[House Report 113-237]
[From the U.S. Government Publishing Office]
113th Congress Report
HOUSE OF REPRESENTATIVES
1st Session 113-237
======================================================================
REGULATORY ACCOUNTABILITY ACT OF 2013
_______
September 28, 2013.--Committed to the Committee of the Whole House on
the State of the Union and ordered to be printed
_______
Mr. Goodlatte, from the Committee on the Judiciary, submitted the
following
R E P O R T
together with
DISSENTING VIEWS
[To accompany H.R. 2122]
[Including cost estimate of the Congressional Budget Office]
The Committee on the Judiciary, to whom was referred the
bill (H.R. 2122) to reform the process by which Federal
agencies analyze and formulate new regulations and guidance
documents, having considered the same, reports favorably
thereon without amendment and recommends that the bill do pass.
CONTENTS
Page
Purpose and Summary.............................................. 2
Background and Need for the Legislation.......................... 2
Hearings......................................................... 13
Committee Consideration.......................................... 14
Committee Votes.................................................. 14
Committee Oversight Findings..................................... 18
New Budget Authority and Tax Expenditures........................ 18
Congressional Budget Office Cost Estimate........................ 18
Duplication of Federal Programs.................................. 23
Disclosure of Directed Rule Makings.............................. 23
Performance Goals and Objectives................................. 23
Advisory on Earmarks............................................. 23
Section-by-Section Analysis...................................... 23
Changes in Existing Law Made by the Bill, as Reported............ 27
Dissenting Views................................................. 42
Purpose and Summary
H.R. 2122, the ``Regulatory Accountability Act of 2013''
(RAA) promotes job creation, economic growth, and the
accountability of Federal regulatory agencies by requiring
agencies to lower the costs of regulation while meeting
statutory objectives; improving agencies' decision-making
processes and enhancing regulatory transparency and
accountability to the public; and strengthening judicial review
of agency action. The legislation achieves these ends through
carefully focused reforms to particular sections of the
Administrative Procedure Act (APA).
Background and Need for the Legislation
I. GENERAL BACKGROUND
The annual cost to the economy of Federal regulations has
recently been estimated to be in excess of $1 trillion dollars,
and this cost is increasing each year. This burden, coupled
with uncertainty over what additional Federal regulation may be
imposed in the near term, have been cited as key factors
continuing to hold back economic recovery and the creation of
new jobs.
The current regulatory burden is largely the fruit of
inadequate administrative law. Most important, the APA, known
as the ``constitution'' of agency rulemaking, imposes only a
few light-handed constraints on the vast majority of agency
rulemaking proceedings. Nowhere in the APA, for example, is an
agency required to consider the costs of a proposed regulation
and weigh them against potential benefits.
In the 67 years since it was enacted on June 11, 1946, the
APA has never been modernized. In the 109th Congress, the
Subcommittee on Commercial and Administrative Law documented a
host of potential rulemaking reforms to modernize the APA and
other administrative law statutes.\1\ In the 112th Congress,
the Subcommittee on Courts, Commercial and Administrative Law
held a series of hearings to reconsider more precisely how the
APA could be improved to create jobs and promote economic
growth by improving agencies' decision-making processes and
enhancing regulatory transparency and accountability.
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\1\House Comm. on the Judiciary, 109th Cong., Interim Report on the
Administrative Law, Process and Procedure Project for the 21st Century
(Comm. Print 10).
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On February 28, 2011, the Subcommittee held a hearing
entitled, ``The APA at 65: Is Reform Needed to Create Jobs,
Promote Economic Growth and Reduce Costs?''\2\ Witnesses at
this hearing were Susan E. Dudley, director of George
Washington University's Regulatory Studies Center and former
administrator of the Office of Management and Budget's Office
of Information and Regulatory Affairs (OIRA) (2007-09); Jeffrey
A. Rosen, Esq., Kirkland & Ellis LLP and former OMB general
counsel (2006-09); and, Professor Peter L. Strauss, Betts
Professor of Law, Columbia Law School.
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\2\APA at 65: Is Reform Needed to Create Jobs, Promote Economic
Growth, and Reduce Costs?: Hearing Before the House Committee on the
Judiciary, Subcommittee on Courts, Commercial and Administrative Law,
112th Cong. (Feb. 28, 2011).
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On March 29, 2011, the Subcommittee held a hearing
entitled, ``Raising the Agencies' Grades: Protecting the
Economy, Assuring Regulatory Quality and Improving Assessments
of Regulatory Need.''\3\ At this hearing, the Subcommittee
heard testimony from Dr. Jerry Ellig, Ph.D., director of the
Mercatus Center's Regulatory Report Card project; Dr. Richard
Williams, Ph.D., Director of Policy Research at the Mercatus
Center and former OMB regulatory development and review
official; and, Professor Robert L. Glicksman, J.B. and Maurice
C. Shapiro Professor of Environmental Law at The George
Washington University Law School.
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\3\Raising the Agencies' Grades--Protecting the Economy, Assuring
Regulatory Quality and Improving Assessments of Regulatory Need:
Hearing Before the House Committee on the Judiciary, Subcommittee on
Courts, Commercial and Administrative Law, 112th Cong. (Mar. 29, 2011).
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On May 4, 2011, the Subcommittee held a hearing entitled,
``Cost-Justifying Regulations: Protecting Jobs and the Economy
by Presidential and Judicial Review of Costs and Benefits.''\4\
Witnesses at this hearing were John Graham, Dean of Indiana
University's School of Public and Environmental Affairs and
former OIRA Administrator (2001-06); Jeffrey R. Holmstead,
Esq., Bracewell & Giuliani LLP and former EPA Assistant
Administrator for Air and Radiation (2001-05); Dr. Harold
Furchtgott-Roth, Ph.D., former Commissioner, Federal
Communications Commission (1997-2001); and, Sally Katzen,
Visiting Professor, NYU School of Law, Senior Advisor at the
Podesta Group, and former OIRA Administrator (1993-98).
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\4\Cost-Justifying Regulations: Protecting Jobs and the Economy by
Presidential and Judicial Review of Costs and Benefits: Hearing Before
the House Committee on the Judiciary, Subcommittee on Courts,
Commercial and Administrative Law, 112th Cong. (May 4, 2011).
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On May 31, 2011, the Subcommittee held a hearing entitled,
``Formal Rulemaking and Judicial Review: Protecting Jobs and
the Economy with Greater Regulatory Transparency and
Accountability.''\5\ The Subcommittee heard testimony from Noel
J. Francisco, Esq., former Associate Counsel to President
George W. Bush (2001-2003) and Deputy Assistant Attorney
General for the Department of Justice's Office of Legal Counsel
(2003-2005), and current member, Government Regulation Practice
Group, Jones Day LLP; Edward W. Warren, P.C., Environmental
Practice Group, Kirkland & Ellis LLP; and, Professor Matthew
Stephenson, Harvard Law School.
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\5\Formal Rulemaking and Judicial Review: Protecting Jobs and the
Economy with Greater Regulatory Transparency and Accountability:
Hearing Before the House Committee on the Judiciary, Subcommittee on
Courts, Commercial and Administrative Law, 112th Cong. (May 31, 2011).
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As the fruit of these hearings, H.R. 3010, the ``Regulatory
Accountability Act of 2011,'' was introduced on September 22,
2011. The Committee held a legislative hearing on H.R. 3010 on
October 25, 2011. Witnesses at the hearing included the
Honorable C. Boyden Gray, Esq., Boyden Gray & Associates, White
House Counsel (1989-93) and Ambassador to the European Union
(2006-07); Arnold Baker, Chair of the National Black Chamber of
Commerce and CEO of Baker Ready-Mix, a concrete supply company
in New Orleans; the Honorable Christopher DeMuth, former OIRA
Administrator (1981-1984) and President of the American
Enterprise Institute (1986-2008); and, Professor Sidney
Shapiro, University Distinguished Chair in Law, Wake Forest
University School of Law.
On February 28, 2013, the Subcommittee on Regulatory
Reform, Commercial and Antitrust Law held an oversight hearing
to commence consideration in the 113th Congress of issues
relevant to the RAA and the Committee's other regulatory reform
legislation. Testimony at the hearing concentrated on the need
for regulatory reform in light of the Obama administration's
continuing high levels of new, major regulation, the adverse
impacts of new regulation on jobs, and the adverse impacts of
new regulation on communities that suffer displaced industry
and jobs. Numerous issues discussed at the hearing bore on the
need for Administrative Procedure Act reform. Witnesses at the
hearing included Douglas Holtz-Eakin, President of the American
Action Forum and former Director of the Congressional Budget
Office; Drew Greenblatt, CEO, Marlin Steel, Baltimore,
Maryland; Rob James, Member, City Council, City of Avon Lake,
Ohio; and, Professor Glicksman.
Chairman Goodlatte reintroduced the Regulatory
Accountability Act on May 23, 2013 by introducing H.R. 2122,
the ``Regulatory Accountability Act of 2013.'' As mentioned
above, on July 9, 2013, the Subcommittee held a legislative
hearing on H.R. 2122. Testimony was received at the hearing
from Jeffrey A. Rosen, Esq., Kirkland & Ellis (formerly general
counsel of the Office of Management and Budget); Keith Hall,
Mercatus Center (formerly Commissioner of the Bureau of Labor
Statistics; Diana Thomas, Huntsman School of Business, Utah
State University; Robert A. Sells, Titan America Mid-Atlantic
Business Division; David Goldston, Natural Resources Defense
Council; and, Professor Ronald Levin, Washington University
School of Law. Mr. Rosen and Mr. Sells provided detailed
testimony regarding the continuing need for Administrative
Procedure Act reform and the potential benefits of the
Regulatory Accountability Act's provisions. Mr. Hall and Prof.
Thomas offered testimony regarding the extent to which new
regulations promulgated under existing law create adverse jobs
impacts and regressive effects on lower income populations. Mr.
Goldston and Prof. Levin testified against the bill, offering
their views that the Regulatory Accountability Act would
unnecessarily slow down the ability of regulators to issue new
regulations.
II. REQUIRING CONSIDERATION OF COSTS AND BENEFITS AND IMPROVING AGENCY
DECISION MAKING
A. Codifying Executive Order Rulemaking Principles
``Whereas Congress has never amended the APA in a material
way, the Executive Branch has frequently created its own
requirements for how Federal agencies ought to function, and
established a variety of principles, requirements, coordination
mechanisms, and the like. . . .''\6\ Over the last 30-plus
years, presidents from both parties have issued executive
orders that require regulatory agencies to take steps in
addition to those required by the APA. Executive Orders 12291,
12866, 13422 and 13563 all required regulatory agencies in the
Executive Branch to conduct regulatory impact analyses,
including cost-benefit analysis requirements, and to coordinate
rulemaking with the OIRA Administrator. Other requirements of
the orders include consideration of reasonable alternatives to
proposed rules, identification of the least burdensome
alternative and consideration of whether it would be more
appropriate to defer to State and local authorities than to
issue a Federal rule.
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\6\APA at 65, note 2 supra, at 31 (Testimony of Jeffrey Rosen).
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To enforce the requirements of these executive orders,
however, has been up to White House discretion, not the courts.
As a result, ``agency regulatory analysis is often incomplete
and seldom used in decisions. This pattern persists across
Administrations, suggesting that the source of the problem is
institutional, not political.''\7\ In the Mercatus Center's
Regulatory Report Card project, Drs. Ellig and Williams
``examine[d] how well the executive-branch regulatory agencies
do what presidents have been telling them to do for more than
three decades.''\8\ Overall, Drs. Ellig and Williams found that
the quality of agencies' regulatory impact analysis is
lacking,\9\ and that agencies rarely utilize the analysis in
the decision making process.\10\ Specifically, in evaluations
of 34 major rulemakings conducted by 17 agencies from 2008
through 2011, the highest average score obtained by any agency
was a meager 35 points out of 60 (earned by the Department of
Justice). The Social Security Administration earned the worst
performance with a score of seven points.
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\7\Raising the Agencies' Grades, note 3 supra, at 20 (Testimony of
Jerry Ellig).
\8\Id. at 21.
\9\Id. at 23 (``One of the major areas where regulatory analysis is
weakest is identification of the systemic problem the regulation is
supposed to solve.'').
\10\Id. at 21 (``All too often, agency economists have to conduct
regulatory analysis after most major decisions about regulations have
already been made. The analysis then becomes an advocacy document
written to justify the agency's decisions, or a mere paperwork exercise
to fulfill requirements imposed by the Office of Management and
Budget.'').
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Dr. Williams observed that agencies only have an incentive
to regulate; there is no incentive not to issue a new
regulation.\11\ Drawing on his 27 years of experience as an FDA
economist, Dr. Williams testified that ``there is no discussion
[within agencies] of whether or not a regulation is required.
There is also no discussion as to whether there is a failure of
the market or some other reason for regulatory intervention;
whether the market will solve the problem in the near future
without intervention (baseline analysis); or if there is a need
for federal, as opposed to some other level of government,
intervention.''\12\ Consequently, ``the regulatory analysis
analyzes a decision, not a problem.''\13\
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\11\Id. at 73-74.
\12\Id. at 74.
\13\Ibid.
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To remedy this failing, Dr. Ellig testified, ``[r]egulatory
analysis needs to be legislatively required for all Federal
agencies, including independent agencies.''\14\ The proposal to
codify some or all of the Executive Orders' decision-making
criteria also was endorsed by Mr. Rosen,\15\ Ms. Dudley,\16\
Prof. Strauss,\17\ Dean Graham,\18\ Mr. Holmstead,\19\ and Dr.
Furchtgott-Roth.\20\
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\14\Raising the Agencies' Grades, note 3 supra, at 20.
\15\APA at 65, note 2 supra, at 33-35.
\16\Id. at 20-21.
\17\Id. at 47.
\18\Cost-Justifying Regulations, note 4 supra, at 6.
\19\Id. at 16.
\20\Id. at 38.
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Section 3(b) of the Bill addresses this issue by codifying
the key rulemaking principles found in the Executive Orders.
This would make the Executive Orders' criteria permanent and
extend them to independent agencies, as numerous witnesses
suggested. To codify these criteria also would make them
judicially enforceable, which they currently are not\21\, but
which multiple witnesses supported.\22\ As Dean Graham
recommended, under section 3(b) (provisions of new subsection
553(k) of title 5), OIRA would also have authority to issue
more detailed guidance for agencies to follow during the
decision-making process, including norms for cost-benefit
analysis.\23\
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\21\See Exec. Order No. 12,866, Sec. 10; Exec. Order 13,563,
Sec. 7.
\22\Cost-Justifying Regulations, note 4 supra, at 38 (Testimony of
Harold Furchtgott-Roth) (``The absence of judicial review of the
regulatory process means that both the Federal agency and the outside
parties do not take the regulatory process seriously. If Congress were
to alter the regulatory process, it would be important to have
mechanisms whereby courts can review Federal agency decisions.''); id.
at 6-7 (Testimony of John Graham) (``Since presidents and agencies do
not always adhere to the provisions in presidential executive orders,
it is imperative that judicial review of the new statutory requirements
be authorized.'').
\23\Id. at 7 (``Second, I recommend that Congress require OMB to
issue guidance on the proper conduct of BCA, and that this guidance be
updated periodically.'').
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B. Improving the Process for Notice-and-Comment Rulemaking
In his testimony to the Subcommittee on May 4, 2011, Dr.
Furchtgott-Roth explained:
One of the most important aspects of the Notice of
Proposed Rulemaking process is to obtain guidance from
the public about how best to craft a rule. A Federal
agency should solicit ideas from the public first
rather than develop a predetermined rule before seeking
public comment. An agency that can articulate in detail
the possible costs and benefits to various segments of
our economy of each proposed rule and alternatives to
it demonstrates some thoughtful analysis behind the
proposed rule. And the agency can explain other forms
of the rule, including no new rule, that can be
considered.\24\
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\24\Id. at 37.
Drawing on his experience at the FCC, Dr. Furchtgott-Roth
described how that independent regulatory agency falls short in
its decision-making processes.\25\ Specifically regarding cost-
benefit analysis, Mr. Holmstead remarked, ``I have also seen,
however, that Federal agencies sometimes do not use [cost-
benefit analysis] to inform their regulatory decision, but
rather to justify actions they may want to take for other
reasons.''\26\
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\25\Id. at 38 (``Perhaps partly because it is not covered by the
executive orders, the FCC does not directly weigh or even itemize the
benefits and costs of a particular regulation. The FCC does not
systematically consider alternative forms of regulation including no
regulation. The FCC certainly does not focus on the alternative with
the greatest net benefit. The only presentation of the costs and
benefits of a regulation is an appendix for the Regulatory Flexibility
Act. This appendix is at best an afterthought: a short, rarely read
boilerplate passage that is outside the deliberative process. Sometimes
it is forgotten altogether. I have seen little change in the regulatory
analyses at the FCC since I left the Commission.'').
\26\Id. at 15.
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In the Regulatory Report Card project, Drs. Ellig and
Williams found that agencies do a poor job of both analyzing
the problem they are trying to solve,\27\ and then applying
whatever analysis is conducted to the drafting of a new
regulation.\28\ This is not to say that agencies are ignorant
of how to make good decisions. Drs. Ellig and Williams found
that in 2008 and 2009, across Republican and Democratic
administrations, ``a few regulatory analyses received a score
of `5' for employing potential best practices.''\29\ This shows
that ``[t]he knowledge required to produce better regulatory
analysis exists, dispersed throughout agencies in the Federal
Government. OMB Circular A-4 also summarizes a great deal of
this knowledge. What's lacking are institutional incentives to
produce good analysis and use it to guide decisions.''\30\
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\27\Raising the Agencies' Grades, note 3 supra, at 23 (Testimony of
Jerry Ellig) (``One of the major areas where regulatory analysis is
weakest is identification of the systemic problem the regulation is
supposed to solve (criterion 6). This is a key weakness. . . . If the
agency cannot identify and demonstrate the existence of a systemic
problem that a regulation might solve, how can it assess whether the
regulation is likely to solve the problem or identify alternative
solutions that might be more effective?''); id. at 74 (Testimony of
Richard Williams) (``Discussion of whether there is a problem and
whether Federal regulation is the best way to solve that problem is
`off the table.' That is, there is no discussion of whether or not a
regulation is required. There is also no discussion as to whether there
is a failure of the market or some other reason for regulatory
intervention; whether the market will solve the problem in the near
future without intervention (baseline analysis); or if there is a need
for federal, as opposed to some other level of government,
intervention.'').
\28\Id. at 74 (Testimony of Richard Williams) (regulatory impact
analysis ``is generally begun after the decision on how to regulate has
been announced. That is a key part of the problem: the regulatory
analysis analyzes a decision, not a problem.''); id. at 25 (Testimony
of Jerry Ellig) (``But the average scores on our Use criteria are
relatively low--less than 2.5 out of a possible 5 points on each of
these criteria. Even under our relatively liberal definition of `use,'
agencies claim to use the regulatory impact analysis for significant
decisions only about 20 percent of the time at best. . . .'').
\29\Id. at 27 (Testimony of Jerry Ellig).
\30\Ibid.
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Section 3(b) of the Bill (in its new subsections 553(c)-(f)
of title 5) addresses these recommendations in the process it
establishes for agencies to follow in advance notices of
proposed rulemaking, notice-and-comment rulemaking on rules
actually proposed, final rulemaking hearings for ``major'' and
``high-impact'' rules, as defined in Section 2, and
promulgation criteria for final rules, in order to focus
agencies on identifying the cause of the problem at hand,
weighing solutions to solve that problem and adopting final
rules. For example, in a notice of proposed rulemaking, the
agency must summarize all information known to it through
application of the executive-order-based rulemaking principles
codified in Section 3(b) of the Bill, as well as information
acquired through an advance-notice process, if one was used.
The agency must provide ``a reasoned preliminary determination
of the need for the rule,'' a preliminary cost-benefit analysis
supporting the rule, an analysis of the alternatives considered
and why they were not proposed, and ``a statement of whether
existing regulations have created or contributed to the
problem'' the agency is trying to solve (and, if so, whether
rescinding or modifying those regulations could solve the
problem). If, following an advance notice of proposed
rulemaking, the agency chooses to proceed on a course of
conduct other than rulemaking, then the agency must identify
that course to the public and make public the information
received during the advance notice process. After publishing a
notice of proposed rulemaking, the agency must ``give
interested persons an opportunity to participate in the rule
making through submission of written data.'' Interested persons
also are given the opportunity to challenge the data supporting
the proposed rule under the Information Quality Act, which is
discussed in more detail below.
Section 3(b) of the Bill also requires that, when agencies
promulgate final rules, they render final determinations on
issues addressed with preliminary determinations in their
notices of proposed rulemaking (new subsection 553(f) of title
5). Further, it requires that an agency generally must issue
the least costly alternative rule considered during the
rulemaking that meets the relevant statutory objectives. (Id.)
An agency may in certain instances adopt a more costly rule,
but only to serve interests of public health, safety or welfare
clearly within the scope of the statutory provision that
authorizes the rule and only if the additional benefits of the
more costly rule justify the additional costs. (Id.) An agency
also may only adopt a rule ``on the basis of the best
reasonably obtainable scientific, technical, economic, and
other information'' and only after consulting with the OIRA
Administrator. (Id.) For major rules and high-impact rules, the
agency also must publish a plan to review the rule every 10
years to determine whether it remains efficacious as written or
should be modified or rescinded. (Id.) Agency review of the
continuing efficacy of their rules is another function in which
Drs. Ellig and Williams found agencies deficient.\31\
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\31\See id. at 26 (``Scores are even lower on criteria 11 and 12,
which indicate whether the agency commits to using the results of
regulatory analysis in the future by establishing goals and measures
for the regulation's outcomes and tracking data to measure the
regulation's performance. The average scores on these criteria are
barely above 1. This indicates that, on average, agency regulatory
analyses provide some semblance of a framework for evaluating the
regulation's effects on the future, but agencies have made no
commitment to do so.'').
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C. Bringing Major Guidance within the Rulemaking Process
In 2007, President Bush expanded the scope of Executive
Order 12866 to bring major agency guidance documents within the
OIRA review process.\32\ Promptly upon taking office, however,
President Obama revoked this Executive Order, thus excluding
major guidance documents from the OIRA review process.\33\
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\32\Exec. Order No. 13,422, Further Amendment to Executive Order
12866 on Regulatory Planning and Review, 72 Fed. Reg. 2763 (Jan. 18,
2007).
\33\Exec. Order No. 13,497, Revocation of Certain Executive Orders
Concerning Regulatory Planning and Review, 74 Fed. Reg. 6113 (Jan. 30,
2009).
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In his testimony on May 31, 2011, Mr. Francisco described
how current judicial review doctrines encourage agencies to use
the rulemaking process to issue broad, ambiguous regulations,
and then interpret those regulations through mere guidance
documents, which do not have to be promulgated through any
established processes.\34\ Under these circumstances, a court
will defer to the agency's interpretation of its own ambiguous
regulation even though the guidance document does not have the
force of law. Both Dean Graham and Mr. Holmstead, testifying on
May 4, 2011, recommended that agencies be required to follow
some decision-making criteria when issuing significant guidance
documents.\35\
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\34\Formal Rulemaking and Judicial Review, note 5 supra, at 179-80
(discussing Bowles v. Seminole Rock & Sand Co., 325 U.S. 410, 414
(1945) and Auer v. Robbins, 519 U.S. 452, 461 (1997)).
\35\Cost-Justifying Regulations, note 4 supra, at 7 (Testimony of
John Graham) (``Third, I recommend that Congress expand the scope of
the statutory mandate to include significant guidance documents as well
as legislative rules, at least in cases where the agency's action to
issue a guidance document has the same practical effect on regulated
parties as a regulation.''); id. at 18 (Testimony of Jeffrey Holmstead)
(``I also recommend that the Subcommittee go beyond just rules and
regulations to require that significant guidance documents are subject
to analysis and interagency review.'').
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To curb agency abuse of guidance documents, the Bill adopts
several measures. First, to change agency incentives, Section
7(b) legislatively overrules the doctrine by which courts defer
to agency interpretations of regulations when the
interpretations are issued outside of rulemaking. In addition,
Section 4 requires agencies to take certain steps before
issuing ``major guidance,'' as defined in Section 2 (e.g.,
guidance with an economic impact of $100 million or more).
Specifically, the agency must assure that the guidance is
understandable and that the benefits justify the costs, and
also must identify the alternatives considered and why the
agency rejected them. The agency must confer with the OIRA
Administrator in making these determinations. The OIRA
Administrator, further, is authorized to establish guidelines
for agencies to follow when issuing guidance documents.
Finally, agencies must identify any guidance ``in a plain,
prominent and permanent manner as guidance that is not legally
binding'' must publish guidance when issued or upon request,
and may not rely on guidance as legal grounds for agency
action, such as agency enforcement action.
III. ENHANCING REGULATORY ACCOUNTABILITY
A. Modernizing Judicial Review Doctrines
At its February 28, 2011, and May 31, 2011, hearings, the
Subcommittee received testimony that ``federal courts in
general are exceedingly deferential'' to regulatory agencies in
the Executive Branch.\36\ Messrs. Rosen\37\ and Francisco\38\
both testified to this effect, and they both commented on the
apparently counter-intuitive system whereby agency decisions
made by informal rulemaking receive a lower standard of
judicial review, and therefore a greater degree of judicial
deference, than agency decisions made by more rigorous formal
rulemaking.\39\
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\36\APA at 65, note 2 supra, at 35 (Testimony of Jeffrey Rosen).
\37\Ibid.
\38\Formal Rulemaking and Judicial Review, note 5 supra, at 179
(``Over time, however, the balance between deference and judicial
oversight has tended strongly toward deference and away from rigorous
judicial review. This shift toward ever-increasing deference weakens
the primary check on agency discretion.'').
\39\APA at 65, note 2 supra, at 39 (Testimony of Jeffrey Rosen);
Formal Rulemaking and Judicial Review, note 5 supra, at 175 (Testimony
of Noel Francisco).
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Consistent with academic criticism, Mr. Francisco
specifically questioned the deference doctrines established by
the Supreme Court in Bowles v. Seminole Rock & Sand Co., 325
U.S. 410 (1945), Auer v. Robbins, 519 U.S. 452 (1997), and in
Baltimore Gas & Electric Co. v. Natural Resources Defense
Council, 462 U.S. 87 (1983).\40\ Mr. Francisco also objected to
the notion, over which the courts of appeals are split, that a
court should defer to an agency's interpretation of its own
jurisdiction.\41\ Regarding the well-established, two-step
analysis first described by the Supreme Court in Chevron,
U.S.A., Inc. v. Natural Resources Defense Council, 467 U.S. 837
(1984), Mr. Francisco suggested ``limit[ing] Chevron deference
to agency decisions made in strict compliance with an agency's
own internal administrative processes and those required by the
APA. Absent strict adherence to administrative procedure,
Skidmore [v. Swift & Co., 323 U.S. 134 (1944)] deference
applies.''\42\
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\40\Formal Rulemaking and Judicial Review, note 5 supra, at 179-81.
\41\Id. at 180.
\42\Id. at 182.
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Section 7(b) of the Bill incorporates provisions that draw
upon certain of these recommendations. In particular, Section
7(b) effectively abolishes Seminole Rock/Auer deference.
(Notably, Justice Scalia--the author of Auer--recently admitted
that he has ``become increasingly doubtful of its
validity.''\43\) Subsection 7(b) also withholds deference to
agency cost-benefit determinations, other economic
determinations, and risk assessments not made in accordance
with guidelines for the conduct of such analyses issued by OIRA
under the bill's new subsection 553(k) of title 5. In addition,
under Section 7(b), courts would not defer to an agency's legal
or factual determinations made in support of an interim-final
rule.
