This is the fourth annual Regulatory Program of the United States Government, a product of the Office of Information and Regulatory Affairs. This report is in two parts. The bulk of it is in Part II, entitled "The Regulatory Program by Agency," and contains the regulatory programs for 1988-89 of 26 executive agencies. It is customary to precede this part of the report with a summary and, to some extent, a review of the overall Federal regulatory program. This year, Part I, entitled "Overview and Summary," summarizes the experience of eight years of effort to improve the system of Federal regulation.

The Office of Information and Regulatory Affairs (OIRA) is a part of the Office of Management and Budget (OMB) in the Executive Office of the President. OIRA was formally established in 1981 under the terms of the legislation known as the Paperwork Reduction Act of 1980. OIRA's dual mission-to reduce the burden of paperwork requirements imposed by Federal agencies on the public (in the form of reports, questionnaires, and required documentation of all sorts), and to oversee the regulatory activity of the Federal agencies-has placed it at the focal point of much of what the Government does.

To some extent, institutionalized Presidential regulatory oversight constitutes a challenge to long-established relationships between the legislative branch and individual agencies, and between the Government and special-interest groups; and to the governmental behaviors that developed over the years as a result of them. The Reagan Administration was not the first to raise the challenge. As this report indicates, it has made this endeavor a major administrative effort.

In 1986, in recognition of the role of OIRA, Congress amended the Paperwork Reduction Act of 1980 to require that the Administrator of OIRA, who was previously appointed by the Director of OMB, be appointed by the President and be subject to Senate confirmation. This gives the Congress a substantial say over the selection of the Administrator and a more formal oversight role regarding the work of the Office. At the same time, the combination of congressional creation and Presidential appointment with Senate approval further confirms the role of the Office.

As the President states in his introductory message, it is important that the United States Government systematically and objectively establish governmentwide regulatory policies and priorities. The Federal regulatory structure is massive and complex. Over 100 Federal agencies regulate the public. Many agencies have overlapping responsibilities. Some du

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plicate the work of others; all have goals that differ from, and that are potentially inconsistent with, each other.

Federal regulations impose costs of over $100 billion annually on the American economy. These costs constitute a hidden tax, a compliance burden that is shifted from the entity regulated to the consumer, who pays higher prices or higher State and local taxes. This hidden tax can also be regressive, burdening poor people and smaller businesses disproportionately.

In addition, setting regulatory standards requires agencies to balance difficult and sensitive issues. Federal regulation, for example, cannot eliminate all safety, health, and environmental risks. As a result, federal regulators have to decide where to begin and where to stop, who should reduce what risks, how much the potential harm should be reduced, who should be held responsible, and how to establish and balance regulatory priorities in order to maximize the benefits to all. The piecemeal regulation of safety and health risks-calling for disparate costs of compliance to reduce equivalent amounts of riskswastes economic and social resources, which, if applied on a consistent basis, would permit a much greater overall reduction of safety and health risk.

The President has therefore had a long-standing commitment to improving the system of Federal regulation to ensure that it is used rationally and effectively to better the lives of Americans. He directed that his Administration follow a basic set of regulatory principles, stating:

In promulgating new regulations, reviewing existing reg-
ulations, and developing legislative proposals concerning
regulation, all agencies, to the extent permitted by law,
shall adhere to the following requirements:

(a) Administrative decisions shall be based on adequate
information concerning the need for and consequences of
proposed government action;

(b) Regulatory action shall not be undertaken unless the
potential benefits to society for the regulation outweigh
the potential costs to society;

(c) Regulatory objectives shall be chosen to maximize the
net benefits to society;

(d) Among alternative approaches to any given regula-
tory objective, the alternative involving the least net cost
to society shall be chosen; and

(e) Agencies shall set regulatory priorities with the aim of
maximizing the aggregate net benefits to society, taking
into account the condition of the particular industries
affected by regulations, the condition of the national econ-
omy, and other regulatory actions contemplated for the
future.'

Section 2 of Executive Order No. 1229, February 17, 1981 (46 FR 13193, February 19, 1981).

