I’m never going to eat sausage again!
J. Saft  (upon hearing plans to reduce regulations by 75%)

An argument can easily and convincingly be made for the need of the federal government to take stock of its regulatory holdings. No system is perfect; the federal regulatory framework is no exception.

The ascendency of Republicans to the Presidency and majority status in both chambers of Congress has thrown the door open to pent up proposals for fixing   a federal system believed bloated and top heavy; a system considered sharing impaired; a governing framework thought to lean further left than Pisa.

The introduction and passage by the House of the Regulatory Reform Act (RAA) and the Regulations of the Executive in Need of Scrutiny Act (REINS), days after the 115th Congress was called to order, marked the first foray of reform.

Although both bills sailed quickly through the House, they are likely to face rougher seas in the Senate.

Whether or not the bills garner the needed supermajority of 60 senators, their spirit will live on as probable priorities of the new Secretary of Energy (Rick Perry), and Administrator of the Environmental Protection Agency (Scott Pruitt). Both are from states noted for judicial challenges to federal environmental regulation.

As Oklahoma’s Attorney General, Pruitt often spearheaded the challenges and involving other states. Texas, despite its reliance on wind energy, has sued EPA on behalf of fossil fuels more often than almost any other state. It has regularly been a member of the Pruitt led coalitions.

Gaining familiarity with the issues surrounding H.R. 5 and H.R. 26 is to face the future. Today’s look at regulatory reform in the Trump Administration continues to focus on key provisions of the RAA and REINS.

What Might It Mean?

Key provisions of both bills are identified below, along with comments as to their impact. This is by no means a complete analysis. As these bills move through the Senate, amendments are likely to be made. I will be following them closely and making them the subject of future articles.

H.R. 5: The Regulatory Accountability Act of 2017 (RAA)

Establish an achievable objective that is to be met by the regulation;

  • Enunciate the metrics that will be used to measure the rule’s impact;
  • Directs agencies to publish online and in plain language summaries of the proposed rules and to make public its cost and benefit analysis.

These provisions seem straightforward. Expecting a clear statement of the why’s and wherefore’s of any proposed regulation is certainly reasonable. It is so reasonable in fact, I would recommend its application to Acts of Congress.

Much of the ambiguity of a regulation—often leading to a legal challenge– can be traced back to the legislative language. The lack of specificity is sometimes deliberate as a strategic maneuver for getting the legislation passed. Less detail can mean less opposition.

Vagaries may also reflect the lack of expertise of the bill’s author(s) and the greater capacity of an agency to undertake the considerable process necessary to craft the actual regulation. An expert at NRDC has observed:

Congress did not do this because it was lazy or interested in abdicating power or responsibility. Instead, Congress rightly concluded that some  kinds of decisions required deep technical expertise and a balanced, judicious decision process somewhat insulated from political horse-trading and power plays.

The problem, of course, is the onus is then placed on the agency to divine what the legislature had hoped to accomplish.

The requirement to publish in comprehensible language is not a change in existing practices. Agencies do publish draft rules, hearing notices and descriptions in the Federal Register and on agency sites. It is part of the reason the Federal Register is so voluminous. As well, this information and the opportunity for the public to comment is also available on sites like www.regulations.gov.

The problematic elements of the three requirements are the matters of metrics and the cost/benefit analysis. Neither is necessarily an objective or accurate measure.

Should members of Congress not credit the scientific basis used by an agency to define or develop the rule, the chosen metrics would be found wanting and used as the basis for voting the rule down. The cost/benefit requirement can suffer from the same theoretical difficulties.

Members of the in-coming administration and Congress, for example, are on record in opposition to the use of social cost benefits as part of the cost/benefit calculation. Their opposition is grounded in the work of conservative think tanks like the Heritage Foundation.

Cost/benefit calculations are particularly controversial when they seek to rationalize inherent value trade-offs and to place a value on benefits not traded in the market (e.g., health or lives). The Congressional Research Service categorizes this type of analysis as imprecise and incredibly difficult to estimate:

 Inaccuracies in cost-benefit estimates conducted by agencies could have the effect of undermining public confidence in the regulatory process. So, too, could a misunderstanding or over-reliance on estimates of the total cost of regulation that are not intended to be considered precise findings.

