December 14, 2015

As many keen observers of the Consumer Product Safety Commission (CPSC) are aware, I aman avid student of the principles of regulatory policy, including the concept of retrospective review of rules – looking at the rules an agency has issued and evaluating their effectiveness and usefulness. In that regard, I am hardly alone. Retrospective review, by one name or another, has featured in Executive Orders from Presidents of both parties across decades.[1]

 

Recently, I have been dismayed to see that one aspect of rule review I find especially promising– that of incorporating or embedding review criteria into rules during their formation – seems to be getting too little attention from the American administrative state. Indeed, one review by Sofie Miller of the Regulatory Studies Center at The George Washington University found quite simply that “agencies are not preparing new regulations with ex post review in mind.”[2] I would like to see CPSC lead our peer agencies in changing that culture.

 

Tomorrow, How Will We Look at Today?

 

The idea behind incorporating retrospective review models into rules from the outset – a prospective retrospective – is that designing a rule with an eye to how it would be evaluated in the future can improve the quality of evaluation[3] and make the future iteration of the agency more likely to conduct that evaluation in the first place.[4] Moreover, including review models intorules during their formation will help promote a culture of review and candid reflectionthroughout the agency.[5]

 

This idea has won supporters in both U.S. and international policy.

 

  • “Regulatory review should not only be a backward-looking exercise; rather . . .[p]lanning for reevaluation and regulatory improvement (including defining how successwill be measured and how the data necessary for this measurement will be collected)should be considered an integral part of the development process.”[6]
  • Retrospective review “must be extended so that evaluations of legislation become anintegral part of smart regulation.”[7]
  • “Prospective evaluations [that] are developed at the same time as the program is beingdesigned and are built into program implementation . . . are more likely to producestrong and credible evaluation results.”[8]

 

Embedded retrospective review models are like the hypothesis stage of the scientific method.[9]Regulators rarely know all or even most of the effects their decisions will have. The best they cando is to determine the most likely outcomes based on the available information. Inevitably, yearsof experience will produce far more information, and agencies should plan in advance how toincorporate the new data into their understanding. While the states may be the laboratories ofdemocracy,[10] administrative agencies can be the laboratories of smart regulation, but only if theyare willing to test their theories.

 

Recent scholarship, though, has found that, however generally agreeable the notion ofincorporating review may be, it has not yet been put into wide practice.[11] Some agencies haveissued rules that commit to future reviews, but those do not typically include detailed criteria for how a future reviewer should judge the rule’s success or failure.[12] I hope we will soon have anopportunity to see a more robust, detailed retrospective review model on display at CPSC.

 

Looking Forward to CPSC Looking Back

 

At CPSC, I have found a retrospective review ally in Chairman Elliot Kaye, as we workedtogether to amend the Fiscal Year 2015 Mid-Year Operating Plan Adjustments (Midyear) toinclude a direction to staff to create a retrospective review plan for the agency. Staff’s proposedplan is currently out for public comment, and I look forward to reviewing the feedback of ourstakeholder community.

 

Among the key features of that plan is the notion of “including retrospective review provisions in new rulemakings.”[13] The agency is engaged in a rulemaking regarding phthalates in children’sproducts, as directed by Section 108 of the Consumer Product Safety Improvement Act of 2008(CPSIA).[14] The CPSC community submitted plenty of thoughtful comments in response to both the original Notice of Proposed Rulemaking (NPR)[15] and the supplemental technical report[16] ourstaff produced at the Chairman’s direction to fill data gaps in the Chronic Hazard Advisory Panel(CHAP) report on which the NPR was based. Those same hard-working staffers are reading,analyzing, and responding to those comments, and I expect we will see the fruits of that labor inthe near future in the form of a draft Final Rule.

 

I will withhold any comments about the substance of the phthalates rule until that draft arrives,but one provision I will be looking for is the set of criteria by which we will evaluate the effectiveness of whatever policy choices we make. I can think of several possible inquiries – we could measure total phthalate exposure, we could measure total phthalate volume in consumerproducts, we could measure the relative risk of chemicals that come to replace the ones we ban.What we should not do is simply make the best choice we can with the information we have andwash our hands of the issue. Hindsight will inevitably provide more wisdom, but we shouldcommit now to listening to it.

 

Conclusion

 

The vote on the phthalates NPR came before the Midyear FY 15 Commission direction todevelop a retrospective review plan, so it makes sense that the NPR would not have reflected anypart of a plan that had not yet been drafted. I look forward to reading a draft Final Rule thatincorporates the notion of embedded retrospective review that was the clear direction of aunanimous Commission.

