Regulatory Analysis II-Carmen

7/23/2019 Regulatory Analysis II-Carmen

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RegulatoryRegulatory

Analysis IIAnalysis II


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OMB Circular A-4OMB Circular A-4

Regulatory Analysis required byRegulatory Analysis required by

Executive Order 12866Executive Order 12866

OMB Circular A- outlines !!!bestOMB Circular A- outlines !!!best

"ractices!!! #or conducting a"ractices!!! #or conducting a

regulatory analysisregulatory analysis

$roduced by govern%ent e%"loyees$roduced by govern%ent e%"loyees

&it' t'e aid o# "ro%inent acade%ic&it' t'e aid o# "ro%inent acade%icsc'olars in la&( econo%ics( and "ublicsc'olars in la&( econo%ics( and "ublic

'ealt' disci"lines'ealt' disci"lines


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Why Have RegulatoryWhy Have Regulatory

Analysis?Analysis?$rovides esti%ates o# ex"ected bene)ts$rovides esti%ates o# ex"ected bene)ts

and costs o# "ro"osed regulationsand costs o# "ro"osed regulations *se#ul #or "ublic consu%"tion as &ell as*se#ul #or "ublic consu%"tion as &ell as

#or govern%ent decision %a+ers#or govern%ent decision %a+ers ,orces agencies to !usti#y! t'eir actions,orces agencies to !usti#y! t'eir actions

using an obective %etricusing an obective %etric Reduces t'e "ossibility o# !!!!"olitical orReduces t'e "ossibility o# !!!!"olitical or

ot'er sel#-interested!!! be'aviorot'er sel#-interested!!! be'aviorunder%ining t'e regulatory "rocessunder%ining t'e regulatory "rocess

On &'at grounds %ig't regulatoryOn &'at grounds %ig't regulatory

analysis be critici.ed/analysis be critici.ed/


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Elements of RegulatoryElements of Regulatory

AnalysisAnalysis

1010 A state%ent o# t'e need #or t'eA state%ent o# t'e need #or t'e

"ro"osed action"ro"osed action

2020 Exa%ination o# alternativeExa%ination o# alternative

a""roac'esa""roac'es

00 Evaluation o# bene)ts and costs o#Evaluation o# bene)ts and costs o#

t'e "ro"osed actiont'e "ro"osed action


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! "he #ee$ for the! "he #ee$ for the

%ro&ose$ Action%ro&ose$ Action 'o& statutory or ot'er !aut'ority!!'o& statutory or ot'er !aut'ority!!

3e%onstrate !!%ar+et #ailure!!!!3e%onstrate !!%ar+et #ailure!!!! oror

other social purposeother social purpose 44Ot'er social "ur"ose5 allo&s govt0 toOt'er social "ur"ose5 allo&s govt0 todeal &it' "roble%s not c'aracteri.ed bydeal &it' "roble%s not c'aracteri.ed by

%ar+et #ailure e0g0 redistribution%ar+et #ailure e0g0 redistribution

Ma+e a case #or ,ederal regulationMa+e a case #or ,ederal regulationover !!!alternative!! solutionsover !!!alternative!! solutions

Econo%ic regulation "resu%ed invalidEcono%ic regulation "resu%ed invalid


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'! Alternative'! Alternative

A&&roachesA&&roaches O"tions under statutory %andateO"tions under statutory %andate

7s regulation required/7s regulation required/

tringency o# regulation/tringency o# regulation/

Co%"lianceE9ective 3atesCo%"lianceE9ective 3ates Costs decrease as t'e ti%e bet&eenCosts decrease as t'e ti%e bet&een

"ublication o# rule and date o# required"ublication o# rule and date o# requiredco%"liance increasesco%"liance increases

!!Bene)ts!!! ty"ically re%ain constant!!Bene)ts!!! ty"ically re%ain constant


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A&&roachesA&&roaches En#orce%ent %et'odsEn#orce%ent %et'ods

record+ee"ing( ins"ections( testingrecord+ee"ing( ins"ections( testing

Balance: cost vs0 e9ectiveness o#Balance: cost vs0 e9ectiveness o#

regulationregulation

Require%ents by )r% si.eRequire%ents by )r% si.e Re%e%ber t'e iron rule;Re%e%ber t'e iron rule;

Regionally dis"arate require%entsRegionally dis"arate require%ents $olitically di9icult( but can %a+e sense$olitically di9icult( but can %a+e sense


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A&&roachesA&&roaches $er#or%ance tds0 vs0 3esign tds0$er#or%ance tds0 vs0 3esign tds0

Regulate outco%es vs0 regulate "rocessRegulate outco%es vs0 regulate "rocess ,lexibility abeling require%ents Rating syste%sRating syste%s ?overn%ent in#or%ation ca%"aigns?overn%ent in#or%ation ca%"aigns


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(! Evaluation of Bene)ts(! Evaluation of Bene)ts

an$ Costsan$ Costs

Bene)t-Cost Analysis


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Bene)t-Cost AnalysisBene)t-Cost Analysis

*BCA+*BCA+Advantages:Advantages:

?ives understandable su%%ary %easures?ives understandable su%%ary %easures

#or costs and bene)ts#or costs and bene)ts

Allo&s a "olicy %a+er to %axi%i.e netAllo&s a "olicy %a+er to %axi%i.e net

bene)ts o# regulationbene)ts o# regulation

3isadvantage:3isadvantage:

'e %oneti.ation o# bene)ts %ay not be'e %oneti.ation o# bene)ts %ay not be

"ossible or %ay be controversial"ossible or %ay be controversial


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Cost-E,ectiveness AnalysisCost-E,ectiveness Analysis

*CEA+*CEA+

Advantage:Advantage: o need to %oneti.e 'ealt'( environ%entalo need to %oneti.e 'ealt'( environ%ental

a%enities( etc0a%enities( etc0

3isadvantage:3isadvantage: Can be di9icult to co%"are alternatives0 e0gCan be di9icult to co%"are alternatives0 e0g

'o& do you co%"are :'o& do you co%"are : %easure 1


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istri.utional E,ectsistri.utional E,ects

Can be used as a 4need #or regulation5Can be used as a 4need #or regulation5

Al&ays required in analysisAl&ays required in analysis

D'y are distributional e9ectsD'y are distributional e9ects

i%"ortant/i%"ortant/


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/eneral Issues in BCA 0/eneral Issues in BCA 0

CEACEA co"eco"e

Residents citi.ens o# t'e * 4"ublic5Residents citi.ens o# t'e * 4"ublic5

Ot'ers


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enera Issues n B Aenera ssues nCEACEA

Evaluation o# AlternativesEvaluation o# AlternativesAgency %ust s'o& t'at BCA or CEA 'asAgency %ust s'o& t'at BCA or CEA 'as

been done #or alternativesbeen done #or alternatives

'o&s t'at agency actually atte%"ted to'o&s t'at agency actually atte%"ted to

%axi%i.e net bene)ts%axi%i.e net bene)ts

rans"arencyrans"arency cience %ust be &ell-docu%entedcience %ust be &ell-docu%ented

Met'odology %ust be &ell-docu%entedMet'odology %ust be &ell-docu%entedActs toActs to

Fee" govt 'onestFee" govt 'onest

Allo& outsiders to c'ec+ results )nd errorsAllo& outsiders to c'ec+ results )nd errors


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Regulatory Analysis1Regulatory Analysis1

2ummary2ummary $rovides a c'ec+

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Regulatory Analysis II-Carmen