By establishing these regulatory principles and designating specific Administration officers as responsible to oversee agency compliance, the President institutionalized Presidential regulatory over

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sight for the Federal government. This Overview and Summary describes the problems the President faced, his obligation to act, and what he did to improve Federal regulation.

During the last half-century Americans have often turned to the Federal government to provide specific solutions to troublesome economic and social problems. As a consequence, Federal regulatory programs have been created as pragmatic answers to specific problems.

The number of problems which the Federal government was expected to solve grew rapidly, and so did the regulatory answers. In almost all cases, however, the regulations were narrowly targeted at specific problems, and developed without considering the cumulative impact of multiple, successive, sometimes inconsistent Federal regulations.

Thus, each new set of regulatory responses has tended to be a patchwork of isolated rules with little overall integration into the larger system of Federal law and policy, or long-term goals. In part, this has been because the long-term additive costs and structural dislocations have not been readily apparent at the time of promulgation. In part, it is because over time the cumulative effect of some regulatory programs has become excessively burdensome and counterproductive. For some programs the expected benefits never materialized or disappeared as conditions changed; for others the costs and adverse impacts far exceeded expectations. Moreover, as the number of regulations increased, it became apparent that the cumulative impact of many regulations could be far greater than the marginal impact of each individual regulation.

In some cases costs and uncertainties of regulation have deterred private investment in activities that are regulated, leading to reduced innovation and slower productivity growth. This may have compromised the market improvements the regulations had sought to achieve. For example, although food standards have become partially outdated by other regulatory developments, the old system has been perpetuated, inhibiting the use of new technical knowledge to develop innovative, nutritious products. Interstate Commerce Commission regulation of the trucking industry at one time established routes, service, and pricing. This slowed the development of alternate or complementary forms of transportation that might have created more flexible and efficient means of delivery. Outdated safety regulations that have been on the books for 17 years have prevented cheaper, more comfortable, and more protective personal equipment from being used by workers to protect themselves from injury.

The President's regulatory principles are designed to encourage Federal agencies to weed out and elimi

nate wasteful, unnecessary, intrusive regulatory standards, while encouraging the development of needed regulations that would increase the benefit to society as a whole. The increasing cost of regulations; their failure to keep up with changing social, economic, and technological conditions; their cumula. tive adverse effects on American society and its econ. omy; and the basic need to fit regulations into the larger legal, social, and economic context led the President to issue his regulatory principles.

THE GROWTH OF THE FEDERAL REGULATORY STRUCTURE

The Federal regulatory structure has grown dramatically in the last 50 years. The bulk of the Federal Register consists of notices of proposed and final rulemaking by Federal agencies: Its size is a measure of the amount of government regulation. The Federal Register published 2,599 pages in 1936, 5,307 in 1940, and 15,508 in 1945. By 1975, the size of that year's publication had grown to 60,221 pages; by 1980, it had reached 87,012 pages. The Code of Federal Regulations, which codifies the official rules of the government, contained 9,745 pages in 1950; 22,877 in 1960; and 102,195 in 1980.

By the early 1970s, Federal rulemaking had become a large part of the work of over 100 Federal agencies. These agencies were controlling major aspects of virtually the entire economy-overseeing the prices set by public utilities, determining the supply of agricultural products, setting the terms of labor contracts and conditions in the workplace, prescribing conditions of import and export, and specifying the nature and extent of pollution control and related environmental impacts.

This growth in government activity caused specific agency regulatory responsibilities to cut across functional areas subject to regulation by other agencies, creating overlap, conflict, and inconsistency. For example, today a wide variety of agencies review, approve, or inspect products for safety before they can be marketed for human or animal consumption. These include the Animal and Plant Health Inspection Service and the Food Safety and Inspection Service in the Department of Agriculture (USDA), the Food and Drug Administration in the Department of Health and Human Services, and the Offices of Pesticide Programs and of Toxic Substances in the Environmental Protection Agency. Similarly, the Offices of Air and Radiation, of Water, and of Solid Waste