Is There Hope for Regulatory Restraint? Clues from Washington.
The last year of a president’s term is often a time of increased regulatory activity. (See blog post: 2016 Small Business Forecast: A Flurry of Federal Reglations) While regulations are proposed to address problems — real or perceived — there is always a cost involved. Ideally the benefit justifies the cost, but it’s hard to strike the right balance. A rush in 2016 to issue and finalize regulations could mean less time devoted to artfully crafting them. For businesses, this means there could be more rules to comply with at a higher cost. This is particularly troubling for small businesses who spend 36% more on regulatory compliance than their large competitors. So, what will Congress do to check an ambitious administration, and what will the President do to find the right balance? Recently, we’ve been given some clues.
LEGISLATIVE EFFORTS
The new Speaker of the House has formed six task forces to develop a broad agenda for Congress to pursue. The Speaker’s Task Force on Reducing Regulatory Burdens released its mission statement on March 1st, along with the ten principles that will guide its efforts to improve the federal regulatory system. The creation of this task force reveals a prioritization of and commitment to regulatory reform in the long term. However, Congress is not waiting for task force recommendations to take action on regulatory relief in the short term.
As one of its first acts this year, the House passed a regulatory reform bill, the Searching for and Cutting Regulations that are Unnecessarily Burdensome (SCRUB) Act. The SCRUB Act would create a Retrospective Regulatory Review Commission to look at federal regulations and recommend to Congress those that should be repealed because they are deemed too costly. Similarly, agencies would be required to review major regulations within 10 years of their issuance to determine their efficacy and whether they should be repealed. To keep regulatory costs nuetral, the bill would require that before agencies issue new rules, they cut old regulations (identified by the Commission) that impose an equal or greater cost. This legislation also has champions in the Senate, where a companion bill has been introduced.
Recently, Congress also has invoked the Congressional Review Act (CRA) in an attempt to block regulations it sees as too costly. The Act gives Congress 60 legislative days to act after a rule has been issued. In January, the House passed a resolution to block an EPA regulation designed to manage the “waters of the United States.” The Senate passed the resolution last November. Not surprisingly, the President promptly vetoed the bill, as he has other attempts by Congress to use the CRA to thwart his regulatory agenda.
In an even more recent legislative effort to impose regulatory restraint, last week, the House Committee on Oversight and Government Reform approved the Midnight Rule Relief Act that would place a post-election moratorium on new regulations that cost the economy $100 million or more annually. An exception would be made for rules that address imminent health or safety threats. A companion bill in the Senate has been introduced and awaits action by the Committee on Homeland Security and Government Affairs.
Of course, it’s unlikely that an executive branch run by one party would let a legislative branch led by the opposing party limit its regulatory role. Yet Congress is intent on questioning regulatory proposals it finds troublesome, urging reconsideration of regulatory decisions, and pushing for reforms to improve the rulemaking process.
ADMINISTRATION POLICY
Despite the President’s unwillingness to let Congress change his administration’s regulations, he did aknowledge the economic problems posed by outdated regulations when he said during this year’s State of the Union speech that, “I believe a thriving private sector is the lifeblood of our economy, I think there are outdated regulations that need to be changed, and there’s red tape that needs to be cut.” Moreover, the administration’s Office of Information and Regulatory Affairs (OIRA), which reviews all regulations before they can be finalized, is sensitive to the problems that can grow out of last-minute regulatory pushes before presidents leave office. OIRA has informed agencies that it expects any major regulations to be submitted for approval by the summer. Hopefully, this will result in better regulations, but it also makes it harder for the next administration to reverse controversial policy (see reference to the CRA above). Assuming the agencies comply with OIRA’s request, be on the look out for major regulatory proposals in the coming months. You can be sure Congress will be watching.