OIRA Cracks Door on Support for ‘Careful' Legislative Fixes

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By Cheryl Bolen

Jan. 29 — A tailored and “careful” package of legislative fixes to the regulatory process might be able to win the support of the administration, but prospects are dim in 2016 for Republican bills that would overhaul existing procedures, the nation's chief regulatory officer said.

The U.S. Chamber of Commerce says that passage of the Regulatory Accountability Act is a top priority this year, because the Administrative Procedure Act (APA) has not been updated in more than 40 years (See previous story, 01/15/16).

But Howard Shelanski, administrator of the Office of Information and Regulatory Affairs, called the APA a tremendous model, saying it provides transparency, accountability and enforceability. His agency is part of the Office of Management and Budget.

“So I have trepidation about legislation,” Shelanski told Bloomberg BNA Jan. 21. “That's not to say there aren't possibly areas where legislation could improve things, but I would want to look at those very carefully and see the specific case for legislative change.”

Overhauling APA

The Republican-controlled House passed several regulatory overhaul bills in 2015, virtually along party lines, including a version (H.R. 185) of the Regulatory Accountability Act (09 DER A-26, 1/14/15).

Most of the bills would make substantial changes to the processes laid out in the APA and all have drawn veto threats from the White House.

Bottom line, Shelanski said, is that the administration, Congress and the public have the tools they need in the APA to maintain a modern, transparent and accountable regulatory system. Under the APA, agencies have to follow a set of processes that “one is hard-pressed to find elsewhere in the world,” he said.

Shelanski said he would be “very cautious about messing with it.”

Public stakeholders in all but unusual cases have the opportunity to comment on regulatory proposals, not just a description, but an actual regulatory proposal, and in many cases one with a regulatory impact analysis, Shelanski said.

The agency then has to finalize the rule, and that final rule is subject to accountability through judicial review if the agency has not justified its decisions on the record, he said.

Taking What's Worst

Amit Narang, regulatory policy advocate at Public Citizen, said the Regulatory Accountability Act would be a dramatic and damaging rewrite of the rulemaking process for all agencies across the board.

It would take what's worst about the current process—too much analysis that paralyzes agencies—and it would pile on many more analytical and legal requirements, Narang said.

The bill basically sets as a default standard the requirement that agencies adopt the least-costly rule to industry, Narang said. But that is bad decision-making criteria for agencies to use, if the goal is to protect the public, he said.

The bill would lead to many more lawsuits of the kind the Chamber is eager to launch this year and in the future, Narang said.

Senate Working Group

Narang said he did not believe that this Congress has been interested in improving the rulemaking process so that it leads to stronger and more effective regulations.

One exception might be a Senate working group that has been meeting behind the scenes (See previous story, 10/19/15)(See previous story, 10/19/15). The group, which was not publicly announced, has not released any legislative package or a timetable for action.

House Republicans, however, remain eager to pass legislation that would make changes to the rulemaking process. On Jan. 7, the House passed two more bills (H.R. 712 and H.R. 1155) that would alter the rulemaking process (See previous story, 01/08/16)(See previous story, 01/08/16).

During debate, Rep. Tom Marino (R-Pa.) said that on multiple occasions he has tried to bring attention to the “overwhelming burden of the regulatory state” on American workers and employers.

“For the past year, it has been my primary objective, as chairman of the [House Judiciary] Subcommittee on Regulatory Reform, Commercial and Antitrust Law, to bring to light these burdens and their true costs on the lives of all Americans,” Marino said.

These bills are critical as lawmakers work to improve the regulatory process and to prevent “misguided and damaging regulatory overreach,” Marino said.

Legislation Possible

“It is possible that there may be some legislation dealing with regulations this year,” said Sally Katzen, senior adviser at the Podesta Group and former administrator of OIRA in the Clinton administration.

Katzen pointed to the work of Sens. James Lankford (R-Okla.) and Heidi Heitkamp (D-N.D.), the chairman and ranking member, respectively, of the Senate Homeland Security and Governmental Affairs Subcommittee on Regulatory Affairs and Federal Management.

But rather than a wholesale rewrite of the APA, such as the Regulatory Accountability Act, Katzen said that only a more moderate, tailored bill would be likely to move.

Interest in Pieces

In the past, there have been efforts to require independent regulatory agencies to do economic analysis and submit to regulatory review, Katzen said.

There also has been interest at both ends of Pennsylvania Avenue in doing more with retrospective rulemaking, that is, considering whether existing rules are accomplishing their objectives, and, if not, modifying them, she said.

“There are pieces that I think could be cobbled together, depending on whether [lawmakers] are looking for good government or whether they're looking to suppress regulations indiscriminately,” she said.

“If the former, you could produce a relatively restrained, but constructive step forward in the regulatory arena.”

Standing Test of Time

Shelanski said there also is in place a set of enforceable, effective executive orders that govern rulemaking and review.

Every administration has backed up those executive orders and refined them to the point that OIRA has significant authority in its regulatory review processes, he said.

The executive orders provide flexibility that allows OIRA to apply standards in the way that fits the particular rule, Shelanski said. Different rules have different kinds of evidence, objectives and analyses, he said.

Shelanski said he worried about putting the standards and requirements for rulemaking into some kind of checklist or “straitjacket” that can't be adjusted.

“So the inherent enforceability, effectiveness, but also adjustability of the existing standards is, I think, a great virtue that could be lost unless legislation is done very, very carefully,” he said.

Only Focused on Costs

Shelanski said the Chamber is often a valuable stakeholder and he is grateful for the variety of input it provides.

But the over-arching objective of the Chamber is to slow down and indeed, to the extent possible, stop regulations, he said.

Chamber leaders are understandably focused on the prosperity of their member corporations, Shelanski said. They are therefore focused entirely on regulatory costs and not at all on regulatory benefits, he said.

Often businesses create externalities, possibly affecting public health or the environment, and a lot of regulation is designed to have businesses bear the costs of some of these more diffuse harms that stem from their activities, Shelanski said.

“They would prefer not to carry those costs and I understand that,” he said.

Duplicative Review

Shelanski said the Regulatory Accountability Act is not necessary, given the tools that already exist in the law and in regulatory review.

Under the APA, an agency has to justify a $1 billion rule just as it has to justify a $10,000 rule, which is already a fairly stringent review, he said.

The more costly the rule, and in particular the more concentrated the way in which those costs fall, the more likely it is there will be a powerful group of stakeholders that holds the agency's feet to the fire through all the APA's requirements, Shelanski said.

So in a way it seems “a bit upside down” to say that more costly rules, like $1 billion rules, need a special layer of review or statutory attention, Shelanski said. The APA already provides that avenue for scrutiny and judicial review, he said.

No Public Gains

It is unclear what the public or society would gain from a new statute, Shelanski said.

“Just to be clear, agencies don't want to impose costly rules. Agencies want to achieve essential benefits for American citizens, for American society, for the environment. They would like to do those at as low cost as possible,” he said.

Sometimes these rules are costly, but they're costly because the benefits are worth it, Shelanski said.

What the Chamber sees as a statutory hurdle to the imposition of cost might equally or better be seen as a statutory hurdle to achieving the great net benefits those rules provide, Shelanski said.

To contact the reporter on this story: Cheryl Bolen in Washington at cbolen@bna.com

To contact the editor responsible for this story: Heather Rothman at hrothman@bna.com