Memorandum for the Heads of Executive Departments and Agencies
Two years ago, I issued Executive Order 12044, "Improving Government Regulations". This Order directed regulatory agencies to find ways to achieve their goals with reduced burden on the private sector. The agencies have developed several new regulatory alternatives that provide flexibility and decentralized decisionmaking. Last year, I asked the Regulatory Council to study these ideas and develop a blueprint for applying them more widely.
The Council's survey of agency experience found eight techniques that show real promise:
• marketable rights;
• economic incentives;
• performance-based standards;
• market-oriented compliance measures;
• reduction of barriers to competition;
• information disclosure;
• voluntary standard setting; and
• adjustment of standards to distinguish among categories of regulated entities ("tiering").
These techniques are not always appropriate. In some cases, only the traditional approach of rigid, detailed "command-and-control" regulation adequately protects public health and safety. Often, however, alternatives that allow flexibility or use market forces can make regulation more cost-effective. Such approaches can cut cost and red tape without sacrificing legitimate regulatory goals. They can also promote innovation, putting private ingenuity to work finding better long-term solutions to regulatory problems.
Each of these alternatives is being used by several agencies and is producing substantial benefits. They are described in greater detail, with specific examples, in the attached summary report by the Council.
I am directing all agencies with regulatory responsibility to review their programs and find areas where these alternatives can be applied. In addition, each agency should expedite the development and implementation of flexible alternatives now under consideration.
The Regulatory Council will report to me on your progress on October 1, 1980. Council Chairman Douglas Costle and his staff will work with you to apply successful alternatives to new regulatory areas. Please designate a contact person for this program and tell the Council who it is.
I know I can count on your personal involvement and support to expand the use of these alternative approaches to regulation.