Penn Program on Regulation Cary Coglianese, Director Edward B. Shils Professor ofLaw and Professor ofPolitical Science September 22, 2013 The Hon. Howard Shelanski Administrator, Office ofInformation and Regulatory Affairs The Office ofManagement and Budget 725 17th Street, NW Washington, DC 20503 Dear Administrator Shelanski, This letter, with enclosures, responds to your request for my review ofthe Draft 2013 Report to Congress on the Benefits and Costs ofFederal Regulations ("Draft Report") available on the OMB website. You asked for comments on the "format and substance" ofthe Draft Report - and you specifically sought my thoughts on the following four recommendations as stated in your August 9th email: (a) retrospective analysis should become a routine part of agency rulemaking, and formal mechanisms should be maintained to reevaluate rules that may be unjustified, excessive, insufficient, or unduly complex; (b) agencies should communicate with the public in a way that is clear, simple, meaningful, and jargon-free; (c) objective, evidence-based assessment of costs and benefits should be used as an integral part ofthe regulatory decision-making process; and (d) agencies should align their priorities across all levels of internal hierarchy. I certainly endorse the first three ofthese recommendations. In various ways they comport with suggestions I have separately urged for some years in my own writing. For example, as the Draft Report notes (p. 9), recommendations (a) and (c) are integrally connected with each other. In a 2005 co-authored paper, published as part ofa National Research Council report, I wrote that retrospective "evaluation research provides valuable information for policy decision making," further observing that: The staff and political officials in state and federal regulatory agencies, legislatures, and other oversight bodies (such as the Office of Management and Budget) need to design and implement policies that work to achieve their goals. With information from retrospective evaluations ofpolicies, policy 3501 Sansom Street • Philadelphia, PA 19104-6204 • Tel215.898.6867 • [email protected] www.law.upenn.edu/coglianese Review of Draft 2013 Report to Congress September 22, 20 13 Page 2 of3 makers will be better able to determine what policies to adopt (and how to design them) in the future. Policy evaluation research can also help identify ways to change existing policies to make them more beneficial. 1 Last year, in an OECD report on retrospective regulatory analysis, I reiterated the importance of improving the ex post evaluation ofregulatory policies, noting among other things that "[i]nstitutionalizing practices ofrigorous ex post evaluation will help ensure more informed decision making in the future about regulation and regulatory policy."2 In addition, similarly supportive statements can be found in my writing with respect to recommendation (b), which calls for clear, straightforward communication with the public. In a 2005 journal article, I noted that to participate effectively in the rulemaking process, "[c ]itizens need to be able to understand what the agency is proposing and must be able to have some understanding ofthe underlying policy issues involved in the rulemaking." 3 I noted that, at that time, "the latest findings from the U.S. Department of Education [indicated that] about 90 million adults (or over half ofall adults in the U.S.) 'experience considerable difficulty in performing tasks that required them to integrate or synthesize information from complex or lengthy texts.'" I suggested that "agencies should certainly strive to display information clearly and in easy-to-read formats." Subsequently, in a 2011 report to the Administrative Conference on the online accessibility ofrulemaking data, I further recommended that agencies "should ensure that rulemaking information will be easily accessible to ordinary individuals."4 I have no comparable affirmations to offer with respect to the fourth recommendation in your August 9th email, recommendation (d). It appears a sensible recommendation, as far as it goes. But it is also not entirely clear to me what it means to "align ... priorities," other than perhaps that the heads ofagencies should try to manage their agencies well, trying to achieve the their most important objectives. Although it may be hard to imagine much reasonable objection to such a seemingly platitudinous recommendation, I confess I find this recommendation at best weakly supported by the contents ofthe Draft Report. Admittedly, the Draft Report contains a section on "regulatory coordination," but that section focuses on coordinating the regulatory standards between the U.S. and other countries. I found nothing in the report expressly indicating that