Bipartisan Regulatory Reform Could Save Billions, 55,000 Jobs

Wed, 2011-11-16 18:25 | Regulation | Sam Batkins
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This week the House could advance three separate regulatory reform bills that have the potential to fundamentally change the regulatory state.  By amending the Administrative Procedure Act (APA), the Unfunded Mandates Reform Act, and the method for approving new “significant” regulations, the House could transform a regulatory system that has avoided fundamental change for decades.

The REINS Act (H.R. 10), the Unfunded Mandates Information and Transparency Act (H.R. 373) and the Regulatory Accountability Act (H.R. 3010) all reform the regulatory process at different, but crucial, stages of the rulemaking process.

Regulatory Accountability Act (H.R. 3010)

H.R. 3010 has 26 cosponsors in the House, including five Democrats.  The related Senate legislation has five cosponsors, including one Democrat.  H.R. 3010 would:

  • Amend the generations-old APA by requiring agencies to conduct a cost-benefit analysis and select the least costly alternative to achieve the necessary congressional objectives;
  • Codify executive orders 12866 and 13563 to allow retrospective review of outdated regulations; and
  • Provide for judicial review if agencies fail to follow new guidelines.  

H.R. 3010 has several merits.  Namely, it would provide a much-needed revision of the APA and mandate, during the rulemaking process, that agencies choose the least costly alternative. 

Unfunded Mandates Information and Transparency Act (H.R. 373)

H.R. 373, which boasts six cosponsors, including two Democrats, would:

  • Amend the Congressional Budget Act of 1974 to change the definition of a federal mandate to include conditions of federal assistance;
  • Allow CBO to account for the costs of implementing a private-sector or intergovernmental mandate, including foregone business profits and possible behavioral changes; and
  • Include independent regulatory agencies for the purpose of complying with the Unfunded Mandates Reform Act (UMRA) and require all agencies to conduct retrospective analyses of existing federal regulation, at the request of a Committee chair or ranking member.

H.R. 373, which is scheduled for markup on Thursday, would add much-need transparency to the regulatory process and allow greater CBO oversight of onerous federal mandates.

CBO recently conducted a review of H.R. 373, concerned that “an analysis of the distributional or macroeconomic effects of mandates … are not feasible as a routine part of analyzing reported legislation for mandates.”  However, that does not appear to be the explicit goal of H.R. 373; rather, the legislation aims to codify the definition of “direct cost” and require administrative agencies to assess costs as well.    

According to former CBO Director and Forum President Doug Holtz-Eakin, “H.R. 373 goes substantially further than the current system to impose transparency on the regulatory state.  As CBO Director Elmendorf noted, Congress has the power to request a more detailed macroeconomic analysis for some bills.  For massive overhauls like Dodd-Frank and the Affordable Care Act, a detailed CBO analysis on the effects of an unprecedented scale of regulation would be invaluable to policymakers and well within CBO’s capabilities.”

REINS Act (H.R. 10)

The REINS Act counts 31 supporters in the Senate, including one Democrat, and 198 supporters in the House, including one Democrat.  CBO’s formal cost estimate of REINS calculated that it could successfully rescind many burdensome regulations, and “result in hundreds of billions of dollars in savings over the 2012-2021 period.”

REINS would require enactment of a joint resolution of approval by Congress before any major rule could take effect.  CBO’s analysis acknowledged that preventing expensive health care or Dodd-Frank regulations from taking effect “would in turn result in significant savings.”  CBO doesn’t quantify “significant” but using the Forum’s database of proposed rulemakings and regulations, an estimate is possible.

For example, the Forum has tracked 23 proposed rules, including the delayed Boiler MACT proposal, which have at least $100 million in quantified costs. Combined, these proposed rules could:

  • Impose $40.6 billion in costs;
  • Require 12.8 million hours of annual paperwork compliance; and
  • Eliminate more than 55,000 jobs, according to government estimates.

Thus, the savings from regulatory reform are tremendous.  Whether through a reform of the APA to require more cost-benefit analyses, demanding heightened transparency and greater CBO oversight, or rescinding regulations before they become final, regulatory reform is essential. 

Although the President has directed agencies to rescind duplicative or onerous rules, the pace is far too slow.  Fundamental regulatory reform, at a minimum, must provide more transparency and greater oversight.  All three pieces of legislation accomplish these goals.