 

Not only will the phthalate rule be the most significant Final Rule to come before theCommission since publication of our review plan, it is also a natural fit for retrospective review.Given the incredible dynamism of the chemicals industry, [17] no level of analysis today can assurethat the rule will effectively regulate the phthalates of 2025. We should take the necessary stepsto give the public confidence that we will ensure our decisions have the consequences weanticipate, and that means incorporating retrospective review criteria at the outset.

 

 


[1] See, e.g., Exec. Order No. 12,291, 46 Fed. Reg. 13,193 (1981); Exec. Order No. 12,866, 58 Fed. Reg. 51,735(1993); Exec. Order No. 13,563, 76 Fed. Reg. 3821 (2011); Exec. Order No. 13,610, 77 Fed. Reg. 28,469 (2012).

[2] Sofie Miller, The George Washington University Regulatory Studies Center, Learning from Experience:Retrospective Review of Regulations in 2014, 7 (Working Paper 2015), available at https://regulatorystudies.columbian.gwu.edu/sites/regulatorystudies.columbian.gwu.edu/files/Retrospective%20Review%20in%202014_MillerS_11_3.pdf.

[3] “Planning for ex post analysis of a rule could ensure both the availability of such data and an implementationscheme that may permit causal inference on the impact of the rule.” Joseph Aldy, Learning from Experience: An Assessment of the Retrospective Reviews of Agency Rules and the Evidence for Improving the Design andImplementation of Regulatory Policy, 61 (2014), available at http://www.hks.harvard.edu/fs/jaldy/img/aldy_retrospective.pdf.

[4] Id. at 62.

[5] See Cass Sunstein, Memorandum for the Heads of Executive Departments and Agencies: Retrospective Analysisof Existing Significant Regulations, 2 (Apr. 25, 2011), available at http://go.usa.gov/cBAV5.

[6] Administrative Conference of the United States, Administrative Conference Recommendation 2014-5:Retrospective Review of Agency Rules, 4-5 (2014), available at http://go.usa.gov/cBAVx.7 European Commission, Smart Regulation in the European Union, 4 (2010), available at http://eurlex.europa.eu/legal-content/EN/TXT/PDF/?uri=CELEX:52010DC0543&from=EN.

[8] Paul Gertler, et al., Impact Evaluation in Practice, xiv (World Bank 2011) (effective evaluation modeling “is bestachieved at the outset of a program, through the design of prospective impact evaluations that are built into theproject’s implementation.).

[9] “The process of generating hypotheses and testing them through experimentation, publication, and replication.”Black’s Law Dictionary (10th ed. 2014).

[10] New State Ice Co. v. Liebmann, 285 U.S. 262, 311 (1932) (Brandeis, J. dissenting).

[11]See Miller at 7. See also Aldy at 6 (“A review of recent economically significant rules show[s] that . . . noneinclude plans for conducting a future retrospective analysis.”).

[12] See Endangered Fish and Wildlife: Final Rule to Remove the Sunset Provision of the Final Rule ImplementingVessel Speed Restrictions to Reduce the Threat of Ship Collisions with North Atlantic Right Whales, 78 Fed. Reg.73,726, 73,732-33 (Nat’l Marine Fisheries Serv. Dec. 9, 2013).

[13] Manager’s Amendment to the FY 2015 Midyear Review and Proposed Operating Plan Adjustments, 2 (2015),available at http://go.usa.gov/cBAVV.

[14] Pub. L. No. 110-314, § 108, 122 Stat. 3016, 3036-38 (2008).

[15] Prohibition of Children’s Toys and Child Care Articles Containing Specified Phthalates, 79 Fed. Reg. 78,324(Consumer Prod. Safety Comm’n Dec. 30, 2014).

[16] Notice of Availability: Estimated Phthalate Exposure and Risk to Pregnant Women and Women of ReproductiveAge as Assessed Using Four NHANES Biomonitoring Data Sets (2005/2006, 2007/2008, 2009/2010, 2011/2012),80 Fed. Reg. 35,938 (Consumer Prod. Safety Comm’n June 23, 2015).

[17] For evidence of that fluid environment, look no further than our staff’s analysis of the data not included in theCHAP report, which shows a marked decline in phthalate-related risk over the past decade. Kent Carlson & SarahGarland, Consumer Prod. Safety Comm’n, Estimated Phthalate Exposure and Risk to Pregnant Women and Womenof Reproductive Age as Assessed Using Four NHANES Biomonitoring Data Sets (2005/2006, 2007/2008,2009/2010, 2011/2012), 15-17 (2015).