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Regulatory Reform Package
Key Development: House passes Red Tape Reduction and Small Business Job Creation Act that would halt all pending federal regulations with annual economic costs of $50 million or more, bar “midnight regulations,” and curtail “sue-and-settle” lawsuits.
Potential Impact: By the Obama administration’s count, at least 140 major rulemakings are under way by agencies including EPA and OSHA.
What's Next: The Democratic-controlled Senate is not expected to take up the legislation, and the White House has issued a veto threat.
By Dean Scott
The House passed a broad regulatory reform package July 26 to halt all major federal regulations in the pipeline after approving several Republican amendments, including one that would broaden the moratorium, which is pegged to the unemployment rate, to any rule that costs the economy $50 million or more a year as opposed to $100 million in the original bill.
Cleared on a 245-172 vote, the Red Tape Reduction and Small Business Job Creation Act would also bar President Obama and future presidents from issuing “midnight” regulations in the final months of their presidencies and target “sue and settle” practices used by environmental groups to strengthen environmental rules in court or force agencies to expedite long-delayed regulations.
But the regulatory moratorium, originally contained in a regulatory freeze bill (H.R. 4078) introduced by Rep. Tim Griffin (R-Ark.), is arguably the most far-reaching of the titles. It would block major rules until the U.S. unemployment rate falls to 6 percent or less.
The White House has threatened a presidential veto and the bill is considered dead on arrival in the Democratic-controlled Senate. But the outcome in the House was never in doubt given the Republican leadership's strong support for the measure.
In two days of floor debate, the House approved all Republican amendments, which generally imposed additional requirements on federal agencies, and voted down all Democratic proposals, which generally called for carving out exemptions for public health and environmental rules (143 DER A-35, 7/26/12).
Among the Republican amendments passed by the House was a proposal by Rep. David McKinley (R-W.Va.) to change the threshold for determining whether a rule is significant enough to be halted. While the original regulatory freeze bill called for halting all major rules that impose annual economic costs of $100 million, McKinley’s amendment, which passed by a vote of 240-178, calls for lowering that threshold to $50 million a year or more.
The House also passed three amendments by Rep. Bill Posey (R-Fla.) including one approved 248-171 that would require that any attorney’s fees awarded to small businesses that sue regulatory agencies be paid out of that agency's budget.
A second Posey amendment, which would specifically bar the Securities and Exchange Commission from enforcing or issuing an interpretive guidance on climate change, was approved 245-171. The SEC in 2010 approved guidance to help publicly traded companies determine the kinds of climate information that may have to be disclosed under the Sarbanes-Oxley Act, enacted in 2002 to require reforms that improve financial disclosures from corporations and prevent accounting fraud.
Posey’s third amendment, to clarify that the regulatory moratorium would apply to new Treasury Department regulatory actions regarding financial deposits by nonresident aliens, cleared the House 251-165.
The House also approved by a vote of 251-166 an amendment by Rep. Michael Fitzpatrick (R-Pa.) to relieve companies from certain Sarbanes-Oxley financial requirements if the total value of their publicly held shares is less than $250 million. Another amendment by Rep. David Schweikert (R-Ariz.), approved by voice vote, would include business revenue in determining the annual costs of rules to be covered by the bill.
Among the Democratic amendments defeated was a proposal by Rep. Dennis Kucinich (D-Ohio) to exempt rules that would limit speculation on oil prices. It failed on a 173-245 vote. Another by Rep. Ed Markey (D-Mass.)--defeated 177-240--would have exempted rules developed to protect the public from drought and other extreme weather events, which many climate scientists have linked to rising global temperatures. A bid by Rep. Peter Welch (D-Vt.) to exempt rules that promote energy efficiency fell 174-242.
Before the bill’s passage, House Republicans were forced to fix technical miscues that plagued the legislative package and their attempts to keep the focus on what they argue is a tidal wave of burdensome regulations coming from the Obama administration.
The first mistake--a typographical error that substituted the word “employment” for “unemployment,” which could have extended the regulatory moratorium indefinitely--was fixed with a hastily scheduled meeting of the House Rules Committee late July 25. But the Rules panel's fix introduced a new mistake: referencing the wrong procedural rule that underpinned the legislation. That required a remedy on the floor July 26.
“A mistake was made and then in attempting to correct that mistake, an extraordinarily minor other mistake was made,” Rep. Virginia Foxx (R-N.C.), a member of the rules panel, told colleagues on the House floor July 26.
Robert Weissman, president of the consumer advocacy group Public Citizen, said in a prepared statement that House passage of the bill amounted to a “gift” to corporate polluters and would block much-needed regulations to protect against financial risks, workplace hazards, and “far-reaching rules [needed] to avert catastrophic climate change.”
But business groups including the National Federation of Independent Business applauded the House action. “As the economy continues to sputter, it is important to ensure that the nation’s biggest job creators are not strapped with punishing new rules,” according to a statement from Susan Eckerly, NFIB senior vice president for federal public policy.
By Dean Scott
The statement of administration policy on H.R. 4078 is available at http://www.whitehouse.gov/sites/default/files/omb/legislative/sap/112/saphr4078r_20120723.pdf.
A list of the amendments cleared by the House Rules Committee is available at http://rules.house.gov/Legislation/legislationDetails.aspx?NewsID=908 by clicking on the Rule tab.
Copyright 2012, The Bureau of National Affairs, Inc.
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