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House Advances Two Regulatory Reform Bills

Thursday, December 08, 2011
Sandler, Travis & Rosenberg Trade Report

The House of Representatives approved Dec. 2 two controversial bills aiming to reform the process of implementing federal regulations. Supporters of the bills believe they will ease often substantial burdens on economic growth, but critics warn that they will further hamstring a regulatory process that is already painfully slow.

According to the Congressional Research Service, the Regulatory Accountability Act (H.R. 3010) would amend the Administrative Procedure Act by requiring federal agencies, in making a rule, to base all preliminary and final determinations on evidence and to consider the legal authority under which the rule may be proposed, the specific nature and significance of the problem addressed by the rule, any reasonable alternatives, and the potential costs and benefits associated with such alternatives. House Judiciary Committee Chairman Lamar Smith, R-Texas, added that the RAA would require federal agencies to “tailor new regulations to impose the least cost necessary to achieve policy goals set out by Congress” and to “hold formal hearings to test the assumptions and evidence on which the costliest new rules are based.” The bill also sets forth criteria for issuing major agency guidance and expands the scope of judicial review of agency rulemaking.

Separately, Smith said, the Regulatory Flexibility Improvements Act of 2011 (H.R. 527) would require federal agencies to “identify the costs new regulations could impose on small businesses,” both direct and indirect, and to “write the regulations in ways that reduce those costs.” This bill “also gives small businesses more opportunities to be heard as regulations are written and forces agencies to look at ways to cut the costs of regulations already on the books.” CRS notes that this bill would expand elements of initial and final regulatory flexibility analyses under the Regulatory Flexibility Act of 1980 to include estimates and descriptions of the cumulative economic impact of a proposed rule on small entities. The bill also provides for judicial review of an agency final rule for compliance with RFA requirements and grants federal courts of appeal jurisdiction to review all final rules issued in accordance with the RFA.

Dozens of business groups wrote to House members Nov. 30 to support H.R. 3010 on the grounds that it would enhance the regulatory process. According to this letter, the bill would increase public participation in shaping the most costly regulations before they are proposed; require agencies to choose the least costly option unless they can demonstrate a need to protect public health, safety or welfare; provide for on-the-record administrative hearings for the most costly regulations to ensure that agency data is well tested and reviewed; restrict agencies’ use of interim final regulations where no comments are taken before a regulation takes effect and provide for expedited judicial review of whether that approach is justified; and provide for a more rigorous test in legal challenges for those regulations that would have the most impact. The letter asserted that this bill “would not affect any regulations that are already in effect, nor would it impact enforcement under current regulations.”

However, an alliance of more than 70 public interest groups said it “strongly opposes” these two bills because they would “make it virtually impossible for federal agencies to ensure that American families are protected from tainted food, unsafe drugs, predatory financial schemes, dirty air and water, and dangerous workplaces.” The Coalition for Sensible Safeguards characterized H.R. 3010 as “an insidious and equally harmful attack on public protections” because it would (a) require agencies to adopt the least costly rule regardless of their legally-mandated missions or the rule’s impact on public health and safety, (b) require 60 additional analyses and other procedural actions for every major rule, and (c) “make it much easier for big corporations … to challenge rules at many more points in the process.” The coalition added that H.R. 527 could subject “virtually any action an agency proposes – even a guidance document designed to help a business comply with a rule,” to a lengthy regulatory process.

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