Economic Report of the President

Federal regulations designed to protect the natural environment andthe health and safety of both workers and consumers are necessary,and will remain so. The unaided market has not produced socially acceptablelevels of pollution or worker exposure to hazardous conditions,and there is little evidence that it will.But Federal regulation designed to protect the environment andthe health and safety of both workers and consumers has not alwaysproduced the hoped-for results. The challenge to those who wouldreform these regulations is to design regulatory systems which intrudeonly to the extent required to achieve their goals and whichuse enforcement techniques that are appropriate, flexible, and efficient.Means must also be found to assure that the regulatory goalsthemselves reflect a proper balancing of national priorities. This mayrequire new oversight methods or new regulatory tools.Oversight Activities and InstitutionsThis Administration has utilized a number of methods to supervisethe regulatory process. By Executive order, any executive agency proposinga major new regulation must develop an analysis of the expectedeconomic consequences of its preferred alternative and ofother possible approaches. Although this requirement only applies toa relatively small number of the regulations issued by the FederalGovernment each year, it has helped to upgrade the entire structureof regulatory decisionmaking. Many agencies now estimate the costsand benefits of all proposed regulations, even though these estimatesare not always made public.The regulatory analyses prepared by the agencies are subjected toindependent review and comment by two institutions: the RegulatoryAnalysis Review Group (RARG) and the Council on Wage and PriceStability (CWPS). The RARG, an interagency body chaired by theCouncil of Economic Advisers, is composed principally of representativesfrom the executive branch agencies with regulatory responsibilities.It reviews approximately 10 regulations per year, concentratingon those that may impose especially large costs or that promise to beprecedent setting. CWPS reviews approximately 50 regulations peryear and is the only Executive Office unit having explicit statutoryauthority to review and comment on the proposed regulations of theindependent regulatory agencies. This ability to provide credible estimatesof the costs and benefits of proposed regulations, to suggestalternatives that might not ordinarily be suggested during the courseof a rulemaking, and to serve as a source of quality control overagency analytical activities has proved crucial to effective regulatoryoversight.Whenever a RARG report has been filed, and in a small number ofadditional executive branch rulemakings, the Council of Economic103