The Regulatory Plan

79455 

Federal Register 

Vol. 75, No. 243 

Monday, December 20, 2010 

OPEN GOVERNMENT AND EVIDENCE-BASED REGULATION 

There is a close connection, even an inextricable relationship, between open 

government and evidence-based regulation. If regulatory choices are based 

on careful analysis of the evidence, and if opportunities are provided for 

public review and comment, we will be able to identify sensible and pragmatic approaches that are designed to promote entrepreneurship, innovation, 

job creation, and economic growth. 

Since his inauguration, President Obama has placed a great deal of emphasis 

on open government. In requiring openness, the President has emphasized 

three separate points. First, he has stressed the importance of accountability. 

In his words, openness ‘‘will strengthen our democracy and promote efficiency and effectiveness in Government.’’ Second, the President has said 

that ‘‘[k]nowledge is widely dispersed in society, and public officials benefit 

from having access to that dispersed knowledge’’ and hence to ‘‘collective 

expertise and wisdom.’’ Third, he has emphasized the importance of providing people with information that they ‘‘can readily find and use.’’ For 

this reason, he has said that agencies ‘‘should harness new technologies’’ 

and ‘‘solicit public feedback to identify information of greatest use to the 

public.’’ 

At the same time, the Administration has been placing a great deal of 

emphasis on sound analysis and on ensuring a careful accounting of the 

anticipated consequences of regulation, including both benefits and costs. 

While regulation can promote vital public goods, such as protection of 

safety, health, and financial stability, the President has said, ‘‘Sometimes 

regulation fails, and sometimes its benefits do not justify its costs.’’ 

The word ‘‘analysis,’’ of course, includes a number of distinct but overlapping 

approaches, such as the cost-benefit analysis required by Executive Order 

12866 and the regulatory flexibility analysis required by the Regulatory 

Flexibility Act. Executive Order 12866 requires agencies, to the extent permitted by law, to give careful consideration to both costs and benefits 

and to ensure that the benefits of regulation justify the costs. It is worth 

noting that, in part because of this Administration’s commitment to careful 

analysis, the quantified benefits of final rules significantly exceeded the 

quantified costs for calendar year 2009-and that the net benefits of final 

regulations for the first year of the Obama Administration far exceeded 

those of the first year for the Clinton and Bush Administrations: 


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79456 Federal Register / Vol. 75, No. 243 / Monday, December 20, 2010 / The Regulatory Plan 

Figure 1: Annual Estimated Net Benefits of Major Rules 

First Calendar Year of an Administration (1/21 to 12/31) 

It is important to emphasize that the monetized benefits are high. We have 

issued rules and undertaken initiatives that are saving lives on the highways 

and in workplaces; reducing air and water pollution; increasing fuel economy, 

thus saving money while reducing pollution; making both trains and planes 

safer; helping students to obtain school loans and so to attend college; 

protecting consumers and investors against manipulation, fraud, and conflicts 

of interest; increasing energy efficiency, saving billions of dollars while 

increasing energy security; combating childhood obesity; and creating a ‘‘race 

to the top’’ in education. 

A central goal for the upcoming period is to ensure that regulations do 

not impose unjustified burdens and that if the costs and burdens are significant, they are producing even more significant gains. Analysis of regulatory 

consequences is part of a broad effort to subject regulatory decisions to 

public scrutiny, with close reference to evidence, and thus improving 

themlnot least by pointing the way toward reduced burdens and innovative 

solutions. 

By promoting accountability, open government policies can help to track 

government’s own performance. In that way, such policies make public 

officials accountable for what they do, including in the regulatory arena. 

Performance review matters; it is a hallmark of this Administration. Regulatory analysis is best seen as a form of performance review for Federal 

rules, typically done in advance (and sometimes done retrospectively). 

Before acting, regulators should attempt to obtain a clear and concrete understanding of the likely consequences of what they propose to do. In its 

2009 Report on the Benefits and Costs of Federal Regulations, OMB specifically underlined the relationship among careful analysis, evidence-based 

regulation, and open government. As the Report says, ‘‘Indeed, careful regulatory analysis, if transparent in its assumptions and subject to public scruVerDate Mar<15>2010 19:16 Dec 17, 2010 Jkt 223001 PO 00000 Frm 00002 Fmt 1259 Sfmt 1259 E:\FR\FM\20DEP4.SGM 20DEP4

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Federal Register / Vol. 75, No. 243 / Monday, December 20, 2010 / The Regulatory Plan 79457 

tiny, should be seen as part and parcel of open government. It helps to 

ensure that policies are not based on speculation and guesswork, but instead 

on a sense of the likely consequences of alternative courses of action. It 

helps to reduce the risk of insufficiently justified regulation, imposing serious 

burdens and costs for inadequate reason. It also helps to reduce the risk 

of insufficiently protective regulation, failing to go as far as proper analysis 

suggests. We believe that regulatory analysis should be developed and designed in a way that fits with the commitment to open government.’’ 