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\43\Talk Am., Inc. v. Mich. Bell Tel. Co., 2011 U.S. LEXIS 4375,
*30-*31 (June 9, 2011) (Scalia, J., concurring) (``When Congress enacts
an imprecise statute that it commits to the implementation of an
executive agency, it has no control over that implementation (except,
of course, through further, more precise, legislation). The legislative
and executive functions are not combined. But when an agency
promulgates an imprecise rule, it leaves to itself the implementation
of that rule, and thus the initial determination of the rule's meaning.
. . . `When the legislative and executive powers are united in the same
person, or in the same body of magistrates, there can be no liberty;
because apprehensions may arise, lest the same monarch or senate should
enact tyrannical laws, to execute them in a tyrannical manner.''')
(quoting Montesquieu, The Spirit of the Laws).
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B. Review of Interim-Final Rules
The APA allows an agency to make what is known as an
``interim-final rule'' ``when the agency for good cause finds
(and incorporates the finding and a brief statement of reasons
therefore in the rules issued) that notice and public procedure
thereon are impracticable, unnecessary, or contrary to the
public interest.''\44\ The interim-final rule is effective
immediately, but ``[t]he adopting agency declares that it will
consider . . . public comments'' after the interim-final rule
is issued, ``will modify the rule in light of those comments,
and will then adopt a final rule.''\45\
---------------------------------------------------------------------------
\44\5 U.S.C. Sec. 553(b)(3)(B).
\45\Michael Asimow, Interim-Final Rules: Making Haste Slowly, 51
Admin. L. Rev. 703, 704 (Summer 1999).
---------------------------------------------------------------------------
Because interim-final rules necessarily ``restrict public
participation''\46\ and ``hinder APA procedures,''\47\ both Ms.
Dudley and Mr. Rosen suggested that Congress examine this
issue. Section 3(b) of the Bill (new subsection 553(g) of title
5) allows agencies to make an interim-final rule without
following full rulemaking procedures if it is ``impracticable
or contrary to the public interest, including interests of
national security. . . .'' Within 270 days after publishing an
interim-final rule--or, in the case of an interim-final major
or high-impact rule, within 18 months of publication--the
agency must complete full rulemaking procedures ``and take
final action to adopt a final rule or rescind the interim
rule.'' Under the Bill, a party may seek immediate judicial
review of an agency's decision to adopt an interim-final rule
except in cases involving national security interests. Section
6 limits judicial review to abuse of discretion by the agency.
---------------------------------------------------------------------------
\46\APA at 65, note 2 supra, at 37 (Testimony of Jeffrey Rosen).
\47\Id. at 21 (Testimony of Susan Dudley).
---------------------------------------------------------------------------
IV. INCREASING REGULATORY TRANSPARENCY AND THE VETTING OF FACTUAL
INFORMATION
A. LRequiring Advance Notice of Potential High-Impact and Major
Rulemakings
At the Subcommittee's March 29, 2011, hearing, Drs. Ellig
and Williams both testified that agencies often make the
decision to regulate behind closed doors, away from the public
eye and before commencing the legally required regulatory
process.\48\ ``This doesn't mean that no stakeholders have
influence over the early decisions. Generally, those that have
petitioned for and favor regulations are heard from early in
the process to help shape the initial decisions.''\49\ As
Professor Strauss observed at the February 28, 2011, hearing,
---------------------------------------------------------------------------
\48\Raising the Agencies' Grades, note 3 supra, at 21 (Testimony of
Jerry Ellig) (``All too often, agency economists have to conduct
regulatory analysis after most major decisions about regulations have
already been made. The analysis then becomes an advocacy document
written to justify the agency's decisions, or a mere paperwork exercise
to fulfill requirements imposed by the Office of Management and
Budget.''); id. at 74 (Testimony of Richard Williams) (``But that
analysis is generally begun after the decision on how to regulate has
been announced. That is a key part of the problem: the regulatory
analysis analyzes a decision, not a problem.'').
\49\Id. at 78 (Testimony of Richard Williams).
Often what occurs before a notice of proposed
rulemaking has been published produces commitments
that, in the words of President George H.W. Bush's
General Counsel at the EPA, convert notice and comment
rulemaking into a form of Kabuki theater--``a highly
stylized process for displaying in a formal way the
essence of something which in real life takes place in
other venues.''\50\
---------------------------------------------------------------------------
\50\APA at 65, note 2 supra, at 48-49 (quoting E. Donald Elliott,
Re-Inventing Rulemaking, 41 Duke L.J. 1490, 1492 (June 1992)).
Dr. Williams observed that this phenomenon is a result of
the agency's overriding incentive to regulate whenever
possible, and that what is needed is ``to decouple the agency's
decision from both early analysis of and democratic input into
a problem. That is, initially, agencies should perform
regulatory analysis and make that analysis available for public
comment. There should be no discussion of the agency's
preferred solutions in this document.''\51\ Specifically, Dr.
Williams recommended:
---------------------------------------------------------------------------
\51\Raising the Agencies' Grades, note 3 supra, at 77.
La clear definition of the problem that the
agency seeks to solve and the evidence it relied on to
---------------------------------------------------------------------------
define the problem;
Lan explanation of and evidence for why a
Federal solution is required for this problem;
Lthe possible ways to solve the problem; and
La preliminary estimate of the benefits and
costs of each of the options listed.\52\
---------------------------------------------------------------------------
\52\Id. at 78.
Dr. Ellig concurred in these recommendations.\53\ Mr. Rosen
also testified, ``[g]reater use of the Advanced Notice of
Proposed Rule-making and similar advance processes would be a
good thing.''\54\ Ms. Dudley recommended Congress consider this
proposal as well.\55\ Relatedly, on May 4, 2011, Mr. Holmstead
described how potentially collusive litigation between
regulatory agencies and interested parties can short-circuit
the regulatory process.\56\
---------------------------------------------------------------------------
\53\Id. at 28.
\54\APA at 65, note 2 supra, at 37.
\55\Id. at 20.
\56\Cost-Justifying Regulations, note 4 supra, at 18.
---------------------------------------------------------------------------
For major rules and high-impact rules, as defined in
Section 2 of the Bill, Section 3(b) (new subsection 553(c) of
title 5) requires regulatory agencies to publish an advance
notice of proposed rulemaking no fewer than 90 days before
publishing a notice of proposed rulemaking, and to provide no
fewer than 60 days in which the public may comment. Whether or
not the agency ultimately decides to propose a new rule, the
agency must publish its decision about what course of action,
if any, is appropriate. If the agency decides to modify or
rescind an existing rule, then the agency may proceed directly
to a notice of proposed rulemaking, without undertaking to
comply once more with the Bill's advance-notice requirement.
B. Improving the Effectiveness of the Information Quality Act
Congress enacted the Information Quality Act as Section 515
of the Treasury and General Government Appropriations Act for
Fiscal Year 2001.\57\ The IQA requires the Director of the
Office of Management and Budget to ``issue guidelines . . .
that provide policy and procedural guidance to Federal agencies
for ensuring and maximizing the quality, objectivity, utility,
and integrity of information (including statistical
information) disseminated by Federal agencies in fulfillment of
the purposes and provisions of'' the Paperwork Reduction
Act.\58\ Further, the IQA instructs that Federal agencies shall
``issue guidelines ensuring and maximizing the quality,
objectivity, utility, and integrity of information (including
statistical information) disseminated by the agency,'' to
``establish administrative mechanisms allowing affected persons
to seek and obtain correction of information maintained and
disseminated by the agency'' and to report both ``the number
and nature of complaints received by the agency regarding the
accuracy of information disseminated'' and ``how such
complaints were handled.''\59\
---------------------------------------------------------------------------
\57\See Pub. L. No. 106-554, Sec. 515.
\58\Id. Sec. 515(a).
\59\Id. Sec. 515(b).
---------------------------------------------------------------------------
On February 28, 2011, Mr. Rosen testified that Congress
should clarify that judicial review is available under the
IQA.\60\ Ms. Dudley suggested that Congress ``consider amending
the IQA to make agency decisions reviewable.''\61\ In the same
vein, on May 31, 2011, Mr. Francisco suggested that one way to
enhance the effectiveness of the IQA would be to incorporate it
into the APA itself.\62\ Drawing upon these recommendations,
Section 3(b) (new subsections 553(d)(4), (e)(5) and (f)(4)(F))
weaves IQA standards into the APA rulemaking process. Section 7
also establishes that an IQA violation qualifies as agency
action ``not in accordance with law,'' clearly rendering the
IQA judicially enforceable.
---------------------------------------------------------------------------
\60\APA at 65, note 2 supra, at 39.
\61\Id. at 18.
\62\Formal Rulemaking and Judicial Review, note 5 supra, at 183.
---------------------------------------------------------------------------
C. Improving the Record to Support High-Impact and Major Rules
At the Subcommittee's February 28, 2011 hearing, Mr. Rosen
discussed how formal rulemaking--i.e., rulemaking based on
formal agency hearings--was specifically contemplated by the
APA, but has become a dead letter over the past several
decades.\63\ Mr. Rosen testified that the formal procedures
discussed in 5 U.S.C. Sec. Sec. 556 and 557 (with evidence
presentation and cross-examination) ``can be especially
beneficial for issues involving complex empirical or scientific
issues.''\64\ Mr. Rosen added, ``[t]here is no better tool than
cross-examination to expose unsupportable factual assertions
and assure the public that only the best science underlies
agency action.''\65\ One option Mr. Rosen suggested is that
``all `major rules' above a certain threshold could be subject
to formal rulemaking. . . .''\66\ Ms. Dudley suggested that
``legislators might consider amending the APA to . . . expand
the use of formal rulemaking procedures.''\67\
---------------------------------------------------------------------------
\63\Id. at 35, 38.
\64\Id. at 35.
\65\Id. at 38.
\66\Ibid.
\67\APA at 65, note 2 supra, at 17.
---------------------------------------------------------------------------
On May 31, 2011, Mr. Francisco observed that ``[f]ormal
rulemaking is often called `rulemaking on a record' because
these trial-type proceedings provide much more opportunity for
the agency to develop a formal record before issuing a final
rule.''\68\ Mr. Francisco also explained that formal rulemaking
is subject to a higher standard of judicial review than
informal rulemaking, i.e., ``substantial evidence'' versus
``arbitrary or capricious'' review.\69\ Mr. Francisco suggested
that Congress consider legislation to put ``a renewed emphasis
on formal rulemaking procedures.''\70\ Also on May 31, 2011,
Mr. Warren testified at length in favor of ``mak[ing]
carefully-tailored amendments to the Administrative Procedure
Act (`APA') which would permit slightly more formal procedures
for major rules currently reviewed by [OIRA] under Executive
Orders 12866 and 13563.'' Believing ``that additional
procedures are warranted in the interest of improving the
agency work product,''\71\ Mr. Warren suggested that the
additional formal procedures should be ``in addition to, not in
lieu of,'' the procedures for informal rulemaking.\72\
---------------------------------------------------------------------------
\68\Formal Rulemaking and Judicial Review, note 5 supra, at 177.
\69\Id. at 178.
\70\Ibid.
\71\Formal Rulemaking and Judicial Review, note 5 supra, at 39.
\72\Ibid.
---------------------------------------------------------------------------
Consistent with these recommendations, for high-impact
rules Section 3(b) of the bill (new subsection 553(e) of title
5) requires agencies to engage in ``hybrid'' rulemaking that
mixes the strengths of formal rulemaking hearings and informal
notice-and-comment procedures. Through this procedure, agencies
must hold targeted factual hearings according to the APA's
formal rulemaking requirements, after following notice-and-
comment procedures and before adopting the proposed high-impact
rule. The agency must publish public notice of the hearing not
less than 45 days in advance. At the hearing, which will allow
for cross-examination, only a subset of issues in the
rulemaking is to be determined, including the key issues of the
factual predicate for the rule (i.e., what evidence establishes
a need for the rule); whether statutory objectives could be
achieved at lower cost by an alternative to the proposed rule;
whether there is a compelling need to protect public health,
safety or welfare that justifies a more costly solution; and
whether the information supporting the rule satisfies the
Information Quality Act. An interested person who has
participated in the rulemaking can bring a petition to have
additional issues considered, which the agency must rule upon
within 30 days and may deny if consideration of those
additional issues through a hearing would unduly delay
completion of the rulemaking. Participants in the rulemaking
other than the agency may waive the hearing entirely or
consideration of any of the above issues at the hearing, to
assure efficiency of the process. This hybrid use of informal
and formal rulemaking procedures builds upon successful
precedents such the Occupational Safety and Health Act.
Hearings
The Committee's Subcommittee on Regulatory Reform,
Commercial and Antitrust Law held one hearing on H.R. 2122 on
July 9, 2013. Testimony was received from Jeffrey A. Rosen,
Esq., Kirkland & Ellis (formerly general counsel of the Office
of Management and Budget); Keith Hall, Mercatus Center
(formerly Commissioner of the Bureau of Labor Statistics);
Diana Thomas, Huntsman School of Business, Utah State
University; Robert A. Sells, Titan America Mid-Atlantic
Business Division; David Goldston, Natural Resources Defense
Council; and, Professor Ronald Levin, Washington University
School of Law, with additional material submitted by the U.S
Chamber of Commerce, the Business Roundtable, the Honorable C.
Boyden Gray, the Associated Builders and Contractors, Inc., the
National Association of Federal Credit Unions, a coalition of
88 trade associations, and a group of 42 administrative law
teachers and practitioners.
Committee Consideration
On July 18, 2013, the Subcommittee on Regulatory Reform,
Commercial and Antitrust Law met in open session and ordered
the bill H.R. 2122 favorably reported without amendment, by
voice vote, a quorum being present. On July 24, 2013, the
Committee met in open session and ordered the bill H.R. 2122
favorably reported without amendment, by a rollcall vote of 13
to 9, a quorum being present.
Committee Votes
In compliance with clause 3(b) of rule XIII of the Rules of
the House of Representatives, the Committee advises that the
following rollcall votes occurred during the Committee's
consideration of H.R. 2122.
1. The amendment offered by Mr. Conyers exempts from cost-
benefit-related requirements of H.R. 2122's new regulations for
which existing law limits or precludes consideration of the
regulations' costs. The amendment was defeated by a rollcall
vote of 11-13.
ROLLCALL NO. 1
------------------------------------------------------------------------
Ayes Nays Present
------------------------------------------------------------------------
Mr. Goodlatte (VA), Chairman................... X
Mr. Sensenbrenner, Jr. (WI)....................
Mr. Coble (NC).................................
Mr. Smith (TX)................................. X
Mr. Chabot (OH)................................ X
Mr. Bachus (AL)................................ X
Mr. Issa (CA)..................................
Mr. Forbes (VA)................................ X
Mr. King (IA)..................................
Mr. Franks (AZ)................................
Mr. Gohmert (TX)............................... X
Mr. Jordan (OH)................................ X
Mr. Poe (TX)...................................
Mr. Chaffetz (UT)..............................
Mr. Marino (PA)................................ X
Mr. Gowdy (SC).................................
Mr. Amodei (NV)................................
Mr. Labrador (ID).............................. X
Ms. Farenthold (TX)............................ X
Mr. Holding (NC)...............................
Mr. Collins (GA)............................... X
Mr. DeSantis (FL).............................. X
Mr. Smith (MO)................................. X
Mr. Conyers, Jr. (MI), Ranking Member.......... X
Mr. Nadler (NY)................................
Mr. Scott (VA)................................. X
Mr. Watt (NC).................................. X
Ms. Lofgren (CA)............................... X
Ms. Jackson Lee (TX)...........................
Mr. Cohen (TN)................................. X
Mr. Johnson (GA)............................... X
Mr. Pierluisi (PR)............................. X
Ms. Chu (CA)................................... X
Mr. Deutch (FL)................................ X
Mr. Gutierrez (IL).............................
Ms. Bass (CA)..................................
Mr. Richmond (LA)..............................
Ms. DelBene (WA)............................... X
Mr. Garcia (FL)................................ X
Mr. Jeffries (NY)..............................
------------------------
Total...................................... 11 13
------------------------------------------------------------------------
2. The amendment offered by Mr. Watt exempts from
requirements of H.R. 2122 new regulations and guidance to
implement the Dodd-Frank Wall Street Reform and Consumer
Protection Act. The amendment was defeated by a rollcall vote
of 9-11.
ROLLCALL NO. 2
------------------------------------------------------------------------
Ayes Nays Present
------------------------------------------------------------------------
Mr. Goodlatte (VA), Chairman................... X
Mr. Sensenbrenner, Jr. (WI)....................
Mr. Coble (NC).................................
Mr. Smith (TX).................................
Mr. Chabot (OH)................................ X
Mr. Bachus (AL)................................ X
Mr. Issa (CA)..................................
Mr. Forbes (VA)................................ X
Mr. King (IA)..................................
Mr. Franks (AZ)................................
Mr. Gohmert (TX)............................... X
Mr. Jordan (OH)................................ X
Mr. Poe (TX)...................................
Mr. Chaffetz (UT)..............................
Mr. Marino (PA)................................ X
Mr. Gowdy (SC).................................
Mr. Amodei (NV)................................
Mr. Labrador (ID).............................. X
Ms. Farenthold (TX)............................
Mr. Holding (NC)...............................
Mr. Collins (GA)............................... X
Mr. DeSantis (FL).............................. X
Mr. Smith (MO)................................. X
Mr. Conyers, Jr. (MI), Ranking Member..........
Mr. Nadler (NY)................................
Mr. Scott (VA)................................. X
Mr. Watt (NC).................................. X
Ms. Lofgren (CA)...............................
Ms. Jackson Lee (TX)...........................
Mr. Cohen (TN)................................. X
Mr. Johnson (GA)............................... X
Mr. Pierluisi (PR)............................. X
Ms. Chu (CA)................................... X
Mr. Deutch (FL)................................ X
Mr. Gutierrez (IL).............................
Ms. Bass (CA)..................................
Mr. Richmond (LA)..............................
Ms. DelBene (WA)............................... X
Mr. Garcia (FL)................................ X
Mr. Jeffries (NY)..............................
------------------------
Total...................................... 9 11
------------------------------------------------------------------------
3. The amendment offered by Mr. Cohen exempts from
requirements of H.R. 2122 new regulations and guidance to
strengthen existing prohibitions against financial companies
owning non-financial businesses. The amendment was defeated by
a rollcall vote of 9-13.
ROLLCALL NO. 3
------------------------------------------------------------------------
Ayes Nays Present
------------------------------------------------------------------------
Mr. Goodlatte (VA), Chairman................... X
Mr. Sensenbrenner, Jr. (WI)....................
Mr. Coble (NC).................................
Mr. Smith (TX)................................. X
Mr. Chabot (OH)................................ X
Mr. Bachus (AL)................................ X
Mr. Issa (CA)..................................
Mr. Forbes (VA)................................ X
Mr. King (IA)..................................
Mr. Franks (AZ)................................
Mr. Gohmert (TX)............................... X
Mr. Jordan (OH)................................ X
Mr. Poe (TX)...................................
Mr. Chaffetz (UT)..............................
Mr. Marino (PA)................................ X
Mr. Gowdy (SC)................................. X
Mr. Amodei (NV)................................
Mr. Labrador (ID).............................. X
Ms. Farenthold (TX)............................
Mr. Holding (NC)...............................
Mr. Collins (GA)............................... X
Mr. DeSantis (FL).............................. X
Mr. Smith (MO)................................. X
Mr. Conyers, Jr. (MI), Ranking Member..........
Mr. Nadler (NY)................................
Mr. Scott (VA)................................. X
Mr. Watt (NC).................................. X
Ms. Lofgren (CA)...............................
Ms. Jackson Lee (TX)...........................
Mr. Cohen (TN)................................. X
Mr. Johnson (GA)............................... X
Mr. Pierluisi (PR)............................. X
Ms. Chu (CA)................................... X
Mr. Deutch (FL)................................ X
Mr. Gutierrez (IL).............................
Ms. Bass (CA)..................................
Mr. Richmond (LA)..............................
Ms. DelBene (WA)............................... X
Mr. Garcia (FL)................................ X
Mr. Jeffries (NY)..............................
------------------------
Total...................................... 9 13
------------------------------------------------------------------------
4. The bill was reported by a rollcall vote of 13-9.
ROLLCALL NO. 4
------------------------------------------------------------------------
Ayes Nays Present
------------------------------------------------------------------------
Mr. Goodlatte (VA), Chairman................... X
Mr. Sensenbrenner, Jr. (WI)....................
Mr. Coble (NC).................................
Mr. Smith (TX)................................. X
Mr. Chabot (OH)................................ X
Mr. Bachus (AL)................................ X
Mr. Issa (CA)..................................
Mr. Forbes (VA)................................ X
Mr. King (IA)..................................
Mr. Franks (AZ)................................
Mr. Gohmert (TX)............................... X
Mr. Jordan (OH)................................ X
Mr. Poe (TX)...................................
Mr. Chaffetz (UT)..............................
Mr. Marino (PA)................................ X
Mr. Gowdy (SC)................................. X
Mr. Amodei (NV)................................
Mr. Labrador (ID).............................. X
Ms. Farenthold (TX)............................
Mr. Holding (NC)...............................
Mr. Collins (GA)............................... X
Mr. DeSantis (FL).............................. X
Mr. Smith (MO)................................. X
Mr. Conyers, Jr. (MI), Ranking Member..........
Mr. Nadler (NY)................................
Mr. Scott (VA)................................. X
Mr. Watt (NC).................................. X
Ms. Lofgren (CA)...............................
Ms. Jackson Lee (TX)...........................
Mr. Cohen (TN)................................. X
Mr. Johnson (GA)............................... X
Mr. Pierluisi (PR)............................. X
Ms. Chu (CA)................................... X
Mr. Deutch (FL)................................ X
Mr. Gutierrez (IL).............................
Ms. Bass (CA)..................................
Mr. Richmond (LA)..............................
Ms. DelBene (WA)............................... X
Mr. Garcia (FL)................................ X
Mr. Jeffries (NY)..............................
------------------------
Total...................................... 13 9
------------------------------------------------------------------------
Committee Oversight Findings
In compliance with clause 3(c)(1) of rule XIII of the Rules
of the House of Representatives, the Committee advises that the
findings and recommendations of the Committee, based on
oversight activities under clause 2(b)(1) of rule X of the
Rules of the House of Representatives, are incorporated in the
descriptive portions of this report.
New Budget Authority and Tax Expenditures
Clause 3(c)(2) of rule XIII of the Rules of the House of
Representatives is inapplicable because this legislation does
not provide new budgetary authority or increased tax
expenditures.
Congressional Budget Office Cost Estimate
In compliance with clause 3(c)(3) of rule XIII of the Rules
of the House of Representatives, the Committee sets forth, with
respect to the bill, H.R. 2122, the following estimate and
comparison prepared by the Director of the Congressional Budget
Office under section 402 of the Congressional Budget Act of
1974:
U.S. Congress,
Congressional Budget Office,
Washington, DC, August 1, 2013.
Hon. Bob Goodlatte, Chairman,
Committee on the Judiciary,
House of Representatives, Washington, DC.
Dear Mr. Chairman: The Congressional Budget Office has
prepared the enclosed cost estimate for H.R. 2122, the
``Regulatory Accountability Act of 2013.''
If you wish further details on this estimate, we will be
pleased to provide them. The CBO staff contact is Susanne S.
Mehlman, who can be reached at 226-2860.
Sincerely,
Douglas W. Elmendorf,
Director.
Enclosure
cc:
Honorable John Conyers, Jr.
Ranking Member
H.R. 2122--Regulatory AccountabilityAct of 2013.
As ordered reported by the House Committee on the Judiciary
on August 1, 2013.
SUMMARY
H.R. 2122 would amend the Administrative Procedures Act
(APA), which is the law that governs how Federal agencies
propose and establish regulations. Enacting this legislation
would codify many practices aimed at increasing regulatory
transparency and accountability that are currently required
under several executive orders. However, this legislation also
would impose some new requirements on Federal agencies related
to the rulemaking process and would extend some of the current
requirements under the executive orders to additional Federal
agencies. Except for changes permitting judicial review for
compliance with the Information Quality Act (enacted as part of
the Consolidated Appropriations Acts, 2001 [Public Law 106-
554]), the changes contained in this legislation would not
apply to any rulemaking pending or completed on the date of
enactment.
CBO estimates that implementing H.R. 2122 would cost about
$70 million over the 2014-2018 period, assuming appropriation
of the necessary funds. Such funding would cover the
governmentwide costs of additional personnel, contractor costs,
and other administrative expenses associated with meeting the
new requirements under the legislation.
CBO also expects that enacting H.R. 2122 could delay the
issuance of some final rules each year. As a result, CBO and
the staff of the Joint Committee on Taxation (JCT) expect that
enacting H.R. 2122 could have effects on both direct spending
and revenues. Therefore, pay-as-you-go procedures apply to the
legislation. However, given the large number of major rules
issued each year and the extent to which rules vary in their
nature and scope, we cannot determine the level of costs or
savings stemming from delaying the effective date of some
rules. In addition, while enacting the bill could affect direct
spending and revenues if agencies not funded through annual
appropriations incur additional costs, CBO estimates that any
net increase in spending or change in revenues for those
agencies would not be significant.
CBO expects that H.R. 2122 would impose no
intergovernmental or private-sector mandates as defined in the
Unfunded Mandates Reform Act (UMRA).
ESTIMATED COST TO THE FEDERAL GOVERNMENT
The estimated budgetary impact of H.R. 2122 on
discretionary spending is shown in the following table. The
costs of this legislation fall within all budget functions that
include agencies that issue regulations.
By Fiscal Year, in Millions of Dollars
----------------------------------------------------------------------------------------------------------------
2014 2015 2016 2017 2019 2014-2018
----------------------------------------------------------------------------------------------------------------
CHANGES IN SPENDING SUBJECT TO APPROPRIATION
Estimated Authorization Level 5 10 15 20 20 70
Estimated Outlays 4 9 14 20 20 67
----------------------------------------------------------------------------------------------------------------
Enacting H.R. 2122 also would affect direct spending and
revenues, but CBO and JCT cannot determine the extent or sign
of those effects.
BASIS OF ESTIMATE
For this estimate, CBO assumes that the legislation will be
enacted near the end of 2013, that the necessary amounts will
be appropriated near the start of each fiscal year, and that
spending will follow historical patterns for regulatory
analysis activities.
Background
CBO is unaware of any comprehensive information on current
spending for regulatory activities governmentwide. However,
according to the Congressional Research Service, Federal
agencies issue 3,000 to 4,000 final rules each year. Most are
promulgated by the Departments of Transportation, Homeland
Security, and Commerce, and the Environmental Protection Agency
(EPA). Agencies that issue the most major rules (those with an
estimated economic impact on the economy of more than $100
million per year) include the Department of Health and Human
Services, the Department of Agriculture, and EPA.
H.R. 2122 would amend the APA to codify certain practices
currently required under several executive orders, including
Executive Orders 12866, 13563, and 13422. (Those instructions
require agencies in the executive branch to analyze the impacts
of regulations (including costs and benefits), to coordinate
with the Office of Information and Regulatory Affairs (OIRA)
during the rulemaking, and to perform other activities and
analyses related to the rulemaking process.) The legislation
would add several definitions to the APA, including major rule,
major guidance, and high-impact rule.
