Cass Sunstein on new directions in regulatory policy

Here’s the scorecard: Bush: $3.4 billion. Clinton: $14 billion. Obama: $91.3 billion.

These numbers represent the net monetary benefits of final, federal agency regulations issued through the third fiscal year of each of these administrations. They were presented to HLS students and faculty on March 26 by Cass R. Sunstein, former Felix Frankfurter Professor of Law and current administrator of the Office of Information and Regulatory Affairs, a department within the White House’s Office of Management and Budget. As administrator, Sunstein oversees the federal government’s entire regulatory process. He was on campus to discuss “New Directions in Regulatory Policy.”

How was that $91.3 billion in net benefits achieved? President Obama’s Executive Order 13563 required all federal agencies to develop plans for streamlining or eliminating inefficient or ineffective rules, based primarily on cost-benefit analyses. If this sounds like a deregulatory initiative, it is, said Sunstein. Agency compliance with this “look-back” order has resulted in savings in fuel economy, home appliance energy efficiency, economic savings for businesses, and advances in highway safety. The number of deaths on the highways is now lower than at any time in recorded history, Sunstein said. “There are people in this room who are with us today, or not hurt today, as a result of tremendous advances in highway safety.”

Sunstein sees more savings and net benefits coming as dozens of federal agencies continue examining their regulations and getting rid of those that are redundant, outmoded, or an unjustified drag on consumers and industry. There are air pollution technology requirements imposed on gas stations that are redundant because cars already have the technology, Sunstein said, by way of one example. The Environmental Protection Agency has proposed eliminating that—at a savings of tens of millions of dollars.

Regulations account for half of OIRA’s responsibilities. The other half involves information. Sunstein dubbed the new guiding principle for how the government presents information to the public as “Plate, Not Pyramid.” He was referring to the switch from the USDA’s old cluttered and unedifying food pyramid to the clean, simple, readily grasped food plate. The idea is that all federal agencies must strive for that kind of clarity when presenting information to the public. Another initiative is aimed at eliminating what Sunstein called “comparison friction”—when data comparisons are insufficiently enlightening. For example, at www.fueleconomy.gov, consumers can now compare the annual fuel cost over five years of a particular car against the fuel cost of the average vehicle. That’s a lot more informative than the old fuel economy label, which compared city and highway mileage. OIRA is also currently working on “smart disclosure,” in which new apps will make it possible for people to analyze their own past choices and make better decisions in the future.

Per the January 2011 Executive Order, federal agencies are also making the public comment process more open and accessible—see www.regulations.gov— and at www.data.gov, enhanced accessibility to government-collected data will, according to Sunstein, permit personal control over information and help markets work better.

Wrapping up, Sunstein said, “In view of the state of the art techniques we now have for engaging the public and disclosing material, and for assessing the consequences of rule both before we act and after we act, the dream of incorporating statistical analysis of rules, avoiding mistakes, and empowering the public is not so far from being a reality.”

—Jeri Zeder