[House Report 113-675]
[From the U.S. Government Publishing Office]
113th Congress } { Rept. 113-675
HOUSE OF REPRESENTATIVES
2d Session } { Part 1
======================================================================
SEARCHING FOR AND CUTTING REGULATIONS THAT ARE UNNECESSARILY BURDENSOME
ACT OF 2014
_______
December 12, 2014.--Ordered to be printed
_______
Mr. Goodlatte, from the Committee on the Judiciary, submitted the
following
R E P O R T
together with
DISSENTING VIEWS
[To accompany H.R. 4874]
[Including cost estimate of the Congressional Budget Office]
The Committee on the Judiciary, to whom was referred the
bill (H.R. 4874) to provide for the establishment of a process
for the review of rules and sets of rules, and for other
purposes, having considered the same, reports favorably thereon
without amendment and recommends that the bill do pass.
CONTENTS
Page
Purpose and Summary.............................................. 1
Background and Need for the Legislation.......................... 2
Hearings......................................................... 7
Committee Consideration.......................................... 7
Committee Votes.................................................. 7
Committee Oversight Findings..................................... 9
New Budget Authority and Tax Expenditures........................ 9
Congressional Budget Office Cost Estimate........................ 9
Duplication of Federal Programs.................................. 9
Disclosure of Directed Rule Makings.............................. 9
Performance Goals and Objectives................................. 10
Advisory on Earmarks............................................. 10
Section-by-Section Analysis...................................... 10
Dissenting Views................................................. 12
Purpose and Summary
H.R. 4874, the ``Searching for and Cutting Regulations that
are Unnecessarily Burdensome Act of 2014'' (SCRUB Act)
establishes a blue-ribbon Retrospective Regulatory Review
Commission to identify and recommend to Congress for repeal
existing Federal regulations that can be eliminated to reduce
unnecessary regulatory costs to the U.S. economy. The
Commission is charged to reduce these costs without
significantly reducing overall regulatory effectiveness, by,
for example, identifying and recommending for repeal
regulations that have achieved their goals and can be repealed
without their target problems recurring; are obsolete or
ineffective; overlap, duplicate or conflict with other Federal
regulations or state and local regulations; or, impose costs
that are not justified by the benefits they produce for society
within the United States.
Background and Need for the Legislation
I. JOBS, GROWTH AND THE IMPACT OF FEDERAL REGULATIONS
Since the official end of the recent recession was declared
in 2009, numerous observers have attributed the economy's
continuing slow rates of job creation and growth in part to the
burden of Federal regulation and uncertainty over what
regulation will come next.\1\ According to some estimates, the
total annual Federal regulatory burden has reached $1.75-$1.86
trillion, or in the neighborhood of $15,000 per year for each
U.S. household.\2\ Americans for Tax Reform estimated in August
2011 that Americans worked an estimated 77 days per year just
to cover the cost of the Federal regulatory burden.\3\
According to recent Gallup survey results, small-business
owners in the United States continue to list government
regulation as one of the top challenges they confront.\4\
---------------------------------------------------------------------------
\1\See, e.g., Editors, The Uncertainty Principle, The Wall Street
Journal (July 14, 2010) (available at http://online.wsj.com/article/
SB10001424052748704288204575363162664835780.html?
KEYWORDS=rulemakings); John B. Taylor, ``John Taylor: Rules for
America's Road to Recovery,'' The Wall Street Journal (May 31, 2012)
(available at http://online.wsj.com/article/
SB10001424052702303674004577434774238817962.html).
\2\See Clyde Wayne Crews, Jr., Ten Thousand Commandments 2014, An
Annual Snapshot of the Regulatory State, at 2 (April 2014) (available
at http://cei.org/studies/ten-thousand-commandments-2014); Nicole V.
Crain & W. Mark Crain, The Impact of Regulatory Costs on Small Firms,
Small Business Administration, 6 & 48 (Sept. 2010) (available at http:/
/www.sba.gov/sites/default/files/rs371tot.pdf).
\3\Americans for Tax Reform, 2011 Cost of Government Day, August 12
(Aug. 10, 2011), (available at http://www.atr.org/?content=2011COGD).
\4\Gallup Economy, Small Businesses Face Operational, Regulatory
Challenges (Feb. 28, 2014) (available at http://www.gallup.com/poll/
167660/small-businesses-face-operational-regulatory-challenges.aspx).
---------------------------------------------------------------------------
Executive orders since the 1980's have required regulatory
agencies to identify clearly the problems their regulations are
intended to solve, available regulatory alternatives (including
the alternative of not regulating), and the costs and benefits
of new regulations. Notwithstanding that, however, many Federal
regulations currently in effect have been ill-considered and
not clearly necessary. For example, the Obama administration
has regularly failed to analyze both the costs and the benefits
of substantial numbers of major regulations.\5\,\6\
Similarly, in a multi-year study of major regulations, the
Mercatus Center found that agencies did a poor job satisfying a
host of basic rulemaking quality standards. These included the
identification of clear problems requiring regulatory
solutions, analysis of adequate alternatives, assessment of
costs and benefits, and demonstration that chosen regulations
would produce the agencies' desired outcomes.\7\ Consistent
with these results, there is bipartisan agreement that too many
regulations currently in force are defective, and that many of
these regulations can be revisited and eliminated or
improved.\8\
---------------------------------------------------------------------------
\5\``Major'' regulations generally are those with $100 million or
more in effects. See, e.g., Executive Order 12866 at sec. 3(f) (Sept.
30, 1993).
\6\See Office of Information and Regulatory Affairs, 2010 Report to
Congress on the Benefits and Costs of Federal Regulations and Unfunded
Mandates on State, Local, and Tribal Entities at 3 (2010) (available at
http://www.whitehouse.gov/sites/default/files/omb/legislative/reports/
2010_Benefit_Cost_Report.pdf); Office of Information and Regulatory
Affairs, 2011 Report to Congress on the Benefits and Costs of Federal
Regulations and Unfunded Mandates on State, Local, and Tribal Entities
at 3 (2011) (available at http://www.whitehouse.gov/sites/default/
files/omb/inforeg/2011_cb/2011_cba_report.pdf); Office of Information
and Regulatory Affairs, 2012 Report to Congress on the Benefits and
Costs of Federal Regulations and Unfunded Mandates on State, Local, and
Tribal Entities at 3-4 (2012) (available at http://www.whitehouse.gov/
sites/default/files/omb/inforeg/2012_cb/2012_cost_benefit_report.pdf);
Office of Information and Regulatory Affairs, 2013 Report to Congress
on the Benefits and Costs of Federal Regulations and Unfunded Mandates
on State, Local, and Tribal Entities at 4 (2014) (available at http://
www.whitehouse.gov/sites/default/files/omb/inforeg/2013_cb/
2013_cost_benefit_report-updated.pdf).
\7\See generally Mercatus Center, Regulatory Report Card, available
at: http://mercatus.org/reportcard. For a description of the Report
Card's methodology, see http://mercatus.org/reportcards/methodology.
\8\See, e.g., Executive Order 13563, Improving Regulation and
Regulatory Review, at sec. 6, 76 Fed. Reg. 3821, 3822 (Jan. 18, 2011)
(agencies shall consider how best to promote retrospective analysis of
rules that may be outmoded, ineffective, insufficient, or excessively
burdensome, and to modify, streamline, expand, or repeal them in
accordance with what has been learned); Pres. Barack Obama, Toward a
21st Century Regulatory System, The Wall Street Journal (January 18,
2011) (E.O. 13563 ``orders a government-wide review of the rules
already on the books to remove outdated regulations that stifle job
creation and make our economy less competitive'') (available at http://
online.wsj.com/article/SB10001424052748703396604576088272112103698.
html).
---------------------------------------------------------------------------
II. RETROSPECTIVE REVIEW EFFORTS BY THE EXECUTIVE BRANCH
The Obama administration has issued three executive orders
that in whole or in part call for retrospective review of
existing regulations. First and foremost is Executive Order
13563, issued on January 18, 2011. Among other things, that
order calls upon executive agencies to conduct, under the
oversight of the Office of Management and Budget's Office of
Information and Regulatory Affairs (OIRA), a retrospective
review of existing, significant regulations to identify which
``may be outmoded, ineffective, insufficient, or excessively
burdensome, and to modify, streamline, expand, or repeal them
in accordance with'' the findings of the retrospective
review.\9\ The order further calls for such review to be
conducted periodically thereafter, so that agencies regularly
can ``determine whether any such regulations should be
modified, streamlined, expanded, or repealed so as to make the
agency's regulatory program more effective or less burdensome
in achieving the regulatory objectives.''\10\
---------------------------------------------------------------------------
\9\76 Fed. Reg. at 3822.
\10\Id.
---------------------------------------------------------------------------
Seven months later, on July 7, 2011, President Obama issued
another executive order, E.O. 13579, directed at independent
agencies, such as the Federal Communications Commission, the
Federal Reserve Board and the Securities Exchange Commission.
These agencies fell outside the requirements of E.O. 13563 and
prior orders, such as E.O. 12866, due in part to hesitancy by
presidents to assert direct White House control over
independent agencies' regulatory decisions. In E.O. 13579, the
President exhorted independent agencies, like the executive
agencies addressed by E.O. 13563, to conduct retrospective
analyses of existing significant regulations and to prepare
plans under which independent agencies would thereafter
periodically conduct similar retrospective reviews to determine
whether any such regulations should be modified, streamlined,
expanded, or repealed.\11\ Unlike executive agencies,
independent agencies were not ordered to submit such plans to
OIRA, but rather simply to release the plans to the public.\12\
---------------------------------------------------------------------------
\11\Id.
\12\Id.
---------------------------------------------------------------------------
Finally, on May 10, 2012, the President released Executive
Order 13610, ``Identifying and Reducing Regulatory Burdens.''
This order ``invites public participation to help agencies
determine whether existing regulations remain justified and
whether they should be modified or streamlined in light of
changed circumstances, including the rise of new
technologies.''\13\ It also ``instructs agencies to give
priority to initiatives that will produce significant monetary
savings or reductions in paperwork burdens while protecting
public health, welfare, safety, and the environment.''\14\
Finally, the order ``[r]equires agencies to regularly report to
OIRA on retrospective review efforts, including their progress,
anticipated accomplishments, and proposed timelines for
relevant actions.''\15\ The first of these reports was due on
September 10, 2012. Reports were due thereafter on the second
Monday of January and July of each year.
---------------------------------------------------------------------------
\13\77 Fed. Reg. 28,469 (May 14, 2012).
\14\Id. at 28,470.
\15\Id.
---------------------------------------------------------------------------
Notwithstanding their goals in concept, these executive
orders have from the outset produced few meaningful results in
practice. For example, the Heritage Foundation's July 25, 2011,
mid-year report on growth in Federal regulation reported that,
notwithstanding the issuance of E.O. 13563, `[i]n the first 6
months of the 2011 fiscal year . . . [n]o major rulemaking
actions were taken to reduce regulatory burdens during this
period.'' From January 2009 to mid-FY 2011, ``there were only
six major deregulatory actions . . . , with reported savings of
just $1.5 billion.''\16\ The Administration's own preliminary
results of the E.O. 13563 review, released in May 2011,
suggested that the Administration had identified only about $1
billion a year in potential regulatory burden reductions from
the repeal or modification of existing regulations.\17\ More
recently, in a January 2014 assessment of the Administration's
retrospective review effort, the American Action Forum (AAF)
determined that ``[o]n net, proposed and final rules that have
come under this reform have added $13.7 billion in new
burdens,'' although ``counting only regulations that cut costs,
the Administration has cut at least $8.7 billion in
burdens.''\18\
---------------------------------------------------------------------------
\16\James Gattuso and Diane Katz, Red Tape Rising: A 2011 Mid-Year
Report, the Heritage Foundation (July 25, 2011) (``Red Tape Rising Mid-
Year Report'') (available at http://www.heritage.org/research/reports/
2011/07/red-tape-rising-a-2011-mid-year-report).
\17\Red Tape Rising Mid-Year Report.
\18\Sam Batkins, Three Years of Regulatory Reform: Did the
President's Executive Orders Work?, American Action Forum (Jan. 21,
2014) (emphasis added) (available at http://americanactionforum.org/
insights/three-years-of-regulatory-reform-did-the-presidents-executive-
orders-work).
