A Dangerous, Misguided Regulatory Attack

by Rick Melberth*, 9/22/2011

Today, Sens. Rob Portman (R-OH), Mark Pryor (D-AR), and Susan Collins (R-ME), and Reps. Collin Peterson (D-MN) and Lamar Smith (R-TX) announced their intention to propose a major revision of the Administrative Procedure Act – the basic legal framework that defines how federal rules are made – that would prevent or delay by years important health, safety, and environmental standards. It's hard to imagine a more damaging attack on the federal government's responsibility to protect the public from a wide range of threats.

The most recent draft of the forthcoming bill, currently known as the Regulatory Accountability Act of 2011, is a “solution” in search of a problem. The proposal is based on dangerous and misguided assumptions about the connection between regulations and job creation. For decades, economic studies have shown consistently that regulations do not negatively impact employment. In fact, some standards and environmental protections actually create jobs and generate new industries. Corporations and banks are sitting on more than a trillion dollars instead of investing those resources and creating jobs because demand is weak, not because of regulations.

A recent survey of small business owners by the Small Business Majority reveals that they do not believe regulations are affecting their ability to grow their businesses. Rather, economic uncertainty (i.e., lack of demand for their products) and the rising cost of doing business are what they worry about most. Likewise, in an August survey of business economists, a large majority reported that the current regulatory climate in this country is good for business and the economy.

If the provisions of the proposal (as described in a fact sheet from Portman's office) become law, they will result in a near-moratorium on rules by creating even more obstacles for agencies to overcome in issuing standards that keep us safe from contaminated food, product defects, and polluted air and water. In addition, the proposal would shift the locus of regulatory decisions to the courts and out of agencies' hands by providing multiple new opportunities for deep-pocketed corporate interests to challenge agencies at nearly every step of the process. When such special favors are granted to special interests, everyday Americans are further shut out of the regulatory process, giving them less of an opportunity to participate in this essential function of democratic governance.

For example, the proposed bill could allow cost-benefit analysis to be reviewed by the courts at both the proposed and final stages of the rulemaking process. If this happens, rules would not only languish for years, but courts would be empowered to substitute cost considerations for the health and safety of the American people – the basis of important laws like those that protect workers and our environment. This court-dominated process would be incredibly costly, wasting resources instead of enabling agencies to address problems in a timely and responsive fashion. This shift would favor wealthy business interests, not small businesses. The proposal's judicial review provisions would also shift the responsibility for agency oversight from Congress to the courts and swamp an already overburdened federal court system.

If Sens. Pryor, Portman, et al. want to constructively reform the federal regulatory process, they should work to reduce the barriers that make it difficult for agencies to fulfill the missions they’ve been assigned: to enforce the rules that protect the American people from environmental, chemical, and workplace dangers and establish the foundations for healthy economic growth.

Editor's Note: This post has been updated to clarify the potential scope of judicial review that the Regulatory Accountability Act would write into law.

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