a lack of"alignment" has become a particularly significant problem within agencies, nor any evidence suggesting what benefits to society would accrue from greater efforts to "align" agency priorities. This is not to deny that there might be a valid problem needing redress nor to suggest that recommendation (d) is in any way unwise. Rather, it is simply to note that the Draft Report does not itself, in my view, provide any justification for this recommenda­ 1 Cary Coglianese & Lori Snyder Bennear, "Program Evaluation of Environmental Policies: Toward Evidence-Based Decision Making," in National Research Council, Social and Behavioral Science Research Priorities for Environmental Decision Making (2005), pp. 246-273, http://www.nap.edu/openbook.php?record_id=lll86&page=246 2 Cary Coglianese, Evaluating the Impact ofRegulation and Regulatory Policy, OECD Expert PaperNo. 1 (August 2012), http://www.oecd.org/gov/regulatory-policy/1_coglianese%20web.pdf. 3 Cary Coglianese, "The Internet and Citizen Participation in Rulemaking," /IS: Journal ofLaw and Policy for the Information Society 1: 33-57 (2005). 4 Cary Coglianese, "Federal Agency Use of Electronic Media in the Rulemaking Process," Report to the Administrative Conference ofthe United States (December 2011), http://www.acus.gov/sites/default/files/docurnents/Coglianese-Federal­ Agencies-Use-of-Electronic-Media-in-Rulemaking-FINAL-REPORT.pdf. Review of Draft 2013 Report to Congress September 22, 20 13 Page 3 of3 tion. If you believe this recommendation is important, I would encourage you and your staff to add a section to your final report explaining and justifying this recommendation. In addition to these general observations about the four recommendations noted in your email (and elaborated in the Draft Report on pages 53-54), I attach a set ofmore focused comments organized by page number in the Draft Report, as well as the following additional materials: • A set ofhandwritten notations on a copy ofthe draft, calling attention to various typographical or other similar minor formatting matters in the Draft Report. • A copy ofa recent paper ofmine, "Moving Forward with Regulatory Lookback," which offers suggestions for achieving still greater institutionalization of retrospective review. • A copy ofchapter 1 and the table ofcontents from my forthcoming co-edited book, Does Regulation Kill Jobs?, which will be published later this year. As sections ofthe Draft Report review the literature on the relationship between regulation and employment, you may find some ofthe other chapters ofthis volume of interest. If you wish to review other parts ofthis book, please feel free to let me know. I hope my review has been of some assistance as you and your staff prepare your final report to Congress. If you have any questions about my comments or these materials, or ifI can assist in any other way, please feel free to contact me again. Sincerely, Review of “2013 Draft Report to Congress on the Benefits and Costs of Federal Regulations” Cary Coglianese Edward B. Shils Professor of Law Director, Penn Program on Regulation University of Pennsylvania Law School September, 2013 Page/Passage Comment P. 3, first para Where exactly are the criteria (“below”) that have been used in defining and coding for “major” rules? P. 3, second bulleted Instead of “net benefits” versus “net costs,” I would advise “positive net para, third sentence benefits” versus “negative net benefits.” After all, an estimate of net benefits is what is being computed. See p. 4 of the Draft Report for the definition of efficiency as “maximizing net social benefits.” P. 3, third bulleted I suggest you insert “quantified and monetized,” so this sentence reads para, second “For 14 rules, representing the majority of the quantified and monetized subpoint, first benefits and costs of rules issued in FY 2012…” As the Draft Report sentence acknowledges, rules may have benefits and costs that have not been quantified or monetized. You can only claim these 14 rules represent a majority of what has been estimated. P. 8, first para, Are the estimates based on all “the major regulations,” as suggested sentence beginning here? Or did agencies fail to quantify or monetize the impacts for some “Estimates are based major regulations? on…” P. 8, fn. 5, last Although I can understand why you “do not update or recalculate sentence benefit and cost numbers,” not doing so seems a bit discordant with one of the principal rationales for conducting retrospective analysis of regulations, which is to improve prospective estimates (p. 9). P. 9, fn. 7 Perhaps you may wish to consider adding a citation here to my earlier paper with Lori Bennear, “Program Evaluation of Environmental Policies: Toward Evidence-Based Decision Making,” in