Five ways to lighten federal agency regulatory burdens

Navigating rapid regulatory reform

A top priority for the President, regulatory reform takes center stage. We explore five measures that can help federal agencies successfully reduce regulation and control regulatory costs.

Regulatory reform: A key priority

Executive Order 13771 requires federal departments and agencies to control regulatory costs through two methods: a “One-In, Two-Out” rule requiring agencies to identify two regulations to be eliminated for every new regulation issued, and a “Net Zero” rule calling for zero net additional costs for new regulation in the 2017 fiscal year.

President Trump’s second Executive Order 13777: Enforcing the Regulatory Reform Agenda requires agencies to nominate lead officials for regulatory reform and establishing task forces to identify regulations to streamline.1

Five measures that can help reduce regulation and control regulatory costs

Based on Deloitte’s research into similar reform efforts around the world, here are five measures that can help federal agencies successfully reduce regulation and control regulatory costs.2

1. Assign leaders for regulatory reform in your agency

Agencies should identify senior officials with a broad purview. In large, complex agencies, it may be important to assign leaders a level below the top staff. Dedicated staff will also most likely be needed to support these leaders and drive change.

2. Use scanning and diagnostic exercises to identify opportunities for agency level reductions or cost offsets

Agencies can use analysis tools to scan existing and pending regulations to determine candidates for streamlining or elimination. The scan can use quantitative and qualitative analysis to determine the number of individuals, businesses and sites affected, and the frequency of compliance actions. Qualitative analysis borrows aspects of human-centered design to develop a field-based, real-world perspective of the regulatory impact. Exploring new ways to better listen to citizens, staff, and the enforcement community can also help agencies identify regulation streamlining opportunities.

3. Build a portfolio of possible reductions and have them ready to show political leaders

Offset opportunities can be tested for the applicability of tried and tested approaches to reducing costs. Some potential solutions:

  • Digitizing transactions. As digital transaction technologies become more ubiquitous, more intuitive, and more intelligent, they can accomplish a fuller range of regulatory transactions from registration to reporting, inquiries to certification, and applications to approvals. Digitizing regulatory transactions as much as possible can yield higher satisfaction and lower costs to those affected (as well as lower costs for regulators).
  • Reducing data collection duplication. In meeting regulatory requirements, those affected must sometimes re-enter the same information on multiple occasions when the technology exists for them to select a “remember me” approach needing only a one-time signup.
  • Eliminating redundant regulations. Regulation can be reduced without affecting protections by eliminating redundant, superseded and obsolete regulations. Examples of rules that can be eliminated with fairly low risk may include those which have fulfilled their original purpose; rules rendered obsolete by changing practices or technologies; or rules that are overlapping, duplicative, or conflict with other federal, state, or local rules.

4. Look for innovative ways to reduce costs associated with inspection and enforcement

Out-of-the-box thinking can help agencies explore new ways to cut costs associated with inspection and enforcement. Recent innovations include:3

  • Complaints-based systems. New data streams from social media and other access points allow for complaints-based interventions. By collecting and analyzing customer complaints one can identify trends that could help determine inspection priorities.
  • Using predictive analytics and sharing data across regulators. This could help identify common offenders and target inspection resources at potentially noncompliant businesses.
  • Sensors. New and lower priced sensors and new secure and confidential data exchange capabilities can create possibilities for continuous monitoring, reducing the need for periodic inspections. Coupled with enhanced data analytics, these data streams could even provide early warning systems to prevent non-compliance.

5. Embrace a coaching and empowerment mindset

Costs can be minimized when compliance comes naturally and leading practices are shared. By making effective compliance more instinctive, businesses may be more likely to be compliant. This requires a mindset shift within agencies - potentially affecting recruiting, training and incentives. For instance, developing a mindset within agencies that inspections should be about helping people succeed, reducing overlap by partnering with inspectors from other agencies, and empowering agency employees to implement new ideas, can all contribute to this shift.

Most businesses want to comply with regulations. But there will always be those who will need to be forced to comply. The existence of these two populations calls for a segmented approach. Data analytics can be a powerful way to identify and manage different types of businesses—coaching and empowering some, and pursuing rigorous enforcement where needed.

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