Mr. Speaker, I include in the Record an analysis of a previous version of H.R. 5 from the 112th Congress: November 2, 2011. Re H.R. 3010, the Regulatory Accountability Act of 2011 Hon. Lamar Smith,…
Mr. Speaker, I include in the Record an analysis of a previous version of H.R. 5 from the 112th Congress:
November 2, 2011.
Re H.R. 3010, the Regulatory Accountability Act of 2011
Hon. Lamar Smith, Chairman,
Hon. John Conyers, Jr., Ranking Member,
Committee on the Judiciary, House of Representatives,
Washington, DC.
Dear Mr. Chairman and Ranking Member Conyers: The
undersigned practitioners and scholars in the field of
administrative law, and former regulatory officials in the
White House, OMB and federal agencies, have reviewed the
provisions of H.R. 3010, the Regulatory Accountability Act of
2011. H.R. 3010 would reform the Administrative Procedure
Act's rulemaking provisions to enhance the quality of federal
regulation, enhance democratic accountability and oversight
for administrative policymaking, and improve policy outcomes
for the American people. We strongly support the Committee's
effort to enhance the analysis, justification, transparency
of, and participation in, federal rulemaking, and we
respectfully request that the Committee include this letter
in the record.
In its current form, the Administrative Procedure Act (APA)
does not adequately regulate the federal rulemaking process.
It does not obligate agencies to rigorously define and
characterize the need for regulation. It does not require
agencies to identify the costs of regulations--including both
compliance costs and impacts imposed on the economy and
general welfare. It does not require agencies to carefully
identify and assess the benefits to be achieved by new
regulations, and does not compel agencies to choose the least
burdensome, lowest-cost regulation that would achieve the
statutory objectives. In short, the APA does not necessarily
ensure that agencies justify their regulations in accordance
with the highest standards the public deserves. H.R. 3010
would correct this.
H.R. 3010's critics argue that the bill would impose new
burdens on agencies, by interposing additional analytic
hurdles before agencies could adopt new regulations. First,
it is important to understand that the bill's regulatory
standards, and its analytic and justification requirements,
are not fundamentally new--they have been previously
developed and applied in Executive Orders issued by
Presidents Reagan, Clinton and Obama. The bill would
effectively codify existing principles and standards from
these Executive Orders in law. Second, while agencies would
surely take the codified legal standards and requirements
very seriously, and thus experience somewhat greater
compliance burdens, that is not necessarily unreasonable or
unwarranted. We believe the American public would view such
additional safeguards as appropriate.
To be clear, we do not oppose environmental, health, safety
or economic regulation. Nor do we believe that only a
regulation's costs should be carefully tabulated and weighed.
We agree that the benefits of many well-designed regulations
can obviously be highly valuable to society, and we recognize
that sound regulations can certainly reflect benefits that
include intangible, non-quantifiable values (such as
environmental, moral, ethical, aesthetic, social, human
dignity, stewardship and other non-pecuniary or practical
factors).
Taken together, we believe that all such costs and all such
benefits must be rigorously analyzed, assessed, justified and
scrutinized before significant new rules are imposed on the
public, the economy, affected parties and regulated entities.
Quite simply, that is ``accountability.''
The heads of regulatory agencies exercise extensive
delegated policymaking authority, but are not directly
accountable to the public through the democratic process.
Accordingly, it is entirely reasonable, appropriate and,
indeed, essential, for Congress to (i) specify in law more
stringent criteria for rulemaking, (ii) facilitate
substantial Presidential oversight of agency regulations
(including those promulgated by ``independent'' agencies),
(iii) enable more robust public participation in the
rulemaking process, (iv) require regulations to be based on
more reliable data and other relevant inputs, and (v) provide
for more effective judicial scrutiny of the final
regulations.
Of course, Congress often delegates its policymaking power
to agencies, and it is incontrovertible that agencies'
rulemaking can often be as highly consequential and important
to the public as the congressionally enacted laws themselves.
But for that very reason, regulation must not be undertaken
without very careful consideration and observation of the
most stringent procedures and analysis. The fact that the
bill's requirements would embody existing regulatory review
duties and obligations (based on numerous Executive Orders)
in the APA itself is not objectionable. Before regulatory
agencies impose new burdens on the public and the economy,
the agencies should spend the time and make the effort to
make sure they get the balance right for the overall benefit
of society.
Accordingly, we view the Regulatory Accountability Act as
serving the public well by mandating in statutory text that
new regulations be thoroughly and meaningfully justified.
Indeed, to the extent feasible, we would recommend that
Congress avail itself of the same cost-benefit analysis prior
to enacting regulatory legislation so as to avoid imposing
unjustified regulatory mandates that agencies cannot fully
resolve in the rulemaking process.