A major rule would be defined as any rule, as determined by
OIRA, likely to impose:
LAn annual cost on the economy of $100 million
or more, adjusted annually for inflation;
LA major increase in costs or prices for
consumers, individual industries, Federal, state,
local, or tribal government agencies, or geographic
regions;
LSignificant adverse effects on competition,
employment, investment, productivity, innovation, or on
the ability of United States-based enterprises to
compete with foreign-based enterprises in domestic and
export markets; or
LSignificant impacts on multiple sectors of
the economy.
This definition of a major rule differs from the one
contained in the Congressional Review Act (CRA) of 1996, which
defines a major rule as one having an annual effect on the
economy instead of an annual cost as defined in H.R. 2122.
The legislation would define the term major guidance issued
by Federal agencies using the same criteria as that used for a
major rule. A high-impact rule would be defined as any rule
that OIRA determines is likely to impose an annual cost on the
economy of $1 billion or more. That threshold would be adjusted
annually for inflation.
Enacting H.R. 2122 also would add several new requirements
that would broadly change the current rulemaking process. For
all major and high-impact rules as well as rules that involve
``novel legal or policy issues,'' agencies would be required to
publish an advance notice of proposed rulemaking (ANPRM) in the
Federal Register 90 days prior to publishing a Notice of
Proposed Rulemaking (NPRM). The legislation specifies minimum
requirements for the ANPRM, including a period of not less than
60 days during which interested parties may submit data, views,
or argument to the agency. A pre-proposal process occurs on a
voluntary basis for some rules under current law, as guided by
Executive Order 13563.
The NPRM process, as defined in the APA, would be amended
to codify certain requirements in place under Executive Orders
12866 and 13563. While many agencies subject to the executive
orders may already be implementing those practices for certain
rules, some independent agencies outside the purview of
executive orders may face an increase in workload with respect
to the rulemaking process. For all agencies, H.R. 2122 would
increase requirements for documenting cost-benefit analyses as
well as placing other supporting documentation in the docket
for the proposed rule. Furthermore, the legislation would
incorporate into the rulemaking process a remedy for members of
the public to petition for a hearing to determine if any
information used by the agency in developing the proposed rule
violates the Information Quality Act.
The legislation would require agencies to hold a hearing
for all high-impact rules. The hearing would occur after
comments have been received on the proposed rule and after any
hearings were held under the NPRM process but before adoption
of the rule. The hearing could be waived if all participants-
not including the agency-agree.
Spending Subject to Appropriation
Based on information from several Federal agencies, CBO
estimates that more resources would be needed for Federal
agencies to produce additional guidance documents and cost-
benefit analyses, support judicial reviews and hearings, and
perform other administrative tasks related to the rulemaking
process. Eventually, CBO estimates that Federal agencies would
spend about $20 million annually to meet the requirements under
this legislation. We expect that it would take about 3 years to
reach that level of effort.
Direct Spending
CBO expects that enacting H.R. 2122 would delay a number of
major and high-impact rules from taking effect each year.
Therefore, in assessing the budgetary effects of H.R. 2122, CBO
considered the costs and savings that would be realized if
anticipated major and high-impact rules were delayed. Delaying
the issuance of some major or high-impact rules, which would
delay when they take effect, could result in costs, while
delaying others could result in savings. CBO expects that the
rules with the largest effects on Federal spending would be
those related to Federal health programs, particularly
Medicare; thus, enacting H.R. 2122 could significantly affect
Medicare spending relative to current law.
CBO cannot determine the level of costs or savings in
direct spending over the 2014-2023 period. However, we expect
that such budgetary effects would largely be driven by delaying
annual updates to payment schedules for providing Medicare
services and other routine revisions to aspects of other
government programs.
Revenues
Enacting H.R. 2122 also would affect revenues by changing
the way the Internal Revenue Service could issue its
nonregulatory guidance and by slowing down rulemaking
generally. JCT expects those delays would reduce revenue
collections in some cases and increase them in others. However,
JCT cannot determine the level of costs or savings of those
possible effects.
PAY-AS-YOU-GO CONSIDERATIONS
The Statutory Pay-As-You-Go Act of 2010 establishes budget-
reporting and enforcement procedures for legislation affecting
direct spending or revenues. Pay-as-you-go procedures apply to
H.R. 2122 because enacting the legislation would affect direct
spending and revenues. CBO and JCT cannot determine the level
of costs or savings associated with those effects.
INTERGOVERNMENTAL AND PRIVATE-SECTOR IMPACT
CBO expects that H.R. 2122 would impose no
intergovernmental or private-sector mandates as defined in
UMRA. By potentially delaying Federal rules, the bill could
affect public or private entities in a number of other ways,
for example, by slowing reimbursements or delaying the
implementation of regulatory requirements. While the costs and
savings associated with such effects could be significant,
because we cannot predict the nature or number of regulations
that could be delayed, CBO has no basis for estimating the
level of costs or savings that would result.
ESTIMATE PREPARED BY:
Federal Spending: Susanne S. Mehlman
Impact on State, Local, and Tribal Governments: Elizabeth Cove
Delisle
Impact on the Private Sector: Paige Piper/Bach
ESTIMATE APPROVED BY:
Theresa Gullo
Deputy Assistant Director for Budget Analysis
Holly Harvey
Deputy Assistant Director for Budget Analysis
Duplication of Federal Programs
No provision of H.R. 2122 establishes or reauthorizes a
program of the Federal Government known to be duplicative of
another Federal program, a program that was included in any
report from the Government Accountability Office to Congress
pursuant to section 21 of Public Law 111-139, or a program
related to a program identified in the most recent Catalog of
Federal Domestic Assistance.
Disclosure of Directed Rule Makings
The Committee estimates that H.R. 2122 specifically directs
each Federal regulatory agency to complete one specific rule
making within the meaning of 5 U.S.C. 551 to prescribe
procedures for the conduct of agency hearings.
Performance Goals and Objectives
The Committee states that pursuant to clause 3(c)(4) of
rule XIII of the Rules of the House of Representatives,
H.R.2122 is designed to promote job creation, economic growth,
and the accountability of Federal regulatory agencies by
reforming the Administrative Procedure Act to require agencies
to lower the costs of regulation while meeting statutory
objectives, to improve agencies' decision-making processes and
enhance regulatory transparency and accountability to the
public, and to strengthen judicial review of agency action.
Advisory on Earmarks
In accordance with clause 9 of rule XXI of the Rules of the
House of Representatives, H.R. 2122 does not contain any
congressional earmarks, limited tax benefits, or limited tariff
benefits as defined in clause 9(e), 9(f), or 9(g) of Rule XXI.
Section-by-Section Analysis
Sec. 1. Short title.
Designates the Bill the ``Regulatory Accountability Act of
2013.''
Sec. 2. Definitions.
Adds to the APA definitions of the following terms: ``major
rule,'' based on the definition given to that term in Section
1(b) of Executive Order 12291; ``high-impact rule'' as any rule
likely to impose an annual cost of $1 billion on the economy;
``guidance,'' based on the definition given to that term in
Section 3(g) of Executive Order 13422; ``major guidance,''
based on the definition given to the term ``significant
guidance document'' in Section 3(h) of Executive Order 13422;
``Information Quality Act,'' as Section 515 of Public Law 106-
554 and its implementing OMB and agency guidelines; and, the
``Office of Information and Regulatory Affairs.''
Sec. 3. Rulemaking (references are to amended section 553 of title 5).
LSubsec. 553(b): Rulemaking Principles.
Incorporates into the APA universally applicable
rulemaking principles rooted in the good-government
principles of Executive Orders 12291, 12866, 13422 and
13563, making them statutorily mandatory and judicially
enforceable. The agency must consider
LSubsec. 553(b)(1)-(2): The legal authority
for the rule and other relevant statutory
considerations.
LSubsec. 553(b)(3): The specific nature of
the problem, whether it genuinely warrants new
regulations, and countervailing risks that may be posed
by alternatives for new agency action.
LSubsec. 3(b)(4): Whether the problem could
be addressed by repealing or modifying existing
regulations.
LSubsec. 553(b)(5): Potential alternatives
to adopting a new regulation, including no Federal
response and a regional/State/local/tribal response.
LSubsec. 553(b)(6): Notwithstanding any
other law, the potential costs and benefits--direct,
indirect and cumulative--associated with each
alternative, as well as estimated impacts on jobs,
economic growth, innovation and economic
competitiveness.
LSubsec. 553(c): Early Public Outreach.
Consistent with President Obama's call in E.O. 13563
for earlier, more transparent outreach to the public
and affected entities, the Bill requires Advance
Notices of Proposed Rulemaking (ANPRs) 90 days before
an agency may propose any major or high-impact rule.
ANPRs must disclose information already known to the
agency, the legal basis for a potential rulemaking, and
allow the public 60 days to submit written views about
the information and issues discussed in the advance
notice.
LSubsec. 553(d)(1): Improved Notices of
Proposed Rulemaking. Improved Notice of Proposed
Rulemaking requirements that assure major and high-
impact proposed rules are built upon the sound,
transparent decision-making platform made possible by
the ANPR process and that other proposed rules also
rest on a more robust and transparent decision-making
platform. These requirements will crystallize for final
public comment the agency's preliminary determinations
of whether a Federal regulation is needed; whether the
benefits of the proposed rule meet statutory objectives
and justify its costs; whether alternatives exist that
could achieve statutory objectives at lower costs;
whether and why the agency has not proposed a lower-
cost alternative; whether existing regulations or other
law have produced or contributed to the problem the
agency seeks to correct with new regulation; and, if
so, whether modification or repeal of those other
regulations or laws could resolve the problem more
effectively than a new rule.
LSubsec. 553(d)(2): Determination of Other
Agency Course. After concluding the ANPR process, if
applicable, an agency may alternatively publish a
Determination of Other Agency Course, describing the
alternative response the agency chose rather than issue
a new rule.
LSubsec. 553(d)(3): Public Participation in
Rulemaking. Requires the agency to give interested
parties at least 90 days to submit written data, views
or arguments related to the proposed rule and 120 days
to do so for any proposed major or high-impact rule.
LSubsec. 553(d)(4): Efficient Early
Resolution of Information Quality Act Issues. Early
opportunities for quick administrative appeals of
whether the key studies or other information on which
agencies base their proposed rules meet vital
information quality standards set under the Information
Quality Act.
LSubsecs. 553(e), (h): Formal Rulemaking
Hearings on the Most Critical Issues for High-Impact
Rules. Formal hearings with opportunities for cross-
examination on the most critical factual issues for
proposed rules that impose a $1 billion burden on the
economy. These issues concern the key information on
``whether the agency's asserted factual predicate for
the rule is supported by the evidence''; whether there
is a lower-cost alternative for regulation that
achieves statutory objectives, and why the agency did
not choose it; and whether the final information on
which the agency relies satisfies standards under the
Information Quality Act. The agency must publish public
notice of the hearing not less than 45 days in advance.
Upon petition, hearings or issues may be waived by
participants in the rulemaking other than the agency.
Issues also may be added to hearings on high-impact
rules, and hearings may be granted on major rules, upon
petition and at the agency's discretion.
LSubsec. 553(f): Improved Requirements for
Final Rules. In adopting a final rule, the agency must:
LSubsec. 553(f)(1): Consult with the OIRA
Administrator.
LSubsec. 553(f)(2): Rely only on the best
reasonably obtainable scientific, technical and
economic information.
LSubsec. 553(f)(3): Adopt only the least-
cost alternative considered during rulemaking that
meets statutory objectives, unless the agency explains
why a more costly rule is justified to serve interests
of public health, safety or welfare clearly within the
scope of the statutory provision that authorizes the
rule and the more costly rule's additional benefits
justify its additional costs.
LSubsec. 553(f)(4): Publish a notice of
final rulemaking giving: ``a concise, general statement
of the rule's basis and purpose,'' an explanation of
the need for the rule, the costs and benefits, and why
the agency did not adopt an alternative rule or amend
or rescind an existing rule. The agency must rest on
specific, final determinations on the critical issues
considered during formal rulemaking hearings, based on
data that meets the strictures of the Information
Quality Act.
LSubsec. 553(f)(5)(G): Publish plans for
periodic review of high-impact and major rules to
determine whether the agency's final rule still is
needed, achieves statutory objectives, and produces
benefits that justify its costs or whether the rule
could be modified or rescinded.
LSubsec. 553(g): Better Protections against
Abuse of Interim-Final Rules. Allows agencies in cases
of public urgency to issue ``interim-final rules'' that
are effective before full rulemaking procedures are
completed, but also requires prompt subsequent
completion of full rulemaking procedures and allows
affected entities to seek rapid judicial review of
agency decisions to adopt interim-final rules (except
for national security rules).
LSubsec. 553(i): Requires publication of a
substantive final or interim rule no less than 30 days
before its effective date.
LSubsec. 553(j): ``Each agency shall give an
interested person the right to petition for the
issuance, amendment, or repeal of a rule.''
LSubsec. 553(k): Guidance for Agencies on
Cost-Benefit Analysis and other Key Issues. Authorizes
OIRA to issue guidelines for agencies to follow as they
assess economic and scientific issues in rulemaking;
observe statute-specific rulemaking regimes in
conjunction with the generally applicable procedures of
the APA as amended; work to assure better coordination,
simplification and coordination by agencies in
rulemaking; and conduct hearings under sections 553,
556 and 557 of title 5.
LSubsec. 553(l): Requires the agency to
include in the rule making record ``all documents and
information considered by the agency during the
proceeding'' including, at the discretion of the
President or the OIRA Administrator, communications
from OIRA to the agency.
LSubsec. 553(m): Exempts the Board of
Governors of the Federal Reserve System and the Federal
Open Market Committee from performing cost-benefit
analysis or holding formal hearings for monetary policy
rules.
Sec. 4. Agency Guidance.
Curbs agency abuse of purportedly non-binding
``guidance''--particularly guidance with major or significant
economic impacts--to avoid statutory rulemaking requirements.
Sec. 5. Hearings.
Adopts technical changes to existing APA requirements for
formal, on-the-record rulemaking hearings that support hearing-
based reforms in Section 3 of the Bill.
Sec. 6. Actions Reviewable.
Provides for immediate judicial review of agency decisions
to establish ``interim-final rules'' before complying with
normal rulemaking requirements. An abuse of discretion standard
applies in such review.
Sec. 7. Scope of Review.
Clarifies that courts may review agency action for
violations of the Information Quality Act. Prohibits judicial
deference to agency interpretations of regulations rendered
outside of rulemaking; agency determinations of cost-benefit
issues, other economic assessments or risk assessments that do
not comply with applicable OIRA guidelines; and agency
determinations of law and fact to support interim-final rules.
Allows agency denials of petitions for hearings or
consideration of specific issues in hearings to be reviewed for
abuse of discretion.
Sec. 8. Added Definition.
Codifies the definition of the term ``substantial
evidence'' given by the Supreme Court in Universal Camera Corp.
v. NLRB, 340 U.S. 474 (1951).
Sec. 9. Effective Date.
Provides that the Bill's provisions generally do not apply
to any rulemaking pending or completed on the date of
enactment. Exceptions are made for the Bill's amendments to
establish definitions in section 551 of title 5; prohibit
judicial deference to agency interpretations of regulations
outside of rulemaking; and guarantee judicial review of
Information Quality Act violations.
Changes in Existing Law Made by the Bill, as Reported
In compliance with clause 3(e) of rule XIII of the Rules of
the House of Representatives, changes in existing law made by
the bill, as reported, are shown as follows (existing law
proposed to be omitted is enclosed in black brackets, new
matter is printed in italics, existing law in which no change
is proposed is shown in roman):
TITLE 5, UNITED STATES CODE
* * * * * * *
PART I--THE AGENCIES GENERALLY
* * * * * * *
CHAPTER 5--ADMINISTRATIVE PROCEDURE
SUBCHAPTER I--GENERAL PROVISIONS
Sec.
500. Administrative practice; general provisions.
* * * * * * *
SUBCHAPTER II--ADMINISTRATIVE PROCEDURE
* * * * * * *
553a. Agency guidance; procedures to issue major guidance; authority to
issue guidelines for issuance of guidance.
* * * * * * *
SUBCHAPTER II--ADMINISTRATIVE PROCEDURE
Sec. 551. Definitions
For the purpose of this subchapter--
(1) * * *
* * * * * * *
(13) ``agency action'' includes the whole or a part
of an agency rule, order, license, sanction, relief, or
the equivalent or denial thereof, or failure to act;
[and]
(14) ``ex parte communication'' means an oral or
written communication not on the public record with
respect to which reasonable prior notice to all parties
is not given, but it shall not include requests for
status reports on any matter or proceeding covered by
this subchapter[.];
(15) ``major rule'' means any rule that the
Administrator of the Office of Information and
Regulatory Affairs determines is likely to impose--
(A) an annual cost on the economy of
$100,000,000 or more, adjusted annually for
inflation;
(B) a major increase in costs or prices for
consumers, individual industries, Federal,
State, local, or tribal government agencies, or
geographic regions;
(C) significant adverse effects on
competition, employment, investment,
productivity, innovation, or on the ability of
United States-based enterprises to compete with
foreign-based enterprises in domestic and
export markets; or
(D) significant impacts on multiple sectors
of the economy;
(16) ``high-impact rule'' means any rule that the
Administrator of the Office of Information and
Regulatory Affairs determines is likely to impose an
annual cost on the economy of $1,000,000,000 or more,
adjusted annually for inflation;
(17) ``guidance'' means an agency statement of
general applicability and future effect, other than a
regulatory action, that sets forth a policy on a
statutory, regulatory or technical issue or an
interpretation of a statutory or regulatory issue;
(18) ``major guidance'' means guidance that the
Administrator of the Office of Information and
Regulatory Affairs finds is likely to lead to--
(A) an annual cost on the economy of
$100,000,000 or more, adjusted annually for
inflation;
(B) a major increase in costs or prices for
consumers, individual industries, Federal,
State, local or tribal government agencies, or
geographic regions;
(C) significant adverse effects on
competition, employment, investment,
productivity, innovation, or on the ability of
United States-based enterprises to compete with
foreign-based enterprises in domestic and
export markets; or
(D) significant impacts on multiple sectors
of the economy;
(19) the ``Information Quality Act'' means section
515 of Public Law 106-554, the Treasury and General
Government Appropriations Act for Fiscal Year 2001, and
guidelines issued by the Administrator of the Office of
Information and Regulatory Affairs or other agencies
pursuant to the Act; and
(20) the ``Office of Information and Regulatory
Affairs'' means the office established under section
3503 of chapter 35 of title 44 and any successor to
that office.
* * * * * * *
Sec. 553. Rule making
[(a) This section applies] (a) Applicability._This section
applies, according to the provisions thereof, except to the
extent that there is involved--
(1) * * *
* * * * * * *
[(b) General notice of proposed rule making shall be
published in the Federal Register, unless persons subject
thereto are named and either personally served or otherwise
have actual notice thereof in accordance with law. The notice
shall include--
[(1) a statement of the time, place, and nature of
public rule making proceedings;
[(2) reference to the legal authority under which
the rule is proposed; and
[(3) either the terms or substance of the proposed
rule or a description of the subjects and issues
involved.
Except when notice or hearing is required by statute, this
subsection does not apply--
[(A) to interpretative rules, general statements of
policy, or rules of agency organization, procedure, or
practice; or
[(B) when the agency for good cause finds (and
incorporates the finding and a brief statement of
reasons therefor in the rules issued) that notice and
public procedure thereon are impracticable,
unnecessary, or contrary to the public interest.
[(c) After notice required by this section, the agency
shall give interested persons an opportunity to participate in
the rule making through submission of written data, views, or
arguments with or without opportunity for oral presentation.
After consideration of the relevant matter presented, the
agency shall incorporate in the rules adopted a concise general
statement of their basis and purpose. When rules are required
by statute to be made on the record after opportunity for an
agency hearing, sections 556 and 557 of this title apply
instead of this subsection.
[(d) The required publication or service of a substantive
rule shall be made not less than 30 days before its effective
date, except--
[(1) a substantive rule which grants or recognizes
an exemption or relieves a restriction;
[(2) interpretative rules and statements of policy;
or
[(3) as otherwise provided by the agency for good
cause found and published with the rule.
[(e) Each agency shall give an interested person the right
to petition for the issuance, amendment, or repeal of a rule.]
(b) Rule Making Considerations.--In a rule making, an
agency shall make all preliminary and final factual
determinations based on evidence and consider, in addition to
other applicable considerations, the following:
(1) The legal authority under which a rule may be
proposed, including whether a rule making is required
by statute, and if so, whether by a specific date, or
whether the agency has discretion to commence a rule
making.
(2) Other statutory considerations applicable to
whether the agency can or should propose a rule or
undertake other agency action.
(3) The specific nature and significance of the
problem the agency may address with a rule (including
the degree and nature of risks the problem poses and
the priority of addressing those risks compared to
other matters or activities within the agency's
jurisdiction), whether the problem warrants new agency
action, and the countervailing risks that may be posed
by alternatives for new agency action.
(4) Whether existing rules have created or
contributed to the problem the agency may address with
a rule and whether those rules could be amended or
rescinded to address the problem in whole or part.
(5) Any reasonable alternatives for a new rule or
other response identified by the agency or interested
persons, including not only responses that mandate
particular conduct or manners of compliance, but also--
(A) the alternative of no Federal response;
(B) amending or rescinding existing rules;
(C) potential regional, State, local, or
tribal regulatory action or other responses
that could be taken in lieu of agency action;
and
(D) potential responses that--
(i) specify performance objectives
rather than conduct or manners of
compliance;
(ii) establish economic incentives
to encourage desired behavior;
(iii) provide information upon
which choices can be made by the
public; or
(iv) incorporate other innovative
alternatives rather than agency actions
that specify conduct or manners of
compliance.
(6) Notwithstanding any other provision of law--
(A) the potential costs and benefits
associated with potential alternative rules and
other responses considered under section
553(b)(5), including direct, indirect, and
cumulative costs and benefits and estimated
impacts on jobs (including an estimate of the
net gain or loss in domestic jobs), economic
growth, innovation, and economic
competitiveness;
(B) means to increase the cost-
effectiveness of any Federal response; and
(C) incentives for innovation, consistency,
predictability, lower costs of enforcement and
compliance (to government entities, regulated
entities, and the public), and flexibility.
(c) Advance Notice of Proposed Rule Making for Major Rules,
High-Impact Rules, and Rules Involving Novel Legal or Policy
Issues.--In the case of a rule making for a major rule or high-
impact rule or a rule that involves a novel legal or policy
issue arising out of statutory mandates, not later than 90 days
before a notice of proposed rule making is published in the
Federal Register, an agency shall publish advance notice of
proposed rule making in the Federal Register. In publishing
such advance notice, the agency shall--
(1) include a written statement identifying, at a
minimum--
(A) the nature and significance of the
problem the agency may address with a rule,
including data and other evidence and
information on which the agency expects to rely
for the proposed rule;
(B) the legal authority under which a rule
may be proposed, including whether a rule
making is required by statute, and if so,
whether by a specific date, or whether the
agency has discretion to commence a rule
making;
(C) preliminary information available to
the agency concerning the other considerations
specified in subsection (b); and
(D) in the case of a rule that involves a
novel legal or policy issue arising out of
statutory mandates, the nature of and potential
reasons to adopt the novel legal or policy
position upon which the agency may base a
proposed rule;
(2) solicit written data, views or argument from
interested persons concerning the information and
issues addressed in the advance notice; and
(3) provide for a period of not fewer than 60 days
for interested persons to submit such written data,
views, or argument to the agency.
(d) Notices of Proposed Rule Making; Determinations of
Other Agency Course.--(1) Before it determines to propose a
rule, and following completion of procedures under subsection
(c), if applicable, the agency shall consult with the
Administrator of the Office of Information and Regulatory
Affairs. If the agency thereafter determines to propose a rule,
the agency shall publish a notice of proposed rule making,
which shall include--
(A) a statement of the time, place, and nature of
public rule making proceedings;
(B) reference to the legal authority under which
the rule is proposed;
(C) the terms of the proposed rule;
(D) a description of information known to the
agency on the subject and issues of the proposed rule,
including but not limited to--
(i) a summary of information known to the
agency concerning the considerations specified
in subsection (b);
(ii) a summary of additional information
the agency provided to and obtained from
interested persons under subsection (c);
(iii) a summary of any preliminary risk
assessment or regulatory impact analysis
performed by the agency; and
(iv) information specifically identifying
all data, studies, models, and other evidence
or information considered or used by the agency
in connection with its determination to propose
the rule;
(E)(i) a reasoned preliminary determination of need
for the rule based on the information described under
subparagraph (D); and
(ii) an additional statement of whether a rule is
required by statute;
(F) a reasoned preliminary determination that the
benefits of the proposed rule meet the relevant
statutory objectives and justify the costs of the
proposed rule (including all costs to be considered
under subsection (b)(6)), based on the information
described under subparagraph (D);
(G) a discussion of--
(i) the alternatives to the proposed rule,
and other alternative responses, considered by
the agency under subsection (b);
(ii) the costs and benefits of those
alternatives (including all costs to be
considered under subsection (b)(6));
(iii) whether those alternatives meet
relevant statutory objectives; and
(iv) why the agency did not propose any of
those alternatives; and
(H)(i) a statement of whether existing rules have
created or contributed to the problem the agency seeks
to address with the proposed rule; and
(ii) if so, whether or not the agency proposes to
amend or rescind any such rules, and why.
All information provided to or considered by the agency, and
steps to obtain information by the agency, in connection with
its determination to propose the rule, including any
preliminary risk assessment or regulatory impact analysis
prepared by the agency and all other information prepared or
described by the agency under subparagraph (D) and, at the
discretion of the President or the Administrator of the Office
of Information and Regulatory Affairs, information provided by
that Office in consultations with the agency, shall be placed
in the docket for the proposed rule and made accessible to the
public by electronic means and otherwise for the public's use
when the notice of proposed rule making is published.
(2)(A) If the agency undertakes procedures under subsection
(c) and determines thereafter not to propose a rule, the agency
shall, following consultation with the Office of Information
and Regulatory Affairs, publish a notice of determination of
other agency course. A notice of determination of other agency
course shall include information required by paragraph (1)(D)
to be included in a notice of proposed rule making and a
description of the alternative response the agency determined
to adopt.
(B) If in its determination of other agency course the
agency makes a determination to amend or rescind an existing
rule, the agency need not undertake additional proceedings
under subsection (c) before it publishes a notice of proposed
rule making to amend or rescind the existing rule.
All information provided to or considered by the agency, and
steps to obtain information by the agency, in connection with
its determination of other agency course, including but not
limited to any preliminary risk assessment or regulatory impact
analysis prepared by the agency and all other information that
would be required to be prepared or described by the agency
under paragraph (1)(D) if the agency had determined to publish
a notice of proposed rule making and, at the discretion of the
President or the Administrator of the Office of Information and
Regulatory Affairs, information provided by that Office in
consultations with the agency, shall be placed in the docket
for the determination and made accessible to the public by
electronic means and otherwise for the public's use when the
notice of determination is published.
(3) After notice of proposed rule making required by this
section, the agency shall provide interested persons an
opportunity to participate in the rule making through
submission of written data, views, or arguments with or without
opportunity for oral presentation, except that--
(A) if a hearing is required under paragraph (4)(B)
or subsection (e), opportunity for oral presentation
shall be provided pursuant to that requirement; or
(B) when other than under subsection (e) of this
section rules are required by statute or at the
discretion of the agency to be made on the record after
opportunity for an agency hearing, sections 556 and 557
shall apply, and paragraph (4), the requirements of
subsection (e) to receive comment outside of the
procedures of sections 556 and 557, and the petition
procedures of subsection (e)(6) shall not apply.
