Smarter Regulation: Reducing Cumulative Burdens

The Obama Administration has adopted a number of initiatives to promote smart, cost-justified regulation. On January 18, 2011, the President ordered an unprecedented government-review of existing rules. After a period of public comment, over two dozen agencies released ambitious reform plans, outlining hundreds of cost-saving reforms. A small fraction of those reforms, already finalized or formally proposed to the public, will save more than $10 billion over the next five years.

As the plans are implemented, far higher savings are anticipated. Just today, the Federal Register has on display a final rule from the Department of Labor that will bring our warning labels for hazardous chemicals in line with those of other nations. This rule will save employers a lot of money on training and updating of materials; improve safety and health protections for American workers; and reduce trade barriers for chemical manufacturers that sell their products abroad.  The overall five-year savings will be in excess of $2.5 billion, most of it in the form of savings for employers. (Stay tuned; significant announcements from other agencies are expected in the near future.)

Today, we are taking another major step toward improving our regulatory system and eliminating unjustified costs. In some cases, the addition of new rules and requirements has unfortunate cumulative effects. Taken in isolation, a new rule may seem perfectly sensible, but it may overlap with existing requirements. The sheer accumulation of regulations can cause real harm, especially for small businesses and startups. As the President said last January, agencies must take into account “the costs of cumulative regulations.”

With our action today, we are directing agencies to take a number of significant steps to reduce such cumulative costs. These steps include:

• Early engagement with state, tribal, and local governments to identify opportunities for eliminating redundancy and reducing burdens on the public and private sectors;
• Early consultation with affected stakeholders to reduce cumulative burdens, well in advance of proposing new rules;
• Specific consideration of the cumulative effects of regulations on small businesses and start-ups;
• Careful consideration, in the analysis of costs and benefits, of the relationship between new regulations and those regulations that are already in effect;
• Identification of opportunities to harmonize the requirements of new and existing rules, so as to eliminate inconsistency, excessive cost, and redundancy.

It should be clear that a central goal of today’s effort is to promote early consultation, so that unnecessary rules and redundant requirements can be avoided. Agencies will be reaching out to the public to promote that goal.

Cass Sunstein is the Administrator of the Office of Information and Regulatory Affairs