Bill would close loophole on figuring regulations’ impacts

Bill aims for more transparency in reguluations. vgm8383/flickr, CC BY-NC

Every president for more than 30 years has required executive branch agencies to analyze regulatory impacts before issuing new requirements. They’ve relied on the Office of Information and Regulatory Affairs (OIRA) in the Office of Management and Budget to review significant new rules to ensure the quality of such regulatory analysis.

Because of their historical designation as “independent,” some agencies have been exempt from these commonsense requirements, making their regulations less accountable and well-reasoned than others. Legislation introduced on Thursday by Senator Rob Portman (Republican of Ohio), Senator Mark Warner (Democrat of Virginia) and Senator Susan Collins (Republican of Maine) would close that loophole.

The Independent Agency Regulatory Analysis Act would require independent regulatory agencies, including the Securities and Exchange Commission, the Federal Communications Commission and the Consumer Product Safety Commission, to follow the same principles other agencies have long followed. The goal: improve regulatory outcomes by understanding possible consequences of new regulations before businesses, workers and individuals are asked to comply with them.

This bipartisan bill has support from chief regulatory oversight officials who served in the past four presidential administrations. They signed a letter saying:

As former OIRA Administrators from Democratic and Republican administrations, we hold varying views on regulatory reform. But we are unanimous in our view that independent regulatory agencies should be held to the same good-government standards as executive agencies, and the Independent Agency Regulatory Analysis Act advances that goal.

Independent regulatory agencies are considered independent not because their method of regulation differs from executive agencies, but because Congress has limited the president’s power to remove their top officials (either by statute or tradition). Legal advisors to presidents from Ronald Reagan to Barack Obama have concluded that presidents have the constitutional authority to extend analytical and executive oversight requirements to independent agencies’ regulations, but presidents have been reluctant to do so out of deference to Congress.

This legislation would remove that hesitation by reaffirming Congress’s agreement that federal regulations, from whatever source, should follow accepted principles of sound decision-making and be accountable to the president.

Despite the fact that regulations issued by independent regulatory agencies have broad social impacts, the analysis supporting them tends to be less robust because they have not been covered by the regulatory executive orders. The Administrative Conference of the United States recommended in 2013 that independent regulatory agencies adopt more transparent and rigorous regulatory analysis practices for major rules. OIRA observed in its most recent regulatory report to Congress that “independent agencies still continue to struggle in providing monetized estimates of benefits and costs of regulation.”

It finds that:

for the purposes of informing the public and obtaining a full accounting, it would be highly desirable to obtain better information on the benefits and costs of the rules issued by independent regulatory agencies. The absence of such information is a continued obstacle to transparency, and it might also have adverse effects on public policy. Recall that consideration of costs and benefits is a pragmatic instrument for ensuring that regulations will improve social welfare; an absence of information on costs and benefits can lead to inferior decisions.

According to available government data, more than 40% of the rules developed by independent agencies throughout the last 10 years provided no information on either the costs or the benefits expected from their implementation. Other agencies are required to provide such information, and applying the same standards to independent agencies is simply good governance.

For years, experts across the political spectrum have urged greater transparency, analytical rigor and accountability for regulations issued by independent agencies. The Independent Agency Regulatory Analysis Act would be a welcome step in that direction.

A similar bill was introduced in the 113th Congress. Whether it becomes law in this Congress is uncertain, but the bill’s bipartisan support offers some hope for constructive reform.