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Want better rules? More information needed

Retrospective review could be the relief small businesses need.

Buried deep in the Regulatory Flexibility Act of 1980 (RFA), there exists a small rule with big potential for regulatory relief. Section 610 of the RFA requires agencies to review the outcomes of rules adopted in the last 10 years that had a significant economic impact on a substantial number of small businesses. The rule was part of a larger effort under the act to reduce the impact of federal regulations on small businesses.

Rigorous retrospective review could result in significant revision to rules and ease the regulatory burden on small businesses.

Despite the rule’s potential, we spotted a few problems in its design:

  • It’s unclear which rules agencies have to review. The phrase “significant economic impact” is broad and ambiguous. Unsurprisingly, every agency interprets it a little differently.

  • Rules under 610 review lack publicity, and, as a result, small businesses miss the chance to comment on rules that affect them.

  • The RFA does not provide any incentive for agencies to conduct 610 reviews.

Most importantly, after a quick search of past 610 reviews on the Federal Register, we could not find an example of a case where the agency changed a rule after Section 610 analysis.

Part of the problem is a lack of data. Agencies are good at passing rules but poor at collecting data to measure their effectiveness. This makes conducting Section 610 reviews especially difficult. How can we expect agencies to accurately measure outcomes without substantial data?

Agency officials recognize the problem. In a statement concerning a 610 review of mattress flammability standards (yes, the federal government wants to make sure you get a good, and safe, night’s sleep), the Consumer Product Safety Commissioner spoke critically of the retrospective review process:

“Instead of having to simply guess at whether it takes 10 or 14 or some other number of years for new mattresses to filter through the market, we could have been collecting data on mattress sales and use. With that information in hand, we could have better determined the cause for the gap between our 2006 expectations and the 2016 reality. Is the standard not good enough or are compliant mattresses just taking too long to work their way into consumers’ homes? We could have known, but we don’t.”

In the mattress study, economists offered their “best guess” review based on shaky statistics about home accidents involving mattresses. Without good quality data, it’s unsurprising that the agency’s default decision is to leave the rule unchanged.

Agency officials don’t just want better information, they need it. Argive is creating a new way to share feedback with government agencies to improve regulatory transparency and participation. Sign up for our newsletter to get notified about upcoming 610 reviews that impact your business. Even better, comment on any rule at “Review a Rule