Regulatory Policy: President Issues Executive Order on Regulatory Review

On January 18, President Obama issued a new Executive Order on "Improving Regulation and Regulatory Review." The Executive Order supplements and reaffirms the principles, structures, and definitions governing contemporary regulatory review that were established in Executive Order 12866, and mostly sets forth broad principles applicable to regulation and regulatory review.

Subsection 1(a) of the Executive Order states generically that
"[o]ur regulatory system must protect public health, welfare, safety, and our environment while promoting economic growth, innovation, competitiveness, and job creation"; "be based on the best available science"; "allow for public participation and an open exchange of ideas'; "promote predictability and reduce uncertainty"; "identify and use the best, most innovative, and least burdensome tools for achieving regulatory ends"; "take into account benefits and costs, both quantitative and qualitative"; "ensure that regulations are accessible, consistent, written in plain language, and easy to understand"; and "measure, and seek to improve, the actual results of regulatory requirements."

Subsection 1(b) states that "each agency must, among other things: (1) propose or adopt a regulation only upon a reasoned determination that its benefits justify its costs (recognizing that some benefits and costs are difficult to quantify); (2) tailor its regulations to impose the least burden on society, consistent with obtaining regulatory objectives, taking into account, among other things, and to the extent practicable, the costs of cumulative regulations; (3) select, in choosing among alternative regulatory approaches, those approaches that maximize net benefits (including potential economic, environmental, public health and safety, and other advantages; distributive impacts; and equity); (4) to the extent feasible, specify performance objectives, rather than specifying the behavior or manner of compliance that regulated entities must adopt; and (5) identify and assess available alternatives to direct regulation, including providing economic incentives to encourage the desired behavior, such as user fees or marketable permits, or providing information upon which choices can be made by the public."

Section 2 directs that "[r]egulations shall be adopted through a process that involves public participation"; that each agency "shall endeavor to provide the public with an opportunity to participate in the regulatory process'; and that "[b]efore issuing a notice of proposed rulemaking, each agency, where feasible and appropriate, shall seek the views of those who are likely to be affected, including those who are likely to benefit from and those who are potentially subject to such rulemaking."

Section 3 states that "[i]n developing regulatory actions and identifying appropriate approaches, each agency shall attempt to promote" interagency coordination as well as simplification and harmonization of rules; and "shall also seek to identify, as appropriate, means to achieve regulatory goals that are designed to promote innovation." Section 4 states that "[w]here relevant, feasible, and consistent with regulatory objectives, and to the extent permitted by law, each agency shall identify and consider regulatory approaches that reduce burdens and maintain flexibility and freedom of choice for the public." Section 5 states that "each agency shall ensure the objectivity of any scientific and technological information and processes used to support the agency's regulatory actions."

Section 6 is the section that creates the most specific new obligation for federal agencies. Subsection 6(a) states that "[t]o facilitate the periodic review of existing significant regulations, agencies shall consider how best to promote retrospective analysis of rules that may be outmoded, ineffective, insufficient, or excessively burdensome, and to modify, streamline, expand, or repeal them in accordance with what has been learned." It also specifies that such retrospective analyses, "including supporting data, should be released online whenever possible." Subsection 6(b) provides that within 120 days of January 18, 2011, "each agency shall develop and submit to the Office of Information and Regulatory Affairs a preliminary plan, consistent with law and its resources and regulatory priorities, under which the agency will periodically review its existing significant regulations to determine whether any such regulations should be modified, streamlined, expanded, or repealed so as to make the agency's regulatory program more effective or less burdensome in achieving the regulatory objectives."

In a January 18 op-ed piece in the Wall Street Journal, the President explains that this regulatory review "will help bring order to regulations that have become a patchwork of overlapping rules, the result of tinkering by administrations and legislators of both parties and the influence of special interests in Washington over decades." He concludes with the observation that "[t]his is the lesson of our history: Our economy is not a zero-sum game. Regulations do have costs; often, as a country, we have to make tough decisions about whether those costs are necessary. But what is clear is that we can strike the right balance. We can make our economy stronger and more competitive, while meeting our fundamental responsibilities to one another."