As noted above, far from imposing partisan or ideologically
divisive requirements, H.R.
3010 embodies and implements a longstanding, bipartisan
consensus on the proper principles of regulatory review and
reform: Presidents Reagan, George H.W. Bush, Clinton, George
W. Bush and--most recently and emphatically--President Obama,
have all issued or implemented Executive Orders calling for
rigorous justification of the need for regulation, careful
cost-benefit analysis before imposing new regulatory
requirements, reliance on sound science, and selection of the
least burdensome regulatory alternatives that meet the
relevant statutory objectives.
H.R. 3010 would take those Executive Branch principles and
codify them, thereby preserving in federal statutes the very
values set forth in President Obama's recent Orders:
Our regulatory system must protect public health, welfare,
safety, and our environment while promoting economic growth,
innovation, competitiveness, and job creation.
It must be based on the best available science.
It must allow for public participation and an open exchange
of ideas.
It must identify and use the best, most innovative, and
least burdensome tools for achieving regulatory ends.
It must take into account benefits and costs, both
quantitative and qualitative.
Each agency must, among other things:
(1) propose or adopt a regulation only upon a reasoned
determination' that its benefits justify its costs
(recognizing that some benefits and costs are difficult to
quantify);
(2) tailor its regulations to impose the least burden on
society, consistent with obtaining regulatory objectives,
taking into account, among other things, and to the extent
practicable, the costs of cumulative regulations;
(3) select, in choosing among alternative regulatory
approaches, those approaches that maximize net benefits
(including potential economic, environmental, public health
and safety, and other advantages; distributive impacts; and
equity);
(4) to the extent feasible, specify performance objectives,
rather than specifying the behavior or manner of compliance
that regulated entities must adopt; and
(5) identify and assess available alternatives to direct
regulation, including providing economic incentives to
encourage the desired behavior, such as user fees or
marketable permits, or providing information upon which
choices can be made by the public.
Regulations shall be adopted through a process that
involves public participation.
Each agency, consistent with Executive Order 12866 and
other applicable legal requirements, shall endeavor to
provide the public with an opportunity to participate in the
regulatory process.
Each agency shall also provide, for both proposed and final
rules, timely online access to the rulemaking docket on
regulations.gov, including relevant scientific and technical
findings, in an open format that can be easily searched and
downloaded.
Before issuing a notice of proposed rulemaking, each
agency, where feasible and appropriate, shall seek the views
of those who are likely to be affected, including those who
are likely to benefit from and those who are potentially
subject to such rulemaking.
Each agency shall identify and consider regulatory
approaches that reduce burdens and maintain flexibility and
freedom of choice for the public.
Each agency shall ensure the objectivity of any scientific
and technological information and processes used to support
the agency's regulatory actions.
Wise regulatory decisions depend on public participation
and on careful analysis of the likely consequences of
regulation.
Such decisions are informed and improved by allowing
interested members of the public to have a meaningful
opportunity to participate in rulemaking.
To the extent permitted by law, such decisions should be
made only after consideration of their costs and benefits
(both quantitative and qualitative).
Executive Order 13563 of January 18, 2011, ``Improving
Regulation and Regulatory Review,'' directed to executive
agencies, was meant to produce a regulatory system that
protects ``public health, welfare, safety, and our
environment while promoting economic growth, innovation,
competitiveness, and job creation.''
Independent regulatory agencies, no less than executive
agencies, should promote that goal.
Executive Order 13563 set out general requirements directed
to executive agencies concerning public participation,
integration and innovation, flexible approaches, and science.
To the extent permitted by law, independent regulatory
agencies should comply with these provisions as well.
Indeed, the Regulatory Accountability Act would implement
President Obama's recent call for ``public participation and
open exchange'' before a rule is proposed. Specifically, H.R.
3010 would create an Advance Notice of Proposed Rulemaking
stage for major rules ($100M+). In this early notice, the
agency would identify the problem it wishes to address
through regulation and articulate the specific legal
authority for doing so; disclose its preliminary views on the
direction of the prospective regulation, and provide
information concerning possible regulatory alternatives; and
invite the public to submit written comments on these issues.
While this adds a step in the regulatory process, it is one
that allows interested parties a greater opportunity to help
the agency reach a sound outcome.
The bill would also obligate agencies to rely on better
scientific and technical data. While agencies must exercise
their expert judgment, it is impossible to argue against the
proposition that they should use the best data and other
inputs available. Affected parties can invoke judicial and
administrative remedies to ensure that agencies rely on
scientific and technical evidence that meets the standards of
the Information Quality Act. This is, of course, consistent
with President Obama's call for regulating ``based on the
best available science.'' This is unassailable. If agencies
cannot disclose and defend the data they rely on as being the
best available, they cannot possibly be confident enough in
their regulatory analysis to impose new requirements on the
basis of the data at their disposal.