---------------------------------------------------------------------------
In and of itself, a reduction of $8.7 billion in regulatory
costs, if it actually occurred, would be a positive
development. However, if the net result of activity under the
Administration's regulatory reform initiative has been the
addition of $13.7 billion in regulatory burdens, then it
appears that the Administration's effort has failed. Making
matters worse, regulatory activity under the current
Administration outside of the retrospective review initiative
has dwarfed any results of the Administration's retrospective
review. According to AAF, between 2010 and early 2014, the
total burden of paperwork hours imposed by Federal regulation
increased by 1.5 billion hours, or 17 percent, and the Obama
administration added $488 billion in new regulatory costs
between 2009 and 2012.\19\ The Heritage Foundation has
estimated that new regulatory costs just from major regulations
totaled roughly $70 billion during the Administration's first
term.\20\
---------------------------------------------------------------------------
\19\Sam Batkins, President Obama's $488 Billion Regulatory Burden,
at 3, American Action Forum (Sept. 19, 2012) (available at http://
americanactionforum.org/research/president-obamas-488-billion-
regulatory-burden).
\20\James Gattuso and Diane Katz, Red Tape Rising: Regulation in
Obama's First Term, the Heritage Foundation (May 1, 2013) (available at
http://www.heritage.org/research/reports/2013/05/red-tape-rising-
regulation-in-obamas-first-term).
---------------------------------------------------------------------------
From 2003 to 2006, the George W. Bush administration also
engaged in retrospective review of existing regulations. Its
aim, like the Obama administration's stated goal, was to
identify and modify or rescind regulations that performed
suboptimally. Also like the Obama administration, the Bush
administration conducted its review under OIRA's oversight and
with opportunities for the public to identify problematic
regulations. The Bush administration's effort, however,
likewise did not produce major results.
There are a number of reasons for which retrospective
review efforts to date may not have produced significant
results. Regulatory agencies, on the one hand, have strong
incentives to focus their resources on prospective regulatory
activities that address new problems and congressional
mandates. They have much weaker incentives to revisit their
past work at their own instance, or even at the Executive's
instances, examine that work, brand it as unnecessary,
ineffective or counterproductive, and repeal or amend it.
Regulated entities, meanwhile, have strong incentives to focus
their resources on the shaping of new regulations and the
prevention of unsound new regulations, rather than on the
nomination of old regulations that agencies should modify or
rescind. For example, post-hoc attempts by regulated entities
at their own instance to identify old regulations for repeal or
amendment can antagonize the very regulatory agencies with
which these entities must deal on a regular basis.
III. RECENT LEGISLATIVE PROPOSALS AND COMMITTEE OVERSIGHT LEADING TO
THE SCRUB ACT
Against this background of failure under executive orders
and other initiatives, a number of proposals to require some
manner of retrospective regulatory review through the stronger
means of legislation have been introduced or advocated over the
past several years, both within the Congress and in the broader
public. These have included, among others, proposals featuring
the institution of a blue-ribbon commission, akin to the Base
Realignment and Closure Commission established under the
Defense Base Closure and Realignment Act of 1990, Pub. L. No.
101-510, to identify and recommend to Congress regulations that
should be repealed, as well as a proposal to require agencies
to repeal one or more existing regulations when they promulgate
new regulations.\21\
---------------------------------------------------------------------------
\21\See, e.g., Michael Mandel, Ph.D., Reviving Jobs and Innovation:
A Progressive Approach to Improving Regulation, Progressive Policy
Institute (Feb. 2011) (available at http://progressivepolicy.org/wp-
content/uploads/2011/02/2011_Mandel_A-Progressive-Approach-to-
Improving-Regulation.pdf); Sen. Mark Warner, Self-Replicating
Regulation: How to Trim Government Overlap, The Atlantic (Mar. 12,
2012) (available at http://www.theatlantic.com/politics/archive/2012/
03/self-replicating-regulation-how-to-trim-government-overlap/253898/).
---------------------------------------------------------------------------
The Subcommittee on Courts, Commercial and Administrative
Law held an oversight hearing on July 12, 2012, at which it
considered the need for retrospective regulatory review,
assessed the Obama administration's efforts up to that time,
and evaluated a number of retrospective review concepts
proposed up to that point.\22\ All witnesses at the hearing
agreed that retrospective regulatory review was an important
concept that deserved serious consideration, although they did
not all agree on what approach to adopt to carry out this
function.
---------------------------------------------------------------------------
\22\Committee on the Judiciary, Subcommittee on Courts, Commercial
and Administrative Law, Hearing on: ``Clearing the Way for Jobs and
Growth: Retrospective Review to Reduce Red Tape and Regulations,''
(July 12, 2012) (hearing record available at http://
judiciary.house.gov/index.cfm/hearings?ID=37A1AEB4-AFA1-6465-6E4E-
0529E909296F).
---------------------------------------------------------------------------
To make the most of meritorious aspects of prior proposals,
including useful concepts from President Obama's executive
orders, to better align incentives, and to create the most
effective overall approach, the ``Searching for and Cutting
Regulations that are Unnecessarily Burdensome Act of 2014,'' or
``SCRUB Act,'' builds several features of prior proposals and
initiatives into its architecture, along with innovations of
its own. In a nutshell, the SCRUB Act institutes an independent
Retrospective Regulatory Review Commission with authority to
identify within the Code of Federal Regulations, and with the
assistance of the public, any regulations or sets of
regulations that implement regulatory programs that, under
specified criteria, merit repeal to reduce unnecessary
regulatory cost burdens. The Commission is empowered to
recommend the highest priority repeals for immediate action,
and, if a joint congressional resolution of approval is
enacted, agencies are required to execute these repeals within
60 days of enactment. All other regulations recommended by the
Commission for repeal are placed into an inventory of
regulations which the agencies must repeal over time through a
``cut-go'' process as agencies promulgate new regulations.
Under this process, the costs of each new regulation must be
offset by cost-reductions associated with the repeal of
regulations in the inventory, until each agency completes the
repeals of its own regulations specified in the inventory.
Agencies are left free to determine the order in which they
will execute inventory-based repeals. They also remain free to
promulgate new regulations that re-implement statutory
authority originally implemented by a regulation in the
inventory. If they do so, however, they must assure that
repeals of regulations in the inventory achieve a full, net
offset of the costs of the new regulation. Finally, when the
Commission recommends the repeal of a set of rules that
implement a regulatory program, the Commission is to provide to
Congress an analysis of whether Congress should consider repeal
of the underlying statutory authority which the set of
regulations implemented.
The Commission is given the goal of achieving at least a
15% reduction in the cumulative cost burden imposed by Federal
regulation, without significantly reducing overall regulatory
effectiveness. Through the institution of this goal, the
provision of the tools needed to achieve it, and a better
alignment of incentives to assure the use of those tools, the
SCRUB Act promises to achieve real, meaningful elimination of
unnecessary regulatory costs, promoting needed job creation and
economic growth.
Hearings
The Committee's Subcommittee on Regulatory Reform,
Commercial and Antitrust Law held 1 day of hearings on H.R.
4874, as embodied in a draft version of the legislation, on
February 11, 2014. Testimony was received from Patrick A.
McLaughlin, Senior Research Fellow, Mercatus Center, George
Mason University; Sam Batkins, Director of Regulatory Policy,
American Action Forum; and, Prof. Ronald M. Levin, Washington
University School of Law, with additional material submitted by
the Natural Resources Defense Council and the Coalition for
Sensible Safeguards.
Committee Consideration
On June 18, 2014, the Committee met in open session and
ordered the bill H.R. 4874 favorably reported without
amendment, by a rollcall vote of 17 to 10, a quorum being
present.
Committee Votes
In compliance with clause 3(b) of rule XIII of the Rules of
the House of Representatives, the Committee advises that the
following rollcall votes occurred during the Committee's
consideration of H.R. 4874.
1. Amendment #2, offered by Mr. Johnson. The Amendment
strikes title II of the bill, eliminating the bill's regulatory
``cut-go'' provisions. The amendment was defeated by a rollcall
vote of 9 to 16.
ROLLCALL NO. 1
------------------------------------------------------------------------
Ayes Nays Present
------------------------------------------------------------------------
Mr. Goodlatte (VA), Chairman................... X
Mr. Sensenbrenner, Jr. (WI)....................
Mr. Coble (NC)................................. X
Mr. Smith (TX).................................
Mr. Chabot (OH)................................ X
Mr. Bachus (AL)................................ X
Mr. Issa (CA).................................. X
Mr. Forbes (VA)................................
Mr. King (IA).................................. X
Mr. Franks (AZ)................................ X
Mr. Gohmert (TX)............................... X
Mr. Jordan (OH)................................
Mr. Poe (TX)...................................
Mr. Chaffetz (UT).............................. X
Mr. Marino (PA)................................ X
Mr. Gowdy (SC)................................. X
Mr. Labrador (ID)..............................
Ms. Farenthold (TX)............................ X
Mr. Holding (NC)............................... X
Mr. Collins (GA)............................... X
Mr. DeSantis (FL).............................. X
Mr. Smith (MO)................................. X
[Vacant].......................................
Mr. Conyers, Jr. (MI), Ranking Member.......... X
Mr. Nadler (NY)................................ X
Mr. Scott (VA)................................. X
Ms. Lofgren (CA)...............................
Ms. Jackson Lee (TX)...........................
Mr. Cohen (TN).................................
Mr. Johnson (GA)............................... X
Mr. Pierluisi (PR)............................. X
Ms. Chu (CA)................................... X
Mr. Deutch (FL)................................
Mr. Gutierrez (IL).............................
Ms. Bass (CA)..................................
Mr. Richmond (LA)..............................
Ms. DelBene (WA)............................... X
Mr. Garcia (FL)................................ X
Mr. Jeffries (NY)..............................
Mr. Cicilline (RI)............................. X
------------------------
Total...................................... 9 16
------------------------------------------------------------------------
2. Reporting H.R. 4874. The bill establishes a blue-ribbon
Retrospective Regulatory Review Commission to identify and
recommend to Congress for repeal existing Federal regulations
that can be eliminated to reduce unnecessary regulatory costs
to the U.S. economy. Reported by a rollcall vote of 17 to 10.
ROLLCALL NO. 2
------------------------------------------------------------------------
Ayes Nays Present
------------------------------------------------------------------------
Mr. Goodlatte (VA), Chairman................... X
Mr. Sensenbrenner, Jr. (WI)....................
Mr. Coble (NC)................................. X
Mr. Smith (TX).................................
Mr. Chabot (OH)................................ X
Mr. Bachus (AL)................................ X
Mr. Issa (CA).................................. X
Mr. Forbes (VA)................................
Mr. King (IA).................................. X
Mr. Franks (AZ)................................ X
Mr. Gohmert (TX)............................... X
Mr. Jordan (OH)................................ X
Mr. Poe (TX)...................................
Mr. Chaffetz (UT).............................. X
Mr. Marino (PA)................................ X
Mr. Gowdy (SC)................................. X
Mr. Labrador (ID)..............................
Ms. Farenthold (TX)............................ X
Mr. Holding (NC)............................... X
Mr. Collins (GA)............................... X
Mr. DeSantis (FL).............................. X
Mr. Smith (MO)................................. X
[Vacant].......................................
Mr. Conyers, Jr. (MI), Ranking Member.......... X
Mr. Nadler (NY)................................ X
Mr. Scott (VA)................................. X
Ms. Lofgren (CA)...............................
Ms. Jackson Lee (TX)...........................
Mr. Cohen (TN)................................. X
Mr. Johnson (GA)............................... X
Mr. Pierluisi (PR)............................. X
Ms. Chu (CA)................................... X
Mr. Deutch (FL)................................
Mr. Gutierrez (IL).............................
Ms. Bass (CA)..................................
Mr. Richmond (LA)..............................
Ms. DelBene (WA)............................... X
Mr. Garcia (FL)................................ X
Mr. Jeffries (NY)..............................
Mr. Cicilline (RI)............................. X
------------------------
Total...................................... 17 10
------------------------------------------------------------------------
Committee Oversight Findings
In compliance with clause 3(c)(1) of rule XIII of the Rules
of the House of Representatives, the Committee advises that the
findings and recommendations of the Committee, based on
oversight activities under clause 2(b)(1) of rule X of the
Rules of the House of Representatives, are incorporated in the
descriptive portions of this report.
New Budget Authority and Tax Expenditures
Clause 3(c)(2) of rule XIII of the Rules of the House of
Representatives is inapplicable because this legislation does
not provide new budgetary authority or increased tax
expenditures.
