[Congressional Record (Bound Edition), Volume 163 (2017), Part 1]
[Extensions of Remarks]
[Pages 751-753]
[From the U.S. Government Publishing Office, www.gpo.gov]




               ANALYSIS OF H.R. 5 FROM THE 112TH CONGRESS

                                  _____
                                 

                           HON. BOB GOODLATTE

                              of virginia

                    in the house of representatives

                      Wednesday, January 11, 2017

  Mr. GOODLATTE. Mr. Speaker, I include in the Record an analysis of a 
previous version of H.R. 5 from the 112th Congress:

                                                 November 2, 2011.
     Re H.R. 3010, the Regulatory Accountability Act of 2011

     Hon. Lamar Smith, Chairman,
     Hon. John Conyers, Jr., Ranking Member,
     Committee on the Judiciary, House of Representatives, 
       Washington, DC.
       Dear Mr. Chairman and Ranking Member Conyers: The 
     undersigned practitioners and scholars in the field of 
     administrative law, and former regulatory officials in the 
     White House, OMB and federal agencies, have reviewed the 
     provisions of H.R. 3010, the Regulatory Accountability Act of 
     2011. H.R. 3010 would reform the Administrative Procedure 
     Act's rulemaking provisions to enhance the quality of federal 
     regulation, enhance democratic accountability and oversight 
     for administrative policymaking, and improve policy outcomes 
     for the American people. We strongly support the Committee's 
     effort to enhance the analysis, justification, transparency 
     of, and participation in, federal rulemaking, and we 
     respectfully request that the Committee include this letter 
     in the record.
       In its current form, the Administrative Procedure Act (APA) 
     does not adequately regulate the federal rulemaking process. 
     It does not obligate agencies to rigorously define and 
     characterize the need for regulation. It does not require 
     agencies to identify the costs of regulations--including both 
     compliance costs and impacts imposed on the economy and 
     general welfare. It does not require agencies to carefully 
     identify and assess the benefits to be achieved by new 
     regulations, and does not compel agencies to choose the least 
     burdensome, lowest-cost regulation that would achieve the 
     statutory objectives. In short, the APA does not necessarily 
     ensure that agencies justify their regulations in accordance 
     with the highest standards the public deserves. H.R. 3010 
     would correct this.
       H.R. 3010's critics argue that the bill would impose new 
     burdens on agencies, by interposing additional analytic 
     hurdles before agencies could adopt new regulations. First, 
     it is important to understand that the bill's regulatory 
     standards, and its analytic and justification requirements, 
     are not fundamentally new--they have been previously 
     developed and applied in Executive Orders issued by 
     Presidents Reagan, Clinton and Obama. The bill would 
     effectively codify existing principles and standards from 
     these Executive Orders in law. Second, while agencies would 
     surely take the codified legal standards and requirements 
     very seriously, and thus experience somewhat greater 
     compliance burdens, that is not necessarily unreasonable or 
     unwarranted. We believe the American public would view such 
     additional safeguards as appropriate.

[[Page 752]]