The Committee may also wish to consider the possible
application, or adaptation, of the Supreme Court's decision
in Daubert v. Merrell Dow Pharmaceuticals, Inc., in the
regulatory context. In Daubert, the Court empowered federal
judges to reject irrelevant or unreliable scientific
evidence, thus providing the judiciary a mandate to foster
``good science'' in the courtroom and to reject expert
testimony not grounded in scientific methods and procedures.
Some federal agencies have been criticized for lacking a
commitment to sound science. Too often, federal courts have
accorded great deference to uphold agency decisions that may
have been based on faulty scientific evidence or unsupported
assumptions and conclusions.
Daubert principles could be applied to the review of agency
rulemaking under the APA because these principles are
consistent with the APA requirement that agencies engage in
reasoned decisionmaking, would assure better documentation of
agencies' scientific decisions, and would enhance the rigor
and predictability of judicial review of agency action based
on scientific evidence. This approach would be entirely
congruent with the Regulatory Accountability Act's
requirement that regulations be based on the best available
science. Applying the Daubert principles in judicial review
of agency action would allow courts to evaluate the
scientific methods and procedures employed by agencies, but
must not allow judges to substitute their own policy
preferences or conclusions for those chosen by the agencies.
The courts' review need not be heavy-handed; it can be both
deferential and probing, ensuring that agencies formulate and
comply with procedures tailored to producing the best
results, while not dictating what those results must be in
any given case.
Incorporating, or adapting, Daubert principles into
administrative law would improve agency decisionmaking and
enhance accountability. Agencies would be compelled to
identify the most reliable and relevant scientific evidence
for the issue at hand and disclose the default assumptions,
policy choices, and factual uncertainties therein. Applying
Daubert in the administrative context would refine judicial
review of agency science, resulting in greater consistency
and rigor.
We also believe that it is reasonable that H.R. 3010 would
expose more agency pronouncements, such as agency guidance
documents, to more rigorous standards. Specifically, the bill
would adopt the good-guidance practices issued by OMB in 2007
(under then-Director, and now Senator, Portman). Such agency
guidance would be clearly noted as ``non-binding,'' and would
not be entitled to substantial judicial deference.
The heart of the bill is to build cost-benefit analysis
principles into each step of the rulemaking process--proposed
rule, final rule, and judicial review. As noted earlier,
these principles are drawn from Executive Orders issued by
Presidents Reagan and Clinton and emphatically reaffirmed by
President Obama. The bill would make those principles
permanent, enforceable and applicable to independent
agencies. Compliance with these codified requirements would
be subject to judicial review.
Significantly, the bill would require agencies to adopt the
``least costly alternative that will achieve the objectives
of the statute authorizing the rule.'' It permits agencies to
adopt a more costly approach only if the agency demonstrates
that the added costs justify the benefits and that the more
costly rule is needed to address interests of public health,
safety, and welfare that are clearly within the scope of the
statute. This is consistent with the White House's recent
instruction to federal agencies to ``minimize regulatory
costs'' and the President's directive to ``tailor regulations
to impose the least burden on society.'' (Exec. Order 13,563)
For high impact, billion-dollar rules, additional
procedures would apply--which seems entirely reasonable given
the resulting consequences for the public and the economy.
Most importantly, affected parties will have access to a fair
and open forum to question the accuracy of the views,
evidence, and assumptions underlying the agency's proposal.
The hearing would focus on (1) whether there is a lower-cost
alternative that would achieve the policy goals set out by
Congress (or a need that justifies an higher cost than
otherwise necessary); (2) whether the agency's evidence is
backed by sound scientific, technical and economic data,
consistent with the Information Quality Act; (3) any issues
that the agency believes would advance the process. Parties
affected by major rules ($100M+) would also have access to
hearings, unless the agency concludes that the hearing would
not advance the process or would unreasonably delay the
rulemaking.
Following the hearing prescribed in the bill, high-impact
rules would be reviewed under a slightly higher standard in
court--so-called ``substantial evidence'' review. While this
standard is still highly deferential to the agency's
judgments, it allows a court reviewing major rules to ensure
that an agency's justifications are supported by ``evidence
that a reasonable mind could accept as adequate to support a
conclusion based on the record as a whole.''
