Trump’s regulatory reforms means more work for regulators
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President Trump’s recent Executive Order requiring two regulation be cut for every new one enacted, with resulting incremental costs to the economy equaling zero, might seem on its face an enticingly simple matter.

As often the case, reality presents a far more complex challenge, with the devil in the details.

Guidance provided by the Office of Information and Regulatory Affairs subsequent to the Executive Order directs all (non-exempt) agencies to conduct thorough cost-benefit analyses of proposed new rules, as well as rules which would be cut to meet the zero-net-effect requirement.

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What this means in practice is that the two-for-one rule represents a two-plus-one amount of work for those charged with implementing the new policy – three times the level of effort to conduct cost-benefit analyses before any new rule can be proposed. Regulatory cost-benefit analyses are extremely complex endeavors, particularly in the case of “significant” rules, which are ones with annual impacts over $100 million annually — the main targets of the new two-for-one order.

 

Among other factors, agencies are required to consider “the evolution of the market, changes in external factors affecting expected benefits and costs, changes in regulations promulgated by the agency or other government entities, and the degree of compliance by regulated entities with other regulations.”

Beyond this, rule makers must also describe all available alternatives to a proposed rule and the reasons for choosing one over another — including the option of doing nothing at all, which means providing a best assessment of “the way the world would look absent the proposed action.”

Further complicating the task, some important benefits and costs (children’s health, privacy protection, etc.) may be inherently too difficult to quantify given current data and methods. Still, regulators are required to carry out “a careful evaluation of non-quantified benefits and costs.”

In some ways, the federal regulatory structure can be viewed as a very old building made up of wings and upgrades, accumulated by a series of multiple owners over the course of generations, without benefit of a master plan.

Anyone who has endeavored to remodel a house which grew in similar fashion can likely attest to discovering a mind-boggling assemblage of studs, joists, headers, pipes, and wiring, once the architectural surfaces are peeled back.

What seems at first like a simple job to remove one section of an accumulated structure often turns into an unexpected puzzle, requiring greater dissection and reassembly than originally anticipated.

In the case of the regulatory system, its building blocks are words such as “shall,” “shall not,” and “may” do or not do such and such, prescribing the complex matrix of rules by which our Democratic society and modern economy organizes itself and evolves.

The Code of Federal Regulations stands as the embodiment of the entire structure of these millions upon millions of prescriptive words, the sum total of general and permanent rules published in the Federal Register by all departments and agencies of the federal government.

From 1960 when the CFR contained 22,877 pages in 68 volumes, the complex word-structure of regulations had grown to 175,496 pages by the end of 2013, including a 1,170-page index. This ocean of largely unstructured verbiage represents the accumulated logic and prescriptions to which the two-for-one rule must now be applied by regulators to pull apart and rearrange, without increasing economic costs.

Fortunately, the power of modern Natural Language Processing (NLP) technology offers some promise to those charged with the seemingly superhuman task of conducting cost-benefit analyses across the disparate, fragmented, and sometimes redundant parts of the overall regulatory structure.

NLP accelerates the process of identifying patterns, trends, and anomalies throughout massive amounts of text, providing a rapid screening capability as a first step toward pinpointing language in the CFR that indicates potentially redundant or obsolete rules to be cut.

Ultimately, policy leaders and subject matter experts (humans), together with input from public and private stakeholders, should always make the final decisions as to which costs and benefits outweigh others. But these critical decisions almost certainly will lead to better outcomes when the people making them enjoy access to the best technology, augmenting their capacity to consider a volume of words grown too vast for effective analysis through traditional methods.

John W. Davis II, is founder and chief executive officers of N&C, provider of the regulatory data analytics solution Regendus. Davis previously served as director of the Homicide and Major Crimes Bureau as federal prosecutor for the U.S. Virgin Islands Justice Department.

The views expressed by contributors are their own and are not the views of The Hill.