An obscure but significant improvement in business regulation is taking shape deep inside the Brown Administration.

Following up legislation adopted in 2011, the state’s Department of Finance has begun reviewing major regulations to determine whether agencies have properly analyzed the economic  and competitiveness effects of their rule makings.

While this may seem a small step and an essentially bureaucratic function, it portends important changes.

First, never before has an agency within the Administration been directed to enforce economic analysis of state regulations. Two decades ago, a unit within the then-Trade and Commerce Agency monitored regulatory filings and occasionally commented when those filings were light on necessary analysis. But agencies were free to ignore this advice.

Second, the methodology by which a regulations’ economic impact (and benefits) are determined is transparent and easily accessible. Everybody from the regulating agency to the regulated party to the advocacy groups knows how to measure economic impact.

Third, the cumulative effect of an outside, expert agency reviewing dozens of major regulations, plus the ability of affected interests and advocates to peer inside this process will create a learning laboratory to drive further improvements to this system.

While the first year of this new era in regulatory reform  has shown promise, its true potential will not be realized unless regulated industries embrace this opportunity. The tools for agency accountability are within reach, but systemic changes will not be fully realized unless affected industries use them.

The bottom line for industry is to use these economic analyses to drive better and more cost effective alternatives to the regulation being proposed. This is not analysis for the sake of analysis, but better information to improve economic regulation.

The Legislature also must continue its oversight of regulatory analysis since, after all, the Administration is largely implementing laws passed by the Legislature. A potentially good step is Assemblyman Ken Cooley’s proposal to engage the Legislature more closely in monitoring the development of major regulations and direct regulators to identify duplicative, overlapping or inconsistent regulations.

During his reelection campaign, Governor Brown lamented the “enactment of tens of thousands of laws” and the “ever-growing reach of state bureaucracy.” He also committed to “do a lot more follow-through work in the next four years.” Diligent implementation of current regulatory reform requirements is a necessary first step on that follow-through work.