On May 26, a wide range of federal agencies released 30 preliminary plans outlining steps each intends to take to meet requirements for reviewing existing regulations, reducing burdens on business, and expanding public participation in the rulemaking process. The plans are part of the Obama administration's efforts to examine ways to reduce regulatory costs and identify outdated and ineffective rules.

President Obama issued Executive Order 13563 (E.O. 13563), Improving Regulation and Regulatory Review, on Jan. 18. The executive order directed federal agencies to develop and submit preliminary plans to the Office of Information and Regulatory Affairs (OIRA) by May 18.

The plans meet the requirement in section 6(b) of E.O. 13563 for each agency to identify how it "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significant regulations to determine whether any such regulations should be modified, streamlined, expanded, or repealed so as to make the agency's regulatory program more effective or less burdensome in achieving the regulatory objectives."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 announcing the public release of the preliminary plans at the conservative American Enterprise Institute, OIRA Administrator Cass Sunstein described the retrospective review effort as an attempt to change the regulatory culture of Washington by concentrating on cost-effective rules based on evidence of what works. The overall intent of the effort, he said, is to focus on burden reduction and cost savings. He indicated that this review is expected to save "hundreds of millions of dollars in annual regulatory burdens."

All 15 cabinet-level departments and the U.S. Environmental Protection Agency (EPA) submitted review plans, as did 14 non-cabinet agencies. The plans differ from agency to agency. The reviews of agency rules are not limited, however, to "existing significant regulations" as the E.O. states but, in some cases, include rules under development. This expansion of the reviews beyond the intent of the E.O. raises concern that proposed regulations will be endangered by additional special interest pressure, either at the agencies or while the rules are under review at OIRA.

Some plans provide information on specific rules agencies plan to target for reform or repeal, thereby drawing the battle lines for upcoming debates over certain safeguards. Some plans propose an ongoing process agencies will use to evaluate existing rules now and in the future. Agencies will be inviting public input on the preliminary plans and will then make their plans final between July 18 and Aug. 6.

Summaries of Preliminary Plans

The summaries of some major agency plans below provide a flavor of the different approaches agencies adopted to meet the requirements of the E.O. The development of the plans appears to have been decentralized and agency-driven. The fact that agency plans each have different formats and different approaches indicates that this was not a top-down, White House-driven exercise.

Department of Agriculture (USDA). USDA's plan intends to "simplify and reduce the reporting burden on the public for entry and access to USDA programs" and reduce costs by sharing information with other agencies. The agency already has a process for the development and review of all regulatory actions consistent with E.O. 12866 (the Clinton-era order directing agencies how to develop and submit for OIRA's review major proposed and final regulations). The process covers the full rulemaking cycle and will be amended to meet the requirements of E.O. 13563 and formally incorporate retrospective analysis into regulatory development procedures.

An example of the type of rule targeted by USDA's approach is the Food Safety and Inspection Service's (FSIS) consideration of how to use the new Public Health Information System to share collected data and reduce reporting requirements. FSIS is also considering reducing the requirement that meat, poultry, and egg product labels be submitted for approval prior to use to "decrease the recordkeeping burden on industry."

Environmental Protection Agency. EPA's preliminary plan lists 31 regulatory reviews for the initial period. The agency plans to address 16 of these priority items during the 2011 calendar year, while the other 15 reviews are longer-term actions. EPA plans to conduct periodic retrospective reviews every five years. It will solicit public input at the start of each review period and plans to aid the public in tracking reviews through the Semiannual Regulatory Agenda and the agency's Rulemaking Gateway.

EPA's plan is heavily focused on burden reduction and resource efficiency. In conducting retrospective reviews, the agency will look for ways to advance four broad initiatives: electronic reporting, improved transparency, innovative compliance approaches, and integrated problem solving. For many of the review items, EPA intends to reduce burden and improve efficiencies by replacing paper-based reporting with electronic reporting, coordinating and clarifying regulatory requirements, and eliminating regulatory requirements that have become redundant because of technological advances. For example, EPA intends to issue a proposed rulemaking during the summer ("Widespread Use of Onboard Refueling Vapor Recovery") that will eliminate redundancy in vehicle fuel vapor recovery systems. This would eliminate gas dispenser-based vapor control requirements that have become redundant due to modern onboard refueling vapor recovery technology. EPA estimates long-term cost savings at $67 million per year.

EPA has developed a comprehensive approach to conducting these reviews. It will conduct them following a four-step process: 1) solicit nominations for regulations in need of review; 2) select regulations for review; 3) conduct retrospective reviews; and 4) make modifications if necessary. In conducting retrospective reviews, EPA will evaluate regulations under several criteria corresponding to principles listed in the E.O. Considerations include: whether the benefits of a regulation justify its costs; whether there are alternatives to direct regulation that would still ensure environmental objectives are met; and whether the regulation applies to entities covered by multiple EPA regulations.

