A nearby state undertakes regulatory reform officials think would work in Washington

Virginia officials under Republican Governor Glen Youngkin have launched a reform of the state’s regulatory system. The new Office of Regulatory Management covers all agencies. It requires them to do detailed economic reviews of proposed regulations. Joining the Federal Drive with Tom Temin  with the details, the deputy director of the new office, Reeve Bull.

Interview Transcript:

Tom Temin And when we last spoke, you were at the Administrative Conference of the United States, which has fashioned and oversees the regulatory process here. So, you know where of you speak. Tell us what’s going on in Virginia and how it is different from what had been happening on the regulatory front.

Reeve Bull Absolutely. Thanks again for the opportunity to join you this morning. So, yeah we’re very excited about the initiative we’re undertaking here in Virginia. You know, Governor Youngkin goal is to make Virginia the best place to live, work and raise a family. And regulation is is a big part of that. We are looking at the regulatory process with fresh eyes, and we’re trying to promote both transparency and accountability, trying to make the process much more open, much more participatory, and then also really focusing on regulatory analysis, making sure that agencies take a really careful look at the regulations that are adopting as well as the regulations they already have on the books, and try to design them in a way that it’s streamlined. That still, of course, promotes important public health and safety goals, but does so in the most cost effective way possible. So that’s kind of our overarching goal here in Virginia.

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Tom Temin Because at the federal level, the requirement has always been to do a cost benefit analysis. In some cases, certain agencies are outside of that requirement at the federal level, correct?

Reeve Bull That’s exactly right. Basically, any so-called independent regulatory agencies like the FCC, the SEC, the FPC, they’re all outside of the OIRA process, the centralized review process. So a significant percentage of the regulations at the federal levels don’t go through the centralized process that a lot of us are familiar with.

Tom Temin So in Virginia then, do you have entities that were outside of the way it’s normally done by the bulk of agencies now moved under the ORM the new Office of Regulatory Management?

Reeve Bull A great question, and the answer is yes. We call it the Administrative Process Act. It’s the same as the Administrative Procedure Act at the federal level. I mean, one of the first things we found out when we started is about half of the agencies in Virginia were exempt. They didn’t go through the traditional Administrative Process Act process. So what we did is under Governor Youngkin’s Executive Order 19, is we brought everything, or at least all of the executive branch agencies, which is 98% of them, into the centralized review process. And we think this is important for efficiency reasons, but also for transparency. About half of the regulations weren’t going on the town hall website, which is sort of like our equivalent of regulations.gov. So now everything is out there for the public to see and to participate in, which we think is a major improvement.

Tom Temin Give us an example maybe of the type of regulation that would have been outside of the normal review process that would take place for the bulk of the agencies, as he said. What agencies in Virginia did come in that were not there and what regulation or what type of regulation might now be approached differently?

Reeve Bull It’s a little bit random in terms of which ones were outside of a few agencies like I think the the Virginia Marine Resources Commission and a handful of others had targeted exemptions and then a handful of agencies were completely exempt. And it was basically just something that built up over the years that certain things would be would be made exempt. You know, another example would be if it’s something that’s required by federal law or even by state statutory law, that would be outside of the process. And it certainly makes sense to have a more streamlined process in those cases which we’re keeping. But we think it’s also important that it still be public, still go up on the website and that it go through the analytical process. So we think that this maintains the right balance. You know, it still allows things to move quickly and a lot of the exempt actions do, but it ensures that it’s still transparent and that the agencies are doing the appropriate analysis.

Tom Temin We’re speaking with Reeve Bull. He is deputy director of Virginia’s Office of Regulatory Management and a former member of the Administrative Conference of the United States. Getting to the regulation process itself, now that everyone is kind of brought into it under one umbrella. What has changed about the process of creating regulations that would have a material effect on how agencies operate?

Reeve Bull One of the major things that has now changed is that the agencies now do what we call a regulatory economic analysis for all of their regulations, as well as their guidance documents as well. Basically, any action that an agency undertakes goes through this process. Where they look at what the problem is they’re trying to solve. They look at possible alternative approaches and then they look at the cost and benefit. And additionally, there are some targeted analysis. They look at effects on families, on local governments, on small businesses, some of the entities that are particularly affected by regulations. And then they put this analysis all together and fill out this form. It’s a relatively short form, actually. It’s only about 8 to 10 pages, which we think is a real difference compared to what you see at the federal level. Regulatory impact analysis can run into the hundreds of pages and are often very, very complicated, whereas ours are pretty streamlined, they’re pretty short, and they’re to the point. They’re something that a member of the public could easily pick up and say could react to it and provide input to the agency.

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Tom Temin Yeah, the guidance documents have been an issue because there were in the Trump administration, certain guidance documents that were online that disappeared when the Biden administration came in. Nobody quite knows why you would see this kind of normalized or that itself would be regulated such that guidance documents would be more easily available.

Reeve Bull Absolutely. Absolutely. We think that that’s critically important because guidance is really important. You know, it’s something that especially the regulated community uses extensively in order to understand here is how to comply with the regulations. So we think it’s absolutely critical that it be available, that every single guidance document be accessible on our town hall website and that that new guidance documents go through the same process. We really think it’s a model and it’s something that we hope that other states and hopefully eventually the federal government do replicate.

Tom Temin So that’s my next question. If presuming we could get all the agencies that are now outside of the ACUS-type of process into it, in the OIRA process, the Office of Information and Regulatory Affairs and they were all brought under there, what would change, should change in the regulatory process itself, regardless of who’s involved in it, because cost benefit analysis is now part of federal regulating.

Reeve Bull Absolutely. So we think early from my perspective over the last 40 or 50 years, I think that the development of regulatory impact analysis at the federal level has been a very important and positive development. But I think that there are a number of challenges, one that we discussed earlier, a significant number of agencies are under the OIRA umbrella. Another one that we just discussed, guidance documents are sort of treated separately. And then maybe what I think is the most critical issue at the federal level is it’s actually it’s really only a tiny, tiny percentage of regulations that actually go through the full RA process. Traditionally, it was rules about $100 billion that’s now been increased to $200 million under the new executive order. So you’re talking about, I think only maybe around like two or 3% of regulations that meet that threshold. There are a handful of others that get swept in, but it’s a pretty small percentage of regulations. But then they go through this very, very extensive detailed analysis. Whereas what we’ve done is we’ve cast a much wider net. It’s every regulatory action, but it’s a more streamlined analysis. And we think that that sort of achieves the right tradeoff. We think everything should be part of the process. We think making it more streamlined, simpler, both brings in additional parties, allows the public to react more effectively. And then also it makes it more straightforward for the agencies to undertake where it’s not such a major time burden. So that’s sort of how we’ve achieved the balance here.

Tom Temin And you mentioned that there was a legislative enablement for the Commonwealth to do this. Do you feel that there would be congressional action, say, an amendment to the Administrative Conference Act to enable the government at the federal level to make this change?

Reeve Bull Technically be an Executive Order 19 at the Virginia level and that we rolled out this process. And at the federal level, I think some of it could be done via executive order. But I think there’s also been some exploration of doing some of it legislatively. I know for the last ten or 15 years there have been various bills debated in Congress that would extend OIRA review to the independent agencies. There’s some debate over whether the president himself, him or herself actually has that authority. So I think you can do it legislatively. And I think that would achieve some some, buy-in. But I think there are also certain actions that the president can actually undertake via executive order, for instance, simplifying the regulatory process. I think that’s something that you could issue a supplement to executive order 12866 and actually achieve that way. So I think it’s perhaps all of the above. I think congressional action would be welcome, but I think there’s a lot the president can do as well.

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