The Regulatory Plan

64137 

Federal Register 

Vol. 74, No. 233 

Monday, December 7, 2009 

INTRODUCTION TO THE FALL 2009 REGULATORY PLAN 

It is . . . the policy of the United States that . . . agencies shall prioritize 

actions based on a full accounting of both economic and social benefits 

and costs and shall drive continuous improvement by annually evaluating 

performance, extending or expanding projects that have net benefits, and 

reassessing or discontinuing under-performing projects. 

Executive Order 13514 on Environmental, 

Energy, and Economic Performance 

(Oct. 5, 2009) 

Some of the nation’s most important policies are implemented through regulation. In domains as diverse as energy efficiency, environmental protection, 

health care, occupational safety, civil rights, communications, homeland 

security, and many more, the government attempts to protect its citizens 

through regulations. 

In a memorandum signed on January 30, 2009, President Obama emphasized 

that as a result of many years of experience, ‘‘Far more is now known 

about regulation – not only about when it is justified, but also about what 

works and what does not.’’ He explicitly directed the Director of the Office 

of Management and Budget, Peter Orszag, to evaluate the regulatory review 

process and, among other things, to ‘‘clarify the role of the behavioral 

sciences in formulating regulatory policy’’ and ‘‘identify the best tools for 

achieving public goals through the regulatory process.’’ 

Director Orszag has written that behavioral economics is ‘‘one of the most 

important intellectual developments of the past several years. . . . By taking 

the insights of psychology and observed human behavior into account, we 

now have a fuller picture of how people actually behave – instead of 

just reducing them to the hyper-rational utility-maximizers of Econ 101.’’ 

A behavioral approach to regulation is straightforward. It draws on evidence 

of people’s actual behavior. It favors approaches that are clear, simple, 

and easy to understand. It attempts to ensure that regulations will have 

good consequences. 

These goals have many implications for regulatory policy. In the domain 

of savings for retirement, consider these words from the President’s Fiscal 

Year 2010 Budget: 

‘‘Research has shown that the key to saving is to make it automatic and 

simple. Under this proposal, employees will be automatically enrolled in 

workplace pension plans—and will be allowed to opt out if they choose. 

. . . Experts estimate that this program will dramatically increase the savings 

participation rate for low and middle-income workers to around 80 percent.’’ 

In September 2009, the President expanded on this theme by offering a 

series of initiatives for increasing automatic enrollment. He said, ‘‘We know 

that automatic enrollment has made a big difference in participation rates 


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64138 Federal Register / Vol. 74, No. 233 / Monday, December 7, 2009 / The Regulatory Plan 

by making it simpler for workers to save – and that’s why we’re going 

to expand it to more people.’’ 

In many other domains, it is possible to promote regulatory goals by selecting 

the appropriate default rules. And where it is not possible or best to change 

the default, we can have a similar effect merely by easing and simplifying 

people’s choices. Several of the rules discussed in this Plan reflect this 

aspiration. One such rule, involving hazard communication to workers and 

proposed by the Occupational Safety and Health Administration in 2009, 

is expected to increase simplicity, to reduce costs, and at the same time 

to save dozens of lives each year. 

In the same vein, the Administration is taking a series of steps toward 

simplifying the Free Application for Federal Student Aid (FAFSA), reducing 

the number of questions and allowing electronic retrieval of information. 

Use of a simpler and shorter form is accompanied by measures designed 

to permit online users to transfer data previously supplied electronically 

on their tax forms directly onto their FAFSA application. 

To achieve regulatory goals, it is important to understand that people are 

often affected by the behavior of their peers: If people learn that they 

are using more energy than similarly situated others, their energy use declines 

– saving money while also reducing pollution. In the domain of seatbelt 

usage, real change occurred as regulation worked hand-in-hand with emerging 

social norms. The Administration is well aware that if safety is to increase 

significantly on the highways, it must be in part because of social norms 

that discourage distracted driving (and other risky behavior). In October 

2009, the President issued an Executive Order banning texting while driving 

by Federal employees; the Department of Transportation is embarking on 

a range of initiatives to reduce distracted driving. 

Scientific integrity is critically important, in the sense that regulators cannot 

decide how to proceed without having a sense of what is known and 

what remains uncertain. Of course some risks are large and others are 

small. Some regulations are burdensome and some are not. Some regulations 

have unintended bad consequences; others have unintended good consequences. 

In his January 30, 2009, memorandum, President Obama pointed to the 

importance of ‘‘a dispassionate and analytical ‘second opinion’ on agency 

actions.’’ He also asked the Director of OMB to address the role of three 

factors that are not always fully included in cost-benefit analysis: the interests 

of future generations; distributional considerations; and fairness. If regulation 

is to be data-driven and evidence-based, it must include, rather than neglect, 

the concerns of future generations. 

Many of the regulations in this Plan reflect these concerns. In particular, 

environmental regulations, designed to combat the risks associated with 

climate change, are attentive to the interests of future generations and those 

who are least well-off. The Administration has recently developed interim 

figures for the social cost of carbon–figures that have been used for several 

different regulations in this Plan, involving energy efficiency in vending 

machines and greenhouse gas emissions from motor vehicles. The figures 

are based in part on a recognition of the well-established view that a high 

discount rate for long-term damage could lead to action that might harm 

future generations. 

In addition, President Obama has placed a great deal of emphasis on open 

government. In his first weeks in office, he quoted the words of Supreme 


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Federal Register / Vol. 74, No. 233 / Monday, December 7, 2009 / The Regulatory Plan 64139 

Court Justice Louis Brandeis: ‘‘Sunlight is said to be the best of disinfectants.’’ 

President Obama explained that ‘‘accountability is in the interest of the 

Government and the citizenry alike.’’ He emphasized that ‘‘[k]nowledge is 

widely dispersed in society, and public officials benefit from having access 

to that dispersed knowledge.’’ President Obama has stressed that transparency 

can ensure that data is available to all – and with available data, we can 

greatly improve our practices. 

The Environmental Protection Agency has built on these ideas with its 

Greenhouse Gas Reporting rule, requiring disclosure by the most significant 

emitters. The data will allow businesses to track their own emissions and 

compare them to similar facilities; it will also provide assistance in identifying cost-effective ways to reduce emissions in the future. 

All this is merely a start. For example, the Executive Order on environmental, 

economic, and energy performance will attempt to track progress in meeting 

crucial goals – including greenhouse gas emissions reductions – and disclose 

both costs and benefits to the public. 

Regulatory decisions often require complex tradeoffs, especially in the current 

economic environment. We are committed to ensuring that those tradeoffs 

reflect the best available information, respect scientific integrity, and benefit 

from public participation – and are rooted in a clear and transparent understanding of the human consequences. 

Cass R. Sunstein 

Administrator 

Office of Information and Regulatory Affairs 


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