Congressional Budget Office Cost Estimate
With respect to clause 3(c)(3) of rule XIII of the Rules of
the House of Representatives, an estimate and comparison
prepared by the Director of the Congressional Budget Office
under section 402 of the Congressional Budget Act of 1974 was
not submitted to the Committee before the filing of the report.
Duplication of Federal Programs
No provision of H.R. 4874 establishes or reauthorizes a
program of the Federal Government known to be duplicative of
another Federal program, a program that was included in any
report from the Government Accountability Office to Congress
pursuant to section 21 of Public Law 111-139, or a program
related to a program identified in the most recent Catalog of
Federal Domestic Assistance.
Disclosure of Directed Rule Makings
The Committee estimates that H.R. 4874 specifically directs
to be completed no specific rule makings within the meaning of
5 U.S.C. 551.
Performance Goals and Objectives
The Committee states that pursuant to clause 3(c)(4) of
rule XIII of the Rules of the House of Representatives, H.R.
4874 is designed to assure the identification and repeal of
existing Federal regulations that can be eliminated to reduce
unnecessary regulatory costs to the U.S. economy, without
significantly reducing overall regulatory effectiveness, and
with a goal of reducing by at least 15 percent the cumulative
cost burden imposed by Federal regulation.
Advisory on Earmarks
In accordance with clause 9 of rule XXI of the Rules of the
House of Representatives, H.R. 4874 does not contain any
congressional earmarks, limited tax benefits, or limited tariff
benefits as defined in clause 9(e), 9(f), or 9(g) of Rule XXI.
Section-by-Section Analysis
The following discussion describes the bill as reported by
the Committee.
Section 1. Short title.
Provides that the short title of the bill shall be the
``Searching for and Cutting Regulations that are Unnecessarily
Burdensome Act of 2014'' (SCRUB Act of 2014).
Section 2. Table of Contents; Titles I-V
Title I. Retrospective Regulatory Review Commission
Sec.101. General Provisions
LEstablishes a blue-ribbon, BRAC-style
commission to review existing Federal regulations and
identify those that should be repealed to reduce
unnecessary regulatory burdens.
LSets the Commission's goal to be the
reduction of at least 15 percent in the cumulative
costs of Federal regulation with a minimal reduction in
the overall effectiveness of such regulation.
LSpecifies classes of regulations that should
be the Commission's priorities for review
(specifically, rules or sets of rules that: are major
rules or include major rules; have been in effect more
than 15 years; impose paperwork burdens that could be
reduced substantially without significantly diminishing
regulatory effectiveness; impose disproportionately
high costs on small businesses; or, could be
strengthened in their effectiveness while reducing
regulatory costs).
LEstablishes additional factors for the
Commission to take into account when identifying
individual regulations or sets of regulations for
repeal (e.g., the regulations have been rendered
obsolete by technological or market changes; the
regulations have achieved their goals and can be
repealed without target problems recurring; the
regulations are ineffective; the regulations overlap,
duplicate or conflict with other Federal regulations
or, where feasible, with state and local regulations;
or, the regulations' costs are not justified by the
benefits they produce for society within the United
States).
LAuthorizes the Commission to classify
identified regulations for either: (1) immediate
repeal; or, (2) repeal through regulatory ``cut-go''
procedures as agencies promulgate new rules. All such
must be made by the relevant agencies if a joint
resolution of Congress is enacted to approve the
Commission's recommendations.
LRequires the Commission to hold public
meetings and publish annual and final reports;
authorizes the Commission to hold hearings; provides
the Commission with authority to obtain necessary
documents and witnesses.
LAuthorizes funding of the Commission from the
unobligated funds of regulatory agencies within the
Commission's purview.
Title II. Regulatory Cut-Go
Sec. 201. Cut-Go Procedures
LRequires agencies, when they promulgate new
regulations, to offset the new regulations' costs fully
by repealing regulations identified by the Commission
for repeal other than on an immediate basis.
LAllows agencies alternatively to repeal
Commission-identified regulations on an earlier basis
to create cost-reduction credits, and later apply the
credits to offset the costs of new regulation.
Sec. 202. Applicability
LLifts the Act's cut-go requirements once
agencies achieve, by repeal of Commission-identified
regulations, all cost reductions the Commission
determined could be achieved.
Sec. 203. OIRA Certification of Cost Calculations
LRequires the Office of Information and
Regulatory Affairs to review and certify the accuracy of
agencies' estimates of the costs of new regulations, include
the certifications in the administrative records of new
regulations, and transmit copies of the certifications to
Congress.
Title III. Retrospective Review of New Rules
Sec. 301. Plan for Future Review
LRequires agencies, when they promulgate new
regulations, to publish plans for the review of those
regulations. Such reviews are to take place no later
than 10 years after promulgation.
LRequires agency reviews of major regulations
(e.g., regulations that impose costs of $100 million or
more) to be substantially similar to Commission-
conducted reviews.
LRequires agencies, when feasible, to include
proposed plans for review in their notices of proposed
rulemaking for new regulations.
Title IV. Judicial Review
Sec. 401. Judicial Review
LSubjects to judicial review under the
Administrative Procedure Act agency compliance with
section 101(j)(1) (immediate repeals), title II of the
Act (cut-go repeals) and section 301 (retrospective
review plans).
Title V. Miscellaneous Provisions
Sec. 501. Definitions
LSets forth definitions of terms in the Act.
Sec. 502. Effective Date
LProvides that the Act and amendments made by
the Act shall take effect beginning on the date of
enactment.
Dissenting Views
INTRODUCTION
H.R. 4874, the ``Searching for and Cutting Regulations that
are Unnecessarily Burdensome (SCRUB) Act of 2014,'' would
establish a ``Retrospective Regulatory Review Commission''
charged with assessing the economic costs of all agency rules,
informal interpretive rules, general statements of policy,
rules of agency organization and procedure, informal guidance
documents, and memoranda. The Commission's assessment would
prioritize corporate profits over public health and safety,
ignoring the many benefits and protections that agency rules
provide. To finance this review of all rules, informal
documents, and interpretative rules, H.R. 4874 would siphon
billions of dollars from agency budgets, diverting these much-
needed funds into an unnecessary bureaucratic accounting
project.
Further yet, title II of the bill would establish a
regulatory ``cut-go'' process that would operate as a one-way
ratchet, forcing agencies to prioritize between existing
protections and responding to new threats to our health and
safety. Regulatory cut-go would prohibit any regulatory agency
from issuing any new rule or informal statement, even in the
case of an emergency or imminent harm to public health, until
the agency first offsets the costs of that new rule or guidance
by repealing an existing rule specified by the Commission. This
requirement would place public health and safety at risk as
well as unnecessarily delay Federal rulemaking by years and
waste untold taxpayer dollars and agency resources.
The SCRUB Act is a dangerous solution in search of a
problem. Each branch of government already conducts effective
oversight through retrospective review of agency rules,
narrowing the delegations of authority to agencies, controlling
agency appropriations, and conducting oversight of agency
activity. Congress also has the specific authority under the
Congressional Review Act to disapprove any rule that an agency
proposes.\1\ Overlooking this array of options that would
provide the necessary scalpel for smart regulatory cuts, the
SCRUB Act's meat-cleaver approach is yet another dangerous and
unbalanced attempt to derail agencies' missions to protect the
public health and safety. Rather than creating jobs, growing
the economy, or making Americans safer, these dangerous
procedures would tie agencies' hands with unnecessary red-tape
and waste valuable agency resources and taxpayer dollars.
---------------------------------------------------------------------------
\1\5 U.S.C. Sec. 801(b) (2014).
---------------------------------------------------------------------------
In recognition of these concerns, the Coalition for
Sensible Safeguards--an alliance of more than 70 consumer,
labor, research, faith, and other public interest groups--
strongly opposes this legislation, stating that it would likely
lead to the repeal of ``critical health, safety, and
environmental safeguards, even when the benefits of these rules
outweigh the costs.''\2\ In addition, the Center for Effective
Government, a government accountability public-interest group,
states that the ``clear agenda behind this legislation is to
limit the role of congressionally established agencies tasked
with protecting public health and safety by establishing a new
commission and tasking it with getting rid of or weakening any
rules that big businesses dislike.''\3\
---------------------------------------------------------------------------
\2\Coalition for Sensible Safeguards, ``The Searching for and
Cutting Regulations that are Unnecessarily Burdensome Act of 2014,'' at
1-2 (June 17. 2014) (on file with the H. Committee on the Judiciary
Democratic staff). Current members of the Coalition include: AFL-CIO;
Alliance for Justice; American Association of University Professors;
American Federation of State, County and Municipal Employees; American
Federation of Teachers Americans for Financial Reform; American Lung
Association; American Rivers; American Values Campaign; American
Sustainable Business Council; BlueGreen Alliance; Campaign for Contract
Agriculture Reform; Center for Effective Government; Center for Digital
Democracy; Center for Food Safety; Center for Foodborne Illness
Research & Prevention; Center for Independent Living; Center for
Science in the Public Interest; Citizens for Sludge-Free Land; Clean
Air Watch; Clean Water Network; Consortium for Citizens with
Disabilities; Consumer Federation of America; Consumers Union;
CounterCorp; Cumberland Countians for Peace & Justice; Demos; Economic
Policy Institute; Edmonds Institute; Environment America; Farmworker
Justice; Free Press; Friends of the Earth; Green for All; Health Care
for America Now; In the Public Interest; International Brotherhood of
Teamsters; International Center for Technology Assessment;
International Union, United Automobile, Aerospace & Agricultural
Implement Workers of America (UAW); League of Conservation Voters; Los
Angeles Alliance for a New Economy; Main Street Alliance; National
Association of Consumer Advocates; National Center for Healthy Housing;
National Consumers League; National Council for Occupational Safety and
Health; National Employment Law Project; National Lawyers Guild,
Louisville Chapter; National Women's Health Network; National Women's
Law Center; Natural Resources Defense Council; Network for
Environmental & Economic Responsibility of United Church of Christ; New
Jersey Work Environment Council; New York Committee for Occupational
Safety and Health; Oregon PeaceWorks; People for the American Way;
Protect All Children's Environment; Public Citizen; Reproductive Health
Technologies Project; Safe Tables Our Priority; Sierra Club; Service
Employees International Union; Southern Illinois Committee for
Occupational Safety and Health; The Arc of the United States; The
Partnership for Working Families; Trust for America's Health; U.S.
Chamber Watch; U.S. PIRG; Union of Concerned Scientists; Union Plus;
United Food and Commercial Workers Union; United Steelworkers;
Waterkeeper Alliance; and Worksafe. Coalition for Sensible Safeguards--
Our Members, http://sensiblesafeguards.org/our-members.
\3\Katie Weatherford, The SCRUB Act: Another Anti-Regulatory Bill
Targets Health, Safety, and Environmental Protections, Center for
Effective Government (Feb. 18, 2014), http://www.foreffectivegov.org/
blog/scrub-act-another-anti-regulatory-bill-targets-health-safety-and-
environmental-protections.
---------------------------------------------------------------------------
For the foregoing reasons, and those discussed more fully
below, we respectfully dissent and urge opposition to H.R.
4874.
DESCRIPTION
A brief summary of H.R. 4874's provisions within the
Committee's jurisdiction is presented here and a more detailed
section-by-section explanation of the bill appears at the end
of these views.
Although Title I of H.R. 4874 is not within the
jurisdiction of our Committee, an explanation of this provision
is necessary to place the remainder of the bill in proper
perspective. Section 101 establishes a Retrospective Regulatory
Review Commission to review rules to determine whether they
should be repealed to eliminate or reduce the costs of
regulation to the economy. The Commission would be composed of
nine members appointed by the President and confirmed by the
Senate. The Commission would be funded through the greater of
$25 million or 1% of all unobligated funds for each Federal
agency that makes rules.
Title I of the SCRUB Act would empower the Commission to
conduct its review of all formal and informal rules through its
own methodology, which must be published in the Federal
Register and on the Commission's website. Although the bill
would require that the Commission prioritize major rules in its
review, this review would also include any rules that have been
in effect for over 15 years, impose paperwork burdens, or
impose disproportionately high costs on small businesses, or
could be strengthened in their effectiveness while reducing
regulatory costs.
The breadth and scope of the mandated review would
encompass not only the entire Code of Federal Regulations, but
also all informal rules and documents as well. This review
would include any ``rule'' defined in section 551 of the
Administrative Procedure Act,\4\ which applies to the entirety
of the APA, as well as all agency interpretive rules, general
statements of policy, or rules of agency organization,
procedure, or practice that would otherwise be exempt from the
APA's notice-and-comment requirements.\5\ The Commission must
set a goal of reducing 15% of the cumulative cost of Federal
regulation with a minimal reduction in the overall
effectiveness of such regulation.