That there is difficulty calculating costs and benefits is not to say they shouldn’t be factored in to a rule’s development. Because the courts are attentive to the cost/benefit equation in terms of the reasonableness of a regulation, e.g. Michigan v. EPA, additional research into this area should be made a research priority.

The Separation of Powers Restoration Act (H.R. 76) (as incorporated into RAA)

  • Allowing a court to review whether an agency has completed the necessary requirements under this Act for a rule to take effect; and
  • Authorizing the courts reviewing agency actions to decide de novo all relevant questions of law.

As discussed in the previous article of the series, these provisions are: major points of contention; will be challenged in court; and likely result in staying the Act’s implementation—perhaps for years. Consider, for example, the delays encountered in EPA’s efforts to finalize the Clean Power Plan.

H.R. 26/S. 23: The Regulations of the Executive in Need of Scrutiny Act (REINS)

  • Under REINS, no major rule shall take effect unless the Congress enacts a joint resolution of approval and won’t become law if Congress does not pass that resolution by 70 session or legislative days. (emphasis mine)

Added to what I have previously written about the relationship of this provision to the separation of power clause, this directive allows for a Congressional pocket veto. Simply by not acting, the regulation falls. This type of inaction offers a certain amount of protection to members not wishing to be on the record in opposition.

Congress, however, has this power now. The Congressional Review Act gives a 60- day window to strike a regulation. It hasn’t often been used over the past 8 years because Congress was asking President Obama to allow them to strike a regulation he ordered.

There is nothing to prevent the Republican Congress from invoking the CRA in the future, as they have an ally in President Trump. What happens, if four years from now, Republican congressional majorities are maintained but a Democratic or Independent President lives on the Avenue?

Inserting Congress into each major regulatory action may also cause, in the words of David Goldston, lobbyists to descend on Congress with even greater fervor than is currently the case to pressure Members to take their side on individual regulations. He further believes opponents of a rule would simply lay in wait to oppose it in Congress–rather than engaging in a dialogue with the issuing agency.

If Goldston is correct, it calls the question whether the approach taken by Republican sponsors of the bills might not be on the wrong side of Mr. Trump’s promise to drain the swamp.

A rule is defined as major if it meets any of these three criteria:

  • Having an annual effect on the economy of $100M or more;
  • Resulting in a substantial increase in costs or prices for consumers, individual industries, federal, state or local government
    agencies or geographic regions; or,
  • Causing a significant adverse effect on competition, employment, investment, productivity, innovation or the ability of U.S.-based enterprises to compete with foreign enterprises.

R Street, a major Republican policy group, believes these provisions will only impact 84 or so rulemakings. Others believe these criteria vague enough to leave the door wide open to a significantly greater number of proposed regulations. The bill doesn’t define phrases like substantial increase in cost or prices to consumers or a significant adverse effect on competition or jobs.

  • Requiring any agency making the rule to identify a rule or rules that may be amended or repealed to completely offset any annual costs of the new rule to the United States economy.

REINS’ requirement that any agency must amend or repeal existing rules in an amount equal to the cost of the proposed new rule reflects Trump’s promise to cut two old rules for every new one promulgated.

Whether one accepts or rejects the cut and go requirement, an agency will be sorely pressed to make it happen in consort with the new rule’s procedures. The initial problem is an agency cannot simply scratch a regulation off the books.

Current law requires an agency, in many instances, to follow the same procedures in removing/amending a rule as were used to create it. This could easily take months—or even years, pushing back the time when a new rule can be considered.

Putting the legal challenges aside, EPA took at least two years to draft and publish the Clean Power Plan. It involved research, soliciting expert opinions, rounds of public dialogue and literally having to way through thousands of comments. Not only was a massive amount of time required, but millions of dollars.

I will leave off this installment in the series with the question I began with: For Better Or Worse?  You be the judge.

Click in to the next part of this  Rulemaking series when I will identify and discuss the choke points in the proposed new energy/environment regulatory framework.