The agency shall provide not fewer than 60 days for interested
persons to submit written data, views, or argument (or 120 days
in the case of a proposed major or high-impact rule).
(4)(A) Within 30 days of publication of notice of proposed
rule making, a member of the public may petition for a hearing
in accordance with section 556 to determine whether any
evidence or other information upon which the agency bases the
proposed rule fails to comply with the Information Quality Act.
(B)(i) The agency may, upon review of the petition,
determine without further process to exclude from the rule
making the evidence or other information that is the subject of
the petition and, if appropriate, withdraw the proposed rule.
The agency shall promptly publish any such determination.
(ii) If the agency does not resolve the petition under the
procedures of clause (i), it shall grant any such petition that
presents a prima facie case that evidence or other information
upon which the agency bases the proposed rule fails to comply
with the Information Quality Act, hold the requested hearing
not later than 30 days after receipt of the petition, provide a
reasonable opportunity for cross-examination at the hearing,
and decide the issues presented by the petition not later than
60 days after receipt of the petition. The agency may deny any
petition that it determines does not present such a prima facie
case.
(C) There shall be no judicial review of the agency's
disposition of issues considered and decided or determined
under subparagraph (B)(ii) until judicial review of the
agency's final action. There shall be no judicial review of an
agency's determination to withdraw a proposed rule under
subparagraph (B)(i) on the basis of the petition.
(D) Failure to petition for a hearing under this paragraph
shall not preclude judicial review of any claim based on the
Information Quality Act under chapter 7 of this title.
(e) Hearings for High-Impact Rules.--Following notice of a
proposed rule making, receipt of comments on the proposed rule,
and any hearing held under subsection (d)(4), and before
adoption of any high-impact rule, the agency shall hold a
hearing in accordance with sections 556 and 557, unless such
hearing is waived by all participants in the rule making other
than the agency. The agency shall provide a reasonable
opportunity for cross-examination at such hearing. The hearing
shall be limited to the following issues of fact, except that
participants at the hearing other than the agency may waive
determination of any such issue:
(1) Whether the agency's asserted factual predicate
for the rule is supported by the evidence.
(2) Whether there is an alternative to the proposed
rule that would achieve the relevant statutory
objectives at a lower cost (including all costs to be
considered under subsection (b)(6)) than the proposed
rule.
(3) If there is more than one alternative to the
proposed rule that would achieve the relevant statutory
objectives at a lower cost than the proposed rule,
which alternative would achieve the relevant statutory
objectives at the lowest cost.
(4) Whether, if the agency proposes to adopt a rule
that is more costly than the least costly alternative
that would achieve the relevant statutory objectives
(including all costs to be considered under subsection
(b)(6)), the additional benefits of the more costly
rule exceed the additional costs of the more costly
rule.
(5) Whether the evidence and other information upon
which the agency bases the proposed rule meets the
requirements of the Information Quality Act.
(6) Upon petition by an interested person who has
participated in the rule making, other issues relevant
to the rule making, unless the agency determines that
consideration of the issues at the hearing would not
advance consideration of the rule or would, in light of
the nature of the need for agency action, unreasonably
delay completion of the rule making. An agency shall
grant or deny a petition under this paragraph within 30
days of its receipt of the petition.
No later than 45 days before any hearing held under this
subsection or sections 556 and 557, the agency shall publish in
the Federal Register a notice specifying the proposed rule to
be considered at such hearing, the issues to be considered at
the hearing, and the time and place for such hearing, except
that such notice may be issued not later than 15 days before a
hearing held under subsection (d)(4)(B).
(f) Final Rules.--(1) The agency shall adopt a rule only
following consultation with the Administrator of the Office of
Information and Regulatory Affairs to facilitate compliance
with applicable rule making requirements.
(2) The agency shall adopt a rule only on the basis of the
best reasonably obtainable scientific, technical, economic, and
other evidence and information concerning the need for,
consequences of, and alternatives to the rule.
(3)(A) Except as provided in subparagraph (B), the agency
shall adopt the least costly rule considered during the rule
making (including all costs to be considered under subsection
(b)(6)) that meets relevant statutory objectives.
(B) The agency may adopt a rule that is more costly than
the least costly alternative that would achieve the relevant
statutory objectives only if the additional benefits of the
more costly rule justify its additional costs and only if the
agency explains its reason for doing so based on interests of
public health, safety or welfare that are clearly within the
scope of the statutory provision authorizing the rule.
(4) When it adopts a final rule, the agency shall publish a
notice of final rule making. The notice shall include--
(A) a concise, general statement of the rule's
basis and purpose;
(B) the agency's reasoned final determination of
need for a rule to address the problem the agency seeks
to address with the rule, including a statement of
whether a rule is required by statute and a summary of
any final risk assessment or regulatory impact analysis
prepared by the agency;
(C) the agency's reasoned final determination that
the benefits of the rule meet the relevant statutory
objectives and justify the rule's costs (including all
costs to be considered under subsection (b)(6));
(D) the agency's reasoned final determination not
to adopt any of the alternatives to the proposed rule
considered by the agency during the rule making,
including--
(i) the agency's reasoned final
determination that no alternative considered
achieved the relevant statutory objectives with
lower costs (including all costs to be
considered under subsection (b)(6)) than the
rule; or
(ii) the agency's reasoned determination
that its adoption of a more costly rule
complies with subsection (f)(3)(B);
(E) the agency's reasoned final determination--
(i) that existing rules have not created or
contributed to the problem the agency seeks to
address with the rule; or
(ii) that existing rules have created or
contributed to the problem the agency seeks to
address with the rule, and, if so--
(I) why amendment or rescission of
such existing rules is not alone
sufficient to respond to the problem;
and
(II) whether and how the agency
intends to amend or rescind the
existing rule separate from adoption of
the rule;
(F) the agency's reasoned final determination that
the evidence and other information upon which the
agency bases the rule complies with the Information
Quality Act; and
(G)(i) for any major rule or high-impact rule, the
agency's plan for review of the rule no less than every
ten years to determine whether, based upon evidence,
there remains a need for the rule, whether the rule is
in fact achieving statutory objectives, whether the
rule's benefits continue to justify its costs, and
whether the rule can be modified or rescinded to reduce
costs while continuing to achieve statutory objectives;
and
(ii) review of a rule under a plan required by
clause (i) of this subparagraph shall take into account
the factors and criteria set forth in subsections (b)
through (f) of section 553 of this title.
All information considered by the agency in connection with its
adoption of the rule, and, at the discretion of the President
or the Administrator of the Office of Information and
Regulatory Affairs, information provided by that Office in
consultations with the agency, shall be placed in the docket
for the rule and made accessible to the public for the public's
use no later than when the rule is adopted.
(g) Exceptions From Notice and Hearing Requirements.--(1)
Except when notice or hearing is required by statute, the
following do not apply to interpretive rules, general
statements of policy, or rules of agency organization,
procedure, or practice:
(A) Subsections (c) through (e).
(B) Paragraphs (1) through (3) of subsection (f).
(C) Subparagraphs (B) through (H) of subsection
(f)(4).
(2)(A) When the agency for good cause, based upon evidence,
finds (and incorporates the finding and a brief statement of
reasons therefor in the rules issued) that compliance with
subsection (c), (d), or (e) or requirements to render final
determinations under subsection (f) of this section before the
issuance of an interim rule is impracticable or contrary to the
public interest, including interests of national security, such
subsections or requirements to render final determinations
shall not apply to the agency's adoption of an interim rule.
(B) If, following compliance with subparagraph (A) of this
paragraph, the agency adopts an interim rule, it shall commence
proceedings that comply fully with subsections (d) through (f)
of this section immediately upon publication of the interim
rule, shall treat the publication of the interim rule as
publication of a notice of proposed rule making and shall not
be required to issue supplemental notice other than to complete
full compliance with subsection (d). No less than 270 days from
publication of the interim rule (or 18 months in the case of a
major rule or high-impact rule), the agency shall complete rule
making under subsections (d) through (f) of this subsection and
take final action to adopt a final rule or rescind the interim
rule. If the agency fails to take timely final action, the
interim rule will cease to have the effect of law.
(C) Other than in cases involving interests of national
security, upon the agency's publication of an interim rule
without compliance with subsections (c), (d), or (e) or
requirements to render final determinations under subsection
(f) of this section, an interested party may seek immediate
judicial review under chapter 7 of this title of the agency's
determination to adopt such interim rule. The record on such
review shall include all documents and information considered
by the agency and any additional information presented by a
party that the court determines necessary to consider to assure
justice.
(3) When the agency for good cause finds (and incorporates
the finding and a brief statement of reasons therefor in the
rules issued) that notice and public procedure thereon are
unnecessary, including because agency rule making is undertaken
only to correct a de minimis technical or clerical error in a
previously issued rule or for other noncontroversial purposes,
the agency may publish a rule without compliance with
subsections (c), (d), (e), or (f)(1)-(3) and (f)(4)(B)-(F). If
the agency receives significant adverse comment within 60 days
after publication of the rule, it shall treat the notice of the
rule as a notice of proposed rule making and complete rule
making in compliance with subsections (d) and (f).
(h) Additional Requirements for Hearings.--When a hearing
is required under subsection (e) or is otherwise required by
statute or at the agency's discretion before adoption of a
rule, the agency shall comply with the requirements of sections
556 and 557 in addition to the requirements of subsection (f)
in adopting the rule and in providing notice of the rule's
adoption.
(i) Date of Publication of Rule.--The required publication
or service of a substantive final or interim rule shall be made
not less than 30 days before the effective date of the rule,
except--
(1) a substantive rule which grants or recognizes
an exemption or relieves a restriction;
(2) interpretive rules and statements of policy; or
(3) as otherwise provided by the agency for good
cause found and published with the rule.
(j) Right To Petition.--Each agency shall give an
interested person the right to petition for the issuance,
amendment, or repeal of a rule.
(k) Rule Making Guidelines.--(1)(A) The Administrator of
the Office of Information and Regulatory Affairs shall
establish guidelines for the assessment, including quantitative
and qualitative assessment, of the costs and benefits of
proposed and final rules and other economic issues or issues
related to risk that are relevant to rule making under this
title. The rigor of cost-benefit analysis required by such
guidelines shall be commensurate, in the Administrator's
determination, with the economic impact of the rule.
(B) To ensure that agencies use the best available
techniques to quantify and evaluate anticipated present and
future benefits, costs, other economic issues, and risks as
accurately as possible, the Administrator of the Office of
Information and Regulatory Affairs shall regularly update
guidelines established under paragraph (1)(A) of this
subsection.
(2) The Administrator of the Office of Information and
Regulatory Affairs shall also issue guidelines to promote
coordination, simplification and harmonization of agency rules
during the rule making process and otherwise. Such guidelines
shall assure that each agency avoids regulations that are
inconsistent or incompatible with, or duplicative of, its other
regulations and those of other Federal agencies and drafts its
regulations to be simple and easy to understand, with the goal
of minimizing the potential for uncertainty and litigation
arising from such uncertainty.
(3) To ensure consistency in Federal rule making, the
Administrator of the Office of Information and Regulatory
Affairs shall--
(A) issue guidelines and otherwise take action to
ensure that rule makings conducted in whole or in part
under procedures specified in provisions of law other
than those of subchapter II of this title conform to
the fullest extent allowed by law with the procedures
set forth in section 553 of this title; and
(B) issue guidelines for the conduct of hearings
under subsections 553(d)(4) and 553(e) of this section,
including to assure a reasonable opportunity for cross-
examination. Each agency shall adopt regulations for
the conduct of hearings consistent with the guidelines
issued under this subparagraph.
(4) The Administrator of the Office of Information and
Regulatory Affairs shall issue guidelines pursuant to the
Information Quality Act to apply in rule making proceedings
under sections 553, 556, and 557 of this title. In all cases,
such guidelines, and the Administrator's specific
determinations regarding agency compliance with such
guidelines, shall be entitled to judicial deference.
(l) Inclusion in the Record of Certain Documents and
Information.--The agency shall include in the record for a rule
making, and shall make available by electronic means and
otherwise, all documents and information prepared or considered
by the agency during the proceeding, including, at the
discretion of the President or the Administrator of the Office
of Information and Regulatory Affairs, documents and
information communicated by that Office during consultation
with the Agency.
(m) Monetary Policy Exemption.--Nothing in subsection
(b)(6), subparagraphs (F) and (G) of subsection (d)(1),
subsection (e), subsection (f)(3), and subparagraphs (C) and
(D) of subsection (f)(5) shall apply to rule makings that
concern monetary policy proposed or implemented by the Board of
Governors of the Federal Reserve System or the Federal Open
Market Committee.
Sec. 553a. Agency guidance; procedures to issue major guidance;
authority to issue guidelines for issuance of
guidance
(a) Before issuing any major guidance, or guidance that
involves a novel legal or policy issue arising out of statutory
mandates, an agency shall--
(1) make and document a reasoned determination
that--
(A) assures that such guidance is
understandable and complies with relevant
statutory objectives and regulatory provisions
(including any statutory deadlines for agency
action);
(B) summarizes the evidence and data on
which the agency will base the guidance;
(C) identifies the costs and benefits
(including all costs to be considered during a
rule making under section 553(b) of this title)
of conduct conforming to such guidance and
assures that such benefits justify such costs;
and
(D) describes alternatives to such guidance
and their costs and benefits (including all
costs to be considered during a rule making
under section 553(b) of this title) and
explains why the agency rejected those
alternatives; and
(2) confer with the Administrator of the Office of
Information and Regulatory Affairs on the issuance of
such guidance to assure that the guidance is
reasonable, understandable, consistent with relevant
statutory and regulatory provisions and requirements or
practices of other agencies, does not produce costs
that are unjustified by the guidance's benefits, and is
otherwise appropriate.
Upon issuing major guidance, or guidance that involves a novel
legal or policy issue arising out of statutory mandates, the
agency shall publish the documentation required by subparagraph
(1) by electronic means and otherwise.
(b) Agency guidance--
(1) is not legally binding and may not be relied
upon by an agency as legal grounds for agency action;
(2) shall state in a plain, prominent and permanent
manner that it is not legally binding; and
(3) shall, at the time it is issued or upon
request, be made available by the issuing agency to
interested persons and the public by electronic means
and otherwise.
Agencies shall avoid the issuance of guidance that is
inconsistent or incompatible with, or duplicative of, the
agency's governing statutes or regulations, with the goal of
minimizing the potential for uncertainty and litigation arising
from such uncertainty.
(c) The Administrator of the Office of Information and
Regulatory Affairs shall have authority to issue guidelines for
use by the agencies in the issuance of major guidance and other
guidance. Such guidelines shall assure that each agency avoids
issuing guidance documents that are inconsistent or
incompatible with, or duplicative of, the law, its other
regulations, or the regulations of other Federal agencies and
drafts its guidance documents to be simple and easy to
understand, with the goal of minimizing the potential for
uncertainty and litigation arising from such uncertainty.
* * * * * * *
Sec. 556. Hearings; presiding employees; powers and duties; burden of
proof; evidence; record as basis of decision
(a) * * *
* * * * * * *
[(e) The transcript of testimony and exhibits, together
with all papers and requests filed in the proceeding,
constitutes the exclusive record for decision in accordance
with section 557 of this title and, on payment of lawfully
prescribed costs, shall be made available to the parties. When
an agency decision rests on official notice of a material fact
not appearing in the evidence in the record, a party is
entitled, on timely request, to an opportunity to show the
contrary.]
(e)(1) The transcript of testimony and exhibits, together
with all papers and requests filed in the proceeding,
constitutes the exclusive record for decision in accordance
with section 557 and shall be made available to the parties and
the public by electronic means and, upon payment of lawfully
prescribed costs, otherwise. When an agency decision rests on
official notice of a material fact not appearing in the
evidence in the record, a party is entitled, on timely request,
to an opportunity to show the contrary.
(2) Notwithstanding paragraph (1) of this subsection, in a
proceeding held under this section pursuant to section
553(d)(4) or 553(e), the record for decision shall also include
any information that is part of the record of proceedings under
section 553.
(f) When an agency conducts rule making under this section
and section 557 directly after concluding proceedings upon an
advance notice of proposed rule making under section 553(c),
the matters to be considered and determinations to be made
shall include, among other relevant matters and determinations,
the matters and determinations described in subsections (b) and
(f) of section 553.
(g) Upon receipt of a petition for a hearing under this
section, the agency shall grant the petition in the case of any
major rule, unless the agency reasonably determines that a
hearing would not advance consideration of the rule or would,
in light of the need for agency action, unreasonably delay
completion of the rule making. The agency shall publish its
decision to grant or deny the petition when it renders the
decision, including an explanation of the grounds for decision.
The information contained in the petition shall in all cases be
included in the administrative record. This subsection shall
not apply to rule makings that concern monetary policy proposed
or implemented by the Board of Governors of the Federal Reserve
System or the Federal Open Market Committee.
* * * * * * *
CHAPTER 7--JUDICIAL REVIEW
* * * * * * *
Sec. 701. Application; definitions
(a) * * *
(b) For the purpose of this chapter--
(1) ``agency'' means each authority of the
Government of the United States, whether or not it is
within or subject to review by another agency, but does
not include--
(A) * * *
* * * * * * *
(H) functions conferred by sections 1738,
1739, 1743, and 1744 of title 12; subchapter II
of chapter 471 of title 49; or sections 1884,
1891-1902, and former section 1641(b)(2), of
title 50, appendix; [and]
(2) ``person'', ``rule'', ``order'', ``license'',
``sanction'', ``relief'', and ``agency action'' have
the meanings given them by section 551 of this
title[.]; and
(3) ``substantial evidence'' means such relevant
evidence as a reasonable mind might accept as adequate
to support a conclusion in light of the record
considered as a whole, taking into account whatever in
the record fairly detracts from the weight of the
evidence relied upon by the agency to support its
decision.
* * * * * * *
Sec. 704. Actions reviewable
[Agency action made] (a) Agency action made reviewable by
statute and final agency action for which there is no other
adequate remedy in a court are subject to judicial review. A
preliminary, procedural, or intermediate agency action or
ruling not directly reviewable is subject to review on the
review of the final agency action. Except as otherwise
expressly required by statute, agency action otherwise final is
final for the purposes of this section whether or not there has
been presented or determined an application for a declaratory
order, for any form of reconsideration, or, unless the agency
otherwise requires by rule and provides that the action
meanwhile is inoperative, for an appeal to superior agency
authority. Denial by an agency of a correction request or,
where administrative appeal is provided for, denial of an
appeal, under an administrative mechanism described in
subsection (b)(2)(B) of the Information Quality Act, or the
failure of an agency within 90 days to grant or deny such
request or appeal, shall be final action for purposes of this
section.
(b) Other than in cases involving interests of national
security, notwithstanding subsection (a) of this section, upon
the agency's publication of an interim rule without compliance
with section 553(c), (d), or (e) or requirements to render
final determinations under subsection (f) of section 553, an
interested party may seek immediate judicial review under this
chapter of the agency's determination to adopt such rule on an
interim basis. Review shall be limited to whether the agency
abused its discretion to adopt the interim rule without
compliance with section 553(c), (d), or (e) or without
rendering final determinations under subsection (f) of section
553.
* * * * * * *
Sec. 706. Scope of review
[To the extent necessary] (a) To the extent necessary to
decision and when presented, the reviewing court shall decide
all relevant questions of law, interpret constitutional and
statutory provisions, and determine the meaning or
applicability of the terms of an agency action. The reviewing
court shall--
(1) * * *
(2) hold unlawful and set aside agency action,
findings, and conclusions found to be--
(A) arbitrary, capricious, an abuse of
discretion, or otherwise not in accordance with
law (including the Information Quality Act);
* * * * * * *
(b) The court shall not defer to the agency's--
(1) interpretation of an agency rule if the agency
did not comply with the procedures of section 553 or
sections 556-557 of chapter 5 of this title to issue
the interpretation;
(2) determination of the costs and benefits or
other economic or risk assessment of the action, if the
agency failed to conform to guidelines on such
determinations and assessments established by the
Administrator of the Office of Information and
Regulatory Affairs under section 553(k);
(3) determinations made in the adoption of an
interim rule; or
(4) guidance.
(c) The court shall review agency denials of petitions
under section 553(e)(6) or any other petition for a hearing
under sections 556 and 557 for abuse of agency discretion.
* * * * * * *
Dissenting Views
INTRODUCTION
H.R. 2122, the ``Regulatory Accountability Act of 2013,''
substantially amends the Administrative Procedure Act (APA)\1\
to impose new procedural and analytical requirements on the
Federal rulemaking process. It does this by adding more than 60
additional procedural and analytical requirements to the
process that agencies use to promulgate regulations under the
APA, many of which have long been rejected as being ill-
conceived. Most critically, H.R. 2122 would override laws that
prohibit agencies from considering costs when public health and
safety are at stake such as the Clean Air Act,\2\ the Clean
Water Act,\3\ the Occupational Safety and Health Act,\4\ and
the Federal Mine Safety and Health Act.\5\ As a result,
agencies will be forced to weigh the financial and economic
costs of critical public health and safety measures against the
number of illnesses and lost lives that will result in the
absence of such a regulation.
---------------------------------------------------------------------------
\1\5 U.S.C. Sec. Sec. 551-59, 701-06, 1305, 3105, 3344, 5372, 7521
(2013).
\2\Pub. L. No. 91-604, 84 Stat. 1676 (1970), as amended. The cost
prohibition is codified at 42 U.S.C. Sec. 7142(d)(2) (2013).
\3\Pub. L. No. 95-217, 86 Stat. 816 (1977), as amended. The
limitation on cost consideration is codified at 33 U.S.C. Sec. 1311(b)
(2013).
\4\Pub. L. No. 91-596, 84 Stat. 1590, 84 Stat. 1590 (1970), as
amended. The limitation on cost consideration is codified at 29 U.S.C.
Sec. 655(b)(5) (2013).
\5\Pub. L. No. 95-164, 91 Stat. 1290 (1977), as amended. The
limitation on cost consideration is contained in section 101(a)(6)(A)
of the Act.
---------------------------------------------------------------------------
In addition to imposing burdensome and unnecessary
analytical and procedural requirements, H.R. 2122 will greatly
increase the ability of anti-regulatory interests to obstruct
agency rulemaking. Specifically, the bill will give anti-
regulatory interests multiple opportunities to intervene in the
rulemaking process by broadening the scope of judicial review
and requiring a less deferential standard of review. H.R. 2122
will also give industry additional opportunities to engage in
dilatory tactics by requiring the use of the trial-type
procedures of formal rulemaking for so-called ``high-impact''
rules. In addition, H.R. 2122 facilitates greater political
interference by giving the White House Office of Information
and Regulatory Affairs (OIRA) more control over
congressionally-mandated rulemaking, providing industry with an
additional chokepoint for the issuance of rules. As a result of
these changes, H.R. 2122 would drastically undermine the
Federal rulemaking process by hobbling the ability of agencies
to effectively regulate consumer health and product safety,
environmental protection, workplace safety, and financial
services industry misconduct, among other matters.
In response to a virtually identical bill considered in the
last Congress,\6\ the Obama administration issued a strong veto
threat.\7\ It warned that the bill ``would seriously undermine
the ability of agencies to execute their statutory duties'' and
would also ``impede the ability of agencies to provide the
public with basic protections,'' among other concerns.\8\ In
addition, 42 administrative law academics,\9\ the
Administrative Law and Regulatory Practice Section of the
American Bar Association,\10\ and the Coalition for Sensible
Safeguards (which includes more than 70 member
organizations)\11\ have expressed strong opposition to this
bill. For example, the Coalition stated that the bill
represented ``the biggest threat to environmental standards,
workplace safety rules, public health, and financial reform
regulations to appear in decades.''\12\
---------------------------------------------------------------------------
\6\H.R. 3010, 112th Cong. (2011).
\7\Executive Office of the President, Office of Management and
Budget, Statement of Administration Policy for H.R. 3010--Regulatory
Accountability Act of 2011 (Nov. 29, 2011).
\8\Id.
\9\Letter from 42 administrative law academics to Lamar Smith,
House Judiciary Committee Chair, and John Conyers, Jr., House Judiciary
Committee Ranking Member (Oct. 24, 2011) (on file with the H. Committee
on the Judiciary Democratic staff).
\10\American Bar Ass'n--Section of Administrative Law and
Regulatory Practice, Comments on H.R. 3010, the Regulatory
Accountability Act (Oct. 24, 2011) (on file with the H. Committee on
the Judiciary Democratic staff).
\11\Coalition for Sensible Safeguards, The Regulatory
Accountability Act of 2011: Legislation Would Override and Threaten
Decades of Public Protections, at 1 (undated) (on file with the H.
Committee on the Judiciary Democratic staff). Current members of the
Coalition include: AFL-CIO; Alliance for Justice; American Association
of University Professors; American Federation of State, County and
Municipal Employees; American Federation of Teachers Americans for
Financial Reform; American Lung Association; American Rivers; American
Values Campaign; American Sustainable Business Council; BlueGreen
Alliance; Campaign for Contract Agriculture Reform; Center for
Effective Government; Center for Digital Democracy; Center for Food
Safety; Center for Foodborne Illness Research & Prevention; Center for
Independent Living; Center for Science in the Public Interest; Citizens
for Sludge-Free Land; Clean Air Watch; Clean Water Network; Consortium
for Citizens with Disabilities; Consumer Federation of America;
Consumers Union; CounterCorp; Cumberland Countians for Peace & Justice;
Demos; Economic Policy Institute; Edmonds Institute; Environment
America; Farmworker Justice; Free Press; Friends of the Earth; Green
for All; Health Care for America Now; In the Public Interest;
International Brotherhood of Teamsters; International Center for
Technology Assessment; International Union, United Automobile,
Aerospace & Agricultural Implement Workers of America (UAW); League of
Conservation Voters; Los Angeles Alliance for a New Economy; Main
Street Alliance; National Association of Consumer Advocates; National
Center for Healthy Housing; National Consumers League; National Council
for Occupational Safety and Health; National Employment Law Project;
National Lawyers Guild, Louisville Chapter; National Women's Health
Network; National Women's Law Center; Natural Resources Defense
Council; Network for Environmental & Economic Responsibility of United
Church of Christ; New Jersey Work Environment Council; New York
Committee for Occupational Safety and Health; Oregon PeaceWorks; People
for the American Way; Protect All Children's Environment; Public
Citizen; Reproductive Health Technologies Project; Safe Tables Our
Priority; Sierra Club; Service Employees International Union; Southern
Illinois Committee for Occupational Safety and Health; The Arc of the
United States; The Partnership for Working Families; Trust for
America's Health; U.S. Chamber Watch; U.S. PIRG; Union of Concerned
Scientists; Union Plus; United Food and Commercial Workers Union;
United Steelworkers; Waterkeeper Alliance; and Worksafe. Coalition for
Sensible Safeguards--Our Members, available at http://
sensiblesafeguards.org/our-members (last visited June 21, 2013).
\12\Coalition for Sensible Safeguards, The Regulatory
Accountability Act of 2011: Legislation Would Override and Threaten
Decades of Public Protections, at 1 (undated) (on file with the H.
Committee on the Judiciary Democratic staff).