We understand that these additional review and analysis
requirements are not perfunctory and may not be easy for
agencies to accomplish. However, we believe that because of
the extensive delegation of essentially legislative authority
from Congress and policymaking discretion that agencies
exercise, and the substantial deference that agencies enjoy
from the courts, the public deserves more analysis and
justification before agencies acts. Moreover, we believe that
the public also expects the President to influence and
control rulemaking by all federal agencies, and thus we
support greater centralized White House review of agency
regulations--including independent agencies--on behalf of the
President by the Office of Information and Regulatory
Affairs at OMB (in the Executive Office of the President).
We believe the bill, which clearly applies its regulatory
standards to independent agencies, should also make clear
that the President is responsible for, and entitled to
review, the rules issued by independent agencies such as
the SEC, CFTC, FCC, FTC, CPSC, CFPB, etc.
The need for such Presidential authority is manifest. For
example, in a recent case before the U.S. Court of Appeals
for the D.C. Circuit, In re Aiken County, the presidentially
controlled Department of Energy and the independent Nuclear
Regulatory Commission did not actually agree on the merits of
how to handle nuclear waste at Yucca Mountain. This prompted
Circuit Judge Brett Kavanaugh to explain why the lack of
presidential authority and control is constitutionally and
politically dubious. Quoting both Alexander Hamilton in the
Federalist Papers and the Supreme Court in PCAOB, he wrote
that ``the issue created by Humphrey's Executor is that the
President's decision on the Yucca Mountain issue is not the
final word in the Executive Branch. In other cases, the issue
created by Humphrey's Executor is that it allows Presidents
to avoid making important decisions or to avoid taking
responsibility for decisions made by independent agencies.
When independent agencies make such important decisions, no
elected official can be held accountable and the people
``cannot `determine on whom the blame or the punishment of a
pernicious measure, or series of pernicious measures ought
really to fall.' ''
President Obama has acknowledged the importance of
Presidential review of independent agency rulemaking in
recent, July 11, Executive Order. (Executive Order, 13,579)
His Order requests (but does not command) that the
independent agencies to submit the regulations they issue to
the same principles applicable throughout the parts of the
Executive Branch for which he is directly accountable.
Specifically, independent agencies are now asked to
scrutinize existing and future regulations in accordance with
cost-benefit analysis. He also asks them to assure that
regulatory policy is cost-effective and protective of
innovation and job creation. Perhaps most importantly,
independent agencies should also make sure that there is a
real problem that needs to be solved before regulating, and
then choose the least burdensome regulatory alternative that
prevents or abates that harm. The bill currently before
Congress should thus make clear--not only that independent
agencies are subject to the salutary standards of cost-
benefit analysis and rigorous policy justification--but also,
that the President has the power and responsibility to review
and control all such Executive Branch rulemaking.
While we endorse the bill's proposed codification of
regulatory standards, analytic criteria, and accountability
principles, we would also recommend that Congress consider
incorporating the prospectively duplicative provisions of the
Regulatory Flexibility Act (with regard to cost-benefit
analysis for small business) and the Unfunded Mandates Reform
Act (with regard to cost-benefit analysis and minimization of
burdens on states, tribes and private sector; though UMRA
does not currently apply to independent agencies). Moreover,
as previously noted, we also believe the bill should
specifically authorize the President to oversee rulemaking by
independent agencies. The President's responsibility to
oversee independent regulatory agencies, like the Consumer
Financial Protection Board, for example, would ensure that
the regulations adopted by such agencies are in the overall
best interest of the American people.
Thank you for considering our views.
Respectfully submitted,
Alan Charles Raul, Former Vice Chairman, White House
Privacy and Civil Liberties Oversight Board, Former General
Counsel, U.S. Department of Agriculture, Former General
Counsel, Office of Management and Budget, Former Associate
Counsel to the President.
C. Boyden Gray, Boyden Gray & Associates, Former Ambassador
to the European Union, Former Counsel to the President,
Former Counsel to the Vice President.
James C. Miller III, Former Director of the Office of
Management and Budget, Former Chairman of the Federal Trade
Commission, Former Administrator of the Office of Information
And Regulatory Affairs, OMB.
David L. Bernhardt, Former Solicitor, Department of the
Interior.
Adam J. White, Boyden Gray & Associates.
Eileen J. O'Connor, Former Assistant Attorney General, Tax
Division, U.S. Department of Justice.
Daren Bakst, Director of Legal and Regulatory Studies, John
Locke Foundation.
Jeffrey R. Holmstead, Former Assistant Administrator of the
Environmental Protection Agency for Air and Radiation, Former
Associate Counsel to the President.
Jeffrey Bossert Clark, Former Deputy Assistant Attorney
General, Environment & Natural Resources Division, United
States Department of Justice.
David R. Hill, Former General Counsel, U.S. Department of
Energy.
