.
"This executive order is hardly a war on red tape, and no affected businesses or consumers are going to be able to sue anybody to force compliance," said Wayne Crews, vice president for policy at the institute. "It's just an 'order' to agencies to behave."
January 18, 2011