Return of the Regulatory Accountability Act: A Veiled Threat to Public Protections

by Katie Greenhaw, 6/18/2013

On May 23, Sen. Rob Portman (R-OH) reintroduced the Regulatory Accountability Act (RAA), a serious threat to environmental standards, workplace safety rules, public health, and financial reform regulations. The Regulatory Accountability Act of 2013, (S. 1029, and its counterpart in the House, H.R. 2122), is the latest version of a bill first introduced in 2011 and then again in 2012. The seemingly innocuous legislation is a drastic overhaul of the Administrative Procedure Act that would undermine the regulatory process. Advertised by its sponsors as a bipartisan proposal to improve rulemaking, the RAA would actually do the opposite.

When first introduced in 2011 by Sens. Portman, Mark Pryor (D-AR), and Susan Collins (R-ME), the RAA was criticized by public interest groups, including the Center for Effective Government, regulatory experts, and the American Bar Association's Section of Administrative Law and Regulatory Practice. While the most recent version of the bill has been revised, the proposal would obstruct agencies' ability to protect the public from harm and still poses significant problems.

Puts Costs to Business First

The RAA would override decades of health, safety, and environmental policies by making the cost of regulation to business the principal concern of federal agencies, not protecting the public.

The bill includes a cost-benefit analysis super-mandate, requiring agencies to conduct cost-benefit analysis not only for proposed rules, but for alternatives as well. This analysis must include "direct, indirect, and cumulative" costs and benefits, as well as estimated impacts on jobs, competitiveness, and productivity. The estimated impacts on health and safety are not emphasized alongside the impacts on competitiveness and productivity.

This would turn current law on its head. While many laws require that agencies take costs into account in some fashion, few mandate that agencies rely on formal cost-benefit analysis for all major rules. And some statutes, such as the Clean Air Act, the Occupational Safety and Health Act, and the Mine Safety and Health Act, bar agencies from relying on cost-benefit analysis. The RAA would run roughshod over these carefully considered laws by requiring one-size-fits-all cost-benefit analysis for all major rules and their alternatives.

In addition to adding new procedural hurdles and cost-benefit analysis requirements to rulemaking, the RAA would dramatically change the substance of regulations by establishing a default rule that an agency adopt the "least costly" rule out of all the alternatives considered, unless it can demonstrate that additional benefits of the more costly rule justify the additional costs. It is unclear what exactly an agency must do to justify the additional benefits of a more costly rule. Agencies with already limited resources and rulemaking timelines may be pressured to choose a weaker, less costly proposal when the burden of analyzing more stringent proposals and the alternatives is too great.

Undermines the Autonomy of Independent Agencies

The RAA would apply these new procedures to independent regulatory agencies, which often have multiple members and are not subject to the day-to-day control of the White House. Currently, such agencies may, but are not required to, forward proposed and final rules to the Office of Information and Regulatory Affairs (OIRA) for review.

Congress often establishes an independent agency when it wants certain policies insulated from White House interference. Many of the independent agencies have three to five members with a wide range of political views. The authorizing statutes of independent agencies define the structure, authority, and requirements they must meet to issue a rule; many already have requirements for cost-benefit analyses. The RAA would force all agencies to use a one-size-fits-all cost-benefit analysis regime, even if that regime is incompatible with the agency's authorizing statute or mission.

The bill would also force independent agencies, including the Securities and Exchange Commission (SEC), National Labor Relations Board (NLRB), Consumer Product Safety Commission (CPSC), and Consumer Financial Protection Bureau (CFPB), to follow guidelines to be established by OIRA.

Expands and Codifies OIRA's Role in Rulemaking

Under the RAA, OIRA's role in the rulemaking process, which is authorized by executive order, not statute, would be codified and expanded. Already, many regulatory experts feel OIRA interferes in the rulemaking process and has too much power. OIRA often makes substantial changes to rules under review, but the review process is not well documented or clear. Instead of reducing OIRA interference and improving transparency, the RAA demands that OIRA issue even more directives to govern agency policy and procedure.

The RAA requires OIRA to establish mandatory guidelines for conducting quantitative and qualitative assessments, issuing major guidance, and conducting risk assessments that include "criteria for selecting studies and models, evaluating and weighing evidence, and conducting peer reviews." Through these guidelines, OIRA will have the final word on how agencies develop and use science to inform their regulatory decision making. OIRA could increase opportunities for political or industry-led interference in agency science by increasing industry control over peer review and giving oversized weight to small pieces of contrary scientific evidence.

Establishes New Expiration Date for All Proposed Rules

The current version of the RAA is, in some respects, worse than earlier iterations. Most crucially, it establishes a novel two-year expiration date, with a possible one-year extension by the agency, on all notices of proposed rulemaking. Agencies that do not finalize rules within two to three years of proposing them would have to abandon the rules and start from scratch at the very beginning of the rulemaking process. This will create an incentive for regulated industries and officials opposed to implementation of a particular law to exploit the current sources of delay in order to "run out the clock" on a rule, thus indefinitely keeping legislation enacted by Congress from being implemented. The significant increase in procedural and analytical requirements that this bill creates, without any commensurate funding, will make it even easier for regulated industries to abuse the expiration date.

Inappropriately Expands Judicial Review

To top it all off, the RAA lowers the standard of judicial deference normally afforded to agencies. For high-impact rules, courts must employ a "substantial evidence" standard of review, which affords significantly less deference to agency expertise than the existing "arbitrary and capricious" standard. Non-expert judges would review agencies' highly technical analyses and have the power to reject rules whenever they determine that those analyses fail to comply with OIRA's one-size-fits-all cost-benefit analysis guidelines. This new and inappropriate role for the courts could mean increased litigation, endless delays, and more uncertainty for regulated industries and the American people.

Conclusion

This time around, the RAA is co-sponsored by nine senators, and the problematic bill remains a threat to a public-interest focused regulatory system. Full of procedural hurdles, inflexible analyses, and opportunities for non-experts to interfere with agency judgments, the latest version of the bill undermines the rulemaking process just as its predecessors did. Congress should be working to improve the process and enhance public protections – this bill is not the way to do that.