Views on S. 1080, the Regulatory Reform Act

Gao ID: 115592 June 23, 1981

Comments were presented on the proposed Regulatory Reform Act. GAO believes that the bill constitutes a marked improvement over previous bills in that it focuses directly on the central issue of regulatory analysis and provides a better definitional framework. Under the bill, major rules are defined as those rules which have an effect on the economy of $100 million in compliance costs; those which result in a substantial increase in other costs, or prices, throughout the economy; and those which produce significant adverse economic effects. Although certain classes of rules are exempted from this definition, the bill, together with the Regulatory Flexibility Act, captures most situations where major analytical effort would be required. However, GAO believes that the scope of this coverage may be too inclusive. Additionally, with regard to the Administration's wish to include in the bill the authority to exempt proceedings which provide regulatory relief, GAO believes that, if waiver authority is to be granted, it should be under clearly specified criteria. Actions that reduce regulatory burdens but which nevertheless generate significant adverse consequences or substantial cost increases to segments of the population should be thoroughly analyzed. Waiver of the requirements for detailed regulatory analyses should be authorized for rules which diminish the extent of regulation imposed, but only where a substantial body of evidence shows a high likelihood of a net gain without serious adverse consequences. Further, GAO could not state whether the cost impacts of the bill would be significantly greater as its implementation proceeds. It could only state that cost increases should be least for those agencies which are accustomed to sophisticated regulatory analysis. Also, GAO was unable to project the capacity of agencies to absorb these costs while meeting their other responsibilities. It was clear, however, that additional funding would be required by a number of agencies and that the regulatory analysis would increase the amount of time involved in the rulemaking processing.

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