A Forecast of the Next Five Years in Regulation

Speakers addressing a captive audience at RegBlog's fifth anniversary event. From left, Cary Coglianese, Sam Batkins, Andy Green, Paul Noe, and Rena Steinzor.
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RegBlog’s fifth anniversary prompts illuminating debate about the best path for future regulators.

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In commemoration of RegBlog’s fifth anniversary, the Penn Program on Regulation recently convened a panel of experts at the University of Pennsylvania Law School to forecast the next five years of regulation, and to offer recommendations for the next presidential administration in Washington.

Focused on the nation’s regulatory priorities for the future, the panel sparked a lively debate about where regulators should prioritize their efforts over the next five years. The panel’s wide-ranging discussion can be viewed in its entirety via the video-recording available at the Penn Program on Regulation’s website, and each of the panel members’ extended essays—more fully conveying their remarks—have been included as part of RegBlog’s 16-part anniversary series, RegBlog@5.

Given the depth and range of the panelists’ discussion, no short synopsis could ever do justice to the full range of issues addressed and perspectives shared. But among the many themes examined within the larger discussion was the role of analysis in the regulatory process—particularly the question of whether there should be more emphasis on cost-benefit analysis and retrospective reviews of current rules, or whether agencies should instead focus their limited resources more on promulgating, and enforcing more vigilantly, effective rules of business conduct.

Paul Noe, Vice President for Public Policy at the American Forest & Paper Association, favored the increased use of cost-benefit balancing in making regulatory decisions. Speaking in his personal capacity only, Noe emphasized that cost-benefit analysis can improve regulatory outcomes by prompting agencies to estimate whether new regulations would actually enhance societal well-being.

5YearsofRegulation_0079Noe argued that the next administration will have an opportunity to advance the practice of cost-benefit analysis. The 2009 Supreme Court decision, Entergy Corp. v. Riverkeeper, jettisoned what Noe characterized as a longstanding, ostensible judicial presumption against the use of cost-benefit analysis, at least when a regulation’s authorizing statute does not require its use.

According to Noe, the Riverkeeper decision aligned the use of cost-benefit analysis with Chevron principles, holding that, all else being equal, if a statute is silent or ambiguous about the use of cost-benefit balancing, it is reasonable for an agency to take a cost-benefit approach when implementing a regulation.

Since many statutes are either silent or ambiguous about cost-benefit balancing, Noe predicted that the next President could dramatically advance the use of cost-benefit analysis in future rulemaking. He also said that, given that the regulatory system gets criticized for failing to be evidence-based, cost-benefit analysis could help drive the creation of better information, which would improve the regulatory process.

5YearsofRegulation_0003Rena Steinzor, a professor at the University of Maryland School of Law and a Member Scholar with and former president of the Center for Progressive Reform, said that the most important priorities are the development of more effective rules, and, overall, strengthened regulatory enforcement—particularly in the areas of environmental, health, and safety regulation. She argued that the administrative state is failing because “it is slow, defunded, and is not embracing the issues of the day in any kind of effective way.” She said that within the past eight years, the U.S. Occupational Safety and Health Administration has only issued one new rule that she would consider to be a major protective regulation.

Steinzor also stressed that there exist other pressing problems that require regulatory attention. Climate change and its ravages, she warned, are already upon us, and a failure to act quickly will lead to grave destruction. She also noted that most of the pharmaceutical products consumed in the United States depend on ingredients from countries with inadequate regulatory oversight, making policing the safety of imported products an ongoing public health challenge.

Andy Green, Managing Director for Economic Policy at the Center for American Progress, addressed the fundamental need for robust regulation to strengthen the nation’s financial markets and to protect consumers. Without effective regulatory oversight, Green argued, instances of fraud, collusion, monopolization, and breaches of fiduciary responsibility will arise, which will ultimately harm consumers and undermine economic growth and stability.

To make regulation effective, Green emphasized the importance of building agency capacity and ensuring adequate budgets. Agencies are only as strong as their human leadership, asserted Green, and if agency officials are asked to do too much paperwork and analysis, they are less able to perform their most vital tasks. Green also stated that agencies have lagged behind in technology, pointing to information collection and data analysis gaps that too often make agencies like the U.S. Securities and Exchange Commission (SEC) lag far behind the private sector.

Cary Coglianese, RegBlog's founder and the panel's moderator, addressing the event's attendees.

Cary Coglianese, RegBlog’s founder and the panel’s moderator, addressing the event’s attendees.

Looking forward, Green stressed that regulators need to be vigilant in identifying new and emerging problems. He also presented three main sets of regulatory solutions that are available to regulators: enact broad principles of business conduct and rely on litigation to determine whether these principles have been met; enact more specific, technical rules and engage in administrative enforcement; or make overarching structural change to an industry. These types of solutions, Green suggested, are not mutually exclusive, and regulators need constantly to seek out the best combinations of these approaches to solve regulatory problems.

Sam Batkins, Director of Regulatory Policy at the American Action Forum, emphasized the need for analysis after regulations have been implemented—that is, so-called retrospective review. Batkins noted the existence of executive orders that urge agencies to conduct retrospective reviews and to modify, streamline, or repeal existing regulations that are not working. But he said that these orders have led to uneven results: Some agencies are more thorough than others in looking back and modifying past regulations that have become outmoded or counterproductive.

For the majority of regulations, there is still too often a lack of information about the performance of these rules once they are implemented. In order to support greater review of past rules, Batkins suggested that, instead of retrospective review being an agency-led process—as it currently is—it should be driven by an independent governmental entity, like the Congressional Budget Office, which would annually review major regulations.

The panel discussion was co-organized by RegBlog and the Penn Program on Regulation, and it was co-sponsored by the Penn Law chapters of the Federalist Society and the American Constitution Society. Penn Law professor Cary Coglianese, who serves as the faculty advisor to RegBlog and is the director of the Penn Program on Regulation, moderated the discussion.

This essay is part of RegBlog’s sixteen-part series, RegBlog@5.