---------------------------------------------------------------------------
In sum, our principal concerns with H.R. 2122 are that the
bill: (1) is based on the false premise that it will ``promote
job creation and economic growth;''\13\ (2) unnecessarily
expands cost-benefit analysis requirements and overrides
existing statutes such as the Clean Air Act and the
Occupational Safety and Health Act that prohibit consideration
of cost when public health and safety are at stake; (3) will
effectively prevent critical public health and safety rules
from being promulgated by expanding the use of formal
rulemaking; (4) will unduly hamper agency rulemaking, lead to
endless litigation, and allow courts to substitute their policy
judgments for those of agencies without enhancing due process;
(5) will provide numerous opportunities for regulated entities
to challenge proposed rulemakings and encourage dilatory
tactics by opponents of regulation; and (6) may undermine the
independence of regulatory agencies by extending cost-benefit
analysis requirements to such agencies.
---------------------------------------------------------------------------
\13\H. Rep. No. 112-294, at 10 (2011).
---------------------------------------------------------------------------
For these reasons, and others discussed below, we
respectfully dissent and urge our colleagues to reject this
seriously flawed legislation.
DESCRIPTION AND BACKGROUND
DESCRIPTION
A brief summary of H.R. 2122's principal provisions is
presented here and a more detailed section-by-section
explanation of the bill appears at the end of our dissenting
views.
H.R. 2122 amends the APA in numerous ways to impose new
procedural and analytical requirements on the Federal
rulemaking process. For instance, the bill requires agencies to
consider ``potential'' costs of proposed rules even when
existing law explicitly directs such agencies not to consider
the costs of such rules. Another provision requires agencies to
follow formal rulemaking procedures for proposed ``high
impact''rules, defined in the bill as those rules that have a
$1 billion or more cost on the economy. The bill also greatly
expands the ability of courts to second-guess agency decisions
by expanding the scope of judicial review and imposing a less
deferential standard of review. In addition, the bill contains
various provisions intended to give OIRA even greater control
over congressionally-mandated rulemakings. Finally, the bill
allows the President and OIRA to withhold documents and
information communicated by OIRA during consultation with the
agency, which would further undermine transparency of the
rulemaking process.
BACKGROUND
The current rulemaking process provides ample opportunity
for public participation and comment. In addition, all three
branches of government have the ability to review rulemakings.
Overall, the system works well and, if anything, could be
streamlined to address the often lengthy process by which
regulations are promulgated.
I. THE CURRENT RULEMAKING PROCESS
The APA, enacted in 1946, establishes the minimum
rulemaking\14\ and formal adjudication requirements for all
administrative agencies. The APA also sets forth standards for
judicial review of final agency actions. While the APA sets
minimum standards, many agency actions may involve procedures
that depart from or go beyond APA requirements. As one academic
noted, ``[T]he American administrative system, by evolution and
design, is characterized by a considerable degree of
informality, agency discretion and procedural
flexibility.''\15\ The APA's baseline procedural requirements
are designed to maintain a balance between this flexibility and
the requirements of due process. The APA effectively functions
as an ``administrative Constitution.'' Indeed, Committee
Chairman Bob Goodlatte (R-VA) cited the APA's ``critical
protections . . . against errors and excesses in agency
rulemakings.''\16\
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\14\The APA defines ``rulemaking'' as the ``agency process for
formulating, amending or repealing a rule.'' 5 U.S.C. Sec. 551(5)
(2013). A ``rule,'' in turn, is defined as ``an agency statement of
general or particular applicability and future effect designed to
implement, interpret, or prescribe law or policy or describing the
organization, procedure, or practice requirements of an agency.'' 5
U.S.C. Sec. 551(4) (2013).
\15\Gary J. Edles, Lessons from the Administrative Conference of
the United States, 2 Eur. Pub. L. 571, 572 (1996).
\16\Unofficial Transcript of Markup of H.R. 1947, the ``Federal
Agriculture Reform and Risk Management Act,'' by the H. Committee on
the Judiciary, 113th Cong. 6 (June 5, 2013).
---------------------------------------------------------------------------
The principal way by which agencies promulgate rules is the
informal notice-and-comment rulemaking process.\17\ Although
called ``informal'' rulemaking, the process is, in fact,
heavily proceduralized. Agencies are required to provide the
public with adequate notice of a proposed rule and a meaningful
opportunity to comment on the rule's content,\18\ including
giving the public the opportunity to submit written ``data,
views, or arguments.''\19\ There is no minimum time period
during which an agency must accept comments, but courts
reviewing an agency's compliance with this requirement
typically consider whether the opportunity to comment was
``adequate.'' Furthermore, the agency must consider the
public's comments and incorporate into the adopted rule a
``concise general statement'' of the ``basis and purpose'' of
the final rule.\20\ The statement should be sufficient to allow
the public to obtain a general idea of the purpose of and basic
justification for the rule. The final rule and the general
statement must be published in the Federal Register not less
than 30 days before the rule's effective date.\21\
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\17\The APA exempts from all of its informal rulemaking
requirements rules concerning: (1) ``a military or foreign affairs
function of the United States;'' (2) ``a matter relating to agency
management or personnel;'' or (3) a matter relating to ``public
property, loans, grants, benefits, or contracts.'' 5 U.S.C. Sec. 553(a)
(2013).
\18\5 U.S.C. Sec. Sec. 553(b), (c) (2013). Under the APA's good
cause exception, an agency may be exempted from the notice-and-comment
requirements when such ``notice and public procedure thereon are
impracticable, unnecessary, or contrary to the public interest.'' 5
U.S.C. Sec. 553(b)(B) (2013). At least one court has noted that ``good
cause requires some showing of exigency beyond generic complexity of
data collection and time constraints.'' Natural Resources Defense
Council, Inc. v. Evans, 316 F.3d 904, 906 (9th Cir. 2003).
\19\5 U.S.C. Sec. 553(c) (2013).
\20\Id.
\21\5 U.S.C. Sec. 553(d) (2013).
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In addition to informal rulemaking, agencies follow the
APA's formal rulemaking procedures ``when rules are required by
statute to be made on the record after opportunity for an
agency hearing.''\22\ These procedures require the agency to
carry the burden of proof in support of its rule through a
trial-like process.\23\ Any interested party has the
opportunity to present evidence and conduct cross-examination,
with an administrative law judge or other agency official
presiding.\24\ The presiding officer can administer oaths,
issue subpoenas, exclude irrelevant evidence, and make other
rulings concerning the conduct of the proceeding.\25\ The rule
must be supported by substantial evidence.\26\ In contrast to
an informal rulemaking, a court can review a rule subject to
formal rulemaking to determine whether the ``evidence''
supporting the rule was ``substantial.''\27\ Since the 1970's,
however, formal rulemaking procedures have generally fallen
into disuse not only because they are unnecessarily cumbersome
and time-consuming, but also because they offer little
advantage over informal rulemaking procedures.\28\
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\22\5 U.S.C. Sec. 553(c) (2013). The Supreme Court, in an opinion
authored by then-Justice William Rehnquist, interpreted this language
to mean that unless Congress specifically states in a statute governing
the substance of the rulemaking that agency ``hearings'' regarding
proposed rules are to be ``on the record,'' an agency is not required
to use formal rulemaking procedures. United States v. Florida East
Coast Railway Co., 410 U.S. 224, 237-238 (1973).
\23\5 U.S.C. Sec. 556(d) (2013).
\24\5 U.S.C. Sec. Sec. 556(c), (d) (2013).
\25\5 U.S.C. Sec. 556(d) (2013).
\26\Id.
\27\See 5 U.S.C. Sec. 706(2) (2013) (outlining various bases for
judicial review).
\28\Stephen G. Breyer et al., Administrative Law and Regulatory
Policy, at 582 (4th ed. 1999).
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In addition to the APA's rulemaking procedures, Federal
agencies sometimes use rulemaking processes that are not
specified by the APA. For example, Congress may direct an
agency to follow specified rulemaking procedures that go beyond
the APA's informal procedures.\29\ These procedures often
include elements of both the APA's formal and informal
rulemaking requirements and are sometimes referred to as
``hybrid'' rulemaking procedures. Such processes attempt to
strike a balance between the flexibility of notice-and-comment
rulemaking and greater public participation that a more formal
rulemaking process may allow.
---------------------------------------------------------------------------
\29\See, e.g., 15 U.S.C. Sec. 57a (2013) (imposing heightened
notice and congressional reporting requirements on the Federal Trade
Commission).
---------------------------------------------------------------------------
II. JUDICIAL, PRESIDENTIAL, AND CONGRESSIONAL CHECKS ON
AGENCY RULEMAKING
A. Judicial Review
The APA provides for judicial review of final agency action
when there is no other adequate judicial remedy available.\30\
The APA requires a reviewing court to compel agency action when
it is unlawfully withheld or unreasonably delayed and to set
aside as unlawful agency action, findings, and conclusions when
they are found to be:
---------------------------------------------------------------------------
\30\5 U.S.C. Sec. Sec. 702, 704 (2013).
(A) arbitrary, capricious, an abuse of discretion, or
---------------------------------------------------------------------------
otherwise not in accordance with law;
(B) contrary to constitutional right, power, privilege,
or immunity;
(C) in excess of statutory jurisdiction, authority, or
limitations, or short of statutory right;
(D) without observance of procedure required by law;
(E) unsupported by substantial evidence in [a formal
rulemaking] or otherwise reviewed on the record of an
agency hearing provided by statute; or
(F) unwarranted by the facts to the extent that the
facts are subject to trial de novo by the reviewing
court.\31\
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\31\5 U.S.C. Sec. 706(2) (2013).
The two exceptions to this presumption of judicial review under
the APA are when ``statutes preclude judicial review'' and when
``agency action is committed to agency discretion by law.''\32\
A court, however, always has the authority to review the
constitutionality of agency action, including those actions
that are otherwise unreviewable.\33\
---------------------------------------------------------------------------
\32\5 U.S.C. Sec. 701 (2013).
\33\See Webster v. Doe, 486 U.S. 592 (1988); Oestereich v.
Selective Service System, 393 U.S. 233 (1968).
---------------------------------------------------------------------------
In Chevron U.S.A., Inc. v. Natural Resources Defense
Council, the Supreme Court held that a reviewing court can
invalidate an agency rule or formal adjudication only when it
violates a constitutional provision or when the agency's rule
exceeds its statutory authority to issue the rule as clearly
expressed by Congress.\34\ Where the statute is ambiguous,
courts must defer to an agency's permissible interpretation of
the statute.\35\ The court cannot strike down a rule based on
substantive policy grounds, out of deference to an agency's
substantive expertise in the matter being regulated.\36\
Subsequent to the Chevron decision, the Supreme Court has
limited the Chevron doctrine to legislative rules\37\ (i.e.,
those having the effect of law), and the extent of judicial
deference can be unclear in a given case.
---------------------------------------------------------------------------
\34\Chevron U.S.A., Inc. v. Natural Resources Defense Council,
Inc., 467 U.S. 837 (1984).
\35\Id.
\36\Id.
\37\United States v. Mead Corp., 533 U.S. 218 (2001).
---------------------------------------------------------------------------
Courts will also invalidate a rule that is arbitrary or
capricious. Normally, this type of scrutiny applies to informal
rulemaking.\38\ Although originally an extremely deferential
standard, the Supreme Court, in a series of decisions since the
1970's, has left unclear precisely what level of deference is
required, suggesting that the ``arbitrary or capricious''
standard may not be as deferential towards agency action as it
is in other contexts.\39\ The Court has suggested that, even
under the arbitrary or capricious standard, a reviewing court
must conduct a ``searching and careful'' review of agency
action.\40\ This type of heightened review under the arbitrary
or capricious standard has been referred to as the ``hard
look'' doctrine, under which a court examines ``carefully the
administrative record and the agency's explanation, to
determine whether the agency applied the correct analytical
methodology, applied the right criteria, considered the
relevant factors, chose from among the available range of
regulatory options, relied upon appropriate policies, and
pointed to adequate support in the record for material
empirical conclusions.''\41\
---------------------------------------------------------------------------
\38\Staff of Subcomm. on Comm. and Admin. Law of the H. Comm. on
the Judiciary, 109th Cong., Interim Report on the Administrative Law,
Process and Procedure Project for the 21st Century 112 (Comm. Print
2006) [hereinafter ``Interim Report''], available at http://
judiciary.house.gov/Media/PDFS/Printers/109th/31505.pdf.
\39\Motor Vehicle Mfr. Ass'n v. State Farm Mut. Auto. Ins. Co., 463
U.S. 29 (1983); Citizens to Preserve Overton Park, Inc. v. Volpe, 401
U.S. 402 (1971).
\40\Citizens to Preserve Overton Park, Inc. v. Volpe, 401 U.S. 402
(1971); Interim Report at 113.
\41\Interim Report at 113 (quoting Thomas O. McGarity, Some
Thoughts on Deossifying the Rulemaking Process, 41 Duke L.J. 1385, 1410
(1992)).
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B. Presidential Review
There are various mechanisms through which the President
can exert control over Federal agency rulemaking. For example,
centralized review of agencies' regulations within the
Executive Office of the President has been part of the
rulemaking process since the early 1970's. OIRA reviews
significant proposed and final rules before they are published
in the Federal Register.\42\ As a result of such reviews, draft
rules may be revised before publication, withdrawn before a
review is completed, or returned to the agencies ``because, in
OIRA's analysis, certain aspects of the rule need to be
reconsidered.''\43\
---------------------------------------------------------------------------
\42\Paperwork Reduction Act of 1980 Sec. 3503, 44 U.S.C. ch. 35
(2007).
\43\Interim Report at 39.
---------------------------------------------------------------------------
Presidents have also imposed various rulemaking
requirements on Federal agencies through executive orders (EO).
For example, President Bill Clinton issued EO 12866 in 1993,
which requires, inter alia, agencies to prepare cost-benefit
analyses for their ``economically significant'' rules and
imposes expanded transparency requirements.\44\ President
Barack Obama issued EO 13563 in January 2011, which emphasizes
the need to increase public participation in the rulemaking
process, to the ``extent feasible and consistent with
law.''\45\ EO 13563 also requires agencies to: (1) identify,
``as appropriate, means to achieve regulatory goals designed to
promote innovation;'' (2) reduce costs and simplify and
harmonize rules through inter-agency coordination; (3) identify
and consider regulatory approaches that reduce burdens and
maintain flexibility and freedom of choice for the public; and
(4) conduct periodic reviews of existing significant
regulations that ``may be outmoded, ineffective, insufficient,
or excessively burdensome, and to modify, streamline, expand,
or repeal them in accordance with what has been learned.''\46\
Later that same year, President Obama issued EO 13579, which
encouraged independent regulatory agencies\47\ to follow the
principles of EO 13563, including complying with its
retrospective review requirement.\48\ Then-OIRA Administrator
Cass Sunstein, however, made clear that EO 13579 was not
binding on independent agencies.\49\
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\44\Exec. Ord. No. 12,866, 58 Fed. Reg. 51,735 (Oct. 4, 1993). In
its statement of regulatory philosophy, EO 12866 states that agencies
should assess all costs and benefits of available regulatory
alternatives, including, significantly, both quantitative and
qualitative measures. It also provides that agencies should select
regulatory approaches that maximize net benefits (unless a statute
requires another approach). Pursuant to the order, agencies, where
permissible and applicable, should adhere to a set of principles when
developing rules, including: (1) consideration of the degree and nature
of risk posed when setting regulatory priorities, (2) adoption of
regulations only upon a ``reasoned determination that the benefits of
the intended regulation justify its costs,'' and (3) tailoring
regulations to impose the least burden on society needed to achieve the
regulatory objectives. Among the EO's stated objectives are ``to
reaffirm the primacy of Federal agencies in the regulatory decision-
making process; to restore the integrity and legitimacy of regulatory
review and oversight; and to make the process more accessible and open
to the public.'' The ``primacy'' of the agencies provision signaled a
significant change in regulatory philosophy, vesting greater control of
the rulemaking process with regulatory agencies and taking away
authority from OIRA. Also, the requirement that the benefits of a
regulation ``justify'' its costs was a noticeably lower threshold than
the requirement in EO 12291, i.e., that the benefits must ``outweigh''
the costs. Id.
\45\Exec. Ord. No. 13,563, 76 Fed. Reg. 3,821 (Jan. 18, 2011). For
example, EO 13563 directs agencies to give the public a meaningful
opportunity to comment on proposed rules through the Internet, to
provide a minimum 60-day comment period, and to provide online access
to the rulemaking docket (including scientific and technical findings
and public comments) in an easily searchable and downloadable format.
Agencies are also directed to seek the views of those likely to be
affected, including those who are likely to benefit and those likely to
be subject to a proposed rule, prior to issuing a notice of proposed
rulemaking.
\46\Id.
\47\Independent regulatory agencies, as opposed to executive branch
agencies, are considered ``independent''because the President has
limited authority to remove their leaders, who can only be removed for
cause, rather than simply serving at the President's pleasure. Such
agencies are usually styled ``commissions'' or ``boards'' (e.g.,
National Labor Relations Board, Securities and Exchange Commission).
Stephen G. Breyer, et al., Administrative Law and Regulatory Policy, at
100 (4th ed. 1999).
\48\Exec. Ord. No. 13,579, 76 Fed. Reg. 41587 (July 11, 2011).
\49\Memorandum from Cass R. Sunstein to the Heads of Independent
Regulatory Agencies, (July 22, 2011) (``It is understood that this
guidance is issued with full respect for the independence of the
agencies to which it is addressed, and hence nothing said here is meant
to be binding.''), available at http://www.whitehouse.gov/omb/
international_regulatory_cooperation
#eo13579.
---------------------------------------------------------------------------
C. Congressional Review
There are various ways in which Congress can check agency
rulemaking behavior: limiting or restricting delegations of
authority, defunding rulemaking activities through the
appropriations process, and conducting oversight activity. In
addition, Congress can exert its powers under the Congressional
Review Act (CRA).\50\ The CRA authorizes Congress to disapprove
an agency rule to which it objects by enacting a joint
resolution of disapproval.\51\ Such a joint resolution must be
introduced within at least 60 days of the rule's submission to
Congress.\52\ For a joint resolution of disapproval to take
effect, it must pass both Houses of Congress and be signed by
the President, thereby meeting the Constitution's Bicameralism
and Presentment Clauses' requirements.\53\ If a joint
resolution is enacted into law, the disapproved rule is deemed
not to have been in effect at any time.\54\ Additionally, the
CRA prohibits an agency from reissuing a rule that is
substantially the same as a disapproved rule.\55\
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\50\5 U.S.C. Sec. Sec. 801-08 (2013).
\51\See 5 U.S.C. Sec. 802 (2013) (outlining congressional
disapproval procedure).
\52\5 U.S.C. Sec. 802(a) (2013). The CRA prescribes special
expedited procedures for Senate consideration of a joint resolution of
disapproval, though it does not provide for similar procedures in the
House of Representatives. 5 U.S.C. Sec. 802(c) (2013).
\53\U.S. Const. Art. I, Sec. 7, cl. 2, 3.
\54\5 U.S.C. Sec. 801(f) (2013).
\55\5 U.S.C. Sec. 801(b)(2) (2013).
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CONCERNS WITH H.R. 2122
I. H.R. 2122 IS BASED ON THE FALSE PREMISE THAT REGULATIONS INHIBIT JOB
CREATION AND STIFLE ECONOMIC GROWTH
H.R. 2122's proponents rely on unsupported assertions that
regulations inhibit job creation and stifle economic growth by
imposing burdensome costs on business and creating regulatory
uncertainty.\56\ While these arguments can sound appealing on
the surface, no facts actually support them.
---------------------------------------------------------------------------
\56\Former Judiciary Committee Chairman Lamar Smith (R-TX), for
example, asserted last Congress:
The American people urgently need jobs that only economic
growth can give. Standing in the way of growth and job
---------------------------------------------------------------------------
creation is a wall of Federal regulation.
* * *
New regulatory burdens and uncertainty about the economy
have helped to keep trillions of dollars of private sector
capital on the sidelines. Companies cannot safely invest if
they cannot tell whether tomorrow's regulations will make
their investments unprofitable.
The Regulatory Accountability Act of 2011: Hearing on H.R. 3010 Before
the Subcomm. on Courts, Commercial and Admin. Law of the H. Comm. on
the Judiciary, 112th Cong. (2011) [hereinafter H.R. 3010 Hearing]
(remarks of Rep. Lamar Smith (R-TX), Chair, H. Comm. on the Judiciary).
A. Regulations Have No Discernible Impact on Job Creation
Over the course of 22 hearings held by the Committee since
the beginning of the 112th Congress, proponents of deregulatory
measures like H.R. 2122 have repeatedly argued that regulations
stifle job creation by creating business uncertainty.\57\
Noticeably absent, however, is any evidence documenting these
arguments. Indeed, Bruce Bartlett, a senior policy analyst in
the Reagan and George H.W. Bush administrations, observes that
no ``hard evidence is offered for'' the claim that President
Obama ``has unleashed a tidal wave of new regulations, which
has created uncertainty among businesses and prevents them from
investing and hiring.''\58\ Rather, Mr. Bartlett notes, this
argument is ``simply asserted as self-evident and repeated
endlessly throughout the conservative echo chamber.''\59\ Mr.
Bartlett concluded his analysis with this observation, ``In my
opinion, regulatory uncertainty is a canard invented by
Republicans that allows them to use current economic problems
to pursue an agenda supported by the business community year in
and year out. In other words, it is a simple case of political
opportunism, not a serious effort to deal with high
unemployment.''\60\
---------------------------------------------------------------------------
\57\See, e.g., Regulatory Accountability Act of 2013: Hearing on
H.R. 2122 Before the Subcomm. on Regulatory Reform, Commercial and
Antitrust Law of the H. Comm. on the Judiciary, 113th Cong. (2013);
Regulatory Flexibility Improvements Act of 2013: Hearing on H.R. 2542
Before the Subcomm. on Regulatory Reform, Commercial and Antitrust Law
of the H. Comm. on the Judiciary, 113th Cong. (2013); Sunshine for
Regulatory Decrees and Settlements Act of 2013: Hearing on H.R. 1493
Before the Subcomm. on Regulatory Reform, Commercial and Antitrust Law
of the H. Comm. on the Judiciary, 113th Cong. (2013); REINS Act:
Promoting Jobs, Growth and American Competitiveness: Hearing on H.R.
367 Before the Subcomm. on Regulatory Reform, Commercial and Antitrust
Law of the H. Comm. on the Judiciary, 113th Cong. (2013); The Obama
Administration's Regulatory War on Jobs, the Economy, and America's
Global Competitiveness: Hearing Before the Subcomm. on Regulatory
Reform, Commercial and Antitrust Law of the H. Comm. on the Judiciary,
113th Cong. (2013); Responsibly and Professionally Invigorating
Development Act of 2013: Hearing on H.R. 2641 Before the Subcomm. on
Regulatory Reform, Commercial and Antitrust Law of the H. Comm. on the
Judiciary, 113th Cong. (2013); Regulation Nation: The Obama
Administration's Regulatory Expansion vs. Jobs and Economic Recovery:
Hearing Before the H. Comm. on the Judiciary, 112th Congress (2012);
The Obama Administration's Abuse of Power: Hearing Before the H. Comm.
on the Judiciary, 112th Cong. (2012); Clearing the Way for Jobs and
Growth: Retrospective Review to Reduce Red Tape and Regulations:
Hearing Before the Subcomm. on Courts, Commercial and Admin. Law. of
the H. Comm. on the Judiciary, 112th Cong. (2012); The Responsibly and
Professionally Invigorating Development Act of 2012: Hearing on H.R.
4377 Before the Subcomm. on Courts, Commercial and Admin. L. of the H.
Comm. on the Judiciary, 112th Cong. (2012); The Office of Information
and Regulatory Affairs: Federal Regulations and Regulatory Reform Under
the Obama Administration: Hearing Before the Subcomm. on Courts,
Commercial and Admin. L. of the H. Comm. on the Judiciary, 112th Cong.
(2012) [hereinafter OIRA Hearing]; The Regulatory Freeze for Jobs Act
of 2012: Hearing on H.R. 4078 Before the Subcomm. on Courts, Commercial
and Admin. L. of the H. Comm. on the Judiciary, 112th Cong. (2012); The
Consent Decree Fairness Act and the Sunshine for Regulatory Decrees and
Settlements Act: Hearing on H.R. 3041 and H.R. 3862 Before the Subcomm.
on Courts, Commercial and Admin. L. of the H. Comm. on the Judiciary,
112th Cong. (2012) [hereinafter Consent Decrees Hearing]; The
Regulatory Accountability Act of 2011: Hearing on H.R. 3010 Before the
H. Comm. on the Judiciary, 112th Cong. (2011) [hereinafter H.R. 3010
Hearing]; The Role of Social Security Administrative Law Judges:
Hearing Before the Subcomm. on Courts, Commercial and Admin. L. of the
H. Comm. on the Judiciary, 112th Cong. (2011); Formal Rulemaking and
Judicial Review: Protecting Jobs and the Economy with Greater
Regulatory Transparency and Accountability: Hearing Before the Subcomm.
on Courts, Commercial and Admin. L. of the H. Comm. on the Judiciary,
112th Cong. (2011) [hereinafter Formal Rulemaking Hearing]; Cost-
Justifying Regulations: Protecting Jobs and the Economy by Presidential
and Judicial Review of Costs and Benefits: Hearing Before the Subcomm.
on Courts, Commercial and Admin. Law of the H. Comm. on the Judiciary,
112th Cong. (2011); Raising the Agencies' Grades--Protecting the
Economy, Assuring Regulatory Quality and Improving Assessments of
Regulatory Need: Hearing Before the Subcomm. on Courts, Commercial and
Admin. Law of the H. Comm. on the Judiciary, 112th Cong. (2011); The
Regulations From the Executive in Need of Scrutiny Act of 2011: Hearing
on H.R. 10 Before the Subcomm. on Courts, Commercial and Admin. Law of
the H. Comm. on the Judiciary, 112th Cong. (2011); [hereinafter REINS
Act Legislative Hearing]; The APA at 65--Is Reform Needed to Create
Jobs, Promote Economic Growth, and Reduce Costs?: Hearing Before the
Subcomm. on Courts, Commercial and Admin. Law of the H. Comm. on the
Judiciary, 112th Cong. (2011) [hereinafter the APA at 65 Hearing];
Regulatory Flexibility Improvements Act of 2011--Unleashing Small
Businesses to Create Jobs: Hearing on H.R. 527 Before the Subcomm. on
Courts, Commercial and Admin. L. of the H. Comm. on the Judiciary,
112th Cong. (2011); The REINS Act--Promoting Jobs and Expanding Freedom
by Reducing Needless Regulations: Hearing Before the Subcomm. on
Courts, Commercial and Admin. Law of the H. Comm. on the Judiciary,
112th Cong. (2011).
\58\Bruce Bartlett, Op-Ed., Misrepresentations, Regulations and
Jobs, N.Y. TIMES Economix Blog, Oct. 4, 2011, available at http://
economix.blogs.nytimes.com/2011/10/04/regulation-and-unemployment/
?scp=4&sq=bartlett&st=cse.
\59\Id.
\60\Id.
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The Majority's own witness at the legislative hearing on a
nearly identical legislation considered in the 112th Congress
clearly debunked the myth that regulations stymie job creation.
Christopher DeMuth, who appeared on behalf of the American
Enterprise Institute, a conservative think tank, stated in his
prepared testimony that the ``focus on jobs . . . can lead to
confusion in regulatory debates'' and that ``the employment
effects of regulation, while important, are
indeterminate.''\61\ At this same hearing, Minority witness
Professor Sidney Shapiro explained that ``[a]ll of the
available evidence contradicts the claim that regulatory
uncertainty is deterring business investment.''\62\
---------------------------------------------------------------------------
\61\H.R. 3010 Hearing (prepared statement of Christopher DeMuth,
American Enterprise Institute)
\62\Id. (prepared statement of Prof. Sidney Shapiro, Wake Forest
School of Law).