---------------------------------------------------------------------------
\4\5 U.S.C. Sec. Sec. 551-59, 701-06, 1305, 3105, 3344, 5372, 7521
(2014). The APA defines a ``rule,'' as ``an agency statement of general
or particular applicability and future effect designed to implement,
interpret, or prescribe law or policy or describing the organization,
procedure, or practice requirements of an agency.'' 5 U.S.C.
Sec. 551(4) (2014).
\5\5 U.S.C. Sec. 553(b)(3)(A).
---------------------------------------------------------------------------
Title II of H.R. 4874 would establish a regulatory ``cut-
go'' process. This process would require agencies to offset the
cost of any new rule by eliminating a rule identified by the
Commission. Alternatively, an agency may elect to repeal rules
identified by the Commission in anticipation of promulgating a
new rule, so long as it results in a net reduction in costs
imposed by the agency's new rule. Once an agency has repealed
all the rules identified by the Commission, that agency is no
longer subject to regulatory cut-go.
The SCRUB Act would create two oversight mechanisms for the
regulatory cut-go process. First, agency compliance with the
SCRUB Act's cut-go process is subject to judicial review under
Title IV of the bill. Second, section 203 would require the
Administrator of the Office of Information and Regulatory
Administration (OIRA) to oversee each agency's calculations of
costs associated with new rules. OIRA would be required to
review and certify the costs of each new rule and informal
publications such as guidance documents and memoranda. Section
203 would further require agencies to include this review in
the administrative record of each rulemaking.
BACKGROUND
Federal regulations impact nearly every aspect of our lives
and are ``one of the basic tools of government used to
implement public policy.''\6\ The Congressional Research
Service observes:
---------------------------------------------------------------------------
\6\Curtis W. Copeland, Cong. Research Serv., RL 32240, The Federal
Rulemaking Process: An Overview 1 (2005).
Agencies issue thousands of rules and regulations each
year to implement statutes enacted by Congress. The
public policy goals and benefits of regulations
include, among other things, ensuring that workplaces,
air travel, foods, and drugs are safe; that the
nation's air, water and land are not polluted; and that
the appropriate amount of taxes is collected. The costs
of these regulations are estimated to be in the
hundreds of billions of dollars, and the benefits
estimates are even higher.\7\
---------------------------------------------------------------------------
\7\Regulatory Reform: Are Regulations Hindering Our
Competitiveness?: Hearing Before the Subcomm. on Regulatory Affairs of
the H. Comm. on Gov't Reform, 109th Cong. (2005) (testimony of J.
Christopher Mihm, Managing Director--Strategic Issues, U.S. Government
Accountability Office).
The Administrative Procedure Act (APA),\8\ enacted in 1946,
establishes the minimum rulemaking and formal adjudication
requirements for all administrative agencies.\9\ The APA's
baseline procedural requirements are designed to maintain a
balance between this type of agency flexibility and the
requirements of due process. As more than 50 leading
administrative law academics have observed, ``The APA has
served for 65 years as a kind of Constitution for
administrative agencies and the affected public--flexible
enough to accommodate the variety of agencies operating under
it and the changes in modern life.''\10\
---------------------------------------------------------------------------
\8\5 U.S.C. Sec. Sec. 551-59, 701-06, 1305, 3105, 3344, 5372, 7521
(2014).
\9\The APA defines ``rulemaking'' as the ``agency process for
formulating, amending or repealing a rule.'' 5 U.S.C. Sec. 551(5)
(2014). A ``rule,'' in turn, is defined as ``an agency statement of
general or particular applicability and future effect designed to
implement, interpret, or prescribe law or policy or describing the
organization, procedure, or practice requirements of an agency.'' 5
U.S.C. Sec. 551(4) (2014).
\10\Letter from 52 administrative law academics to H. Judiciary
Comm. Chair Lamar Smith (R-TX) and H. Judiciary Comm. Ranking Member
John Conyers, Jr., 1 (Oct. 24, 2011) (on file with the H. Comm. on the
Judiciary, Democratic staff).
---------------------------------------------------------------------------
In general, proposed rules go through an extensive vetting
process that many believe has become already too ossified.\11\
In addition to the APA, numerous other procedural and
analytical requirements have been imposed on the rulemaking
process by Congress and various presidents.\12\ These
requirements focus ``predominately on agencies' development of
new rules,'' according to the Government Accountability Office
(GAO).\13\
---------------------------------------------------------------------------
\11\See, e.g., Richard J. Pierce, Jr., Rulemaking Ossification Is
Real: A Response to Testing the Ossificiation Thesis, 80 Geo. Wash. L.
Rev. 1493 (2012).
\12\Examples of legislative mandates include the Unfunded Mandates
Reform Act, Pub. L. No. 104-4 (1995); the Regulatory Flexibility Act,
Pub. L. No. 96-354, 94 Stat. 1164, 1169 (1980); and the Congressional
Review Act, Pub. L. No. 104-121 (1996). In addition, both Republican
and Democratic Presidents have issued executive orders mandating
additional procedural and analytical requirements for Federal
rulemakings. See, e.g., Exec. Ord. 12,866, 58 Fed. Reg. 190 (Sept. 30,
1993) (outlining requirements for cost-benefit analysis and review by
the Office of Information and Regulatory Affairs for significant rules
issued by executive branch agencies).
\13\U.S. Gov't Accountability Office, GAO-07-791, Reexamining
Regulations: Opportunities Exist to Improve Effectiveness and
Transparency of Retrospective Reviews 1 (2007) [hereinafter GAO
Report].
---------------------------------------------------------------------------
In addition to assessing rules before they go into effect,
agencies are often required to review their regulations
retrospectively to determine whether any should be revoked or
modified. Some reviews are conducted in response to legislative
mandate, at the discretion of the agency,\14\ or as required by
executive order.\15\
---------------------------------------------------------------------------
\14\Id. at 5.
\15\For a more extensive discussion of statutes and executive
orders requiring retrospective review, see discussion infra Part III.B.
---------------------------------------------------------------------------
CONCERNS WITH H.R. 4874
The SCRUB Act would establish a Commission charged with a
redundant and unbalanced mandate that prioritizes economic
costs of rules with little to no consideration of the benefits
and protections these rules provide for the public safety and
the health of the environment. Title II of the bill would
further require that agencies off-set the cost of new rules
through a regulatory ``cut-go'' process for every new agency
rule. Relying on the faulty premise that regulations undermine
economic growth and job creation, regulatory cut-go would force
agencies to offset the costs of any new rule, informal guidance
document, or memoranda by repealing an existing rule identified
by the Commission. This additional layer of red-tape would
require a new rulemaking process for each rule eliminated,
forcing agencies to wastefully calculate the cost of any agency
action, including issuing informal memoranda. The result of
this misguided legislation would be years of delays in the
rulemaking process, an unprecedented burden on agencies and
taxpayers, and a dangerous threat to the agencies' missions to
protect the public health and safety from imminent harm.
I. REGULATORY CUT-GO WOULD IMPEDE AGENCY ACTION BY IMPOSING BURDENSOME
AND UNNECESSARY REQUIREMENTS ON ANY AGENCY ACTION
Title II of the SCRUB Act would prohibit any regulatory
agency from issuing any new rule, including non-legislative and
procedural rules, until the agency offsets the costs of the new
rule by eliminating an existing rule identified by the
Commission.\16\ This process, also known as regulatory cut-go,
would present a dangerous false choice to agencies, cause years
of delays in the rulemaking process, and create additional
burdens due to its implementation problems. As administrative
law experts Sidney Shapiro and Richard Murphy argue, regulatory
cut-go is ``so fundamentally flawed that it cannot be regarded
as a serious policy proposal,'' but instead is ``a political
stunt designed to appeal to the anti-regulatory reflexes of
corporate interests that find regulation costly and of people
who subscribe to the ideological belief that government is
always the problem and never the solution.''\17\
---------------------------------------------------------------------------
\16\H.R. 4874, 113th Cong. 201 (2014).
\17\Sidney A. Shapiro et al., Regulatory, `Pay Go': Rationing the
Public Interest, Ctr. for Progressive Reform Issue Alert #1214 1 (Oct.
2012), http://progressivereform.org/articles/Regulatory_Pay-Go_1214.pdf
[hereinafter Shapiro].
---------------------------------------------------------------------------
A. Regulatory Cut-Go Would Require Agencies to Estimate the Cost of
Virtually Every New Action
The SCRUB Act would require agencies to calculate the costs
of any new ``rule,'' which includes practically any agency
action or communication, to determine whether the rule triggers
the bill's regulatory cut-go provisions.\18\ The bill defines
``rule'' through reference to section 551 of the APA.\19\ This
definition is so broad that it applies to virtually any agency
action, including (1) legislative rules that bind regulated
entities; (2) non-legislative rules, such as general statements
of policy such as a press release, speech, memorandum,
statements, and informal guidance document;\20\ and (3) rules
of agency organization, procedure and practice, which courts
have defined as technical regulations to prescribe order and
formality in business transactions.\21\ The effect of this
limitless classification of agency action would be to
discourage agencies from clarifying and updating rules, leading
to the inconsistent application of rules by agency personnel.
---------------------------------------------------------------------------
\18\H.R. 4874, 113th Cong. 203 (2014) (``The Administrator of the
Office of Information and Regulatory Affairs of the Office of Managment
[sic] and Budget shall review and certify the accuracy of agency
determinations of the costs of new rules under section 201.'')
\19\5 U.S.C. Sec. 551 (2014).
\20\5 U.S.C. Sec. 553(b)(3)(A); William Funk, A Primer on
Nonlegislative Rules, 53 Admin. L. Rev. 1321, 1322 (2001)(``These rules
are often called nonlegislative rules, because they are not 'law' in
the way that statutes and substantive rules that have gone through
notice and comment are 'law,' in the sense of creating legal
obligations on private parties.'').
\21\Pickus v. United States Board of Parole, 507 F.2d 1107, 1113-14
(D.C. Cir. 1974).
---------------------------------------------------------------------------
The SCRUB Act is silent on how agencies would calculate the
costs of every new rule. Far from an exact science, costs are
notoriously difficult for agencies to calculate.\22\ The Office
of Management and Budget (OMB) observed in its first annual
report on the costs and benefits of Federal regulations that
there are ``enormous data gaps in the information available on
regulatory benefits and costs.''\23\ If tasked with determining
the costs of each regulatory action, agencies would likely rely
on industry-supplied data, which routinely overstates the costs
of rules.\24\ In a review of several dozen environmental and
occupational safety regulations, researchers repeatedly found
that ``cost estimates tend to be much higher than real-world
compliance costs.''\25\ This is particularly true for the
initial estimates of rules' costs, which were ``at least
double'' their actual cost, and ``could be seen more in the
nature of debating points than objective cost assessments of
costs.''\26\
---------------------------------------------------------------------------
\22\Shapiro, supra note 17, at 8.
\23\Office of Management and Budget, 1998 Report of OMB to Congress
on the Costs and Benefits of Federal Regulations 2 (1998).
\24\Thomas O. McGarity & Ruth Ruttenberg, Counting the Cost of
Health, Safety, and Environmental Regulation, 80 Tex. L. Rev. 1997,
2011, 2042 (2002)
\25\Id.
\26\Id.
---------------------------------------------------------------------------
The SCRUB Act's cost-assessment requirement would also
deter agencies from proactively clarifying matters of law or
policy through non-legislative and procedural rules. Agency
personnel routinely rely on non-legislative rules to inform the
public and to maintain the consistent applications of statutes
and regulations within agencies.\27\ These rules are routine
and serve a variety of critical functions, such as assuring the
uniform application of a statute or regulation and informing
the public of an agency's practice and views.\28\ For instance,
David Cohen, the Under Secretary for Terrorism and Financial
Intelligence at the U.S. Department of the Treasury, delivered
remarks earlier this year to clarify the finance risks involved
with virtual currency such as Bitcoin, which is an emerging
topic in the field.\29\ These remarks, which described prior
enforcement actions by the agency and agency guidance in the
area of virtual currency, would not be considered a ``meeting''
within the meaning of section 553 of the APA.\30\ However,
these remarks would still be within the SCRUB Act's definition
of a rule, thereby triggering the SCRUB Act's cost-assessment
requirement. In another example, the Food and Drug
Administration (FDA) regularly issues informal guidance on
routine matters to inform the public of its practices, such as
its recent guidance on the FDA's voting procedures for advisory
committee meetings.\31\ The FDA also issues guidance to ensure
the uniform application of statutes, such as when it recently
issued informal guidance on the quality requirements of baby
formula,\32\ as well as the nutritional labeling for foods that
are gluten-free or contain allergens.\33\ Again, because the
SCRUB Act's cost-estimate requirement does not distinguish
between routine guidance and major rules, it is unclear whether
agencies would continue to perform this function if each action
triggered procedural hurdles under the SCRUB Act. This reverse
incentive to avoid offering clarification or additional
guidance would result in the inconsistent application of
regulation and statutes by agency personnel. Without routine
informal guidance, agency personnel lack a consistent mechanism
for applying rules and statutes.
