Our Best Bet to Modernize the Federal Rulemaking Process

Nov 3, 2011

government regulationsToday, the House Judiciary Committee will mark up H.R. 3010, the Regulatory Accountability Act.  Passage of the bill holds the promise of a much-needed modernization of the Administrative Procedure Act (APA), the law that governs the procedures federal agencies must use when they write new rules.  Modernizing the APA, which has remained virtually unchanged from when it was written in 1946, is long overdue.  The Chamber commends Chairman Lamar Smith, along with Rep. Collin Peterson for their leadership and vision, and their recognition of the need for greater agency accountability and citizen participation in rulemakings.

After World War II, federal agencies shifted their focus from war production to regulating the peacetime U.S. economy. As agencies ramped up their regulatory agendas, the need for standardized rulemaking procedures became clear.  In response, Congress passed the APA.  The law worked well for many years, bringing uniformity to the rule writing process and giving the public more opportunity to be involved.

Today’s regulatory landscape is far different from what it was in 1946, however. First of all, only a handful of today’s federal agencies existed sixty-five years ago.  Most of today’s most important agencies were not created until the 1960s and 1970s (e.g., Department of Transportation (1966), Equal Employment Opportunity Commission (1964), National Highway Traffic Safety Administration (1970), Environmental Protection Agency (1970), Consumer Product Safety Commission (1972), Occupational Safety and Health Administration (1975), Department of Energy (1977), and Mine Safety and Health Administration (1978)). 

Second, with these new agencies came an onslaught of costly new regulations.  The cumulative regulatory burden on U.S. businesses is estimated in a study done for the SBA’s Office of Advocacy to have grown to $1.75 trillion.  It is now common for agencies to issue several rules each year that cost more than $100 million.  Agencies are poised to finalize seven rules in 2011 with price tags of $1 billion or more.  And finally, through the years, agencies have become very skilled at manipulating the rulemaking process to serve their aggressive agendas.  Agencies finalize rules without adequate notice or supporting data, as well as cherry-picking the data that supports their proposal and ignoring the cumulative and indirect impacts to businesses throughout the economy.  The 65-year old APA needs an overhaul to conform it to the current state of regulatory activity – hundreds of agencies issuing thousands of rules every year.  Modernizing the law is just good government.

By creating more transparency and public participation, and holding agencies accountable for the nature and quality of their data, the Act requires better process for today’s rulemakingsThe Act requires agencies to justify the need for new rules and show that their proposal is actually the best alternative for achieving congressional intent.  By compelling agencies to do their homework and show the public the data that supports their action early in the process, the Act will result in better rules.

By contrast, poorly-designed rulemakings have a substantial negative impact on the economy.  Arnold Baker, the CEO of Baker Ready-Mix in New Orleans, Louisiana, testified in an October 25 hearing before the Judiciary Committee that flawed new environmental and health care rules threaten the ability of his small   concrete supply company to stay in business.  And concrete companies aren’t the only ones affected by poorly written rules.  Rules that are rushed, poorly-designed, and needlessly costly and burdensome, are a serious drag on an already anemic U.S. economy.  Mr. Baker testified that if the Regulatory Accountability Act had been law, EPA and other agencies would have been required to:

  • lay out in detail the data supporting the rules at an earlier stage before they were proposed;
  • have on-the-record hearings or be subject to requests from interested parties who want to challenge the data on which the agency is relying;
  • consider the rule’s impact on jobs and the economy, as well as the cumulative and indirect impacts of the rule;
  • show why they didn’t select less costly alternatives that accomplish Congressional objectives.

The net result is that the new rules would have been better-designed and less likely to damage his business, which is helping to rebuild New Orleans.  Mr. Baker and countless other businesses depend on a fair, accountable rulemaking process.  The Chamber along with many other business groups strongly support the Judiciary Committee’s passage of H.R. 3010 and its common-sense principles that will bring the APA into the 21st Century.

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