Citizen Health & Safety
Sponsors of the Independent Agency Regulatory Analysis Act Try to Slip Bill in Under the Radar
The Independent Agency Regulatory Analysis Act (S. 3468), introduced on Aug. 1 by Sens. Mark Warner (D-VA), Rob Portman (R-OH), and Susan Collins (R-ME), may appear to be just another item in the string of anti-regulatory legislation considered, but not enacted, by the 112th Congress. Unfortunately, because it boasts both Democratic and Republican co-sponsors, it appears to be heading straight to mark-up within the Senate's Homeland Security and Governmental Affairs Committee (HSGAC).
The Independent Agency Regulatory Analysis Act seeks to change the way independent regulatory agencies operate. The bill authorizes the president to require that all independent agencies compare the costs and benefits of proposed and final rules and submit those rules to the Office of Information and Regulatory Affairs (OIRA) for approval. Executive Order 12866 requires executive branch agencies to complete cost-benefit analysis before rules are adopted and to obtain OIRA approval before they are published. No such requirement currently applies to independent regulatory agencies like the Federal Communications Commission or the Consumer Financial Protection Bureau. If enacted, the bill would dramatically increase executive branch control over independent agencies. They would no longer be able to enact rules to implement existing legislation without approval from OIRA.
The Independent Agency Regulatory Analysis Act is merely the latest piece of "regulatory reform" legislation to be referred to HSGAC. The last time the committee held hearings on regulatory reform issues, the debate was highly partisan, and no related legislation has been reported by the committee. However, Sens. Joseph Lieberman (I-CT) and Susan Collins – the Chair and Ranking Member of the committee, respectively – have indicated a desire to find compromise legislation. The Independent Agency Regulatory Analysis Act apparently is the “compromise” legislation with which they expect to move forward.
Independent regulatory agencies implement a wide variety of statutes, each of which requires that the agency consider a variety of different factors before issuing rules. The Securities and Exchange Commission, for example, must determine whether its rules adequately protect investors, while the Consumer Product Safety Commission must weigh the costs of product safeguards against the risk that the public will be harmed by those products. Congress requires some agencies to complete cost-benefit analyses to justify rules, while other agencies are not required to do so. The Independent Agency Regulatory Analysis Act would override the unique priorities given to each independent agency in the legislation that created it, requiring instead that every independent agency focus first and foremost on the economic impact of its proposed rules.
A requirement that all rules pass a cost-benefit test can yield absurd – even dangerous – results. Consider, for example, the Federal Aviation Administration (FAA) – an executive agency already subject to OIRA's comprehensive cost-benefit analysis requirements. The FAA has been remarkably successful at protecting the flying public, meaning that there have been relatively few airplane accidents over the past decade. That very success has made it more difficult for the agency to modernize its safety standards because, under a purely economic cost-benefit analysis requirement, too few people have died to justify any improvements over the status quo. Subjecting independent agencies to this same type of mandate would limit their ability to protect Americans from nuclear meltdowns, keep lead paint off children's toys, and stand guard against another mortgage fiasco.
Unlike executive branch agencies, the president cannot dictate the day-to-day policies of an independent regulatory agency. Most of these agencies are guided by a bipartisan, multi-member commission that serves for a fixed term. Rules are almost always a compromise between competing political visions. Currently, OIRA lacks authority to review rules proposed by these agencies. The Independent Agency Regulatory Analysis Act would fundamentally change the way such agencies operate, making them answer to OIRA for the first time.
With this one act, each previous decision by Congress to establish an independent agency outside the executive branch in order to insulate the agency from political pressure would be undone. For example, when it passed the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank), Congress chose to insulate the Consumer Financial Protection Bureau from political pressure by making it independent. S. 3468 would effectively nullify that choice.
Congress does not usually easily cede control over a regulatory agency to OIRA. In fact, Collins – a co-sponsor of the Independent Agency Regulatory Analysis Act – previously expressed concern about the prospect of OIRA control over independent agencies, arguing in May 2009 at a HSGAC hearing, "If you bring these independent agencies within the regulatory purview of OIRA, you defeat the whole purpose of having them be independent agencies. You’re treating them as if they’re members of the [president’s] cabinet." Collins has given no reason for her dramatic reversal on this issue.
Indications are that HSGAC is preparing to take the Independent Agency Regulatory Analysis Act straight to mark-up without holding a hearing to determine the bill’s impact. This expedited process means that independent agency heads will not have an opportunity to testify about how the bill would affect their ability to implement the laws Congress has adopted. Lawmakers with an interest in the bill (including, for example, the leaders and members of the Senate Banking Committee, who spent months fighting for the Dodd-Frank reforms) will have only limited, informal opportunities to participate in the process.
Like other so-called "regulatory reform" legislation HSGAC has considered and rejected, the Independent Agency Regulatory Analysis Act is not designed to improve the regulatory process or, more fundamentally, to improve Americans' lives. Instead, it would slow the process and undercut laws like Dodd-Frank and the Consumer Product Safety Improvement Act that were designed to guard against economic and public health disasters, regardless of who is in the White House.
Before taking such dramatic action to curtail the independence of agencies that previous Congresses deliberately established, HSGAC should hold a hearing to examine the full implications of this proposed legislation. What is potentially at stake is Congress’ ability to ensure ongoing enforcement in some key areas of law. Legislators need to carefully consider whether they want to give up this authority and whether this bill would undermine the ability of independent agencies to fulfill the missions for which they were created.
UPDATE: The Senate Homeland Security and Governmental Affairs Committee has postponed a possible vote on this bill until mid-November.