---------------------------------------------------------------------------
\27\Sam Kalen, Guidance Documents and the Courts, in 57 Rocky
Mountain Mineral Law Institute Proceedings of the Rocky Mountain
Mineral Law Fifty-Seventh Annual Institute 5-1 (Rocky Mountain Mineral
Law Foundation ed., 2011).
\28\Id.
\29\David S. Cohen, Remarks From Under Secretary of Terrorism and
Financial Intelligence David S. Cohen on ``Addressing the Illicit
Finance Risks of Virtual Currency, Department of the Treasury (Mar. 18,
2014), http://www.treasury.gov/press-center/press-releases/Pages/
jl236.aspx.
\30\5 U.S.C. 553(b) (defining ``meeting'' as ``the deliberations of
at least the number of individual agency members required to take
action on behalf of the agency where such deliberations determine or
result in the joint conduct or disposition of official agency
business.'').
\31\Food and Drug Administration, Voting Procedures for Advisory
Committee Meetings (Aug. 2008), http://www.fda.gov/downloads/
RegulatoryInformation/Guidances/UCM125641.pdf.
\32\21 CFR 106.96(i) (``Eligible'' infant formulas)
\33\Food Allergens Guidance Documents & Regulatory Information,
Food and Drug Administration, http://www.fda.gov/Food/
GuidanceRegulation/GuidanceDocumentsRegulatoryInforma
tion/Allergens/default.htm (accessed on July 2, 2014).
---------------------------------------------------------------------------
Worse still, the bill would discourage agencies from
clarifying rules, notifying the public of shifting views on
existing rules, or updating previous guidance documents to
include the latest science on important issues affecting the
public health, such as the FDA has with baby formula guidance
documents.\34\ The SCRUB Act would also have a chilling effect
on speech by agency officials, who would think twice before
delivering statements or issuing press releases to inform the
public of agency views or activity, shrouding these practices
and views from the public. Regardless of the result, the
practical effects of this over-broad requirement would be to
diminish agencies' ability to protect and inform the public
through clarifications and updates of non-legislative and
procedural rules.
---------------------------------------------------------------------------
\34\21 CFR 106.96(i).
---------------------------------------------------------------------------
In addition to tasking agencies with calculating the costs
of any new rule, Section 203 of the SCRUB Act would further
require that OIRA certify the accuracy of these estimates.
Currently, OIRA only reviews a small portion of ``significant''
proposed rules,\35\ allowing it to efficiently allocate its
finite resources to review the most pressing rules. By
substantially expanding OIRA's mandate to include every
regulatory action, the SCRUB Act would water-down OIRA's
oversight of the rulemaking process. Additionally, requiring
OIRA to review every new rule would facilitate greater
political interference in the rulemaking process by giving the
executive branch more control over congressionally-mandated
rulemaking. In short, greater presidential control over
rulemaking, in the wrong administration's hands, could
undermine important health, safety, consumer protection,
financial and other regulations by providing industry with an
additional bottleneck for the issuance of rules. As a detailed
analysis of the Bush administration's involvement of the
rulemaking process demonstrates, overly restrictive control of
the rulemaking process by the executive branch undermines the
public interests and circumvents legislative intent.\36\
---------------------------------------------------------------------------
\35\Exec. Order 12,866, 58 Fed. Reg. 51,735, Sec. 6(b)(1) (1993).
\36\H. Comm. on the Judiciary Majority Staff, Reining in the
Imperial Presidency--Lessons and Recommendations Relating to the
Presidency of George W. Bush, 111th Cong., at 186 (Mar. 2009).
---------------------------------------------------------------------------
B. Regulatory Cut-Go Would Require Agencies to Conduct a Costly and
Time-Consuming Rulemaking Process for Each Rule Eliminated
As previously discussed, the SCRUB Act would require
agencies to offset the costs of virtually all agency action.
Agencies, however, are unable to simply rescind rules. Instead,
the APA requires that agencies follow the same notice-and-
comment procedures to eliminate a rule as would be required to
issue the same rule in the first place.\37\ Therefore, prior to
eliminating any rule through regulatory cut-go procedures, the
Supreme Court has clarified that agencies must undertake a
lengthy rulemaking process to carefully ``examine the relevant
data and articulate a satisfactory explanation for its
action,''\38\ thereby forcing agencies to undertake twice as
much work to issue a single new rule. Prior to promulgating a
new legislative rule, agencies would have to prepare two
proposals: one for promulgating a new rule, and one for
eliminating an existing rule required by the Commission.\39\
This process may take anywhere from a few months to several
years,\40\ especially when the underlying rule involves complex
matters of science or economics.\41\ Although Congress
specifically excluded non-legislative and procedural rules from
this process,\42\ the SCRUB Act's broad definition of rule
would circumvent this commonsense exclusion.\43\ Furthermore,
unless agencies are able to justify the elimination of a rule
through a rational basis supported by the rulemaking record,
any rescission of a rule may be vacated as ``arbitrary and
capricious'' under section 706 of APA.\44\ The SCRUB Act would
essentially function as a chokehold on Federal agency
rulemaking, delaying any new action by an agency and draining
agency resources in a time of widespread budget austerity.\45\
---------------------------------------------------------------------------
\37\5 U.S.C. Sec. 551(2014).
\38\Motor Veh. Mfrs. Ass'n v. State Farm Ins. 463 U.S. 29, 31
(1983).
\39\Id.
\40\Center for Effective Government, Notice-and-Comment Rulemaking,
http://www.
foreffectivegov.org/node/3463 (last visited July 20, 2014).
\41\Regulations from the Executive in Need of Scrutiny Act of 2011:
Hearing on H.R. 10 Before the Subcomm. on Courts, Commercial and Admin.
L. of the H. Comm. on the Judiciary, 112th Cong. (2011) (statement of
David Goldston, Director of Government Affairs, Natural Resources
Defense Council) (``Agencies often take several years to formulate a
particular safeguard, reviewing hundreds of scientific studies, drawing
on their own experts in science and economics, empaneling outside
expert advisors, gathering thousands of public comments, and going
though many levels of executive branch review''); Center for Effective
Government, Notice-and-Comment Rulemaking, http://
www.foreffectivegov.org/node/3463 (Last visited July 20, 2014).
\42\5 U.S.C. Sec. 553(b)(A) (2014) (excluding ``interpretative
rules, general statements of policy, or rules of agency organization,
procedure, or practice'' from section 553).
\43\Motor Veh. Mfrs. Ass'n v. State Farm Ins. 463 U.S. 29, 31
(1983).
\44\5 U.S.C. Sec. 706(2) (2014); Motor Veh. Mfrs. Ass'n v. State
Farm Ins. 463 U.S. 29, 31 (1983).
\45\Shapiro, supra note 17, at 10.
---------------------------------------------------------------------------
C. The SCRUB Act Would Open the Floodgates to Legal Challenges to Rules
Eliminated through Regulatory Cut-Go
In the event that agencies could overcome the procedural
hurdles imposed by the SCRUB Act, courts would have ample
opportunity to review any agency action to implement the
statute, opening the floodgates of legal challenges to the
SCRUB Act. Title IV of the bill subjects an agency's compliance
with the bill's cut-go procedures to judicial review.
Additionally, the APA provides that ``final agency action for
which there is no other adequate remedy in a court [is] subject
to judicial review,'' including those actions that are
otherwise unreviewable.\46\ Courts may therefore vacate any
rule, including a rescission of a rule,\47\ as ``arbitrary and
capricious'' under section 706 of the APA unless the agency
carefully reviews each rule eliminated and is able to justify
the rescission of a rule through an adequate basis in the
rulemaking record.\48\ The Supreme Court has construed this
standard to require a reviewing court to conduct a ``searching
and careful'' review of agency action.\49\ This type of
heightened review under the arbitrary or capricious standard
has been referred to as the ``hard look'' doctrine. Under this
doctrine, courts must carefully analyze both the administrative
record and the agency's explanation to review whether it
applied the ``correct analytical methodology, applied the right
criteria, considered the relevant factors, chose from among the
available range of regulatory options, relied upon appropriate
policies, and pointed to adequate support in the record for
material empirical conclusions.''\50\ The SCRUB Act lacks any
clarification of the Commission's methodology for reviewing
rules, as well as any limit on the criteria the Commission must
follow for identifying rules that must be repealed so long as
rescinding these rules would ``eliminate or reduce
unnecessarily burdensome costs to the United States economy''
pursuant to section 101 of the bill. It is doubtful that this
administrative blank-check would provide agencies with adequate
empirical support to satisfy the hard-look doctrine's
requirement of a thorough administrative record supporting a
rule's recision,\51\ making it unlikely that the SCRUB Act's
process of regulatory cut-go would withstand judiciary
scrutiny.
---------------------------------------------------------------------------
\46\5 U.S.C. Sec. Sec. 702, 704. Any plaintiff that is ``adversely
affected or aggrieved'' by a final agency action, including the
recisision of a rule, may invoke judicial review. 5 U.S.C. Sec. 702.;
see Webster v. Doe, 486 U.S. 592 (1988); Oestereich v. Selective
Service System, 393 U.S. 233 (1968).
\47\Motor Veh. Mfrs. Ass'n v. State Farm Ins. 463 U.S. 29, 31
(1983).
\48\5 U.S.C. Sec. 706(2) (2013); Motor Veh. Mfrs. Ass'n v. State
Farm Ins. 463 U.S. 29, 31 (1983).
\49\Citizens to Preserve Overton Park, Inc. v. Volpe, 401 U.S. 402,
407-09 (1971).
\50\Thomas O. McGarity, Some Thoughts on Deossifying the Rulemaking
Process, 41 Duke L.J. 1385, 1410 (1992).
\51\Shapiro, supra note 17, at 10.
---------------------------------------------------------------------------
D. Regulatory Cut-Go Would Disproportionately Affect New Agencies,
Inviting Controversy and Discouraging Government Efficiency
The SCRUB Act would create strong disincentives to
streamline government agencies or respond to crises through the
creation of new agencies. Regulatory cut-go applies to any
agency that promulgates rules without exception, creating
substantial uncertainty for a newly-created agency starting
with a regulatory budget of $0.\52\ If regulatory cut-go
applies to the entire regulatory budget of an administration,
then the initial regulation issued by new agency would have to
displace an existing regulation from another agency. If,
however, the bill's procedural hurdles only apply to the
regulatory budget of each agency, it is unclear whether
Congress would have to specifically exempt new agencies from
regulatory cut-go, or if these agencies would borrow through
other agencies' regulatory budgets. For instance, if regulatory
cut-go existed prior to the creation of the Consumer Financial
Protection Bureau (CFPB), an entirely new agency created in the
wake of the financial crisis, either an agency separate from
the CFPB would have to offset a new rule issued by the CFPB, or
Congress would have needed to provide a special exemption for
the CFPB due to the agency's inability to function without a
regulatory budget.\53\ Regardless of how new agencies would
address these difficult, unnecessary, and controversial
choices, the SCRUB Act would create barriers to reorganizing
agencies to more effectively serve the public interest.\54\
---------------------------------------------------------------------------
\52\See id. at 9.
\53\Id.
\54\See id.