       To be clear, we do not oppose environmental, health, safety 
     or economic regulation. Nor do we believe that only a 
     regulation's costs should be carefully tabulated and weighed. 
     We agree that the benefits of many well-designed regulations 
     can obviously be highly valuable to society, and we recognize 
     that sound regulations can certainly reflect benefits that 
     include intangible, non-quantifiable values (such as 
     environmental, moral, ethical, aesthetic, social, human 
     dignity, stewardship and other non-pecuniary or practical 
     factors).
       Taken together, we believe that all such costs and all such 
     benefits must be rigorously analyzed, assessed, justified and 
     scrutinized before significant new rules are imposed on the 
     public, the economy, affected parties and regulated entities. 
     Quite simply, that is ``accountability.''
       The heads of regulatory agencies exercise extensive 
     delegated policymaking authority, but are not directly 
     accountable to the public through the democratic process. 
     Accordingly, it is entirely reasonable, appropriate and, 
     indeed, essential, for Congress to (i) specify in law more 
     stringent criteria for rulemaking, (ii) facilitate 
     substantial Presidential oversight of agency regulations 
     (including those promulgated by ``independent'' agencies), 
     (iii) enable more robust public participation in the 
     rulemaking process, (iv) require regulations to be based on 
     more reliable data and other relevant inputs, and (v) provide 
     for more effective judicial scrutiny of the final 
     regulations.
       Of course, Congress often delegates its policymaking power 
     to agencies, and it is incontrovertible that agencies' 
     rulemaking can often be as highly consequential and important 
     to the public as the congressionally enacted laws themselves. 
     But for that very reason, regulation must not be undertaken 
     without very careful consideration and observation of the 
     most stringent procedures and analysis. The fact that the 
     bill's requirements would embody existing regulatory review 
     duties and obligations (based on numerous Executive Orders) 
     in the APA itself is not objectionable. Before regulatory 
     agencies impose new burdens on the public and the economy, 
     the agencies should spend the time and make the effort to 
     make sure they get the balance right for the overall benefit 
     of society.
       Accordingly, we view the Regulatory Accountability Act as 
     serving the public well by mandating in statutory text that 
     new regulations be thoroughly and meaningfully justified. 
     Indeed, to the extent feasible, we would recommend that 
     Congress avail itself of the same cost-benefit analysis prior 
     to enacting regulatory legislation so as to avoid imposing 
     unjustified regulatory mandates that agencies cannot fully 
     resolve in the rulemaking process.
       As noted above, far from imposing partisan or ideologically 
     divisive requirements, H.R. 3010 embodies and implements a 
     longstanding, bipartisan consensus on the proper principles 
     of regulatory review and reform: Presidents Reagan, George 
     H.W. Bush, Clinton, George W. Bush and--most recently and 
     emphatically--President Obama, have all issued or implemented 
     Executive Orders calling for rigorous justification of the 
     need for regulation, careful cost-benefit analysis before 
     imposing new regulatory requirements, reliance on sound 
     science, and selection of the least burdensome regulatory 
     alternatives that meet the relevant statutory objectives.
       H.R. 3010 would take those Executive Branch principles and 
     codify them, thereby preserving in federal statutes the very 
     values set forth in President Obama's recent Orders:
       Our regulatory system must protect public health, welfare, 
     safety, and our environment while promoting economic growth, 
     innovation, competitiveness, and job creation.
       It must be based on the best available science.
       It must allow for public participation and an open exchange 
     of ideas.
       It must identify and use the best, most innovative, and 
     least burdensome tools for achieving regulatory ends.
       It must take into account benefits and costs, both 
     quantitative and qualitative.
       Each agency must, among other things:
       (1) propose or adopt a regulation only upon a reasoned 
     determination' that its benefits justify its costs 
     (recognizing that some benefits and costs are difficult to 
     quantify);
       (2) tailor its regulations to impose the least burden on 
     society, consistent with obtaining regulatory objectives, 
     taking into account, among other things, and to the extent 
     practicable, the costs of cumulative regulations;
       (3) select, in choosing among alternative regulatory 
     approaches, those approaches that maximize net benefits 
     (including potential economic, environmental, public health 
     and safety, and other advantages; distributive impacts; and 
     equity);
       (4) to the extent feasible, specify performance objectives, 
     rather than specifying the behavior or manner of compliance 
     that regulated entities must adopt; and
       (5) identify and assess available alternatives to direct 
     regulation, including providing economic incentives to 
     encourage the desired behavior, such as user fees or 
     marketable permits, or providing information upon which 
     choices can be made by the public.
       Regulations shall be adopted through a process that 
