Recommendation 2013-2 Remains Relevant Guidance

This article was authored by Daniel Thaler, a 2L at Antonin Scalia Law School. The views expressed below are those of the author and do not represent the views of ACUS or the Federal Government.

ACUS Recommendation 2013-2, Benefit-Cost Analysis at Independent Regulatory Agencies, encourages independent regulatory agencies to conduct benefit-costs analyses in rulemaking and specifies “innovative practices” for doing so. The five-year anniversary of the Recommendation has passed with higher frequency of its encouraged analyses and potential for a larger role in an increasingly deregulatory environment.

According to an Office of Management and Budget’s (OMB) 2017 Draft Report to Congress, 64.9% of independent agencies included “some information” on benefits or costs in “major rules” from FY2010-2012, the three years preceding Recommendation 2013-2. In the three years after the Recommendation, FY2014-2016, that same percentage increased to 72.3%. Additionally, the Recommendation identifies the Federal Communications Commission (FCC) as an independent agency not subject to regulatory analysis requirements. Recently, the FCC voted to establish an “Office of Economics & Analytics” that will conduct “rigorous cost-benefit analysis for rulemakings,” according to Chairman Ajit Pai. Recommendation 2013-2 provides pertinent guidance for these independent regulatory agencies that are increasing their use of benefit-cost analysis.

Further, the Recommendation goes beyond encouraging “some information” on benefit-cost and calls for more substantive benefit-cost analyses. Curtis W. Copeland’s 2013 report, the foundation of the Recommendation, provides that 39.7% of independent regulatory agencies’ “major rules” from FY 2007-2011 monetized costs and 5.8% monetized benefits. According to OMB’s 2017 Draft Report, only 33.3% of the same “major rules” monetized costs and zero monetized benefits in FY2016.

However, the current deregulatory environment may induce more substantive analyses and, as a result, the Recommendation’s guidance may become particularly useful. Executive Order (EO) 13,771 forbids executive agencies from issuing new regulations that increase total costs. As discussed at the “New Developments in Regulatory Benefit-Cost Analysis” symposium, co-hosted by ACUS, executive agencies may enhance benefit-cost analyses to meet the EO’s constraint. Although the EO does not apply to independent regulatory agencies, these agencies may take notice of the executive agencies’ practices and may follow suit.

Additionally, future legislation may set benefit-cost analysis requirements for independent regulatory agencies. For example, the Regulatory Accountability Act of 2017, currently under consideration in the Senate, would require the agencies to publish their benefit-cost determinations in final rulemaking notices. The Lessening Regulatory Costs and Establishing a Federal Regulatory Budget Act of 2017, currently in the House of Representatives, would codify EO 13,771’s cost constraint requirement and extend it to independent regulatory agencies. Recommendation 2013-2 could help independent regulatory agencies comply with such legislation, if enacted. Further, the Recommendation could help lawmakers craft future legislation. Section 9 of the Recommendation encourages lawmakers to consider agencies’ flexibility and resource needs when establishing or endorsing benefit-cost analysis requirements. Overall, the Recommendation remains useful for the wide spectrum of benefit-cost analysis developments.

This post is part of the ACUS Intern Blog Series.