---------------------------------------------------------------------------
If anything, regulations may promote job growth and put
Americans back to work. For instance, the BlueGreen Alliance,
notes:
Studies on the direct impact of regulations on job
growth have found that most regulations result in
modest job growth or have no effect, and economic
growth has consistently surged forward in concert with
these health and safety protections. The Clean Air Act
is a shining example, given that the economy has grown
204% and private sector job creation has expanded 86%
since its passage in 1970.\63\
---------------------------------------------------------------------------
\63\Letter to House Judiciary Committee Chair Lamar Smith and House
Judiciary Committee Ranking Member John Conyers, Jr. from David A.
Forster, Executive Director, BlueGreen Alliance, at 2 (Nov. 2, 2011)
(on file with the H. Committee on the Judiciary, Democratic Staff).
Also in reference to the Clean Air Act, the White House Office
of Management and Budget (``OMB'') observed that 40 years of
success with this measure ``have demonstrated that strong
environmental protections and strong economic growth go hand in
hand.''\64\ Similarly, the Natural Resources Defense Council
and the United Auto Workers cite the fact that increased fuel
economy standards have already led to the creation of more than
155,000 U.S. jobs.\65\
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\64\Executive Office of the President--Office of Management and
Budget, Statement of Administration Policy on H.R. 2401, Transparency
in Regulatory Analysis of Impacts on the Nation Act of 2011 (Sept. 21,
2011).
\65\Natural Resources Defense Council et al., Supplying Ingenuity:
U.S. Suppliers of Clean, Fuel-Efficient Vehicle Technologies (2011),
available at http://www.nrdc.org/transportation/autosuppliers/files/
SupplierMappingReport.pdf.
---------------------------------------------------------------------------
The facts also indicate that regulatory uncertainty is not
the problem. A July 2011 Wall Street Journal survey of business
economists, found that the ``main reason U.S. companies are
reluctant to step up hiring is scant demand, rather than
uncertainty over government policies.''\66\ Similarly, a 2011
National Federation of Independent Business survey of its
members likewise suggests that ``poor sales''--not regulation--
is the biggest problem.\67\ The Main Street Alliance, an
alliance of small businesses, similarly observed that a lack of
demand, and not regulation, is the problem\68\ In sum, there is
no credible evidence that regulations depress job creation.\69\
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\66\Phil Izzo, Dearth of Demand Seen Behind Weak Hiring, Wall St.
J., July 18, 2011, available at http://online.wsj.com/article/
SB10001424052702303661904576452181063763332.html.]
\67\Press Release, Nat'l Federation of Independent Businesses,
Small Business Confidence Takes Huge Hit: Optimism Index Now in Decline
for Six Months Running (Sept. 13, 2011) (``Of those reporting negative
sales trends, 45 percent blamed faltering sales, 5 percent higher labor
costs, 15 percent higher materials costs, 3 percent insurance costs, 8
percent lower selling prices and 10 percent higher taxes and regulatory
costs.''), available at http://www.nfib.com/press-media/press-media-
item?cmsid=58190.
\68\Letter to House Judiciary Committee Chair Lamar Smith and House
Judiciary Committee Ranking Member John Conyers, Jr. from Jim Houser,
Co-Chair, The Main Street Alliance, et al., at 1-2 (Nov. 2, 2011) (on
file with the H. Committee on the Judiciary, Democratic Staff).
\69\See also Jia Lynn Yang, Does Government Regulation Really Kill
Jobs? Economists
Say Overall Effect Minimal, Wash. Post, Nov. 13, 2011, available at
http://www.washingtonpost.com/business/economy/does-government-
regulation-really-kill-jobs-
economists-say-overall-effect-minimal/2011/10/19/
gIQALRF5INXstory.html?hpid=z1 (``In 2010, 0.3 percent of the people who
lost their jobs in layoffs were let go because of `government
regulations/intervention.' By comparison, 25 percent were laid off
because of a drop in business demand. . . . Economists who have studied
the matter say that there is little evidence that regulations cause
massive job loss in the economy, and that rolling them back would not
lead to a boom in job creation.'').
---------------------------------------------------------------------------
If anything, H.R. 2122 will cause greater business
uncertainty by substantially lengthening and adding to the
complexity of the rulemaking process, which will result in less
predictability\70\ and leave ``stakeholders (including
businesses large and small) less able to plan effectively for
the future.''\71\ Just two examples of how it does this is that
the bill: (1) adds more than ``60 new procedural and analytical
requirements to the agency rulemaking process;'' and (2)
expands the APA's informal rulemaking requirements by
approximately tenfold.\72\
---------------------------------------------------------------------------
\70\H.R. 3010 Hearing (statement of Prof. Sidney Shapiro, Wake
Forest Law School) (``It currently takes 4 to 8 years for an agency to
promulgate and enforce most significant rules, and the proposed
procedures would likely add another two to 3 years to the process.
Under H.R. 3010, the longest rulemakings could take more than 12
years--spanning potentially four different presidential
administrations--to complete. In the meantime, thousands of people
would die and tens of thousands more would be injured or become ill
because of the lack of regulation.'').
\71\Letter from 42 administrative law academics to House Judiciary
Committee Chair Lamar Smith and House Judiciary Committee Ranking
Member John Conyers, Jr., at 2 (Oct. 24, 2011) (on file with the H.
Committee on the Judiciary, Democratic Staff).
\72\Id.
---------------------------------------------------------------------------
Those who claim that regulations stifle economic growth
fail to remember that the lack of adequate regulation of the
financial services industry led to the 2008 financial crisis
and the ensuing Great Recession, the lingering effects of which
many Americans still suffer from today. The Dodd-Frank Wall
Street Reform Act\73\ was designed, in part, to ensure that
America's largest financial institutions could no longer
jeopardize our Nation's economy through reckless conduct, to
protect consumers through the establishment of a Consumer
Financial Protection Bureau, and to stop any future need for
congressional bailouts. Although it is essential that rules
implementing the Act's provisions be promulgated, industry
lobbyists have been working overtime to stop them from going
into effect. As Representative Melvin L. Watt (D-NC), who sits
on both the Judiciary and Financial Services Committees,
explained:
---------------------------------------------------------------------------
\73\Pub. L. No. 111-203 (2010).
We are having a hard enough time getting the
regulators to timely proceed with completing the rules,
because a lot of the areas in which they are rulemaking
are so very complicated and have so many nuances and
implications. The last thing we want to do is slow down
that process.
And I hear all the time when I go home with my
business community that they are looking for certainty.
``Just tell us what the rules are so that we can start
playing by them.'' And to the extent that we delay that
certainty, we delay their ability to rely on what the
rules of the road will be going forward.\74\
---------------------------------------------------------------------------
\74\Unofficial Tr. of Markup of H.R. 2122, the Regulatory
Accountability Act of 2013, by the H. Comm. on the Judiciary, 113th
Cong. at 135 (July 24, 2013), available at http://judiciary.house.gov/
hearings/Markups%202013/mark_07242013/
07.24.13%20Markup%20Transcript.pdf.
Accordingly, to ensure that the promulgation of these
critical regulations would not be adversely impacted by H.R.
2122, Representative Watt offered an amendment that would have
exempted from the bill any regulations issued to implement the
Dodd-Frank Wall Street Reform Act. His amendment, however,
failed by a party-line vote of 9 to 11.
B. The Benefits of Regulations More Than Outweigh Their Costs
Proponents of H.R. 2122 overstate the purported costs of
regulation while completely ignoring its benefits. At nearly
every hearing on various anti-regulatory bills and oversight
issues during the current and prior Congress, Majority Members
and witnesses have cited the same widely debunked study by
economists Mark and Nicole Crain, which claims that Federal
regulation imposes an annual cost of $1.75 trillion on
business.\75\
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\75\Nicole V. Crain & W. Mark Crain, The Impact of Regulatory Costs
on Small Firms, Rep. No. SBAHQ-08-M-0466 (Sept. 2010), available at
http://archive.sba.gov/advo/research/
rs371tot.pdf.
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The Crain study, however, has been extensively criticized
for exaggerating the economic costs of Federal rulemaking. For
example, the Center for Progressive Reform (CPR) notes that the
study myopically fails to account for any benefits of
regulation.\76\ In fact, as CPR observed, OMB estimated in 2008
that major rules imposed $46 billion to $54 billion in costs,
but also produced $122 billion to $656 billion in benefits.\77\
---------------------------------------------------------------------------
\76\Sidney Shapiro, et al., Setting the Record Straight: The Crain
and Crain Report on Regulatory Costs, Center for Progressive Reform
White Paper #1103 (Feb. 2011).
\77\Id.
---------------------------------------------------------------------------
Moreover, the study's methodology is seriously flawed with
respect to how it calculated economic costs. The study, which
relied on international public opinion polling by the World
Bank on how friendly a particular country was to business
interests, ignored actual data on costs imposed by Federal
regulation in the United States.\78\ CRS conducted an extensive
examination of the Crain study and criticized much of its
methodology.\79\ In fact, the authors of the study told CRS
that it was ``not meant to be a decision-making tool for
lawmakers or Federal regulatory agencies to use in choosing the
`right' level of regulation. In no place in any of the reports
do we imply that our reports should be used for this purpose.
(How could we recommend this use when we make no attempt to
estimate the benefits?)''\80\ CRS concluded that ``a valid,
reasoned policy decision can only be made after considering
information on both costs and benefits'' of regulation.\81\ The
Economic Policy Institute also issued a critique of the Crain
study outlining additional concerns with the study's
methodology and data.\82\
---------------------------------------------------------------------------
\78\Id.
\79\Curtis W. Copeland, Analysis of an Estimate of the Total Costs
of Federal Regulations, Congressional Research Service Report for
Congress, R41763 (Apr. 6, 2011).
\80\Id. at 26 (quoting an e-mail from Nicole and W. Mark Crain to
te author of the CRS report).
\81\Id.
\82\John Irons & Andrew Green, Flaws Call for Rejecting Crain and
Crain Model: Cited $1.75 Trillion Cost of Regulations Is Not Worth
Repeating, Economic Policy Institute, July 19, 2011, available at
http://w3.epi-data.org/temp2011/IssueBrief308.pdf.
---------------------------------------------------------------------------
Although the proponents of H.R. 2122 emphasize the
purported costs of regulations, regulations, in truth,
routinely result in net benefits to society. OMB's 2012 annual
report to Congress estimates that the annual benefits of
Federal regulations for which agencies estimated and monetized
both benefits and costs from October 1, 2001 through September
30, 2011 aggregate between $141 billion to $691 billion, while
the estimated annual costs aggregate between $42.4 billion and
$66.3 billion.\83\ In sum, there is simply no credible evidence
that the cost of regulations exceed their benefits.
---------------------------------------------------------------------------
\83\Office of Management and Budget, 2012 Report to Congress on the
Benefits and Costs of Federal Regulations and Unfunded Mandates on
State, Local, and Tribal Entities at 3, avail-
able at http://www.whitehouse.gov/sites/default/files/omb/inforeg/
2012_cb/2012_cost_benefit_
report.pdf.
---------------------------------------------------------------------------
II. H.R. 2122 PRIORITIZES PERCEIVED COST OVER CRITICAL PUBLIC HEALTH,
SAFETY AND ENVIRONMENTAL PROTECTIONS
H.R. 2122 will undermine the government's ability to
protect us from a wide range of harms, in complete disregard of
the devastating impact that inadequate regulation has had on
the health and economic well-being of Americans. For example,
our Nation continues to struggle in the aftermath of the 2008
financial crisis and to deal with the ongoing costs of
regulatory failure and underenforcement of current regulations.
As Americans for Financial Reform observed, the crisis has cost
the United States economy an estimated ``trillions of dollars
and millions of jobs, and led to millions of families losing
their homes.''\84\ Likewise, the BP oil spill and Massey coal
mine explosion provide further examples of the dangers of
regulatory failure.
---------------------------------------------------------------------------
\84\Letter to House Judiciary Committee Chair Lamar Smith and House
Judiciary Committee Ranking Member John Conyers, Jr. from Americans for
Financial Reform, at 2 (DATE) (on file with the H. Committee on the
Judiciary, Democratic Staff).
---------------------------------------------------------------------------
Notwithstanding these and other examples, H.R. 2122's
supporters appear to suffer some form of collective amnesia
about the dangers of regulatory failure. H.R. 2122 prioritizes
minimizing business costs over protecting the health and safety
of Americans in at least two ways. First, it imposes a
``supermandate'' that overrides numerous statutes prohibiting
or limiting the authority of agencies to consider cost in
promulgating public health and safety rules. Second, it goes
well beyond the existing cost-benefit analysis requirements
contained in EOs 12866 and 13563 to mandate expanded analytical
requirements with much less agency discretion, threatening
paralysis by analysis. Indeed, as David Goldston, the Director
of Government Affairs at the Natural Resources Defense Council,
observed at the legislative hearing on H.R. 2122, this bill
``is a kind of anthology of bad ideas that have already proven
to interfere with efforts to protect the public.''\85\
---------------------------------------------------------------------------
\85\The Regulatory Accountability Act of 2013: Hearing on H.R. 2122
Before the Subcomm. on Regulatory Reform, Commercial and Antitrust Law
of the H. Comm. on the Judiciary, 113th Cong. (2013) (prepared
statement of David Goldston, the Director of Government Affairs at the
Natural Resources Defense Council).
---------------------------------------------------------------------------
A. LH.R. 2122 Overrides Statutory Prohibitions or Limitations on
Considering Costs in the Rulemaking Process
Regulations are critical to protecting all Americans from a
vast array of harms, including dirty air and water, dangerous
toys, reckless financial behavior, and unsafe workplaces. This
is not an abstract notion. With respect to workplace safety,
for instance, there were 4,383 fatal occupational injuries last
year, according to the Bureau of Labor Statistics.\86\ And, an
analysis by the National Institute for Occupational Safety and
Health, the American Cancer Society, and Emory University's
School of Public Health estimates that after factoring in
disease and injury data ``there are a total of 55,200 US deaths
annually resulting from occupational disease or injury (range
32,200-78,200).''\87\
---------------------------------------------------------------------------
\86\Press Release, U.S. Dep't of Labor Bureau of Labor Statistics,
National Census of Fatal Occupational Census of Fatal Occupational
Injuries in 2012 (Preliminary Results), Aug. 13, 2013, available at
http://www.bls.gov/news.release/pdf/cfoi.pdf.
\87\Kyle Steenland et al., Dying for Work: The Magnitude of US
Mortality from Selected Cases of Death Associated with Occupation, 43
Am. J. Industrial Medicine 461 (2003).
---------------------------------------------------------------------------
This is why we believe that one of the most pernicious
aspects of H.R. 2122 is its requirement that agencies consider
regulatory costs and benefits of proposed and final rules
regardless of the dictates of other laws, thereby establishing
a ``supermandate.'' As a result, it overrides provisions in
numerous other statutes that prohibit or limit agency
consideration of costs when promulgating rules. These statutes
include the Clean Air Act,\88\ the Clean Water Act,\89\ the
Occupational Safety and Health Act,\90\ and the Federal Mine
Safety and Health Act.\91\
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\88\Pub. L. No. 91-604, 84 Stat. 1676 (1970), as amended. The cost
prohibition is codified at 42 U.S.C. Sec. 7142(d)(2) (2013).
\89\Pub. L. No. 95-217, 86 Stat. 816 (1977), as amended. The
limitation on cost consideration is codified at 33 U.S.C. Sec. 1311(b)
(2013).
\90\Pub. L. No. 91-596, 84 Stat. 1590, 84 Stat. 1590 (1970), as
amended. The limitation on cost consideration is codified at 29 U.S.C.
Sec. 655(b)(5) (2013).
\91\Pub. L. No. 95-164, 91 Stat. 1290 (1977), as amended. The
limitation on cost consideration is contained in section 101(a)(6)(A)
of the Act.
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Various environmental groups warn that this is a ``cynical
attempt'' to overturn these measures and the carefully crafted
legislative bargains that they represent.\92\ One such
organization, American Rivers, notes that ``[m]any of our
nation's fundamental laws protecting our health, like the Clean
Air Act and the Clean Water Act, would likely not have come
into effect when their costs, the costs of keeping our air and
water clean, were greater compared to less protective
regulations.''\93\ As the ABA's Administrative Law Section
observes:
---------------------------------------------------------------------------
\92\Letter to House Members from American Rivers, Clean Water
Action, Defenders of Wildlife, Earthjustice, Environment America,
League of Conservation Voters & the Natural Resources Defense Council
(Nov. 2, 2011) (on file with the H. Committee on the Judiciary,
Democratic Staff).
\93\Letter to House Judiciary Committee Chair Lamar Smith and House
Judiciary Committee Ranking Member John Conyers, Jr. from Jim Bradley,
Director of Government Relations, American Rivers (Nov. 2, 2011) (on
file with the H. Committee on the Judiciary, Democratic Staff).
In addition to burdening the rulemaking process with
analytical requirements that appear to be out of
proportion to their likely payoffs, the bill's
``rulemaking considerations'' are troubling because of
the way in which they would, in some cases, alter the
substantive law. The APA would thus become, in several
respects, an ``Administrative Substance Act.''\94\
---------------------------------------------------------------------------
\94\American Bar Ass'n--Section of Administrative Law and
Regulatory Practice, Comments on H.R. 3010, the Regulatory
Accountability Act, at 12-13 (Oct. 24, 2011) (on file with the H.
Committee on the Judiciary, Democratic Staff) (noting that `[m]uch,
perhaps most, of the safety and health legislation now on the books
would seemingly be replaced').]
In addition, the bill imposes other supermandates that
compromise public health, workplace safety, and environmental
protections. For example, new section 553(d) requires agencies
to ``adopt the least costly rule considered during the rule
making . . . that meets relevant statutory objectives'' and
permits agencies to chose a more expensive option only if the
additional benefits ``justify its additional costs.'' As the
AFL-CIO observed, this provision ``would make protecting
workers and the public secondary to limiting costs and impacts
on business and corporations.''\95\
---------------------------------------------------------------------------
\95\Letter to House Judiciary Committee Chair Lamar Smith and House
Judiciary Committee Ranking Member John Conyers, Jr. from William
Samuel, Director, the American Federation of Labor and Congress of
Industrial Organizations, at 1 (Nov. 1, 2011) (on file with the H.
Committee on the Judiciary, Democratic Staff).
---------------------------------------------------------------------------
To rectify the pernicious effects of the bill's
supermandates, Ranking Member John Conyers, Jr. (D-MI) offered
an amendment striking these provisions and clarifying that the
bill's cost-benefit analysis requirements apply only to the
extent permitted by existing law. He explained:
My colleagues, this measure is an endangerment to the
health and safety and wellbeing of all Americans,
anywhere they may be. And it will force agency
officials, were it to become law, to ignore
congressional directives in these statutes to not
consider cost in issuing regulations enforcing the
critical, lifesaving protections required by these
laws. Now, apparently the supporters of the bill
believe that money should trump safety, a proposition
that I adamantly oppose.\96\
---------------------------------------------------------------------------
\96\Unofficial Tr. of Markup of H.R. 2122, the Regulatory
Accountability Act of 2013, by the H. Comm. on the Judiciary, 113th
Cong. at 124 (July 24, 2013), available at http://judiciary.house.gov/
hearings/Markups%202013/mark_07242013/
07.24.13%20Markup%20Transcript.pdf.
Ranking Member Conyers' amendment would have ensured that
prior congressional intent--as expressed in such laws as the
Clean Air Act--would be preserved and thereby prevent agencies
from weighing costs against saving lives. His amendment,
however, failed by a vote of 11 to 13.
B. LH.R. 2122 Compels Agencies To Prioritize Cost and Analysis Over
Protecting Health and Safety By Imposing Onerous and
Unnecessary Cost-Benefit Analysis Requirements, Resulting in
Paralysis by Analysis
Although H.R. 2122's proponents claim that the bill simply
codifies the cost-benefit requirements of the various executive
orders that Presidents have issued over more than 30 years
concerning cost-benefit analysis of agency rules, the bill
actually does much more than that. For example, H.R. 2122 would
force agencies to adopt the least costly rule absent a
compelling need to protect public health and safety. Under EO
12866, in contrast, agencies must simply determine that the
benefits of a proposed rule--including non-quantifiable
benefits--justify the costs of the rule and that benefits are
maximized. As U.S. PIRG observes:
The new bill would in effect slow down the regulatory
process by adding unending cost-benefit analyses,
followed by court challenges. New analyses mandated by
the legislation would require estimates of future
direct and indirect costs that are impossible to
forecast with any reliability. These new hurdles and
the increased influence given to big business and
corporate special interests would cause significant
problems for Federal agencies such as the CDC and the
FDA and would undermine their ability to fulfill their
missions.\97\
---------------------------------------------------------------------------
\97\Letter to House Judiciary Committee Chair Lamar Smith and House
Judiciary Committee Ranking Member John Conyers, Jr. from Nasima
Hossain, U.S. PIRG Public Health Advocate, at 2 (Nov. 2, 2011) (on file
with the H. Committee on the Judiciary, Democratic Staff)
In addition, the bill mandates all agencies to conduct a
cost-benefit analysis for virtually every rule, and not just
economically significant ones. This expanded scope would apply
to more than 3,000 rules annually, including minor ones. For
example, if the U.S. Coast Guard wanted to issue a rule
establishing a safety zone for a fireworks display (something
the Coast Guard does frequently), the bill would require the
agency to do a cost-benefit analysis, and to show that the
benefits ``justify'' the costs.
The bill's cost-benefit analysis mandate itself will result
in a tremendous expenditure of taxpayer dollars to pay for
agencies' greatly expanded analysis responsibilities. Even one
of the Majority's witnesses at the legislative hearing on a
nearly identical version of the bill considered in the last
Congress acknowledged as much. He said cost-benefit analysis
``summons the apparatus of cost (and benefit) estimation--which
is itself costly.''\98\
---------------------------------------------------------------------------
\98\H.R. 3010 Hearing (prepared statement of Christopher DeMuth,
American Enterprise Institute).
---------------------------------------------------------------------------
More than 50 administrative law academics also highlighted
their concern about the additional costs that the bill's
burdensome requirements will impose on agencies, which is
particularly problematic in this time of severe budgetary
pressures.\99\
---------------------------------------------------------------------------
\99\Letter from 42 administrative law academics to House Judiciary
Committee Chair Lamar Smith and House Judiciary Committee Ranking
Member John Conyers, Jr., at 1 (Oct. 24, 2011).
---------------------------------------------------------------------------
In addition to expanding cost-benefit analysis requirements
to include all rules and not just economically significant ones
per the existing executive orders, H.R. 2122 also adds numerous
analytical requirements to the APA's already substantial
analytical requirements, threatening ``paralysis by analysis.''
Moreover, H.R. 2122 expands the cost-benefit analysis
requirement to include ``major guidance'' documents, i.e.,
documents that are not ``rules'' under current law. The bill
also would require agencies to identify the costs and benefits
of alternatives to rules that are ultimately proposed.
There is an additional concern with not only statutorily
requiring cost-benefit analysis, but with specifying the
factors to be considered in that analysis. While both
Democratic and Republican administrations have agreed on the
basic principle that agencies should engage in cost-benefit
analysis of proposed and final rules, former OIRA Administrator
Sally Katzen opposes codification of cost-benefit analysis
requirements because it would impede an Administration's
flexibility to respond to current conditions.\100\
---------------------------------------------------------------------------
\100\Cost-Benefit Hearing (statement of Sally Katzen, former OIRA
Administrator).
---------------------------------------------------------------------------
C. LH.R. 2122 Will Prevent Needed Public Health and Safety Rules from
Being Promulgated Because of its Formal Rulemaking Requirement
for High-Impact Rules
H.R. 2122's expanded use of formal rulemaking procedures
will effectively halt agency rulemaking for so-called ``high-
impact'' rules (defined in the bill as those with a $1 billion
cost to the economy). The bill lacks any exception for proposed
regulations protecting public health and the environment.
Proponents of formal rulemaking assert that it allows an
opportunity for parties to cross-examine the agency, which is
the best way to vet the agency's factual assertions and assure
the public that only the best science underlies agency
action.\101\ Such an assertion, however, is itself unsupported
by evidence. H.R. 2122's proponents offer no study or other
data indicating that cross-examination and other facets of the
formal rulemaking process are the most effective tools for
making scientific and policy judgements. Indeed, Professor
Matthew Stephenson of Harvard Law School challenged this
assertion in testimony before the Subcommittee on Regulatory
Reform, Commercial and Antitrust Law.\102\ Additionally,
Professor Stephenson noted that informal notice-and-comment
rulemaking is already heavily proceduralized (as outlined
above), making formal rulemaking procedures unnecessary. And,
such an expansion of formal rulemaking would do nothing to
improve the quality of agency decisions. Mandating formal
rulemaking, as Ronald M. Levin, the William R. Orthwein
Distinguished Professor of Law at Washington University in St.
Louis, observed, ``is a serious mistake.''\103\
---------------------------------------------------------------------------
\101\APA at 65 Hearing (statement of Jeffrey A. Rosen); Formal
Rulemaking Hearing (statements of Noel J. Francisco and Edward W.
Warren).
\102\Formal Rulemaking Hearing (statement of Matthew C.
Stephenson).
\103\The Regulatory Accountability Act of 2013: Hearing on H.R.
2122 Before the Subcomm. on Regulatory Reform, Commercial and Antitrust
Law of the H. Comm. on the Judiciary, 113th Cong. (2013) (prepared
statement of Ronald M. Levin, the William R. Orthwein Distinguished
Professor of Law at Washington University in St. Louis).
---------------------------------------------------------------------------
While adopting formal rulemaking procedures would not
improve the quality of agency rules, the costs and delays
associated with formal rulemaking would effectively bring
agency rulemaking to a halt.\104\ Formal rulemakings could take
up to a decade and produce thousands of pages of documents,
without any positive effect on the quality of the final
decisions.\105\ Additionally, by impeding agency rulemaking
through more formal procedural requirements, Congress may: (1)
impede desirable rule changes; (2) lead agencies to use other,
less desirable forms of agency regulation such as ad hoc
adjudication; (3) force agencies to write cruder, blunter
rules, leaving the interpretation to courts; and (4) impede its
own oversight of rulemaking by making it harder for agencies to
change course in response to the views of the political
branches, giving agencies a way to ``run out the clock'' on a
President or a congressional majority, and shifting power
within agencies away from political appointees to career
staff.\106\ As Professor Sidney Shapiro observed, ``Almost no
serious administrative law expert regards formal rulemaking as
reasonable, and it has been all but relegated to the dustbin of
history.''\107\ More than 40 other administrative law academics
concur.\108\
---------------------------------------------------------------------------
\104\Formal Rulemaking Hearing (statement of Matthew C.
Stephenson).
\105\Stephen G. Breyer et al., Administrative Law and Regulatory
Policy, at 582 (4th ed. 1999) (noting Food and Drug Administration
formal rulemaking on peanut butter that took 10 years to conclude).
\106\Formal Rulemaking Hearing (statement of Matthew C.
Stephenson).
\107\Hearing on H.R. 3010 (prepared statement of Prof. Sidney
Shapiro, Wake Forest School of Law).]