Of particular concern is EPA's plan to include reviews of many regulations already in development. The plan notes, "of EPA's current regulatory workload, almost two-thirds of [the] activity is a review of an existing regulation." This emphasis on new rules was not the intent of the E.O. and may indicate the agency has bowed to the intense political pressure to ease regulations. For example, EPA intends to review the efficacy of testing requirements issued under the 2008 Lead Renovation, Repair, and Painting Program. Additional testing and cleaning requirements, proposed in May 2010, are "designed to ensure that renovation work areas are adequately cleaned after the renovation work is finished and before the areas are re-occupied."

Lastly, EPA will review five rules in an attempt to determine why the cost estimates of the regulations differ from actual compliance costs. One of the goals is to determine if any systematic biases exist in EPA's ex-ante cost estimates, according to the plan.

Department of Health and Human Services (HHS). HHS's plan does not include a timeline for its review process but indicates that the rules discussed in its proposal will be reviewed over the next two years. According to HHS, the review process will focus on eliminating rules that are no longer necessary, but there is no listing of rules nominated for elimination. The department also indicates that the list of rules included in its proposal is incomplete because some initiatives have not cleared the internal process at the agency.

The plan includes new goals for the agency's ongoing review process, including increased transparency, more public participation in the review process, and strengthening agencies' ability to analyze regulations. In order to reach these goals, HHS indicates it will consider initiatives to improve online access to regulatory activity and set up a task force to determine how best to involve the public in the review process.

The review will include all significant regulations, whether they are final, proposed, or interim final. For example, the Food and Drug Administration (FDA) includes in its list of affected regulations a proposed rule requiring graphic warning labels on cigarette packages, which has a built-in review process for assessing the effectiveness of the labels. The Good Manufacturing Practice (GMP) food regulations, which are also on the FDA's review list, have been in the pre-rule stage since before the E.O. was issued.

A truly retrospective review of FDA's 2004 bar code rule will also take place. The agency proposes a cost-benefit reassessment to determine if the rule should be updated to include technology advancements.

Department of Labor (DOL). DOL's plan identifies nine rules as candidates for retrospective reviews. Five of these rules are "Signature Burden-Reducing Retrospective Review Projects," well-defined projects, each with an estimated cost savings; the other rules are more conceptual in nature and do not have estimates of cost savings. The agency does not outline a formal process for future retrospective reviews. Instead, during DOL's semiannual regulatory agenda planning periods, leadership will ask "agency officials to review existing regulations to determine whether items are candidates for retrospective review." This will be done by the existing Regulatory Council, which includes cross-agency leadership. There is a long list of factors to be considered but no clearly defined criteria for when a rule might be reviewed.

This plan also highlights several review efforts that are already underway, along with some new projects. For example, one of the Occupational Safety and Health Administration's (OSHA) "signature" projects is a proposed rule on harmonizing hazard communications. By harmonizing hazard classifications, safety data sheet formats, and warning labels, OSHA expects annualized savings of between $585 million and $798.4 million.

The Mine Safety and Health Administration's (MSHA) rule for approving electrical products used in underground mines has been in place since 1968. According to DOL's plan, MSHA expects to propose a new rule to "improve the efficiency of the approval process, recognize new technology, add quality assurance provisions, incorporate existing approval policies into MSHA regulations, clarify existing policies and procedures, and reorganize portions of the approval regulations." MSHA estimates that a streamlined process could save equipment manufacturers between $500,000 – $1 million.

Department of Transportation (DOT). DOT is using its preliminary plan to refine a preexisting plan the agency developed to review all of its regulations over a ten-year period. Under the existing plan, which began in 2008, the department is reviewing portions of the Code of Federal Regulations (CFR) each year. As part of its compliance with E.O. 13563, DOT will supplement its review process by expanding the participants to include inspectors, for example, and use advisory committees to review the agency's process. The plan lays out DOT's evaluation criteria.

The preliminary plan takes a rule-by-rule/issue-by-issue approach, overlaying the CFR review. The department took public comments after the E.O. was issued and used the preliminary plan to respond to issues raised in the responses the department received. DOT also asked individual departmental agencies for suggestions. The preliminary plan identifies 70 regulations for action and is divided into three sections: Actions being taken; further study required; and no further action.

Under the heading "Documents covered under this plan," DOT says, "This plan covers all of the Department's existing rules. Any review of a listed rule may also include related guidance, information collections, and other documents, such as waivers and interpretations."

Examples of rules DOT is likely to address include Federal Aviation Administration (FAA) rules that could streamline alcohol and drug testing programs and aircraft manufacturing certification rules.

A May 26 press release from OMB Watch expressed concerns about the retrospective review process while acknowledging that final plans are still months away. The focus of the E.O. was clearly on existing rules. Opening the door to proposed regulations, as many agencies' plans do, plays into the hands of special interests attempting to kill regulations targeting Wall Street and much more. Both the plans and the process for finalizing the plans could be significantly more transparent. Additionally, they could allow for more meaningful public participation. Many of the plans are simply too vague to know what action an agency intends to take on a particular rule.

The press release also notes that "there is a concern about allocation of agency resources. Many of the plans discuss multi-year processes for retrospective reviews. This comes at a time that Congress is cutting regulatory agency budgets. The result is likely to mean that the more agencies look back, the less they will be able to look forward. Americans demand more from their government to protect them from harm."