     involves public participation.
       Each agency, consistent with Executive Order 12866 and 
     other applicable legal requirements, shall endeavor to 
     provide the public with an opportunity to participate in the 
     regulatory process.
       Each agency shall also provide, for both proposed and final 
     rules, timely online access to the rulemaking docket on 
     regulations.gov, including relevant scientific and technical 
     findings, in an open format that can be easily searched and 
     downloaded.
       Before issuing a notice of proposed rulemaking, each 
     agency, where feasible and appropriate, shall seek the views 
     of those who are likely to be affected, including those who 
     are likely to benefit from and those who are potentially 
     subject to such rulemaking.
       Each agency shall identify and consider regulatory 
     approaches that reduce burdens and maintain flexibility and 
     freedom of choice for the public.
       Each agency shall ensure the objectivity of any scientific 
     and technological information and processes used to support 
     the agency's regulatory actions.
       Wise regulatory decisions depend on public participation 
     and on careful analysis of the likely consequences of 
     regulation.
       Such decisions are informed and improved by allowing 
     interested members of the public to have a meaningful 
     opportunity to participate in rulemaking.
       To the extent permitted by law, such decisions should be 
     made only after consideration of their costs and benefits 
     (both quantitative and qualitative).
       Executive Order 13563 of January 18, 2011, ``Improving 
     Regulation and Regulatory Review,'' directed to executive 
     agencies, was meant to produce a regulatory system that 
     protects ``public health, welfare, safety, and our 
     environment while promoting economic growth, innovation, 
     competitiveness, and job creation.''
       Independent regulatory agencies, no less than executive 
     agencies, should promote that goal.
       Executive Order 13563 set out general requirements directed 
     to executive agencies concerning public participation, 
     integration and innovation, flexible approaches, and science. 
     To the extent permitted by law, independent regulatory 
     agencies should comply with these provisions as well.
       Indeed, the Regulatory Accountability Act would implement 
     President Obama's recent call for ``public participation and 
     open exchange'' before a rule is proposed. Specifically, H.R. 
     3010 would create an Advance Notice of Proposed Rulemaking 
     stage for major rules ($100M+). In this early notice, the 
     agency would identify the problem it wishes to address 
     through regulation and articulate the specific legal 
     authority for doing so; disclose its preliminary views on the 
     direction of the prospective regulation, and provide 
     information concerning possible regulatory alternatives; and 
     invite the public to submit written comments on these issues. 
     While this adds a step in the regulatory process, it is one 
     that allows interested parties a greater opportunity to help 
     the agency reach a sound outcome.
       The bill would also obligate agencies to rely on better 
     scientific and technical data. While agencies must exercise 
     their expert judgment, it is impossible to argue against the 
     proposition that they should use the best data and other 
     inputs available. Affected parties can invoke judicial and 
     administrative remedies to ensure that agencies rely on 
     scientific and technical evidence that meets the standards of 
     the Information Quality Act. This is, of course, consistent 
     with President Obama's call for regulating ``based on the 
     best available science.'' This is unassailable. If agencies 
     cannot disclose and defend the data they rely on as being the 
     best available, they cannot possibly be confident enough in 
     their regulatory analysis to impose new requirements on the 
     basis of the data at their disposal.
       The Committee may also wish to consider the possible 
     application, or adaptation, of the Supreme Court's decision 
     in Daubert v. Merrell Dow Pharmaceuticals, Inc., in the 
     regulatory context. In Daubert, the Court empowered federal 
     judges to reject irrelevant or unreliable scientific 
     evidence, thus providing the judiciary a mandate to foster 
     ``good science'' in the courtroom and to reject expert 
     testimony not grounded in scientific methods and procedures. 
     Some federal agencies have been criticized for lacking a 
     commitment to sound science. Too often, federal courts have 
     accorded great deference to uphold agency decisions that may 
     have been based on faulty scientific evidence or unsupported 
     assumptions and conclusions.
       Daubert principles could be applied to the review of agency 
     rulemaking under the APA because these principles are 
     consistent with the APA requirement that agencies engage in 
     reasoned decisionmaking, would assure better documentation of 
     agencies' scientific decisions, and would enhance the rigor 
     and predictability of judicial review of agency action based 
     on scientific evidence. This approach would be entirely 
     congruent with the Regulatory Accountability Act's 
     requirement that regulations be based on the best available 
     science. Applying the Daubert principles in judicial review 
     of agency action would allow courts to evaluate the 
     scientific methods and procedures employed by agencies, but 
     must not allow judges to substitute

