Economic Report of the President

and particulates was demonstrated. Finally, and perhaps most importantly,a solution to a problem once thought to be insurmountable—namely, how to permit the concept to be applied in areas of thecountry not already meeting ambient air quality standards—appearedto be in sight. As the year came to an end, numerous "bubbles" werein the final stages of design and approval.In some situations where the bubble concept is applied the costsavings will approach 60 percent. Furthermore, the concept so increasesengineering flexibility that it offers the prospect of sharplyreduced emissions in some cases.Experimentation with a second regulatory innovation—the use ofmarketable permits—is just beginning. EPA recently suggested anoverall limit on fluorocarbon production (and, hence, fluorocarbonemissions), combined with the creation of a market for buying andselling emission rights. While this approach promises substantial savingsin the cost of reducing emissions, it transfers income from fluorocarbonusers and producers to the government. If ways can befound to deal with the income transfer issues, and certain other technicaldifficulties overcome, the use of such a strategy would permitthe continued use of fluorocarbons in those products that consumersvalue most while eliminating the need for administrative agency determinationsof "essential" and "nonessential" uses. It will also stimulatethe development of products that make more efficient use of thesechemicals.A third kind of effort at "smarter" regulation is the attempt totailor regulations to the organization being regulated. The burden ofcompliance (especially the paperwork burden) often falls disproportionatelyon small businesses, some local governments, and certainnonprofit organizations. While a blanket exemption of small entitiesfrom regulation would not be feasible, it is often possible to reducetheir regulatory burden. This approach was incorporated into statuteby the Regulatory Flexibility Act of 1980, which requires the FederalGovernment to estimate the costs of new regulations for small organizationsand to review its existing regulations to see whether theburden could be reduced.Another way of improving the regulatory process is to examine existingregulations in a systematic way and eliminate those that areoutmoded or unnecessary. On the basis of such a review, the OccupationalSafety and Health Administration (OSHA) has eliminatednearly one thousand regulations during the past 4 years. And in Septemberthe Department of Housing and Urban Development (HUD)proposed to eliminate significant portions of its Minimum PropertyStandards, a large body of regulations going back almost 40 years.These regulations had been originally designed to ensure, among106