\108\Letter from 42 administrative law academics to House Judiciary
Committee Chair Lamar Smith and House Judiciary Committee Ranking
Member John Conyers, Jr., at 2 (Oct. 24, 2011) (noting that formal
rulemaking `runs directly contrary to the consensus of the
administrative law community that the APA formal rulemaking procedure
is unworkable and obsolete') (on file with H. Committee on the
Judiciary, Democratic Staff).]
---------------------------------------------------------------------------
By delaying the rulemaking process, this legislation
presents serious public health and workplace safety concerns.
As the AFL-CIO explained:
These formal rulemaking procedures will make it more
difficult for workers and members of the public to
participate, and give greater access and influence to
business groups that have the resources to hire lawyers
and lobbyists to participte in this complex process.
For agencies that already provide for public hearings,
such as OSHA and MSHA, the bill would substitute formal
rulemaking for the development of all new rules,
overriding the effective public participation processes
conducted by these agencies.\109\
---------------------------------------------------------------------------
\109\Letter to House Judiciary Committee Chair Lamar Smith and
House Judiciary Committee Ranking Member John Conyers, Jr. from William
Samuel, Director, the American Federation of Labor and Congress of
Industrial Organizations, at 2 (Nov. 1, 2011) (on file with H.
Committee on the Judiciary, Democratic Staff).
As David Goldston, the Director of Government Affairs at
the Natural Resources Defense Council, aptly noted, the short
title of the bill should actually be the ```Regulatory Atrophy
Act' because its primary effect would be to prevent the
government from exercising its responsibility and duty to
protect the public.''\110\ He continued, ``The title is also
misleading because it implies that the current system lacks
checks and balances when, in reality, Congress and the courts
already have ample authority to hold agencies to account, and
the entire system gives industry and others numerous
opportunities, formal and informal, to influence the
development of regulations.''\111\
---------------------------------------------------------------------------
\110\The Regulatory Accountability Act of 2013: Hearing on H.R.
2122 Before the Subcomm. on Regulatory Reform, Commercial and Antitrust
Law of the H. Comm. on the Judiciary, 113th Cong. (2013) (prepared
statement of David Goldston, the Director of Government Affairs at the
Natural Resources Defense Council).
\111\Id.
---------------------------------------------------------------------------
III. H.R. 2122 FURTHER TILTS THE REGULATORY PROCESS IN FAVOR OF
BUSINESS INTERESTS AND THOSE WHO WANT TO INTERFERE WITH REGULATIONS
H.R. 2122 will enable regulated entities to exert even more
influence over Federal rulemaking than they already do. For
instance, the bill's formal rulemaking provisions and expanded
and less deferential standard of judicial review give
additional opportunities for anti-regulatory interests to
engage in dilatory tactics that can substantially slow down an
already slow rulemkaing process.
A. LH.R. 2122's Expanded Use of Formal Rulemaking Will Give an Unfair
Advantage to Well-Funded Special Interests to Influence
Rulemaking
As noted in the prior section, formal rulemaking is a
grueling, time-consuming and litigation-intensive process. By
mandating formal rulemaking, the bill will force agencies to
expend extensive agency resources to litigate the validity of
their proposed rulemakings against deep-pocketed regulated
industries and well-funded anti-regulatory interests.
In effect, the bill would exacerbate the problems that
already exist under current law by which ``corporate and
business lobbying of agencies far exceeds that by groups
representing the public.''\112\ We accordingly share the
concerns of the Union of Concerned Scientists, which notes, for
example, that these provisions jeopardize ``the respect and
deference to the role of science in rulemaking'' that exists
under current law.\113\ Rather than facilitating ``thoughtful
consideration based on facts,'' the bill would open ``the
floodgates to challenges that are not fact-based and that seek
only to delay the rulemaking process, and to make it easier for
special interests to contest rules in the courts.''\114\
---------------------------------------------------------------------------
\112\H.R. 3010 Hearing (prepared statement of Prof. Sidney Shapiro,
Wake Forest School of Law).
\113\Letter to to House Judiciary Committee Chair Lamar Smith and
House Judiciary Committee Ranking Member John Conyers, Jr. from
Francesca T. Grifo, Senior Scientist and Director--Scientific Integrity
Program, Union of Concerned Scientists (Nov. 3, 2011) (on file with the
H. Committee on the Judiciary, Democratic Staff).
\114\Id.
---------------------------------------------------------------------------
Subcommittee Ranking Member Steve Cohen (D-TN) sought to
minimize the impact of H.R. 2122 on rules that prohibit or
strengthen existing prohibitions on financial businesses owning
non-financial businesses. He was reacting to then-recent press
reports about financial service entities that own non-financial
business which, in turn, engage in speculative activities that
may raise prices for commodities, such as aluminum and
oil.\115\ As a result of such activities, consumers and other
businesses pay more for products, such as the price of soda
sold in aluminum cans. His amendment, however, failed by a
party-line vote of 9 to 13.
---------------------------------------------------------------------------
\115\See, e.g., David Kocieniewski, A Shuffle of Aluminum, But to
Banks, Pure Gold, N.Y. Times, July 21, 2013, at A1.
---------------------------------------------------------------------------
B. LH.R. 2122's Judicial Review Standard Risks Undermining Agency
Rulemaking and Reducing Political Accountability for Policy
Decisions Without Enhancing Due Process
H.R. 2122 would subject to judicial review agency
compliance with numerous APA requirements as well as the bill's
cost-benefit analysis requirements. By greatly expanding
opportunities for judicial review, the legislation would
present many more instances when a court could overrule agency
action.
Even assuming that courts had the resources to review these
types of agency decisions, expanded and less deferential
judicial review would be troublesome. It would make rulemaking
more costly and time-consuming for agencies by forcing them to
adopt more detailed factual records and explanations,
effectively imposing more procedural requirements on agency
rulemaking. Also, agencies may be dissuaded from pursuing
regulations in the first place. Additionally, criticism of the
existing ``hard look'' arbitrary or capricious review standard
for informal rulemaking may apply to a much greater degree to
H.R. 2122's more formal move to expand the scope of judicial
review.
In particular, H.R. 2122 would require that a court give
less deference to agency decisions under many circumstances,
and such a less deferential judicial review standard runs the
risk that judges effectively will be making policy by allowing
personal policy preferences to intrude in their review of an
agency rule, whether consciously or not. Public Citizen, a
nonprofit consumer advocacy organization representing consumer
interests, observes:
[B]y needless expanding the scope of judicial review,
the legislation marks an unprecedented and dangerous
move away from traditional judicial deference to a
system where courts are encouraged to overturn highly
technical, resource-intensive agency decisions and
substitute their own policy preferences instead. This
new and inappropriate role for the courts is a recipe
for more activist judges, increased litigation, endless
delays, and more rather than less uncertainty for
regulated parties and the public.\116\
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\116\Letter to to House Judiciary Committee Chair Lamar Smith and
House Judiciary Committee Ranking Member John Conyers, Jr. from David
Arkush, Director, & Amit Narang, Regulatory Policy Advocate, Public
Citizen's Congress Watch, at 2 (on file with the H. Committee on the
Judiciary, Democratic Staff).]
Much of H.R. 2122's judicial review standard appears to be
old wine in new bottles. A similar legislative initiative was
promoted during the 1980's by anti-regulatory interests in
Congress. The view then, as now, among proponents of enhanced
judicial review was that the existing standard of judicial
review favored agency decisions too much whenever injured
members of the public sought to reverse those decisions on
appeal.\117\ The enhanced judicial review standard proposed in
that legislation would have required courts to independently
decide all relevant questions of law, review agency
determinations of jurisdiction and authority to determine
whether they were based on statutory language or other evidence
of legislative intent, not accord any presumption in favor of
agency determinations of questions of law other than its
jurisdiction and authority, and apply what was in effect a
``substantial evidence'' test for informal rulemaking.\118\
---------------------------------------------------------------------------
\117\See Morton Rosenberg, The Future of Public Participation in
Informal Agency Rulemaking Under Pending Regulatory Reform Proposals,
Congressional Research Service Report for Congress, at 44 (Dec. 7,
1982).
\118\Id. at 45.
---------------------------------------------------------------------------
CRS concluded that the effect of this enhanced judicial
review proposal would be ``to abolish the judicially developed
doctrine of deference, which was developed by the courts as an
aid to reviewing agency decisions and which recognizes agency
expertise and involvement in the legislative process.''\119\
CRS also noted that enhanced judicial review threatened to skew
the agency factfinding process in favor of those with the
resources to shape the agency record by making it more lengthy
and costly.\120\ Also, parties opposed to a rule could further
add costs and delay to the rulemaking process by appealing
agency determinations.\121\ Finally, enhanced judicial review
increases the risk of judicial activism, whereby judges would
make policy from the bench by substituting their policy views
for those of the agency.\122\ Unfortunately, the same
criticisms that applied to expanded judicial review considered
and rejected more than a generation ago apply equally to H.R.
2122's judicial review provision.
---------------------------------------------------------------------------
\119\Id.
\120\Id. at 46-47.
\121\Id. at 47-48.
\122\Id. at 48-51.
---------------------------------------------------------------------------
C. LH.R. 2122's Expansion of Opportunities to Challenge Agency
Compliance With the Information Quality Act Gives More
Opportunities for Business Interests To Undermine Rulemaking
New APA section 553(d)(4), as proposed by H.R. 2122, would
permit any ``member of the public''--that is, anyone, including
an entity that has no legitimate interest in the rule at
issue--to petition for a trial-type hearing for the purpose of
determining whether a proposed rule complies with of the
Information Quality Act (``IQA'').\123\ In support of such
petition, section 553(d)(4) only requires the proponent to
present a ``prima facie case that evidence or other information
upon which the agency bases the proposed rule fails to comply''
with the IQA. Moreover, the bill makes agency compliance with
the IQA subject to judicial review, including the decision
whether to hold an agency hearing.
---------------------------------------------------------------------------
\123\Pub. L. No. 106-554, Sec. 515 (2000).
---------------------------------------------------------------------------
The IQA, also known as the Data Quality Act, was a
Republican initiative buried in a voluminous appropriations
bill. No hearings or legislative process preceded its
enactment. The Act requires OMB to issue data quality
guidelines to Federal agencies. Under these guidelines, all
agencies subject to the Paperwork Reduction Act--a law that
requires OMB to develop and oversee the implementation of
policies, principles, standards, and guidelines applicable to
the dissemination of public information by Federal agencies--
are required to establish and follow data quality guidelines
that: (1) ensure and maximize the quality, objectivity, utility
and integrity of information, including statistical information
prior to dissemination; and (2) allow affected individuals and/
or organizations to seek and obtain correction of information
maintained and disseminated by the agency that does not comply
with OMB or agency guidelines. In addition, an agency must
report to OMB regarding the number and nature of complaints
received by the agency regarding agency compliance with OMB
guidelines. More controversially, the IQA also requires Federal
agencies to have a process by which outside parties can ``seek
and obtain correction of information maintained and
disseminated by the agency that does not comply with'' the
IQA's requirements for information quality. Proponents of the
IQA include the U.S. Chamber of Commerce and the Center for
Regulatory Effectiveness, an industry-backed anti-regulatory
``watch dog''group. Critics of the law, which include the
Center for Progressive Reform, the Center for Effective
Government (f/k/a OMB Watch), and Public Citizen, observe that
the IQA is a mechanism for ``regulating the regulators.''\124\
---------------------------------------------------------------------------
\124\Project on Scientific Knowledge and Public Policy, Information
Quality Act, available at DefendingScience.org
---------------------------------------------------------------------------
The expanded opportunities to challenge agency compliance
with the IQA is very problematic for several reasons. In
addition to offering yet another way to slow down rulemaking
both by challenging agencies' data and by challenging their
compliance with the IQA, the IQA itself provides opportunities
for regulated entities to challenge agencies' scientific
findings to the extent that those findings are contrary to the
economic interests of industry.
In sum, H.R. 2122 would permit anyone to request an IQA
hearing, even if that person suffers no injury, i.e., lacks any
legal standing. In addition, the bill fails to clarify what
constitutes a ``prima facie'' case of agency non-compliance
with the IQA, which will force agencies to err on the side of
caution and hold IQA hearings, especially in light of the
bill's provision making a decision not to hold a hearing
subject to judicial review. Finally, judicial review would add
an entirely new level of litigation to the rulemaking process.
D. H.R. 2122 Encourages a Regulatory Race to the Bottom
Section 2 of H.R. 2122 defines a major rule, in pertinent
part, as a rule that has ``significant adverse effects on . . .
the ability of United States-based enterprises to compete with
foreign-based enterprises in domestic and export markets.'' The
practical effect of this definition is that it will require
agencies and the courts to consider the business and regulatory
environments of other nations.
For example, a proposed rule that imposes heightened clean
air requirements on American steel manufacturers would
necessarily require consideration of whether this regulation--
which could potentially result in higher compliance costs--
could make American steel products less competitive in a
country, such as China, that has a much less stringent
regulatory regime. While the economic analysis under this
requirement may be simple, its dangerous ramifications for
public health cannot be underestimated. Chinese officials have
only recently begun to acknowledge the health hazard risks
presented by extensive air pollution that affects its cities,
including its capital.\125\
---------------------------------------------------------------------------
\125\See, e.g., Andrew Jacobs, With Anger Over Dirty Air Rising,
Beijing Tries Tours on Monitoring Center, N.Y. Times, Nov. 9, 2011
(`Environmental officials who have resisted releasing sensitive data
about air pollution here in the capital announced that they would take
action to address increasing complaints that the government's
monitoring system fails to report on the most dangerous airborne
particles emitted by the growing ranks of cars and trucks.'), available
at http://www.nytimes.com/2011/11/10/world/asia/with-anger-over-dirty-
air-rising-beijing-tries-tours-on-monitoring-center.html?ref=world.
---------------------------------------------------------------------------
The end result of H.R. 2122 is that the public health of
Americans and the safety of the environment will be compromised
so that American manufacturers can better compete with their
foreign counterparts. This is a shortsighted regulatory ``race
to the bottom'' that prioritizes profits over saving lives.
IV. H.R. 2122 USURPS CONGRESSIONAL INTENT BY SUBSTANTIALLY EXPANDING
THE EXECUTIVE BRANCH'S CONTROL OVER RULEMAKING AND UNDERCUTTING CURRENT
TRANSPARENCY REQUIREMENTS
H.R. 2122 substantially expands OIRA's control over all
agency rulemaking and undercuts current transparency
requirements under EO 12866. Although we do not impugn in any
way the current Administration's integrity or current OIRA
leadership, this extraordinary and unaccountable power over
congressionally-mandated rulemaking in the hands of the wrong
Administration will allow the Executive Branch to interfere and
possibly derail such congressional directives.
A. H.R. 2122 Empowers OIRA To Exert a Choke Hold Over Rulemaking
As noted above, OIRA reviews significant proposed and final
rules from Federal agencies before they are published in the
Federal Register. As a result of OIRA's review, draft rules may
be revised before publication, withdrawn before a review is
completed, or returned to the agencies ``because, in OIRA's
analysis, certain aspects of the rule need to be
reconsidered.''\126\ Currently, EO 12866 and EO 13563 govern
the use of cost-benefit analysis by executive agencies in
issuing rules, as well as OIRA review of such rules.
---------------------------------------------------------------------------
\126\Interim Report on the Administrative Law, Process and
Procedure Project for the 21st Century, Subcomm. on Commercial and
Administrative Law of the H. Comm. on the Judiciary, 109th Cong. 39
(2006) available at http://judiciary.house.gov/Media/PDFS/Printers/
109th/31505.pdf [hereinafter `Interim Report'].
---------------------------------------------------------------------------
H.R. 2122's excessive concentration of OIRA control over
rulemaking is troubling. During the Bush administration,
``OIRA's increasingly aggressive role in controlling agency
action'' may have been ``the biggest administrative law story
of the new century.''\127\ By way of background, President
George W. Bush issued EO 13422, which substantively amended EO
12866, on January 18, 2007.\128\ The directive gave ``the White
House much greater control over the rules and policy statements
that the government develops to protect public health, safety,
the environment, civil rights and privacy.''\129\ Critics of
the new executive order questioned whether it was an attempt to
establish standards for rulemaking that were inconsistent with
statutory requirements.\130\ For example, a New York Times
commentator noted that EO 13422 ``will make it even easier for
political appointees to overrule the professionals, tailoring
government regulations to suit the interests of companies that
support the G.O.P.''\131\
---------------------------------------------------------------------------
\127\Lisa Heinzerling, Statutory Interpretation in the Era of OIRA,
33 Ford. Urb. L. Rev. 1097, 1117 (2006).
\128\Exec. Ord. No. 13,422, 72 Fed. Reg. 2,763 (Jan. 23, 2007).
\129\Robert Pear, Bush Directive Increases Sway on Regulation, N.Y.
Times, Jan. 30, 2007, at A1.
\130\See, e.g., Press Release, Public Citizen, New Executive Order
Is Latest White House Power Grab (Jan. 18, 2007), at http://
www.citizen.org/pressroom/release.cfm?ID=2361; Garrett Epps, The Power
of King George, Salon.com (Feb. 1, 2007) (describing EO 13422 as a
``power
grab'' by the Bush administration), at http://www.salon.com/opinion/
feature/2007/02/01/
presidential_power/.
\131\Paul Krugman, Op-Ed., The Green-Zoning of America, N.Y. Times,
Feb. 5, 2007, at A25.
---------------------------------------------------------------------------
EO 13422 revised EO 12866 in a number of ways. In
particular, EO 13422 imposed greater specificity and market
analysis requirements on agencies; heightened scrutiny of
significant guidance documents that agencies issued from time
to time to provide non-binding information regarding their
regulations; increased emphasis on cost-benefit analysis by
agencies, including requiring agencies to include reasonable
estimates of the aggregate costs and benefits of all of the
agencies regulations for each calendar year; and allowed for a
greater role for political appointees in agency rulemaking.
These heightened requirements were in line with the Bush
administration's view that OIRA should be a ``gatekeeper for
new rulemakings.''\132\ The OIRA Administrator during the Bush
administration explained that one of his office's functions is
``to protect people from poorly designed rules,'' and that OIRA
review is a way to ``combat the tunnel vision that plagues the
thinking of single-mission regulators.''\133\
---------------------------------------------------------------------------
\132\Curtis W. Copeland, ``Changes to the OMB Regulatory Review
Process by Executive Order 13422,'' CRS Report for Congress, RL 33862,
at 56 (2007) (quoting Office of Management and Budget, Stimulating
Smarter Regulation: 2002 Report to Congress on the Costs and Benefits
of Federal Regulations and Unfunded Mandates on State, Local, and
Tribal Entities, Dec. 2002).
\133\John Graham, Administrator, OIRA, Remarks to the Board of
Trustees, The Keystone Center, at Washington, DC (June 18, 2002),
available at http://www.whitehouse.gov/omb/inforeg/
keystone_speech061802.html.
---------------------------------------------------------------------------
This ``return to the gatekeeper perspective of OIRA's role
[had] implications for an array of OIRA's functions.''\134\
Under the Bush administration, ``OIRA's increasingly aggressive
role in controlling agency action'' may have been ``the biggest
administrative law story of the new century.''\135\
Manifestations of OIRA's heightened role in the rulemaking
process, as identified by the Government Accountability Office
(GAO)\136\ and CRS,\137\ included the following:
---------------------------------------------------------------------------
\134\Interim Report at 56.
\135\Lisa Heinzerling, ``Statutory Interpretation in the Era of
OIRA,'' 33 Ford. Urb. L. Rev. 1097, 1117 (2006).
\136\U.S. General Accounting Office, Rulemaking: OMB's Role in
Reviews of Agencies' Draft Rules and the Transparency of Those Reviews,
GAO-03-929, Sept. 22, 2003.
\137\The Rulemaking Process and the Unitary Executive Theory:
Hearing Before the Subcomm. on Commercial and Administrative Law of the
H. Comm. on the Judiciary, 110th Cong. (2008) (prepared statement of
Curtis W. Copeland, Specialist in American National Government,
Congressional Research Service) (footnotes omitted). Additional
instances of this heightened role include the following:
Gthe increased use of ``informal'' OIRA reviews in which
agencies share preliminary drafts of rules and analyses before final
decisionmaking at the agencies--a period when OIRA says it can have its
greatest impact on the rules, but when OIRA says that some of the
---------------------------------------------------------------------------
transparency requirements in Executive Order 12866 do not apply;
Gextensions of OIRA review for certain rules for months or
years beyond the 90-day time limit delineated in the executive order;
Gusing a general statutory requirement that OIRA provide
Congress with ``recommendations for reform'' to request the public to
identify rules that it believes should be eliminated or reformed;
Ga leadership role for OIRA in the development of
electronic rulemaking, which has led to the development of a
centralized rulemaking docket, but which some observers believe can
lead to increased presidential influence over the agencies;
Gthe development of an OMB bulletin on peer review that,
in its original form, some believed could have led to a centralized
system within OMB that could be vulnerable to political manipulation or
control;
Gthe development of a proposed bulletin standardizing
agency risk assessment procedures that the National Academy of Sciences
concluded was ``fundamentally flawed,'' and that OIRA later withdrew;
and
Gthe development of a ``good guidance practices'' bulletin
that standardizes certain agency guidance practices.
Id.
Lthe development of a detailed economic
analysis circular and what agency officials described
as a perceptible ``stepping up the bar'' in the amount
of support required from agencies for their rules, with
OIRA reportedly more often looking for regulatory
benefits to be quantified and a cost-benefit analysis
for every regulatory option that the agency considered,
not just the option selected;
Lthe issuance of 21 letters returning rules to
the agencies between July 2001 and March 2002--three
times the number of return letters issued during the
last 6 years of the Clinton administration;\138\
---------------------------------------------------------------------------
\138\However, OIRA returned only two rules in 2003, one rule in
2004, one rule in 2005, no rules in 2006, and one rule in 2007. OIRA
officials indicated that the pace of return letters declined after 2002
because agencies had gotten the message about the seriousness of OIRA
reviews.
Lthe issuance of 13 ``prompt letters'' between
September 2001 and December 2003 suggesting that
agencies develop regulations in a particular area or
encouraging ongoing efforts. However, OIRA issued two
prompt letters in 2004, none in 2005, one in 2006, and
---------------------------------------------------------------------------
none in 2007[.]
According to CRS, these and other initiatives ``represent[ed]
the strongest assertion of presidential power in the area of
rulemaking in at least 20 years.''\139\ Not surprisingly,
President Obama, as one of his first official acts after
assuming office, revoked EO 13422 on January 30, 2009.\140\
---------------------------------------------------------------------------
\139\The Rulemaking Process and the Unitary Executive Theory:
Hearing Before the Subcomm. on Commercial and Administrative Law of the
H. Comm. on the Judiciary, 110th Cong. (2008) (prepared statement of
Curtis W. Copeland, Specialist in American National Government,
Congressional Research Service).
\140\Exec. Ord. No. 13,497, 74 Fed. Reg. 6,113 (Jan. 30, 2009).
---------------------------------------------------------------------------
H.R. 2122, in part, reflects the Bush administration view
that OIRA should act as a rulemaking ``gatekeeper'' by
expanding cost-benefit analysis requirements and OIRA review
authority in some of the ways outlined in EO 13422. In short,
greater presidential control over rulemaking, in the wrong
Administration's hands, could undermine important health,
safety, consumer protection, financial and other regulations.
The Democratic staff of the House Judiciary Committee prepared
a detailed analysis of the Bush administration's control of the
rulemaking process and concluded that such control was ``to the
detriment of the public interest and has served to circumvent
legislative intent.''\141\
---------------------------------------------------------------------------
\141\H. Comm. on the Judiciary Majority Staff, Reining in the
Imperial Presidency--Lessons and Recommendations Relating to the
Presidency of George W. Bush, 111th Cong., at 186 (Mar. 2009).
---------------------------------------------------------------------------
Notwithstanding the serious concerns presented regarding
greater presidential control over rulemaking, section 3 of H.R.
2122 would require all agencies--including independent
regulatory agencies--to consult with OIRA before they could
publish a proposed or final rule. This requirement represents
an unprecedented delegation of power to OIRA and the President
as it will effectively allow OIRA to control all rulemaking
activity. Moreover, this provision would undermine the
independence of independent regulatory agencies that Congress
created to be independent of the President.\142\
---------------------------------------------------------------------------
\142\Certain agencies are considered ``independent'' because the
President has limited authority to remove their leaders (usually, heads
of such agencies can only be removed for cause, rather than at the
President's pleasure). Stephen G. Breyer, et al., Administrative Law
and Regulatory Policy, at 100 (4th ed. 1999).
---------------------------------------------------------------------------
This requirement is particularly curious in light of the
fact that many of the proponents of H.R. 2122 are also,
somewhat hypocritically, proponents of H.R. 367, the
``Regulations from the Executive in Need of Scrutiny Act of
2013'' or the ``REINS Act,''\143\ which requires, among other
things, that Congress approve all major rules before they can
go into effect. Therefore, proponents of H.R. 367 are seeking
to have Congress regain control from the Executive Branch over
the rulemaking process, while in H.R. 2122, they seek to give
the Executive Branch even more power over the rulemaking
process.
---------------------------------------------------------------------------
\143\H.R. 367, 113th Cong. (2013).
---------------------------------------------------------------------------
Rather than learning from prior mistakes, the proponents of
H.R. 2122, in effect, seek to revitalize and codify the Bush
administration's view that OIRA should act as a rulemaking
``gatekeeper'' by mandating OIRA review authority in some of
the same ways specified in the Bush administration's overruled
EO 13422. As a result, H.R. 2122 ensures greater presidential
control over rulemaking, which, in the wrong Administration's
hands, could undermine important health, safety, consumer
protection, financial and other regulations.
B. H.R. 2122 Undercuts Current Transparency Requirements
Another problematic provision of H.R. 2122 gives the
President and OIRA the discretion as to what information must
be made available to the public in connection with certain
rulemaking processes. As a result, the bill would reduce--not
strengthen--current requirements for OIRA transparency. For
example, EO 12866 currently requires OIRA to ``make available
to the public all documents exchanged between OIRA and the
agency during the review by OIRA.'' The bill, however, would
allow the President and the OIRA Administrator to decide--at
their sole discretion--what information that OIRA provides to
the agency will be disclosed to the public. Also, the bill
would allow the President or the OIRA Administrator to choose
what documents and information communicated by OIRA should be
in the public rulemaking record.
C. LIn Extending Cost-Benefit Analysis Requirements to Independent
Regulatory Agencies, H.R. 2122 Usurps the Congressionally
Mandated Independence of Such Agencies
One area where there may a limited degree of consensus is
with respect to the question of whether modest cost-benefit
analysis requirements should apply to independent regulatory
agencies. Such limited consensus, however, does not extend to
OIRA review of independent regulatory agencies. For instance,
EO 12866 (and EO 13563, by reference) specifically excludes
agencies that are ``considered to be independent regulatory
agencies'' from its requirements, including the requirement to
consider the costs and benefits of regulation.\144\ Certain
agencies are considered ``independent'' because the President
has limited authority to remove their leaders (usually, heads
of such agencies can only be removed for cause, rather than at
the President's pleasure).\145\ Such agencies are usually
styled ``commissions'' or ``boards'' (e.g., the Securities and
Exchange Commission, the Federal Trade Commission, the National
Labor Relations Board.) Some of these independent agencies
voluntarily choose to comply with the requirements of EO 12866
and EO 13563, but none are compelled to do so. While not all
observers support the extensive reliance on cost-benefit
analysis in agency rulemaking, to the extent that agencies
already engage in such analysis, it would seem logical to
extend those same requirements to other agencies.
---------------------------------------------------------------------------
\144\Exec. Ord. No. 12,866, 58 Fed. Reg. 51,735 (Oct. 4, 1993).
