Making Regulation Smarter to Save Lives and Money

Smart regulations save lives and dollars. For example, the number of deaths on the highways is now down to its lowest level in over 60 years. This is an extraordinary achievement, produced not only by the commitment and creativity of the private sector but also by educational and regulatory initiatives from local, state, and national governments. In areas that include food and workplace safety, clean air, fuel economy, energy efficiency, and investor protection, well-designed regulations are preventing tens of thousands of premature deaths and hundreds of thousands of illnesses and accidents -- and saving billions of dollars.

Under the President’s direction, we have finalized rules, in our first three years, with more than $91 billion in net benefits – over 25 times the corresponding figure in the first three years of the Bush Administration, and over 6 times the corresponding figure in the first three years of the Clinton Administration.

But we don’t need all of the regulations that are on the books. By streamlining some and eliminating others, we can save billions of dollars in unnecessary costs. As President Obama has emphasized, it is possible, even indispensable, both to issue sensible, protective regulations and to eliminate rules that are no longer justified.  Today, we are taking three important steps in that direction.

First, the President has signed a new Executive Order, making it a continuing obligation of our government to scrutinize rules on the books to see if they really make sense. The Order directs agencies to seek public comments on rules in need of review. To promote priority-setting, the Order directs agencies to emphasize reforms that produce significant quantifiable savings. To promote accountability, the Order requires agencies to provide the public with regular reports on their past efforts and their future plans -- with details and deadlines. These historic steps build on, and institutionalize, the President’s Executive Order of January 18, 2011,  which first called for retrospective review of rules on the books (the regulatory “lookback”). 

Second, the Council of Economic Advisers is issuing a report on the “lookback.” The report outlines the progress made to date. It notes that agencies have identified over 500 reforms and that a small fraction of them, already finalized or formally proposed to the public, will be saving more than $10 billion over the next five years. The report emphasizes that we need continued analysis and public participation to identify rules that should be streamlined, improved, or eliminated.

Third, we are announcing five final rules that will save nearly $6 billion as a result of the President’s directive that agencies review old rules:

  • The Department of Health and Human Services is finalizing two rules to remove unnecessary regulatory and reporting requirements now imposed on hospitals and other healthcare providers, saving more than $5 billion over the next five years.
  • The Department of Transportation is finalizing a rule to eliminate unnecessary regulation of the railroad industry, saving up to $335 million in the near future while continuing to maintain public safety.
  • The Department of Transportation is finalizing a rule to extend compliance dates on traffic control requirements (which would, among other things, require states and localities to change street signs), saving millions of dollars in the process.
  • The Environmental Protection Agency is eliminating the obligation for some states to require air pollution vapor recovery systems at local gas stations. This obligation was imposed before new vehicles were required to have increasingly ubiquitous built-in air pollution control technologies.  The anticipated five-year savings are over $300 million. 

With today’s announcements, the regulatory “lookback” is becoming a standardized feature of American government. In an economically difficult time, it promises to increase the benefits and to decrease the costs of Federal regulation.

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