[[Page 753]]

     their own policy preferences or conclusions for those chosen 
     by the agencies. The courts' review need not be heavy-handed; 
     it can be both deferential and probing, ensuring that 
     agencies formulate and comply with procedures tailored to 
     producing the best results, while not dictating what those 
     results must be in any given case.
       Incorporating, or adapting, Daubert principles into 
     administrative law would improve agency decisionmaking and 
     enhance accountability. Agencies would be compelled to 
     identify the most reliable and relevant scientific evidence 
     for the issue at hand and disclose the default assumptions, 
     policy choices, and factual uncertainties therein. Applying 
     Daubert in the administrative context would refine judicial 
     review of agency science, resulting in greater consistency 
     and rigor.
       We also believe that it is reasonable that H.R. 3010 would 
     expose more agency pronouncements, such as agency guidance 
     documents, to more rigorous standards. Specifically, the bill 
     would adopt the good-guidance practices issued by OMB in 2007 
     (under then-Director, and now Senator, Portman). Such agency 
     guidance would be clearly noted as ``non-binding,'' and would 
     not be entitled to substantial judicial deference.
       The heart of the bill is to build cost-benefit analysis 
     principles into each step of the rulemaking process--proposed 
     rule, final rule, and judicial review. As noted earlier, 
     these principles are drawn from Executive Orders issued by 
     Presidents Reagan and Clinton and emphatically reaffirmed by 
     President Obama. The bill would make those principles 
     permanent, enforceable and applicable to independent 
     agencies. Compliance with these codified requirements would 
     be subject to judicial review.
       Significantly, the bill would require agencies to adopt the 
     ``least costly alternative that will achieve the objectives 
     of the statute authorizing the rule.'' It permits agencies to 
     adopt a more costly approach only if the agency demonstrates 
     that the added costs justify the benefits and that the more 
     costly rule is needed to address interests of public health, 
     safety, and welfare that are clearly within the scope of the 
     statute. This is consistent with the White House's recent 
     instruction to federal agencies to ``minimize regulatory 
     costs'' and the President's directive to ``tailor regulations 
     to impose the least burden on society.'' (Exec. Order 13,563)
       For high impact, billion-dollar rules, additional 
     procedures would apply--which seems entirely reasonable given 
     the resulting consequences for the public and the economy. 
     Most importantly, affected parties will have access to a fair 
     and open forum to question the accuracy of the views, 
     evidence, and assumptions underlying the agency's proposal. 
     The hearing would focus on (1) whether there is a lower-cost 
     alternative that would achieve the policy goals set out by 
     Congress (or a need that justifies an higher cost than 
     otherwise necessary); (2) whether the agency's evidence is 
     backed by sound scientific, technical and economic data, 
     consistent with the Information Quality Act; (3) any issues 
     that the agency believes would advance the process. Parties 
     affected by major rules ($100M+) would also have access to 
     hearings, unless the agency concludes that the hearing would 
     not advance the process or would unreasonably delay the 
     rulemaking.
       Following the hearing prescribed in the bill, high-impact 
     rules would be reviewed under a slightly higher standard in 
     court--so-called ``substantial evidence'' review. While this 
     standard is still highly deferential to the agency's 
     judgments, it allows a court reviewing major rules to ensure 
     that an agency's justifications are supported by ``evidence 
     that a reasonable mind could accept as adequate to support a 
     conclusion based on the record as a whole.''
       We understand that these additional review and analysis 
     requirements are not perfunctory and may not be easy for 
     agencies to accomplish. However, we believe that because of 
     the extensive delegation of essentially legislative authority 
     from Congress and policymaking discretion that agencies 
     exercise, and the substantial deference that agencies enjoy 
     from the courts, the public deserves more analysis and 
     justification before agencies acts. Moreover, we believe that 
     the public also expects the President to influence and 
     control rulemaking by all federal agencies, and thus we 
     support greater centralized White House review of agency 
     regulations--including independent agencies--on behalf of the 
     President by the Office of Information and Regulatory Affairs 
     at OMB (in the Executive Office of the President). We believe 
     the bill, which clearly applies its regulatory standards to 
     independent agencies, should also make clear that the 
     President is responsible for, and entitled to review, the 
