Regulatory reform and the U.S. manufacturing sector: the focus is on improving efficiency

Business Economics, Jan, 2006 by Thomas A. Hemphill

* Conduct a regulatory impact analysis of new rules. Lastly, OMB should rigorously apply its recently developed guidance on regulatory impact analysis to any proposed rules that would influence the costs imposed on the manufacturing sector, particularly as they affect small and medium-sized businesses. As a part of this effort, the newly established assistant secretary for manufacturing and services in the Department of Commerce should task the new Office of Industry Analysis to work with OMB and other agencies to refine the analytic tools needed to assess the impact of proposed rules and regulations on economic growth and job creation in the manufacturing sector and other areas of the economy.

Following the issuing of the Manufacturing in America report, the OMB announced on February 13, 2004 its intentions to implement the first recommendation to establish an inventory of potential regulatory reforms that would lower the cost of manufacturing. To that end, OMB sought public comment on manufacturing regulations in need of modernization to reduce costs, increase effectiveness, and enhance the competitiveness of U.S. manufacturers (Office of Management and Budget, 2004). It should be noted that the OMB's request for nominations of regulatory reforms was directed to those that can be implemented through administrative action, and not legislative recourse.

In response to OMB's request for public nominations of promising regulatory reforms (concerning rules, guidance documents, or paperwork requirements) relevant to the manufacturing sector, the office received 189 distinct nominations that would improve manufacturing regulation by reducing unnecessary costs, increasing effectiveness, enhancing competitiveness, reducing uncertainty, and increasing flexibility, from 41 respondents. (2) Of these 189 reform nominations, nearly 50 percent (94) concerns rules under the authority of the U.S. Environmental Protection Agency (EPA).

Not surprisingly, the overwhelming majority of the regulatory reform nominations are submitted by corporations or industry associations, although other special interest groups, including Public Citizen and People for the Ethical Treatment of Animals, submitted several nominations.

On March 9, 2005, OMB announced that Federal agencies (the Departments of Treasury, Agriculture, Commerce, Labor, Health and Human Services, Transportation, and Homeland Security, as well as the Environmental Protection Agency) will be taking practical steps to reduce the cost burden on manufacturing firms operating in the United States by acting on 76 of the submitted public nominations to reform federal regulations (Office of Management and Budget, 2005a). Recommended actions range from gathering and reporting additional information to issuing modernized regulations, with reforms implemented through rulemaking procedures that include an opportunity for public participation.

Examples of a few of these accepted OMB regulatory reform proposals focused on reducing environmental paperwork costs for manufacturers and include (Office of Management and Budget, 2005b):