Sunstein’s Legacy: Retrospective Reviews = An Unjustified Burden on Regulatory Agencies

by Randy Rabinowitz, 8/13/2012

No one is in favor of outmoded, ineffective, duplicative, or unnecessary regulation. But judgments about what rules are necessary or effective are in the eye of the beholder: the same rules that save the lives of consumers and workers may be viewed as burdensome by the firms that have to follow them.

Regulatory agencies exist to protect the health and well-being of the American public. Congress adopts protective legislation – and agencies then create rules to implement the laws – because businesses too often put profits above public safety and lack adequate economic incentives to raise safety standards. So it is not surprising that businesses complain about rules. But departing Office of Information and Regulatory Affairs (OIRA) Administrator Cass Sunstein’s demands that executive agencies spend time searching for obsolete rules is an unjustified burden and cost to government agencies.

Sunstein tried to establish a “culture of retrospective review and analysis” (Executive Order 13563, issued in January 2011) at OIRA, telling agencies to look for “outmoded, ineffective, insufficient, or excessively burdensome” rules to repeal. Executive Order 13610, issued in May 2012, ordered agencies to “reduce unjustified regulatory burdens and costs” and encouraged staff to review existing rules to determine whether they could be modified or streamlined. Taken together, these two executive orders require executive branch agencies to spend precious staff time continually looking back at old rules instead of forward at new risks. This emphasis on the retrospective review of rules was both unwise and unnecessary, a solution in search of a problem.

When businesses have real evidence that regulatory compliance creates an unnecessary economic burden or that regulatory requirements are ineffective and outdated, the Administrative Procedure Act provides a mechanism for them to petition the responsible agency to eliminate or ease the regulation. There is no reason for agencies to spend their limited resources searching for evidence of regulatory burdens that businesses have not bothered to identify. This can consume a large amount of agency resources, and agencies have tools other than rulemaking to address these concerns. They can choose not to enforce obsolete rules and let the regulated parties know that the agency will accept alternative forms of compliance. This is a more streamlined and efficient way to hand obsolete rules.

Moreover, section 610 of the Regulatory Flexibility Act already requires executive branch agencies to periodically review rules that have a significant impact on small businesses for 10 years after the rule has been put in place to determine whether the rule should be amended. The “look back legacy” of Sunstein’s term was fixing “a problem” that didn’t really exist.

And in the process, it created a new one. The real problem with retrospective review of rules is that it prevents agencies from moving forward to protect the public from new and unregulated hazards. By constantly looking backwards, and spending limited resources on streamlining old rules, agencies will have too little time to look forward and plan future rulemakings to protect the public. Small wonder, then, that business organizations like the U.S. Chamber of Commerce and the National Federation of Independent Business praised Sunstein’s tenure, and public interest groups are happy to see him go.

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