---------------------------------------------------------------------------
II. THE SCRUB ACT WOULD UNDERMINE AGENCIES' ABILITY TO PROTECT PUBLIC
HEALTH AND SAFETY
A. The Scrub Act Would Force Agencies to Make a Dangerous False Choice
Between Existing Rules and New Rules to Protect the Public
Health and Safety
Regulatory cut-go imposes a false choice between existing
protection and a new threat to public health and safety. If an
agency needed to respond to an imminent hazard to the public or
environment, it would have to either rescind an existing rule
that is haphazardly identified by the Commission's arbitrary
process, or choose not to act. Regardless of its choice, the
SCRUB Act would force agencies to choose the least-worst
option, leaving people and the environment without safeguards
against risks that agencies have identified and are designed to
prevent.\55\ For example, the implementation of the Dodd-Frank
Wall Street Reform Act requires financial agencies to implement
hundreds of critical regulations that are intended to prevent
another financial meltdown. Under a regulatory cut-go system,
financial agencies would be unable to meet congressional
mandates and deadlines in putting forth these reforms without
identifying hundreds of existing regulations, of equal economic
significance, to be repealed, making the number of regulations
that an agency must implement more important than the merits of
those regulations.
---------------------------------------------------------------------------
\55\See id. at 5 (``Regulatory pay-go completely ignores this less
[of cost-benefit analysis], and thus is even more extreme than cost-
benefit analysis in its disregard of regulatory benefits.'').
---------------------------------------------------------------------------
Title II of the SCRUB Act also fails to provide any
exception from cumbersome procedural hurdles for agencies to
issue emergency rules that protect the public and environment
from imminent harm. Agencies often promulgate emergency rules
or orders in a timely response to immediate threats to public
health and safety. Indeed, the APA specifically permits
agencies to finalize rules not subject to the notice-and-
comment process where the agency has good cause for genuine
emergencies.\56\ For instance, the U.S. Department of
Transportation earlier this year issued an emergency order in
response to the derailment of a railroad train in Quebec,
Canada that killed 47 people,\57\ with requirements for
additional safety procedures to prevent railroad accidents
involving the sudden release of flammable liquids.\58\
Following a ``string of fiery accidents'' in North Dakota,
Alabama, and Virginia, the Department of Transportation also
issued an emergency order in May 2014, requiring railroads that
carry more than one million gallons of fuel to provide certain
information to the Department.\59\ The Department of
Transportation thereafter issued another emergency order
following the derailment of a train carrying crude oil in
downtown Lynchburg, Virginia that spilled thousands of gallons
of oil into the James River.\60\ This oil later caught fire and
disbursed throughout the James River, traveling in an oil slick
that was 17 miles long toward Richmond and the Chesapeake
Bay.\61\ Following the train's derailment, officials stated
that ``2 to 5 trains carrying at least one million gallons of
oil pass through 20 Virginia counties weekly.''\62\ Observing
that railroad shipments of crude oil were causing an unsafe
condition, the Department of Transportation found that a
``pattern of releases and fires involving petroleum crude oil
shipments originating from the Bakken and being transported by
rail constitute an imminent hazard under 49 U.S.C. 5121(d),''
justifying the emergency order.\63\ In each response to unsafe
conditions, the Department of Transportation issued emergency
orders to protect the public safety and environment. Prior to
these orders, railroads were under no obligation to notify
emergency responders when trains carrying millions of gallons
of crude oil passed through their states.\64\
---------------------------------------------------------------------------
\56\S. Comm. on the Judiciary, ``Administrative Procedure Act:
Legislative History,'' S. Doc. 248, 79th Cong. (1946) (requiring that
agencies publish a ``true and supported or supportable finding of
necessity or emergency'' when using the good cause exception).
\57\Matthew Brown, U.S. Railroads Disclose Figures, Details on
Volatile Oil Train Shipments, Calgary Herald (June 25, 2014), http://
www.calgaryherald.com/business/Railroads+
disclose+figures+details+volatile+train+shipments/9970734/story.html
[hereinafter Brown].
\58\49 CFR 232.103(n) (2013).
\59\Brown, supra note 57.
\60\Curtis Tate, Lynchburg, Va., Oil Train Derailment Illustrates
Threat to Rivers, McClatchyDC (May 2, 2014) http://www.mcclatchydc.com/
2014/05/02/226425/lynchburg-va-oil-train-derailment.html.
\61\Id.
\62\Brown, supra note 57.
\63\Dept. of Transportation, Petroleum Crude Oil Railroad Carriers,
DOT-OST-2014-0067, Petroleum Crude Oil Railroad Carriers (May 7, 2014),
http://www.dot.gov/briefing-room/
emergency-order.
\64\Jad Mouawad, U.S. Issues Safety Alert for Oil Trains, New York
Times (May 7, 2014), http://www.nytimes.com/2014/05/08/business/us-
orders-railroads-to-disclose-oil-shipments.html.
---------------------------------------------------------------------------
The SCRUB Act's cut-go procedures, however, would have
prevented the Department of Transportation from issuing these
orders without first identifying the cost of the order and then
offsetting this cost by eliminating a rule identified by the
Commission, which in turn would trigger the APA's rulemaking
process for rescinding a rule. Although the APA's good cause
exception does not require that agencies provide a notice-and-
comment period for genuine emergencies,\65\ the SCRUB Act fails
to provide any such flexibility for agencies to bypass the cut-
go procedures while issuing emergency rules to protect the
public and environment from imminent harm, creating a serious
risk to the safety of the public and environment.
---------------------------------------------------------------------------
\65\Senate Committee on the Judiciary, ``Administrative Procedure
Act: Legislative History,'' Senate Document 248, 79th Congress, 2nd
Session (1946) (requiring that agencies publish a ``true and supported
or supportable finding of necessity or emergency'' when using the good
cause exception).
---------------------------------------------------------------------------
Another example of the practical effects of regulatory cut-
go can be found in the Federal Aviation Administration (FAA)
decisions to prohibit flights into dangerous and unsafe areas.
The FAA routinely updates its Temporary Flight Restriction
list, which provides a ``do-not-fly'' list for areas affected
by extreme weather or other unsafe conditions.\66\ The FAA also
issues emergency rules to routinely amend the Special Federal
Aviation Regulation (SFAR), a list of flight paths that the FAA
restricts due to dangerous conditions. For instance, the FAA
issued a rule earlier this year under the good cause exception
to the APA to prohibit American commercial flights through
Eastern Ukraine due to escalating conflicts in the region.\67\
In promulgating this rule, the FAA specifically noted that, due
to the escalating tension between Ukraine and the Russian
Federation, there is a risk that ``compliance with air traffic
control instructions issued by the authorities of one country
could result in a civil aircraft being misidentified as a
threat and intercepted or otherwise engaged by air defense
forces of the other country.''\68\ Following the crash of
Malaysia Airlines Flight 17 as a result of this regional
conflict, the FAA expanded the area of Eastern Ukraine where
flights are prohibited.\69\
---------------------------------------------------------------------------
\66\Federal Aviation Administration, Temporary Flight Restriction
List, http://tfr.faa.gov/tfr2/list.html (last visited on July 21,
2014).
\67\Federal Aviation Administration, Prohibition Against Certain
Flights in the Simferopol (UKFV) Flight Information Region (FIR), 79 FR
22862, (Apr. 25, 2014), https://www.federalregister.gov/articles/2014/
04/25/2014-09545/prohibition-against-certain-flights-in-the-simferopol-
ukfv-flight-information-region-fir.
\68\Id.; Zeke Miller, U.S. Warned Of Unsafe Airspace Over Crimea,
But Not Where MH17 Crashed, Time (July 17, 2014), http://time.com/
3001874/ukraine-crash-faa-crimea-airspace.
\69\Mark Berman, FAA Bans U.S. flights over Eastern Ukraine, Wash.
Post (July 17, 2014), http://www.washingtonpost.com/news/post-nation/
wp/2014/07/17/faa-bans-u-s-flights-over-eastern-ukraine/.
---------------------------------------------------------------------------
Nevertheless, had the SCRUB Act applied to this rulemaking,
the FAA would first have to determine its cost to the U.S.
economy, and then eliminate a rule identified by the Commission
that was ``unnecessarily burdensome,'' a process could take
months or years, depending on the complexity of the underlying
rule that the Commission identifies for repeal. Thus, even
though Congress appreciates the value of agency efficiency and
speed when responding to public emergencies by establishing a
good-cause exception to the APA's comment and notice
requirements for new rules, the SCRUB Act would effectively
eviscerate this exception, impairing the ability of any agency
to respond to any threat to public health, safety, and the
environment, no matter how dangerous or imminent.
To address the host of concerns raised by regulatory cut-
go, Rep. Hank Johnson (D-GA) offered an amendment to strike
these portions of H.R. 4874 by eliminating Title II of the
bill.\70\ Noting that regulatory cut-go would have far-reaching
consequences for every new agency rule, he stated that the
SCRUB Act ``would apply to a new rule to prevent the further
loss of life as a result of ignition switch failures in cars we
drive,'' and ``prevent an agency from issuing an emergency
regulation to prevent chemical contamination of the water we
drink.''\71\ Speaking in support of the amendment, Ranking
Member John Conyers (D-MI) cited the bill's ``many other
shortcomings,'' including ``a litany of undefined terms'' that
would require a review of ``all current rules, regardless of
whether they impose little or no cost.''\72\ This amendment
failed along party lines by a vote of 9 to 16.\73\
---------------------------------------------------------------------------
\70\Tr. of Markup of H.R. 4874, ``Searching for and Cutting
Regulations that are Unnecessarily Burdensome Act of 2014 by the H.
Comm. on the Judiciary, 113th Cong. at 87 (June 19, 2014), http://
judiciary.house.gov/_cache/files/f7dc303b-9bc1-47a8-a7c7-a8abcc89efef/
06.18.14-markup-transcript.pdf [hereinafter Markup Tr.]
\71\Id.
\72\Id. at 92.
\73\Id. at 102.
---------------------------------------------------------------------------
B. Regulatory Cut-Go Would Create an Additional Layer of Bureaucracy
and Siphon Billions from Regulatory Agencies
Ironically, the SCRUB Act's solution to the claims of ``too
much bureaucracy'' is to mandate additional layers of
bureaucracy. Title I of the bill would establish a new agency
to be funded by potentially billions of taxpayer dollars.
Although Title I is not within the jurisdiction of our
Committee, an explanation of this provision is necessary for an
understanding of the bill's impact on agency missions to
protect the public health and safety.
To fund this Commission, the SCRUB Act allocates the
greater of 1% of all unobligated funds of regulatory agencies
or $25 million. Without a definition of ``regulatory
agencies,'' the bill appears to apply to any agency capable of
issuing guidance on any agency rule. If this definition only
includes Cabinet-level agencies, the Commission's budget would
be at least $4.3 billion.\74\ Alternatively, if the definition
includes all of the Executive agencies that have the authority
to make rules to fulfill their statutory obligations, the
Commission's budget would exceed $5.3 billion.\75\
---------------------------------------------------------------------------
\74\The White House, Balances of Budget Authority: Budget of the
U.S. Government, Federal Fund Unobligated Balance Carried Forward, By
Agency--FY 2013 Budget, 15, http://www.whitehouse.gov/sites/default/
files/omb/budget/fy2013/assets/balances.pdf.
\75\Id.
---------------------------------------------------------------------------
Recognizing the excessive waste caused by siphoning
billions from other agencies' funds, Rep. Hank Johnson (D-GA)
noted that the ``effects of the bill would be a new sequester
on regulatory agencies.''\76\ As Rep. Johnson observed, ``The
Department of Veterans Affairs, for example, could lose $54
million from its budget at a time when it clearly needs robust
funding,'' concluding that this section of the bill alone
``demonstrates the incomprehensible nature of this
legislation.''\77\
---------------------------------------------------------------------------
\76\Markup Tr., supra note 70, at 84.
\77\Id.
---------------------------------------------------------------------------
To address the concern that the Commission's budget would
indiscriminately divert funds from the essential funds of
agencies, Rep. Jerrold Nadler (D-NY) offered an amendment to
Title I of the SCRUB Act that would have limited the
Commission's operating budget to $25 million.\78\ In
comparison, he explained that other commissions, such as the
National Bankruptcy Review Commission, were allocated
considerably less.\79\ The SCRUB Act Commission's budget would
likewise dwarf the budget of the 9/11 Commission, which set a
record for employing the most staff of any congressional
commission, at one time having more than eighty researchers,
and receiving a total budget of $12,000,000.\80\
---------------------------------------------------------------------------
\78\Id. at 78.
\79\Id. at 85.
\80\Matthew E. Glassman & Jacob R. Straus, Congressional
Commissions: Overview, Structure, and Legislative Considerations,
Congressional Research Service 18 (May 14, 2014), http://www.crs.gov/
pdfloader/R40076.
