The "RED TAPE Act" prioritizes easily measured monetary benefits in regulatory decisions, requiring agencies to quantify and publish the financial impacts of regulations while prohibiting the consideration of non-monetized factors in benefit-cost analyses.
Joni Ernst
Senator
IA
The RED TAPE Act prioritizes easily measured monetary benefits in regulatory decisions, requiring agencies to demonstrate clear financial benefits from regulations while minimizing costs. It amends Title 5 of the U.S. Code to prohibit the consideration of non-monetized or unquantified factors in regulatory impact analyses and benefit-cost analyses. The Act mandates transparency by requiring agencies to publish detailed analyses in the Federal Register and allows affected parties to challenge rules that violate these provisions in court. It applies to rules issued on or after November 9, 2023, with changes effective 30 days after enactment.
RED TAPE Act: New Rules Force Agencies to Ignore Non-Cash Benefits in Regulations, Starting June 2024
The "Regulations Evaluated to Determine The Anticipated Price and Effect Act," or RED TAPE Act, drastically reshapes how federal agencies weigh the costs and benefits of new regulations. The core change? Agencies must now prioritize easily measured monetary benefits and are prohibited from considering factors that can't be easily quantified in dollar terms. This could significantly impact how regulations are made, particularly those concerning environmental protection, public health, and social welfare.
Dollars and Sense Only?
The RED TAPE Act amends Title 5 of the U.S. Code, focusing on how regulatory impact and benefit-cost analyses are conducted. It explicitly forbids agencies, and even the Office of Management and Budget (OMB), from factoring in "non-monetized or unquantified factors" (SEC. 3). Think of things like the value of clean air, reduced health risks, or improved quality of life – if it doesn't have a clear price tag, it's off the table. The law references specific OMB circulars and Executive Orders to define what constitutes a valid "benefit-cost analysis" and "regulatory impact analysis" (SEC. 3).
Real-World Rollout
So, how might this play out? Imagine a new EPA regulation aimed at reducing pollution from a factory. Previously, the EPA could consider the long-term health benefits of cleaner air (fewer asthma cases, for example), even if those benefits were hard to quantify precisely in dollar terms. Under the RED TAPE Act, those health benefits cannot be part of the official analysis. The agency must focus solely on easily measured monetary factors, like the factory's compliance costs versus any direct, quantifiable financial gains from the regulation. This could make it harder to justify regulations where the benefits are primarily social or environmental, rather than strictly financial.
The Legal Hammer
Crucially, the RED TAPE Act gives teeth to these restrictions. Any party "affected by a rule" can bring a civil action in a U.S. district court if they believe the agency considered non-monetized factors (SEC. 3). And if the court agrees? The rule must be invalidated (SEC. 3). This creates a significant legal risk for agencies and could chill the development of regulations with broad, but hard-to-quantify, benefits. The Act applies to any rule issued on or after November 9, 2023, and the changes take effect 30 days after enactment (SEC. 4), so the clock is ticking.
Challenges and Connections
The RED TAPE Act directly challenges the way agencies have traditionally evaluated regulations, potentially shifting the balance away from qualitative factors and toward purely financial considerations. This could lead to fewer regulations in areas where the benefits are difficult to express in dollars, even if those benefits are substantial. The law also raises questions about how it will interact with existing laws that require agencies to consider factors beyond simple monetary costs and benefits. For example, many environmental laws mandate the protection of natural resources, even when the economic value is not immediately clear.