Summary

S. 3262, known as the "Regulatory Cost Reduction Act of 1978," purposes to establish a procedure to reduce the costs of compliance with rules and regulations of Federal executive departments and independent agencies. The bill would require from each executive department and independent agency annual reports which would include: an estimate of the cost of compliance with each rule and regulation, present and proposed; a description of actions taken in the previous year and planned for the next year to reduce these costs; and an explanation of any failures to reduce these costs by 5 percent per year.

GAO supports the objective of the bill to reduce the costs of compliance with Federal rules and regulations. The prescribed method of reducing regulatory costs may be inefficient both because the bill does not take into account regulatory benefits and because the implementation costs of the bill will likely be high. The bill imposes evaluation requirements that may exceed the current state of the art. It is concerned only with compliance costs and does not mention other important costs. Some provisions appear ambiguous; others seem to require unnecessary annual repetition of work. The bill places substantial new burdens on a large number of executive departments and agencies. A fundamental issue not addressed in S. 3262 is that the costs of compliance are only part of the costs of regulation. Regulation can cause inefficient resource allocation in the private sector of the economy. Furthermore, dynamic costs such as reductions in the level of research and development and the rate of technological change can also develop. Beyond this, there is concern about the implications of requiring GAO to review each report, particularly considering the large volume of such reports to be submitted. In lieu of this approach, it is recommended that GAO review the reports on a selective basis, either on its own initiative or at the request of committees having jurisdiction.