---------------------------------------------------------------------------
Because this amendment would apply to Title I of the bill,
which is not within the Committee's jurisdiction, a point of
order raised by Rep. Jason Smith (R-MO) stating that the
amendment was not germane was sustained. Thus the amendment was
not considered.
III. THE SCRUB ACT IS A SOLUTION IN SEARCH OF A PROBLEM
A. The SCRUB ACT is Yet Another Anti-Regulatory Bill Based on False
Assumptions
The SCRUB Act's regulatory cut-go process is premised on
the misguided belief that the public cannot benefit from new
public protections and safeguards unless old ones are repealed.
This ``one in, one out'' system overlooks the fact that
Congress already has the power to repeal any regulation.
However appealing this concept may be in theory, the practical
impact of this legislation would be nothing short of
disastrous, as Professor Ronald Levin argued in his testimony
on the bill:
[E]ven if the Title II process were justified in
principle, the unwieldiness of the process would
counsel against adopting it. The challenges an agency
would face in implementing it would be daunting. The
process would require the agency to quantify the costs
of every new rule, no matter how trivial the rule might
be. This is a substantial departure from current
practice. . . . The SCRUB Act . . . goes much further
by requiring the same procedure for every rule, not
just every major rule. I have to assume that the
subcommittee did not give sufficient thought to this
manifestly extravagant requirement. Could the sponsors
really mean to require an agency to prepare a plan for
decennial review of rules that would have such minor
impact that they would even be exempted from notice and
comment requirements? Rules that would have no
compliance costs at all, because they are instituted to
distribute benefits rather than to impose burdens?
Rules that are designed to address a short-term
situation, so that they will not even exist 10 years
after they are promulgated? Rules of particular
applicability, such as decisions approving corporate
reorganizations? Section 301 is stunningly overbroad,
but I am not going to recommend that it be trimmed back
to encompass major rules, because even with that
limitation it should be eliminated from the bill.\81\
---------------------------------------------------------------------------
\81\Searching for and Cutting Regulations that are Unnecessarily
Burdensome (SCRUB) Act of 2014: Hearing Before the Subcomm. on
Regulatory Reform, Commercial and Antitrust Law of the H. Comm. on the
Judiciary, 113th Cong. 9, 11 (2014) (statement of Ronald M. Levin,
Professor of Law, Washington University School of Law), http://
judiciary.house.gov/_cache/files/61953df7-cc3f-486a-bb27-71a8d2be42c0/
levin-scrub-act-testimony.pdf [hereinafter SCRUB Hearing].
Proponents of so-called regulatory ``reform'' measures like
the SCRUB Act claim that regulation imposes such costs on
businesses that it stifles economic growth and job creation. In
support of this contention, they repeatedly cite a widely-
debunked study by economists Mark and Nicole Crain that claims
Federal regulation imposes an annual cost of $1.75 trillion on
business.\82\ The Crain study, however, has been extensively
criticized for exaggerating the costs of Federal rulemaking on
small businesses. For example, the Center for Progressive
Reform (CPR) notes that the $1.75 trillion cumulative burden
cited by the study fails to account for any benefits of
regulation.\83\ CPR observed that OMB estimated in 2008 that
major rules imposed $46 billion to $54 billion in costs, but
also produced $122 billion to $656 billion in benefits.\84\
Moreover, the study's methodology is flawed with respect to how
it calculated economic costs. The study, which relied on
international public opinion polling by the World Bank on how
friendly a particular country was to business interests,
ignored actual data on costs imposed by Federal regulation in
the United States.\85\
---------------------------------------------------------------------------
\82\Nicole V. Crain & W. Mark Crain, The Impact of Regulatory Costs
on Small Firms, Rep. No. SBAHQ-08-M-0466 (Sept. 2010), http://
archive.sba.gov/advo/research/rs371tot.pdf.
\83\Sidney Shapiro, et al., Setting the Record Straight: The Crain
and Crain Report on Regulatory Costs, Center for Progressive Reform
White Paper #1103 (Feb. 2011).
\84\Id.
\85\Id.
---------------------------------------------------------------------------
The Congressional Research Service (CRS) also conducted an
extensive examination of the Crain study and criticized much of
its methodology.\86\ CRS noted that the authors of the Crain
study themselves told CRS that their study was ``not meant to
be a decision-making tool for lawmakers or Federal regulatory
agencies to use in choosing the `right' level of regulation. In
no place in any of the reports do we imply that our reports
should be used for this purpose. (How could we recommend this
use when we make no attempt to estimate the benefits?)''\87\
CRS concluded that ``a valid, reasoned policy decision can only
be made after considering information on both costs and
benefits'' of regulation.\88\
---------------------------------------------------------------------------
\86\Curtis W. Copeland, Analysis of an Estimate of the Total Costs
of Federal Regulations, Congressional Research Service Report for
Congress, R41763 (Apr. 6, 2011).
\87\Id. at 26 (quoting an e-mail from Nicole and W. Mark Crain to
the author of the CRS report).
\88\Id. The Economic Policy Institute also issued a critique of the
Crain study outlining additional concerns with the study's methodology
and data. See John Irons and Andrew Green, Flaws Call for Rejecting
Crain and Crain Model: Cited $1.75 Trillion Cost of Regulations Is Not
Worth Repeating, Economic Policy Institute, July 19, 2011, available at
http://w3.epi-data.org/temp2011/IssueBrief308.pdf.
---------------------------------------------------------------------------
Bruce Bartlett, a senior policy analyst in the Reagan and
George H.W. Bush administrations, has also refuted the claim
that regulations undermine the economy or job growth,
explaining that ``[n]o hard evidence is offered for this claim;
it is simply asserted as self-evident and repeated endlessly
throughout the conservative echo chamber.''\89\ At a
legislative hearing held by the Subcommittee on a prior anti-
regulatory bill, the Majority's own witness debunked the myth
that regulations stymie job creation. Christopher DeMuth stated
on behalf of the American Enterprise Institute, a conservative
think tank, that the ``focus on jobs . . . can lead to
confusion in regulatory debates'' and that ``the employment
effects of regulation, while important, are
indeterminate.''\90\ A recently released study confirms this
result.\91\
---------------------------------------------------------------------------
\89\Bruce Bartlett, Op-Ed., Misrepresentations, Regulations and
Jobs, N.Y. Times Economix, Oct. 4, 2011, http://
economix.blogs.nytimes.com/2011/10/04/regulation-and-unemployment.
\90\The Regulatory Accountability Act of 2011: Hearing on H.R. 3010
Before the H. Comm. on the Judiciary, 112th Cong. 64-65 (2011)
(prepared statement of Christopher DeMuth, American Enterprise
Institute); see, e.g., Jia Lynn Yang, Does Government Regulation Really
Kill Jobs? Economists Say Overall Effect Minimal, Wash. Post, Nov. 13,
2011, http://www.
washingtonpost.com/business/economy/does-government-regulation-really-
kill-jobs-economists-say-overall-effect-minimal/2011/10/19/
gIQALRF5IN_story.html?hpid=z1 (``In 2010, 0.3 percent of the people who
lost their jobs in layoffs were let go because of `government
regulations/intervention.' By comparison, 25 percent were laid off
because of a drop in business demand. . . . Economists who have studied
the matter say that there is little evidence that regulations cause
massive job loss in the economy, and that rolling them back would not
lead to a boom in job creation.'').
\91\See Tara M. Sinclair & Kathryn Vesey, Regulation, Jobs, and
Economic Growth: An Empirical Analysis 27, (The George Washington
University Regulatory Studies Center, Working Paper), at 27(finding
that the ``macroeconomic effects of regulation are uncertain'' and that
the study's ``results reveal no impact'' when considering either the
impact of regulations on the ``total economy or strictly the private
sector''), available at http://regulatorystudies.columbian.gwu.edu/
files/downloads/032212_sinclair_vesey_reg_jobs_growth.pdf
---------------------------------------------------------------------------
If anything, regulations can promote job growth and put
Americans back to work. For instance, the BlueGreen Alliance
has noted that studies of the direct impact of regulations have
concluded that ``most regulations result in modest job growth
or have no effect, and economic growth has consistently surged
forward in concert with these health and safety
protections.''\92\ The OMB observed that 40 years of success of
the Clean Air Act ``have demonstrated that strong environmental
protections and strong economic growth go hand in hand.''\93\
Similarly, the Natural Resources Defense Council, the United
Auto Workers, and the National Wildlife Federation jointly
issued a report finding that vehicle emissions standards and
clean vehicle research, development and production are already
responsible for 155,000 jobs at 504 facilities in 43 states and
the District of Columbia.\94\ According to the same report,
119,000 jobs were created in this industry between 2009 and
2011 alone.\95\
---------------------------------------------------------------------------
\92\Letter to Rep. Lamar Smith (R-TX), Chair, & Rep. John Conyers,
Jr. (D-MI), Ranking Member, H. Comm. on the Judiciary, from David A.
Forster, Executive Director, BlueGreen Alliance, at 2 (Nov. 2, 2011)
(on file with the H. Committee on the Judiciary, Democratic Staff).
\93\Executive Office of the President--Office of Management and
Budget, Statement of Administration Policy on H.R. 2401, Transparency
in Regulatory Analysis of Impacts on the Nation Act of 2011 (Sept. 21,
2011).
\94\Natural Resources Defense Council et al., Supplying Ingenuity:
U.S. Suppliers of Clean, Fuel-Efficient Vehicle Technologies (2011),
available at http://www.nrdc.org/transportation/autosuppliers/files/
SupplierMappingReport.pdf.
\95\Id.
---------------------------------------------------------------------------
Similarly, it was estimated in 2012 that a pending rule
under the Clean Air Act requiring power plants to reduce
mercury and other toxic emissions by 90 percent in the next 5
years would create 45,000 temporary construction jobs over the
next 5 years and possibly 8,000 permanent jobs because of the
upgrades required by the new rule.\96\ This job growth would be
in addition to the rule's expected benefit of preventing 11,000
deaths from heart attacks and respiratory diseases like
asthma.\97\
---------------------------------------------------------------------------
\96\Editorial, The Job-Creating Mercury Rule, N.Y. Times, Feb. 22,
2012, http://www.nytimes.com/2012/02/23/opinion/the-job-creating-
mercury-rule.html.
\97\Id.
---------------------------------------------------------------------------
Additionally, a report by Northeast States for Coordinated
Air Use Management (NESCAUM) demonstrates a direct correlation
between environmental regulations and job growth in the
Northeast. It found that by enacting stricter fuel economy
standards and pursuing cleaner forms of energy, more jobs would
be created.\98\ Specifically, NESCAUM found that stricter fuel
economy standards and regulations governing cleaner forms of
energy would increase employment from 9,490 to 50,700 jobs;
increase gross regional product, a measure of the states'
economic output, by $2.1 billion to $4.9 billion; and increase
household disposable income increases by $1 billion to $3.3
billion.\99\
---------------------------------------------------------------------------
\98\Northeast States for Coordinated Air Use Management (NESCAUM),
Economic Analysis of a Program to Promote Clean Transportation Fuels in
the Northeast/Mid-Atlantic Region (2011) (on file with Natural
Resources Defense Council) http://switchboard.nrdc.org/blogs/ngreene/
CFS%20Economic%20Analysis%20Report%20INTERNAL.PDF.
\99\Id.
---------------------------------------------------------------------------
Anti-regulatory proponents also rely on an equally flawed
corollary argument that regulatory uncertainty creates a
disincentive for businesses to hire additional employees. Bruce
Bartlett, the senior economic official from the Reagan and Bush
administrations, observes that ``regulatory uncertainty is a
canard invented by Republicans that allows them to use current
economic problems to pursue an agenda supported by the business
community year in and year out.''\100\ Likewise, Professor
Sidney Shapiro testified before the Subcommittee in the 112th
Congress that ``[a]ll of the available evidence contradicts the
claim that regulatory uncertainty is deterring business
investment.''\101\ In fact, a July 2011 Wall Street Journal
survey of business economists found that the ``main reason U.S.
companies are reluctant to step up hiring is scant demand,
rather than uncertainty over government policies.''\102\ Not
surprisingly, a September 2011 National Federation of
Independent Business survey of its members found that ``poor
sales''--not regulation--is the biggest problem.\103\ Indeed,
the Main Street Alliance, a small business organization, has
noted that ``[i]n survey after survey and interview after
interview, Main Street small business owners confirm that what
we really need is more customers--more demand--not
deregulation.''\104\
---------------------------------------------------------------------------
\100\Bruce Bartlett, Op-Ed., Misrepresentations, Regulations and
Jobs, N.Y. Times Economix Blog, Oct. 4, 2011, http://
economix.blogs.nytimes.com/2011/10/04/regulation-and-unemployment/
?s.p.=4&sq=Bartlett&st=case.