     rules issued by independent agencies such as the SEC, CFTC, 
     FCC, FTC, CPSC, CFPB, etc.
       The need for such Presidential authority is manifest. For 
     example, in a recent case before the U.S. Court of Appeals 
     for the D.C. Circuit, In re Aiken County, the presidentially 
     controlled Department of Energy and the independent Nuclear 
     Regulatory Commission did not actually agree on the merits of 
     how to handle nuclear waste at Yucca Mountain. This prompted 
     Circuit Judge Brett Kavanaugh to explain why the lack of 
     presidential authority and control is constitutionally and 
     politically dubious. Quoting both Alexander Hamilton in the 
     Federalist Papers and the Supreme Court in PCAOB, he wrote 
     that ``the issue created by Humphrey's Executor is that the 
     President's decision on the Yucca Mountain issue is not the 
     final word in the Executive Branch. In other cases, the issue 
     created by Humphrey's Executor is that it allows Presidents 
     to avoid making important decisions or to avoid taking 
     responsibility for decisions made by independent agencies. 
     When independent agencies make such important decisions, no 
     elected official can be held accountable and the people 
     ``cannot `determine on whom the blame or the punishment of a 
     pernicious measure, or series of pernicious measures ought 
     really to fall.'''
       President Obama has acknowledged the importance of 
     Presidential review of independent agency rulemaking in 
     recent, July 11, Executive Order. (Executive Order, 13,579) 
     His Order requests (but does not command) that the 
     independent agencies to submit the regulations they issue to 
     the same principles applicable throughout the parts of the 
     Executive Branch for which he is directly accountable. 
     Specifically, independent agencies are now asked to 
     scrutinize existing and future regulations in accordance with 
     cost-benefit analysis. He also asks them to assure that 
     regulatory policy is cost-effective and protective of 
     innovation and job creation. Perhaps most importantly, 
     independent agencies should also make sure that there is a 
     real problem that needs to be solved before regulating, and 
     then choose the least burdensome regulatory alternative that 
     prevents or abates that harm. The bill currently before 
     Congress should thus make clear--not only that independent 
     agencies are subject to the salutary standards of cost-
     benefit analysis and rigorous policy justification--but also, 
     that the President has the power and responsibility to review 
     and control all such Executive Branch rulemaking.
       While we endorse the bill's proposed codification of 
     regulatory standards, analytic criteria, and accountability 
     principles, we would also recommend that Congress consider 
     incorporating the prospectively duplicative provisions of the 
     Regulatory Flexibility Act (with regard to cost-benefit 
     analysis for small business) and the Unfunded Mandates Reform 
     Act (with regard to cost-benefit analysis and minimization of 
     burdens on states, tribes and private sector; though UMRA 
     does not currently apply to independent agencies). Moreover, 
     as previously noted, we also believe the bill should 
     specifically authorize the President to oversee rulemaking by 
     independent agencies. The President's responsibility to 
     oversee independent regulatory agencies, like the Consumer 
     Financial Protection Board, for example, would ensure that 
     the regulations adopted by such agencies are in the overall 
     best interest of the American people.
       Thank you for considering our views.
       Respectfully submitted,
       Alan Charles Raul, Former Vice Chairman, White House 
     Privacy and Civil Liberties Oversight Board, Former General 
     Counsel, U.S. Department of Agriculture, Former General 
     Counsel, Office of Management and Budget, Former Associate 
     Counsel to the President.
       C. Boyden Gray, Boyden Gray & Associates, Former Ambassador 
     to the European Union, Former Counsel to the President, 
     Former Counsel to the Vice President.
       James C. Miller III, Former Director of the Office of 
     Management and Budget, Former Chairman of the Federal Trade 
     Commission, Former Administrator of the Office of Information 
     And Regulatory Affairs, OMB.
       David L. Bernhardt, Former Solicitor, Department of the 
     Interior.
       Adam J. White, Boyden Gray & Associates.
       Eileen J. O'Connor, Former Assistant Attorney General, Tax 
     Division, U.S. Department of Justice.
       Daren Bakst, Director of Legal and Regulatory Studies, John 
     Locke Foundation.
       Jeffrey R. Holmstead, Former Assistant Administrator of the 
     Environmental Protection Agency for Air and Radiation, Former 
     Associate Counsel to the President.
       Jeffrey Bossert Clark, Former Deputy Assistant Attorney 
     General, Environment & Natural Resources Division, United 
     States Department of Justice.
       David R. Hill, Former General Counsel, U.S. Department of 
     Energy.

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