OECD Unveils 'Regulatory Guillotine' to Cut Business Burden
The Organisation for Economic Co-operation and Development (OECD) has developed a method to evaluate the impact of regulatory repeals, known as the 'Regulatory Guillotine'. This structured approach aims to identify and remove outdated or unnecessary rules, reducing regulatory burden on businesses and citizens.
The OECD's method, published in 2018 as part of its 'Regulatory Policy Review' work, involves quantitatively and qualitatively assessing relevant regulations to analyse their benefits and burdens. This process helps identify rules that can be repealed to lower regulatory costs.
The OECD's 'Regulatory Policy Outlook 2018' provides guidelines on implementing regulatory reform programmes, including evaluating and repealing existing rules. It also explains how to measure and assess the impact of regulatory repeals.
In the United States, agencies struggle to quantify innovation and its effects on costs. Therefore, updating regulatory impact assessments (RIAs) with recent innovations is crucial. The goal of amending or repealing regulations is to cut overall costs while considering the benefits to the American people. A structured analysis, called a regulatory repeal impact assessment (RRIA), is used to identify and assess regulations being considered for repeal.
For instance, repealing the EPA's methane rule would deliver significant cost savings but ranks sixth in terms of net benefits. Considering only costs, rather than both costs and benefits, can lead to different repeal recommendations. When conducting RRIAs, agencies should consider partial, complete, or no repeal options. The process involves replicating the original RIA, updating the baseline, subtracting sunk costs and benefits, and updating the analysis according to the latest science.
The new EPA administrator, Lee Zeldin, has announced the reconsideration of various regulations, including those covering power plants, cars, clean air and water standards, and greenhouse gas reporting. The OECD's method and RRIA process can help ensure these reviews are thorough, transparent, and based on robust evidence.