With these points in mind, the Office of Information and Regulatory Affairs 

issued (in November 2010) an ‘‘Agency Checklist’’ for Regulatory Impact 

Analysis, designed to promote clarity and transparency with respect to the 

anticipated effects of regulation (see http://www.whitehouse.gov/sites/default/files/omb/inforeg/regpol/RIAlChecklist.pdf). The checklist emphasizes 

that agencies must assess costs and benefits (to the extent feasible), explore 

alternatives, and demonstrate the need for regulatory action. In these ways, 

we have been seeking to increase openness and improve our regulatory 

practices. 

The second function of open government is very different: Openness promotes not merely accountability, but also access to widely dispersed information. The central idea is that officials often lack information that is held 

by numerous others, especially in the private sphere. When it is working 

well, open government can ensure that rules are properly informed by such 

information, which will often help to increase benefits, reduce costs, or 

identify new and creative alternatives. 

Consider the rulemaking process itself. A large advantage of notice-andcomment rulemaking is that it allows agencies to offer proposals, and supporting analyses, that are subject to public scrutiny, and that can benefit 

from knowledge that is widely dispersed in society. On numerous occasions 

in the last 21 months, final rules have been significantly different from 

proposed rules, and public comments are a key reason. 

In its 2010 Report on the Benefits and Costs of Federal Regulations, OMB 

specifically noted that ‘‘some regulations have significant adverse effects 

on small business’’ and that ‘‘it is appropriate to take steps to create flexibility 

in the event that those adverse effects cannot be justified by commensurate 

benefits.’’ To tap dispersed knowledge, OMB requested public suggestions 

about regulatory changes that might serve to promote economic growth, 

with particular reference to increasing employment, innovation, and competitiveness. More specifically, OMB sought suggestions for regulatory reforms 

that have significant net benefits, that might increase exports, and that 

might promote growth, innovation, and competitiveness for small business, 

perhaps through increasing flexibility. We continue to seek such suggestions 

in an effort to reduce the risk that regulation will impose unjustified costs 

or contain unjustified rigidityland to square important regulatory goals 

with the interest in economic recovery. 

Finally, in emphasizing the value of providing access to information that 

people ‘‘can readily find and use,’’ the President signaled a distinctive 

idealthat openness promotes learning by making data and evidence accessible. Anecdotes, speculation, and guesswork can be replaced with information and evidence. The point bears directly on the role of regulatory impact 

analysis. Such analysis is something that members of the public can ‘‘find 

and use,’’ not least because advance notice promotes predictability and 

avoids unfair surprise. 


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79458 Federal Register / Vol. 75, No. 243 / Monday, December 20, 2010 / The Regulatory Plan 

In its Memorandum of July 23, 2010, on the Regulatory Plan and Unified 

Agenda, the Office of Information and Regulatory Affairs noted: 

‘‘Executive Order 12866 identifies a number of principles that you should 

keep in mind, to the extent permitted by law, as you set priorities and 

prepare your submissions. 

First, Executive Order 12866 directs agencies to propose or adopt a regulation 

‘only upon a reasoned determination that the benefits of the intended regulation justify the costs’ (recognizing that some benefits are difficult to quantify 

but are nonetheless essential to consider, such as visibility in national parks). 

Second, it requires each agency to ‘tailor its regulations to impose the 

least burden on society . . . taking into account, among other things, 

and to the extent practicable, the costs of cumulative regulations.’ 

Third, it requires agencies to ‘identify and assess available alternatives to 

direct regulation, including providing economic incentives to encourage the 

desired behavior, such as the public.’ 

Fourth, it directs agencies to design regulations ‘in the most cost-effective 

manner to achieve the regulatory objective.’ 

Fifth, it asks each agency to ‘avoid regulations that are inconsistent, incompatible, or duplicative with its other regulations or those of other Federal 

agencies.’ 

Sixth, it directs agencies to ‘select those approaches that maximize net 

benefits (including potential economic, environmental, public health and 

safety, and other advantages; distributive impacts; and equity), unless a 

statute requires another regulatory approach.’’’ 

OIRA asked agencies to ‘‘comply with these requirements as you develop 

your submissions.’’ It also asked agencies, among other things, to ‘‘highlight 

rulemakings that simplify or streamline regulations and reduce or eliminate 

unjustified burdens’’ and to identify ‘‘regulations that are of particular concern to small businesses.’’ Before they can be finalized, the regulations 

on the plans that follow will, of course, be subject to a rigorous process 

of assessment and scrutiny, with careful attention to the foregoing principles. 

The list of regulations is intended to provide a public account of regulations 

that are under consideration; agencies are under no obligation to issue 

these regulations (unless some independent source of law requires them 

to do so). 

In the current economic environment, it is especially important to see that 

analysis and openness are mutually reinforcing. If the two are taken together, 

they can help to promote important social goals, to eliminate unjustified 

costs, and to identify approaches that will promote entrepreneurship, innovation, job growth, and competitiveness. 


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