Regulation is a basic tool of government. Pursuant to federal agencies' respective statutory authorities, they have issued thousands of regulations to help ensure public health and safety, protect the environment, and facilitate the effective functioning of financial markets, among other goals. However, regulations are issued in a dynamic environment in which an industry sector, technology, or behavior of regulated entities can change in unanticipated ways. These changes, among other factors, may call for a reexamination of existing regulations, which we refer to here as "retrospective regulatory reviews."
Impetus for Retrospective Regulatory Reviews
- Governmentwide statutes
- Agency-specific statutes
- Program-specific statutes
- Executive orders
- Executive branch directives
- Petitions or other forms of industry feedback
- Changes in market conditions
- Suggestions from agency staff
- Agency policy
Retrospective regulatory reviews are not new and serve a variety of purposes. They typically occur both as a consequence of specific legal or administrative requirements or directives, as well as at the initiative of individual agencies exercising discretion under their general regulatory authorities. In our work, we have referred to two types of reviews. Mandatory reviews are retrospective reviews of regulations that agencies conduct in response to requirements in statutes that apply governmentwide, agency- or program-specific statutes, executive orders, and executive branch directives. Discretionary reviews are retrospective reviews of regulations that agencies undertake on their own initiative pursuant to their general statutory authorities to issue regulations. For example, agencies may conduct discretionary reviews in response to petitions or changes in market conditions.
Statutes and executive orders have added a number of procedural and analytical requirements and directives to the regulatory process. These requirements and directives focus predominantly on agencies' development of new regulations, but some, such as Section 610 reviews required by the Regulatory Flexibility Act (RFA), call for the evaluation of existing regulations. The RFA requires agencies to reexamine all regulations that have or will have a "significant economic impact upon a substantial number of small entities" within 10 years of their adoption as final rules. The purpose of these reviews is to determine whether such regulations should be continued without change, or should be amended or rescinded, consistent with the stated objectives of applicable statutes, to minimize their impact on small entities. A number of agencies are also directed by specific statutes to conduct some type of periodic retrospective reviews of their regulations. For example, the Clean Air Act and Clean Water Act require the Environmental Protection Agency to conduct retrospective reviews. Further, since 1978, every U.S. president has directed agencies to evaluate or reconsider existing regulations, including most recently, President Obama through the issuance of Executive Order 13563 in January 2011. That order, entitled Improving Regulations and Regulatory Review, includes a section on retrospective analysis of existing significant regulations; such regulations include those that may have an annual effect on the economy of $100 million or more. Executive Order 13563 instructs agencies to consider how best to promote retrospective reviews of regulations that may be outmoded, ineffective, insufficient, or excessively burdensome, and to modify, streamline, expand, or repeal them in accordance with what has been learned, and it requires agencies to submit preliminary plans to the Office of Information and Regulatory Affairs (OIRA) within 120 days for conducting such periodic retrospective reviews. In addition, House Resolution 72, passed by the U.S. House of Representatives in February 2011, calls for a different type of "retrospective regulatory review." Among other things, the resolution directs 10 congressional committees to inventory and review existing regulations and orders from federal agencies within the respective committees' jurisdiction with a focus on the potential adverse impact of the regulations on jobs and economic growth.
There is no one standard term or definition for the variety of activities that might be considered retrospective regulatory reviews. In different contexts, these have been referred to as look-backs, ex post (postregulation) studies, retrospective studies, validation studies, and sometimes just as "reviews." For purposes of our 2007 report on reexamining regulations, we used the term retrospective review broadly to mean any assessment of an existing regulation, primarily for purposes of determining whether (1) the expected outcomes of the regulation have been achieved; (2) the agency should retain, amend, or rescind the regulation; and/or (3) the actual benefits and costs of the implemented regulation correspond with estimates prepared at the time the regulation was issued. GAO reported that from 2001 through 2006, the nine agencies selected for GAO's examination conducted retrospective reviews primarily to determine the effectiveness of the implementation of regulations, but agencies also conducted reviews to identify ways to reduce regulatory burden and to validate their original estimates of benefits and costs.
Why are retrospective reviews important? Back to top
Retrospective reviews can help inform Congress and other policymakers, as well as agencies themselves, of improvements in the design of regulations and regulatory programs, and can play a part in examining the federal government's existing programs, policies, functions, and activities. Experts and stakeholders that GAO consulted during our work on economic and regulatory analyses and federal mandates (including regulations) indicated that more retrospective analysis is needed and, further, that the quality and credibility of these analyses could be improved. These experts and stakeholders also stated that retrospective regulatory reviews are useful, in part because regulations can change the behavior of regulated entities and the public in ways that were not predicted before the regulations were implemented. Similarly, retrospective reviews provide a mechanism for reviewing the role of the federal government in response to changing conditions that may occur over time or suddenly as a result of unexpected events. It is important to note, however, as GAO has in the past, that as agencies face trade-offs in allocating limited resources to conducting mandatory and discretionary retrospective reviews, as well as conducting other mission-critical activities, they must make decisions about what activities will produce the greatest net benefit.
Which agencies oversee and coordinate agencies' retrospective regulatory reviews? Back to top
OIRA, within the Office of Management and Budget (OMB), oversees and coordinates federal regulatory policy. Executive Order 12866 directs OIRA to provide guidance and oversight related to agencies' regulatory actions and to coordinate agencies' reviews of their existing significant regulations. Similarly, Executive Order 13563, which supplements Executive Order 12866, requires agencies to submit a preliminary plan to OIRA under which the agency will periodically review its existing significant regulations. Executive Orders 12866 and 13563 do not apply to independent regulatory agencies. However, in a February 2, 2011 memorandum regarding implementation of Executive Order 13563, OMB has encouraged such agencies to give consideration to all of the provisions of the executive order, consistent with their legal authority. In particular, such agencies are encouraged to consider undertaking, on a voluntary basis, retrospective analysis of existing rules.
The Small Business Administration (SBA), an independent agency of the federal government, was created to aid, counsel, assist, and protect the interests of small business concerns to preserve free competitive enterprise and to maintain and strengthen the national economy. SBA's Office of Advocacy monitors and provides guidance regarding the compliance of all agencies (including regulatory agencies) with the RFA and with the Section 610 reviews that the RFA requires agencies to conduct. Those reviews must reexamine all regulations that have or will have a "significant economic impact upon a substantial number of small entities" within 10 years of their adoption as final rules.
Pub. L. No. 96-354, 94 Stat. 1164, 1169 (Sept. 16, 1980) (codified at 5 U.S.C. § 610). These reviews are referred to as Section 610 reviews. In 2006, we reported that it is not clear whether these reviews have been consistently and effectively implemented. See GAO, Regulatory Flexibility Act: Congress Should Revisit and Clarify Elements of the Act to Improve Its Effectiveness, GAO-06-998T (Washington, D.C.: July 20, 2006).
Although the RFA does not define "significant" or "substantial," the Small Business Administration (SBA) has developed guidance for government agencies on how to comply with the RFA. The SBA guidance states that "what is 'significant' or 'substantial' will vary depending on the problem that needs to be addressed, the rule's requirements, and the preliminary assessment of the rule's impact."
GAO, Reexamining Regulations: Opportunities Exist to Improve Effectiveness and Transparency of Retrospective Reviews, GAO-07-791 (Washington, D.C: July 16, 2007).