\145\Stephen G. Breyer et al., Administrative Law and Regulatory
Policy, at 100 (4th ed. 1999).
---------------------------------------------------------------------------
H.R. 2122, however, does not protect the independence of
such agencies. Rather, it would require them to comply with
mandatory guidelines issued by OMB and OIRA, thereby bringing
them under the President's control. Such a move would
contravene Congress's intent in making them ``independent'' in
the first place.
H.R. 2122 SECTION-BY-SECTION EXPLANATION
A description of the bill's principal substantive
provisions follows. Section 2 of H.R. 2122 amends section 551
of title 5 of the U.S. Code, which defines various terms
applicable to the Administrative Procedure Act (APA) to add new
definitions. For the definition of ``major rule,'' section 2
sets forth four alternative definitions, each of which is
potentially vague and subject to interpretation because each
definition applies where a rule is ``likely to impose'' some
effect. A major rule, under new section 551(15), is any rule
determined by OIRA that is ``likely to impose'':
(1) an annual cost on the economy of $100 million or
more, adjusted annually for inflation;
(2) a major increase in costs or prices for consumers,
individual industries, Federal, state, local or tribal
government agencies, or geographic regions (it is
unclear what a ``major increase'' means in this
context);
(3) significant adverse effects on competition,
employment, investment, productivity, innovation, or on
the ability of U.S.-based enterprises to compete with
foreign-based enterprises in domestic and expert
markets (this has the potential to undo a broad range
of safety regulations); or
(4) significant costs on multiple sectors of the
economy (again, ``significant costs'' is a vague term).
Section 2 also defines a ``high-impact rule'' as any rule
that OIRA determines is likely to impose an annual cost on the
economy of $1 billion or more, adjusted for inflation
In addition, section 2 defines ``guidance'' as an agency
statement of general applicability and future effect, other
than a regulatory action, that sets forth a policy on a
statutory, regulatory or technical issue or an interpretation
of a statutory or regulatory issue. Section 2 also defines
``major guidance'' as guidance that OIRA finds is ``likely to
lead to'' any of the four impacts set forth for the definition
of a major rule. Further, section 2 includes definitions for
the Information Quality Act (IQA) (new section 551(19)) and
OIRA (new section 551(20)).
Subsection 3 amends section 553, which sets forth the
requirements for informal notice-and-comment rulemaking under
the APA, to add an extensive series of new requirements. First,
new subsection (b) requires an agency to make all preliminary
and final determinations based on evidence. It is not clear
what type of evidentiary standard would apply. Second, the
agency must, in addition to other applicable considerations,
consider the following:
(1) The legal authority under which the rule may be
proposed, such as whether it is required by statute
and, if so, whether it is due by a specific date and
whether the agency has discretion to commence a
rulemaking (new section 553(b)(1)).
(2) Other statutory considerations applicable to
whether the agency can or should propose a rule or
undertake other agency action (new section 553(b)(2)).
It is unclear what ``other agency action'' would
encompass.
(3) The specific nature and significance of the problem
the agency may address with a rule, including the
degree and nature of risks the problem poses and the
priority of addressing those risks compared to other
matters or activities within the agency's jurisdiction,
and whether the problem warrants new agency action and
any countervailing risks posed by such new action (new
section 553(b)(3)). Again, these criteria are very
vague.
(4) Whether existing rules have created or contributed
to the problem the agency may address with a rule and
whether such rules could be amended or rescinded to
address the problem in whole or in part (new section
553(b)(4)).
(5) Any reasonable alternatives in lieu of a new rule
or other response identified by the agency or
``interested persons,'' including not only responses
that mandate particular conduct or manners of
compliance, but also the alternative of no Federal
response; amending or rescinding existing rules;
potential regional, state, local or tribal regulatory
action or other responses that could be taken in lieu
of agency action; and potential responses that specify
performance objectives rather than conduct or manners
of compliance, establish economic incentives to
encourage desired behavior, provide information upon
which choices can be made by the public, or incorporate
other innovative alternatives rather than agency
actions that specify conduct or manners of compliance
(new section 553(b)(5)). Essentially, this directs the
agency to consider alternatives to promulgating a new
rule. Note that ``interested persons'' can include
literally anyone.
Third, new section 553(b)(6) acts as a ``supermandate'' by
overriding all existing law to require the agency to consider:
(1) the ``potential'' costs and benefits associated with
``potential'' alternatives and other responses set forth above,
including direct, indirect, and cumulative costs and benefits
and estimated impacts on jobs (including an estimate of the net
gain or loss in domestic jobs), economic growth, innovation,
and economic competitiveness (new section 553(b)(6)(A)); (2)
means to increase the cost-effectiveness of any Federal
response (new section 553(b)(6)(B)); and (3) incentives for
innovation, consistency, predictability, lower costs of
enforcement and compliance--for governmental and regulated
entities, and the public--and flexibility (new section
553(b)(6)(C)).
Fourth, new section 553(c)(1) requires advance notice of
proposed rulemaking for major and high-impact rules as well as
rules involving novel legal or policy issues. The bill,
however, does not define what would constitute a ``novel legal
or policy'' issue. Not later than 90 days before a notice of
proposed rulemaking (NPRM) is published in the Federal Register
(the current starting point for notice-and-comment rulemaking),
an agency must published advance notice of such rulemaking
(ANPRM) in the Federal Register. The ANPRM must include a
written statement, ``at a minimum,'' identifying all of the
following:
(1) the nature and significance of the problem the
agency may address with a rule, including data and
other evidence and information on which the agency
expects to rely for the proposed rule (new section
553(c)(1)(A)(i));
(2) the legal authority under which a rule may be
proposed, such as whether it is required by statute
and, if so, whether it is due by a specific date and
whether the agency has discretion to commence a
rulemaking (new section 553(c)(1)(A)(ii);
(3) preliminary information available to the agency
concerning the other considerations specified in new
section 553(b) (new section 553(c)(1)(A)(iii); and
(4) with respect to a rule that involves a novel legal
or policy issue arising out of statutory mandates, the
nature of and potential reasons to adopt the novel
legal or policy position upon which the agency may base
a proposed rule.
In addition, the notice must solicit data, views or argument
from interested persons concerning the information and issues
addressed in the ANPRM and provide for a period of not less
than 60 days for such persons to submit such feedback to the
agency (new section 553(c)(1)(B)-(C)).
Fifth, new section 553(d) requires the agency, after
complying with new section 553(c) (if applicable) and in
consultation with OIRA, to publish a NPRM containing the
following:
(1) a statement of the time, place, and nature of
public rulemaking proceedings (new section
553(d)(1)(A));
(2) reference to the legal authority under which the
rule is proposed (new section 553(d)(1)(B));
(3) the terms of the proposed rule (new section
553(d)(1)(C));
(4) a description of the information known to the
agency on the subject and issues of the proposed rule,
including--``but not limited to''--a summary of
information known to the agency concerning the items
specified in section 553(b); a summary of additional
information the agency provided to and obtained from
interested persons under subsection 553(c); a summary
of any preliminary risk assessment or regulatory impact
analysis performed by the agency; and information
specifically identifying all data, studies, models, and
other evidence or information considered or used by the
agency in connection with its determination to propose
the rule (new section 553(d)(1)(D));
(5) a reasoned preliminary determination of need for
the rule based on information described in the
preceding paragraph; and whether the rule is required
by statute (new section 553(d)(1)(E));
(6) a reasoned preliminary determination that the
benefits of the proposed rule meet the relevant
statutory objectives and justify the costs of the rule,
including all costs described in section 553(b)(6);
(7) a discussion of alternatives to the proposed rule
and other alternative responses considered by the
agency under new section 553(b);
(8) a discussion of the costs and benefits of those
alternatives (including all costs to be considered
under section 553(b)(6);
(9) a discussion of whether those alternatives meet
relevant statutory objectives;
(10) a discussion of why the agency did not propose any
of those alternatives (new section 553(d)(1)(G)); and
(11) a statement of whether existing rules have created
or contributed to the problem that the agency seeks to
address with the rule, and, if so, whether or not the
agency proposes to amend or rescind any of these rules
(new section 553(d)(1)(H)).
Note that the requirements set forth in items (4) through (11)
are in addition to the current NPRM requirements.
Sixth, all information considered by the agency and ``steps
to obtain information by the agency'' in connection with its
determination to propose the rule must be placed in the docket
for the proposed rule and made available to the public (new
section 553(d)(1)).
Seventh, if the agency undertakes procedures under new
section 553(c) and then determines not to propose a rule, the
agency must then publish a notice of determination of other
agency course of action. This notice must include the
information required by new section 553(d)(1)(D) and a
description of the alternative response the agency determined
to adopt. If in its determination of other agency course the
agency determines to amend or rescind an existing rule, the
agency is not required to undertake additional proceedings
under new section 553(c) before it publishes a NPRM to amend or
rescind the existing rule (new section 553(d)(2))(B)).
Eighth, all information considered by the agency and
``steps to obtain information by the agency'' in connection
with its determination of other agency course must be placed in
the docket for the proposed rule and made available to the
public (new section 553(d)(2)).
Ninth, after issuing the NPRM, the agency must provide
interested persons an opportunity to participate in the
rulemaking through submissions of written data, views, or
arguments with or without opportunity for oral presentation.
The agency must provide not less than 60 days for the
submission of such material and 120 days if the rule is major
or high impact. An opportunity for oral presentation must be
provided if a hearing is required under section 553(d)(4)(B) or
553(e) (new section 553(d)(3)(A)). With regard to rules
required by statute or required to be made on the record after
opportunity for agency hearing, sections 556 and 557 must apply
and the following provisions do not apply: section 553(d)(4),
553(e) (pertaining to receiving comment outside of the
procedures of sections 556 and 557), and 553(e)(6) (pertaining
to the petition procedures) (new section 553(d)(3)(B)).
Tenth, within 30 days of publication of a NPRM, a member of
the public may petition for a hearing in accordance with
section 556 to determine any evidence or other information upon
which the agency bases the proposed rule fails to comply with
the IQA (new section 553(d)(4)(A). This means that anyone, even
someone who would not qualify as an interested person, could
demand this relief (new section 553(d)(4)(A)). Upon review of
the petition, the agency may exclude from the rulemaking the
evidence or information that is the subject of the petition.
The agency may also withdraw the proposed rule. In addition,
the agency must promptly publish any such determination (new
section 553(d)(4)(B)(i)).
Eleventh, if the petition is not resolved per the above,
then the agency must grant any such petition that presents a
prima facie case that evidence or other information upon which
the agency bases the proposed rule fails to comply with the IQA
and hold the requested hearing not later than 30 days after
receipt of the petition, provide a reasonable opportunity for
cross-examination at the hearing, and decide the issues
presented by the petition no later than 60 days after receipt
of the petition. The agency may deny a petition that does not
present a prima facie case. (new section 553(d)(4)(B)(ii)).
Twelfth, judicial review is not available with respect to
the agency's disposition of issues considered under new section
553(d)(4)(B)(ii) until there is judicial review of the agency's
final action. In addition, the provision prohibits judicial
review of an agency's determination to withdraw a proposed rule
under new section 553(d)(4)(B)(i) (new section 553(d)(3)(C).
Nevertheless, the failure to petition for a hearing under new
section 553(d)(4) does not preclude judicial review of any
claim based on the IQA under chapter 7 (new section
553(d)(3)(D).
Thirteenth, the agency, with respect to high-impact rules,
must hold a hearing in accordance with sections 556 and 557,
following a NPRM, receipt of comments on the proposed rule, and
any hearing held under section 553(d)(4), unless such hearing
is waived by all participants in the rulemaking other than the
agency (new section 553(e)). The agency must provide a
reasonable opportunity for cross-examination at the hearing.
The hearing is limited to the following issues of fact, except
that participants at the hearing other than the agency may
waive determination of any such issue: (1) whether the agency's
asserted factual predicate for the rule is supported by the
evidence; (2) whether there is an alternative to the proposed
rule that would achieve the relevant statutory objectives at a
lower cost (including all costs considered under section
553(b)(6)); (3) if there is more than one alternative, which
would achieve the relevant statutory objectives at the lowest
cost; (4) whether, if the agency proposes to adopt a rule that
is more costly than the least costly alternative, the
additional benefits of the more costly rule exceed the
additional costs of the more costly rule [how does one define
cost here?]; (5) whether the evidence and other information
upon which the agency bases the proposed rule meets the
requirements of the IQA; and (6) upon petition by an interested
person who has participated in the rulemaking other issues
relevant to the rulemaking, unless the agency determines that
consideration of the rule would not advance consideration of
the rule or would, in light of the need for agency action,
unreasonably delay completion of the rulemaking. The agency
must grant or deny this petition within 30 days of receipt.
Fourteenth, not later than 45 days before any hearing held
under new section 553(e) or sections 556 and 557, the agency
must publish in the Federal Register a notice specifying the
proposed rule to be considered at such hearing, the issues to
be considered at the hearing, time/place, except that such
notice may be issued not later than 15 days before a hearing
under section 553(d)(4)(B).
Fifteenth, an agency may only adopt a rule following
consultation with OIRA to facilitate compliance with applicable
rulemaking requirements (new section 553(f)(1)).
Sixteenth, an agency may adopt a rule only on the basis of
best reasonably obtainable scientific, technical, economic, and
other evidence and information concerning the need for,
consequences of, and alternatives to the rule (new section
553(f)(2)).
Seventeenth, except as provided in new section
553(f)(3)(B), the agency must adopt the least costly rule
considered during the rulemaking, including all costs pursuant
to section 553(b)(6) (new section 553(f)(3)(A)). The agency may
adopt a more costly rule only if its additional benefits
justify its additional costs and only if the agency explains
its reason for doing so based on interests of public health,
safety or welfare that are clearly within the scope of the
statutory provision authorizing the rule (new section
553(f)(3)(B)).
Eighteenth, when the agency adopts a final rule, it must
publish a NFRM that includes: (1) a concise, general statement
of the rule's basis and purpose (new section 553(f)(4)(A)); (2)
the agency's reasoned final determination of need for a rule,
including whether it is required by statute (new section
553(f)(4)(B)); (3) the agency's reasoned final determination
that the rule's benefits meet the relevant statutory objectives
and justify the rule's costs (new section 553(f)(4)(C)); (4)
the agency's reasoned final determination not to adopt any of
the alternatives to the rule (new section 553(f)(4)(D)); (5)
the agency's reasoned final determination that existing rules
have not created or contributed to the problem that the agency
seeks to address with the rule or that existing rules have
created or contributed to the problem, and if so, why amendment
or rescission of such existing rules is not alone sufficient to
respond to the problem and whether and how the agency intends
to amend or rescind the existing rule separate from adoption of
the rule (new section 553(f)(4)(E)); (6) the agency's reasoned
final determination that the evidence and other information
upon which the agency bases the rule complies with IQA (new
section 553(f)(4)(F)); and (7) for any major or high-impact
rule, the agency's plan for review of the rule no less than
every 10 years to determine whether, based on evidence, there
remains a need for the rule, whether the rule is in fact
achieving statutory objectives, whether the rule's benefits
continue to justify its costs, and whether the rule can be
modified or rescinded to reduce costs while continuing to
achieve statutory objectives (new section 553(f)(4)(G)). As
required elsewhere, all information considered by the agency
must be placed in the docket for the rule.
Unless notice or hearing is otherwise required by statute,
the requirements of new section 553(c) through (e) do not apply
to interpretive rules, general statements of policy, or rules
of agency organization, procedure or practice (new section
553(g)(1)). When the agency for good cause, based on evidence,
finds (and incorporates the finding and a brief statement of
reasons therefore in the rules issued) that compliance with
subsection (c), (d) or (e) or requirements to render final
determinations under subjection (f) before the issuance of an
interim rule is impracticable or contrary to the public
interest (including national security), such provisions/
requirements do no apply to the agency's adoption of an interim
rule new section 553(g)(2)(A)). If an agency, in compliance
with subsection (A), adopts an interim rule, it must commence
proceedings that comply fully with subsections (c) through (f)
immediately upon publication of the interim rule and must
complete compliance within 270 days from publication of the
interim rule or 18 months for a major or high-impact rule and
take final action to adopt a final rule or rescind the interim
rule. If the agency fails to take timely final action, the
interim rule will cease to have the effect of law (new section
553(g)(2)(B)).
Other than in cases involving national security, the
agency's publication of an interim rule not in compliance with
subsection (c) through (e) or requirements to render final
determinations under subsection (f), an interested party may
seek immediate judiciary review under chapter 7 of the agency's
determination to adopt such interim rule. The record on review
must include all documents and information considered by the
agency and any additional information presented by a party that
the court determines necessary to consider to assure justice
(new section 553(g)(2)(C)). Note it pertains to an interested
party, not a person. This could allow parties to overwhelm
courts with submissions that would force them to sort through
and determine whether they would assure justice (``justice''
being a vague term in this context).
Nineteenth, when a hearing is required under subsection (e)
or is otherwise required by statute or at the agency's
discretion before the adoption of a rule, the agency must
comply with the formal rulemaking requirements of sections 556
and 557 in addition to subsection (f) in adopting the rule and
in providing notice of the rule's adoption (new section
553(h)).
Twentieth, the required publication or service of a
substantive final or interim rule must be made within 30 days
before the rule's effective date, unless: (1) a substantive
rule grants or recognizes an exemption or relieves a
restriction; (2) interpretive rules and statements of policy;
or (3) as otherwise provided by the agency for good cause found
and published with the rule (new section 553(i)).
Twenty-first, each agency must give an interested person
the right to petition for the issuance, amendment, or repeal of
a rule (new section 553(j)). This appears to be extremely
broad.
Twenty-second, OIRA has authority to establish guidelines
for the assessment, including quantitative and qualitative, of
the costs and benefits of potential, proposed, and final rules,
other economic issues, or issues related to risk that are
relevant to rulemaking under section 553 and other sections of
this title (new section 553(k)(1)(A)). It is unclear what
``other economic issues'' would include.
Twenty-third, to ensure that agencies use the best
available techniques to quantify and evaluate anticipated
present and future benefits, costs, other economic issues, and
risks as accurately as possible, OIRA must regularly update
these guidelines (new section 553(k)(2)(B)).
Twenty-fourth, OIRA also has the authority to issue
guidelines to promote coordination, simplification, and
harmonization of agency rules. Such guidelines must assure that
each agency avoids regulations that are inconsistent or
incompatible with or duplicative of its other regulations and
those of other Federal agencies. These guidelines should ensure
that agencies draft their regulations to be simple and easy to
understand with the goal of minimizing the potential for
uncertainty and litigation (new section 553(k)(2)).
Twenty-fifth, OIRA, to ensure consistency in rulemaking,
must issue guidelines and otherwise ensure that rulemakings
conducted under procedures specified in provisions of law other
than those of subchapter II of title 5 conform to the fullest
extent allow by law with the procedures set forth in section
553 (new section 553(k)(3)(A)).
Twenty-sixth, OIRA must issue guidelines for the conduct of
hearings under subsections 553(d)(4) and (e), including
provisions that assure a reasonable opportunity for cross-
examination. Each agency must adopt regulations for conducting
hearings consistent with these guidelines (new section
553(k)(3)(B)).
Twenty-seventh, OIRA must issue guidelines pursuant to the
IQA to apply in rulemaking proceedings under sections 553, 556,
and 557. Such guidelines and OIRA's specific determinations
regarding agency compliance with such guidelilnes shall be
entitled to judicial deference (new section 553(k)(4)).
Twenty-eighth, the agency must include in the rulemaking
record all documents and information considered by the agency
during the proceeding, including at the discretion of the
President or OIRA documents and information communicated by
OIRA during consultation with the agency (new section 553(l)).
New section 553(m) recognizes an exception for certain
provisions with respect to monetary policy rulemakings by the
Federal Reserve or Federal Open Market Committee.
Section 4 of the bill imposes an extensive series of new
obligations on an agency before it can issue major guidance (as
opposed to a rule). First, before an agency may issue any major
guidance, it must make a reasonable determination and document
it assuring that such guidance is understandable and complies
with relevant statutory objectives and regulatory provisions
(new section 553a(a)(1)(A)).
Second, the agency must identify the costs and benefits
(including all costs considered during the rulemaking under
section 553(b)) of conduct conforming to such guidance and
assures that such benefits justify such costs (new section
553a(a)(1)(B)).
Third, the agency must describe alternatives to such
guidance and their costs and benefits (including all costs to
be considered during the rulemaking under section 553(b)) and
explain why the agency rejected those alternatives (new section
553a(a)(1)(C)). This would force an agency to potentially do
countless cost-benefit analyses.
Fourth, the agency must confer with OIRA to assure that the
guidance is reasonable, understandable, consistent with
relevant statutory and regulatory provisions, and requirements
or practices of other agencies, does not produce costs that are
unjustified by the guidance's benefits, and otherwise
appropriate (new section 553a(a)(2)).
Fifth, the agency guidance must state in a plain, prominent
and permanent manner that it is not legally binding (new
section 553a(b)(2)).
Sixth, the guidance must be made available by the issuing
agency to interested persons and the public at the time it is
issued (new section 553a(b)(3)).
Seventh, OIRA has authority to issue guidelines for use by
agencies in the issuance of major guidance and other guidance
that must assure each agency avoids issuing guidance documents
that are inconsistent or incompatible with or duplicative of
its other regulations and those of other agencies. The agency
must draft its guidance documents to be simple and easy to
understand in order to minimize the potential for uncertainty
and litigation.
Section 5 of the bill sets forth a comprehensive regime of
new requirements for hearings.
New section 556(e)(1) appears to be identical to current
section 556(e). It provides that the transcript of testimony
and exhibits, together with all papers and requests filed in
the proceeding, constitute the exclusive record for decision in
accordance with section 557, on payment of lawfully prescribed
costs, shall be made available to the parties. When an agency
decision rests on official notice of a material fact not
appearing in the evidence in the record, a party is entitled,
on timely request, to an opportunity to show the contrary.
New section 556(e)(2) overrides paragraph (1) with respect
to a proceeding held under section 556 pursuant to section
553(d)(4) or 553(e), the record for decision must include any
information that is part of the record of proceedings under
section 553. When an agency conducts rulemaking under sections
556 and 557 directly after concluding proceedings on an ANPR
under section 553(c), the matters to be considered and
determinations to be made must include, among other relevant
matters and determinations, the matters and determinations
described in subsections (b) and (f).
Upon receipt of a petition for a hearing under this
section, an agency pursuant to new subsection 556(g) must grant
the petition in the case of any major rule, unless the agency
reasonably determines that a hearing would not advance
consideration of the rule or would, in light of the need for
agency action, unreasonably delay completion of the rulemaking.
The agency must publish its decision to grant or deny the
petition when it renders the decision, including an explanation
of the grounds for such decision. The information contained in
the petition must be included in the administrative record.
Subsection (g), however, does not apply to monetary policy
rulemakings proposed or implemented by the Federal Reserve or
Federal Open Market Committee.
Section 6 of the bill amends section 704 of the APA, which
specifies what agency actions are reviewable by a court.
Section 6 adds a new provision to section 704 that broadens the
types of actions reviewable. Except for cases involving
national security, an interested party may seek immediate
judicial review of the agency's determination to adopt an
interim rule on an interim basis upon the agency's publication
of such rule without compliance with section 553(c), (d), or
(e) or requirements to render final determinations under
section 553(f). Review is limited to whether the agency abused
its discretion to adopt the interim rule without compliance
with section 553(c), (d), or (e) or without rendering final
determinations under section 553(f).
Section 7 of the bill amends section 706 of the APA, which
sets forth the scope of judicial review. Current section
706(a)(2)(A) provides that a court, in appropriate
circumstances, must ``hold unlawful and set aside action,
findings, and conclusions found to be arbitrary, capricious, an
abuse of discretion, or otherwise not in accordance with law.''
Section 7(2) would require such action if the agency action,
findings or conclusions violated the Information Quality Act.
Section 7(3) adds a new provision that prohibits a court from
deferring to the agency's interpretation of an agency rule if
the agency's (1) interpretation of an agency rule did not
comply with the procedures of sections 553, 556 and 557; (2)
determination of the costs and benefits or economic or risk
assessment of the action failed to conform to guidelines on
such determinations and assessments established by OIRA
pursuant to section 553(k); or (3) determinations under
interlocutory review pursuant to sections 553(g)(2)(C) and
704(b). In addition, section 7 requires a court to review
agency denials of petitions under section 553(e)(6) (pertaining
to petitions by interested persons raising other issues) or any
other petition for a hearing under sections 556 and 557 for
abuse of agency discretion.
Section 8 of the bill amends the definitions pertinent to
judicial review of agency actions to add a definition of
``substantial evidence.'' It defines this term to mean such
relevant evidence as a reasonable mind might accept as adequate
to support a conclusion in light of the record considered as a
whole, taking into account whatever in the record fairly
detracts from the weight of the evidence relied on by the
agency to support its decision.
Section 9 of the bill provides that its amendments to
sections 553, 556, 704, 701, and 706(b) and (c) do not apply to
any rulemakings pending or completed on the date of enactment.
CONCLUSION
The cumulative weight of the changes to the APA made by
H.R. 2122 threatens to bring rulemaking to a halt. Most
academic administrative law experts believe that the bill's
revisions to current law, taken as a whole, will pour ``sand in
the gears'' of the rulemaking process. Although Congress
legislatively directs agencies to issue rules to protect the
American public from a wide spectrum of harms, H.R. 2122 would
effectively contravene such directives by making it almost
impossible for agencies to promulgate rules.
H.R. 2122 garners our strong opposition for numerous
reasons. First, it is based on the false and unsupported
assertions that regulations stifle economic growth and job
creation. Such claims ignore the overwhelming evidence that
regulations result in net benefits to society, including
spurring economic activity. Second, H.R. 2122's numerous and
ill-conceived changes to the APA would have the cumulative
effect of halting agency rulemaking in its tracks and
undermining agencies' ability to protect the American people
from a wide range of harms. They also would permit the
Executive Branch to circumvent Congress's intent in delegating
rulemaking authority to agencies through various statutes.
Third, H.R. 2122 prioritizes cost considerations over public
health, workplace safety, environmental protection, and other
values by overriding substantive law and imposing an unworkable
cost-benefit analysis regime on agencies. Fourth, the bill
dangerously concentrates unaccountable political power over
rulemaking in OIRA's hands. Fifth, H.R. 2122 tilts the
rulemaking playing field in favor of business interests by
resurrecting the long-discredited and time-consuming formal
rulemaking process, providing for expanded and less deferential
judicial review, increasing opportunities to challenge agency
compliance with the IQA, and encouraging the United States to
engage in a regulatory ``race to the bottom'' with countries
that lack protective regulatory regimes.
The Congressional Budget Office estimates that agencies
will need to expend $20 million annually to (cover the
governmentwide costs of additional personnel, contractor costs,
and other administrative expenses associated with meeting the
new requirements under the legislation.\146\
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\146\Congressional Budget Office, Cost Estimate for H.R. 2122, the
Regulatory Accountability Act of 2013, at 1, 4 (Aug. 1, 2013),
available at http://www.cbo.gov/sites/default/files/cbofiles/
attachments/hr2122.pdf.
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For these reasons, we respectfully dissent and urge our
colleagues to oppose H.R. 2122.
John Conyers, Jr.
Jerrold Nadler.
Robert C. ``Bobby'' Scott.
Melvin L. Watt.
Zoe Lofgren.
Sheila Jackson Lee.
Steve Cohen.
Henry C. ``Hank'' Johnson, Jr.