Bipartisan regulatory reform bill draws administration’s silence

Agencies would be required to be more transparent and subject their cost-versus-benefit judgments to greater scrutiny by business under legislation to revamp federal rulemaking recently introduced by Sen. Rob Portman, R-Ohio, and Rep. Lamar Smith, R-Texas.

The Regulatory Accountability Act (S. 1606) would seek to modernize the 1946 Administrative Procedures Act by codifying requirements for cost-benefit analysis that administrations of both parties have sought through executive order.

It has a Democratic co-sponsor, Mark Pryor of Arkansas, and comes as the Obama administration is in the middle of its own regulatory look-back designed to ease burdens on businesses.

"This common-sense, bipartisan legislation will cut back on unnecessary red tape by building economic reality-checks into every step of the regulatory process," Portman said on introducing the bill with Sens. Susan Collins, R-Maine, and Mark Pryor, D-Ark. "It's an immediate step Washington can take to help unleash the forces of job creation again in America."

The House version also has a Democratic co-sponsor, Collin Peterson, D-Minn. "While it is difficult to enact a new law, it's even harder to get a regulation written correctly," Peterson said. "In many cases, interest groups try to use regulation to interpret the law in their best interest, instead of following the intent of the law. By bringing transparency and accountability to the regulatory process, the American people will be allowed to have a voice in these policy decisions."

The Portman-Smith bill would require agencies to perform public outreach for comment earlier in the rulemaking process, reduce use of "guidance documents" that some agencies produce for internal use, build cost-benefit analysis into each step of the regulatory process, toughen standards for consensus on scientific and technical data, and require agencies to adopt the "least burdensome option."

It won backing from some 60 industry groups, ranging from the American Chemistry Council to the Irrigation Association to the National Roofing Contractors Association, which signed a Sept. 22 letter to the sponsors.

"This is the first piece of regulatory legislation in this Congress that is both bipartisan and bicameral," Rosario Palmieri, vice president for infrastructure, legal and regulatory policy at the National Association of Manufacturers, told Government Executive. "It is also good-government reform because the [Administrative Procedures Act] hasn't been adapted for 65 years. It takes what we've learned for the past 30 years about cost and benefit analysis and infuses it into the DNA of every rulemaking."

By taking principles from executive orders issued under presidents Clinton and Obama, Palmieri said, the legislation "says there's more to regulating than what is in the current APA process. We live in a complex world that requires more technical and scientific analysis than in the past."

A contrary view was offered by Rick Melberth, director of regulatory policy for the nonprofit OMB Watch. In a blog post last month, he called the bill "a dangerous, misguided regulatory attack" based on "misguided assumptions about the connection between regulations and job creation."

He warned that if enacted, the legislation would produce "a near-moratorium on rules by creating even more obstacles for agencies to overcome in issuing standards that keep us safe from contaminated food, product defects, and polluted air and water. In addition, the proposal would shift the locus of regulatory decisions to the courts and out of agencies' hands by providing multiple new opportunities for deep-pocketed corporate interests to challenge agencies at nearly every step of the process."

Amit Narang, regulatory policy advocate for Public Citizen, also opposed the bill, warning that it affords big business "special access and influence, above and beyond what even small business owners and concerned citizens are afforded." He added that the bill "will breed needless litigation and uncertainty once a rule is finalized: The judicial review provisions will involve courts in second-guessing technical decisions based on agency expertise by making the numerous additional agency requirements under this bill subject to court scrutiny."

A spokeswoman for the Office of Management and Budget declined comment, saying the administration has not taken a position on the bill.

Obama's chief regulatory officer, Cass Sunstein, administrator of OMB's Office of Information and Regulatory Affairs, testified Sept. 21 before the House Small Business Committee. He emphasized that Obama's January executive order already directs agencies to continue their look-back, as well as continue to use cost-benefit analysis; increase public participation; and harmonize, simplify and coordinate rules while reducing burdens, particularly on small business.

He noted that 26 agencies in August submitted 500 initiatives described in 805 pages for a projected savings of at least $10 billion over five years. "We will continue to eliminate unjustified regulatory costs, and thus strengthen our economy, in an economically challenging time," Sunstein said.

Sunstein's testimony drew scorn from Rep. Sam Graves, R-Mo., the chairman of the House Small Business Committee who supports a separate bill, the Regulatory Flexibility and Improvements Act, (H.R. 527). He blasted OIRA's approach in a Sept. 28 statement, saying, "Unfortunately, the reality is that this plan is nothing more than smoke and mirrors. It focuses on modest, cost-cutting measures such as reduced paperwork, but does nothing to confront the most problematic and debilitating federal regulations that are crippling our small businesses."

Asked to comment on the Portman-Smith bill, Graves told Government Executive: "I am reviewing the Regulatory Accountability Act and believe it moves in the right direction. It is a common-sense approach to reforming the rule-making process so that consequences of regulations on small businesses are fully assessed before implementation. Legislation like this and the Regulatory Flexibility Act, which the committee has given considerable time to examining, helps remove barriers to small business growth and job creation."

Clarification: Rep. Sam Graves, R-Mo., supports the Regulatory Flexibility and Improvements Act (H.R. 527). Previous wording may have wrongly suggested he introduced the bill.