\101\Regulatory Accountability Act of 2011: Hearing on H.R. 3010
Before the H. Comm. on the Judiciary, 112th Cong. 1 (2011) (statement
of Prof. Sidney Shapiro, Wake Forest School of Law) http://
judiciary.house.gov/_files/hearings/pdf/Shapiro%2010252011.pdf
\102\Phil Izzo, Dearth of Demand Seen Behind Weak Hiring, Wall St.
J., July 18, 2011, available at http://online.wsj.com/article/
SB10001424052702303661904576452181063763332.html.
\103\Press Release, Nat'l Federation of Independent Businesses,
Small Business Confidence Takes Huge Hit: Optimism Index Now in Decline
for Six Months Running (Sept. 13, 2011) (``Of those reporting negative
sales trends, 45 percent blamed faltering sales, 5 percent higher labor
costs, 15 percent higher materials costs, 3 percent insurance costs, 8
percent lower selling prices and 10 percent higher taxes and regulatory
costs.''), available at http://www.nfib.com/press-media/press-media-
item?cmsid=58190.
\104\Letter to Rep. Lamar Smith (R-TX), Chair, & Rep. John Conyers,
Jr. (D-MI), Ranking Member, H. Committee on the Judiciary, from Jim
Houser, Co-Chair, The Main Street Alliance, et al., at 1-2 (Nov. 2,
2011) (on file with the H. Committee on the Judiciary, Democratic
Staff).
---------------------------------------------------------------------------
B. The SCRUB Act's Solution to ``Over-Regulation'' is an Unbalanced and
Redundant Review That Agencies Already Conduct
Even if one were to accept the false premise that
regulations impede job growth and harm the economy, the SCRUB
Act represents a redundant and arbitrary solution to any such
problem. Agencies regularly conduct retrospective reviews.\105\
In fact, retrospective review has been a top priority under the
Obama administration,\106\ and Congress has long prescribed
that agencies review regulations to determine whether any
should be revoked or modified.
---------------------------------------------------------------------------
\105\SCRUB Hearing, supra note 81, at 2 (statement of Ronald M.
Levin, Professor of Law, Washington University School of Law).
\106\Cheryl Bolen, Shelanski Considering Changes in Agency
Rulemaking Processes in Year Ahead, Bloomberg BNA Daily Report for
Executives, at 1 (Jan. 16, 2014).
---------------------------------------------------------------------------
1. Congress Already Has Tools for Enforcing Retrospective
Review
Congress already has numerous tools for influencing Federal
rules. In addition to its numerous tools for exercising
oversight, Congress may shape agency missions through the
appropriations process, or narrowing agency authority through
statute.\107\ Congress may also disapprove any rule proposed by
an agency through the Congressional Review Act,\108\ or pass
legislation to stay the effect of an existing rule. For
instance, the House attempted to do this in the in the 112th
Congress, passing legislation in response to the Environmental
Protection Agency's cement manufacturing standards.\109\
---------------------------------------------------------------------------
\107\See, e.g., Congressional Research Service, Congressional
Influence on Rulemaking and Regulation Through Appropriations
Restrictions, RL 34354 (2008).
\108\5 U.S.C. Sec. 801(b) (2013).
\109\Cement Sector Regulatory Relief Act of 2011, H.R. 2681, 112th
Cong. (2011).
---------------------------------------------------------------------------
Congress has already enacted several legislative mandates
that require retrospective review.\110\ Section 610 of the
Regulatory Flexibility Act (RFA) requires periodic evaluation
of existing regulations that affect small business
entities.\111\ The RFA also tasks agencies with demonstrating
the continued need for rules, whether the agency has received
complaints from the public concerning the rule, the complexity
of the rule, and the extent to which the rule is duplicative or
overlaps with other Federal rules, or State and local
government rules.\112\ In 1996, the Economic Growth and
Regulatory Paperwork Reduction Act was enacted,\113\ requiring
requires certain financial agencies, such as the Federal
Deposit Insurance Corporation, to conduct a review of their
regulations every 10 years.\114\ Other reviews are conducted at
the discretion of the agency.\115\
---------------------------------------------------------------------------
\110\SCRUB Hearing, supra note 81 (statement of Ronald M. Levin,
Professor of Law, Washington University School of Law).
\111\Pub. L. No. 96-354, 94 Stat. 1164, 1169 (1980).
\112\5 U.S.C. Sec. 610 (2014).
\113\Pub. L. No. 104-208, Sec. 2222, 110 Stat. 3009 (1996),
codified at 12 U.S.C. Sec. 3311 (2014). Other agencies subject to this
statutory mandate are the Board of Governors of the Federal Reserve
System, the Office of the Comptroller of the Currency, and the Consumer
Financial Protection Bureau.
\114\Id.
\115\GAO Report, supra note 13, at 5.
---------------------------------------------------------------------------
2. The Administration Has Issued Several Executive Orders
Requiring Retrospective Review that Have Already
Led to Hundreds of Rules Proposed for Elimination
Retrospective review is also a top priority for the Obama
administration.\116\ Since 2011, President Obama has issued a
series of Executive Orders to have agencies conduct meaningful
retrospective reviews.\117\ In January 2011, President Obama
issued Executive Order 13563 directing agencies to ``consider
how best to promote retrospective analysis of rules that may be
outmoded, ineffective, insufficient, or excessively burdensome,
and to modify, streamline, expand, or repeal them in accordance
with what has been learned.''\118\ The Executive Order further
directs each agency to: ``develop and submit to [OIRA] a
preliminary plan, consistent with law and its resources and
regulatory priorities, under which the agency will periodically
review its existing significant regulations to determine
whether any such regulations should be modified, streamlined,
expanded, or repealed so as to make the agency's regulatory
program more effective or less burdensome in achieving
regulatory objectives.'' Soon thereafter, President Obama
issued Executive Order 13579 in July 2011 encouraging
independent regulatory agencies to ``consider how best to
promote retrospective analysis of rules that may be outmoded,
ineffective, insufficient, or excessively burdensome, and to
modify, streamline, expand, or repeal them in accordance with
what has been learned.''\119\ These analyses, together with
supporting data and evaluations, should be released online
whenever possible, according to the Executive Order. In
addition, the Executive Order asked each independent regulatory
agency to ``develop and release to the public a plan,
consistent with law and reflecting its resources and regulatory
priorities and processes, under which the agency will
periodically review its existing significant regulations to
determine whether any such regulations should be modified,
streamlined, expanded, or repealed so as to make the agency's
regulatory program more effective or less burdensome in
achieving the regulatory objectives.''\120\ Such plans were
required to be filed within 120 days from the date of the
Executive Order.
---------------------------------------------------------------------------
\116\Cheryl Bolen, Shelanski Considering Changes in Agency
Rulemaking Processes in Year Ahead, Bloomberg BNA Daily Report for
Executives, at 1 (Jan. 16, 2014).
\117\SCRUB Hearing, supra note 81, at 2 (statement of Ronald M.
Levin, Professor of Law, Washington University School of Law).
\118\Exec. Order No. 13,563, 76 Fed. Reg. 3821 (Jan. 18, 2011).
\119\Exec. Order No. 13,579, 76 Fed. Reg. 41587 (July 14, 2011).
Independent regulatory agencies are ``independent'' in the sense that
they are independent of the President. The President has limited
authority to remove their leaders (usually, heads of such agencies can
only be removed for cause, rather than at the President's pleasure).
Stephen G. Breyer, et al., Administrative Law and Regulatory Policy 100
(4th ed., Aspen Publishers, Inc. 1999). Such agencies are usually
styled ``commissions'' or ``boards'' (e.g., the Securities and Exchange
Commission, the Federal Communications Commission, the National Labor
Relations Board).
\120\Id.
---------------------------------------------------------------------------
In May 2012, President Obama issued yet another Executive
Order requiring agencies to ``conduct retrospective analyses of
existing rules to examine whether they remain justified and
whether they should be modified or streamlined in light of
changed circumstances, including the rise of new
technologies.''\121\ In particular, this Executive Order
directed agencies to ``invite, on a regular basis . . . public
suggestions about regulations in need of retrospective review
and about appropriate modifications to such regulations.''\122\
The Executive Order required agencies to ``give priority,
consistent with law, to those initiatives that will produce
significant quantifiable monetary savings or significant
quantifiable reductions in paperwork burdens while protecting
public health, welfare, safety, and our environment.''\123\ In
addition, the Executive Order directed agencies to ``give
special consideration to initiatives that would reduce
unjustified regulatory burdens or simplify or harmonize
regulatory requirements imposed on small businesses.\124\
---------------------------------------------------------------------------
\121\Exec. Order. 13610, 77 Fed. Reg. 28467 (May 14, 2012).
\122\Id.
\123\Id.
\124\Id.
---------------------------------------------------------------------------
According to Cass Sunstein, who served as OIRA
Administrator from 2009 to 2012, these Orders cumulatively
``energized'' agencies to identify nearly 600 outdated rules
for elimination.\125\ Agencies have already finalized or
formally proposed over a hundred of these reforms.\126\ For
instance, the Department of Health and Human Services (HHS) has
finalized several rules to remove hospital and healthcare
reporting requirements, saving $5 billion over 5 years.\127\
Additionally, as Howard Shelanski, the current OIRA
Administrator, recently noted, OIRA plans to establish ``more
concrete ways to deepen and strengthen retrospective
review.''\128\ Combined, these good-government initiatives have
already resulted in hundreds of formal proposals to eliminate
rules, representing billions of dollars in savings over the
next several years,\129\ and substantially more in eventual
savings.\130\
---------------------------------------------------------------------------
\125\Cass R. Sunstein, The Regulatory Lookback, forthcoming in B.U.
L. REV. (preliminary draft available at http://ssrn.com/
abstract=2360277) (draft at 13).
\126\See Cary Coglianese, Moving Forward with Regulatory Lookback,
30 YALE J. ON REG. 57, 58 (2013).
\127\Dep't of Health & Hum. Servs., Plan for Retrospective Review
of Existing Rules 3, 8-17 (2011), http://www.whitehouse.gov/sites/
default/files/other/2011-regulatoryaction-plans/
healthandhumanservicesregulatoryreformplanaugust2011.pdf.
\128\Cheryl Bolen, Shelanski Considering Changes in Agency
Rulemaking Processes in Year Ahead, Bloomberg BNA Daily Report for
Executives, at 1 (Jan. 16, 2014).
\129\Council of Econ. Advisers, Exec. Office of the Pres., Smarter
Regulations through Retrospective Review 6 (2012), http://
www.whitehouse.gov/sites/default/files/lookback_report_rev_final.pdf.
\130\Cass R. Sunstein, The Regulatory Lookback, forthcoming in B.U.
L. REV. (preliminary draft available at http://ssrn.com/
abstract=2360277) (draft at 16).
---------------------------------------------------------------------------
3. The SCRUB Act's Meat-Cleaver Approach to Rulemaking
Would Create Immense Bureaucratic Hurdles without
Addressing the Critical Barriers to Effective
Retrospective Review
The existing processes for retrospective review are a
smart, scalpel-like approach to regulatory revisions. The
overwhelming consensus of administrative law experts support a
balanced and affordable approach to retrospective review that
allows for agency flexibility and selectivity to target rules
for elimination. In contrast, not even the conservative
proponents of regulatory cut-go support a meat-cleaver approach
to every regulation, which will only increase bureaucratic red
tape and uncertainty.
There is broad consensus from the nonpartisan
Administrative Conference of the United States (ACUS) that any
retrospective review should be selective, flexible, and even-
handed. These goals reflect the assessments and expertise of a
broad group of practitioners, agency personnel, and academics
in the administrative law field. In its recommendations on
retrospective review, ACUS noted that any review should give
agencies ``maximum flexibility to design processes that are
sensitive to individual agency situations and types of
regulations.''\131\ Given differences among agencies, ACUS
stated that such processes should be ``tailored to meet
agencies' individual needs'' and that the President as well as
Congress ``should avoid mandating standardized or detailed
requirements.''\132\ ACUS also recommended that the review
should focus on the most important regulations with sufficient
time and resources to ensure a meaningful review.\133\
---------------------------------------------------------------------------
\131\Administrative Conference of the U.S., Review of Existing
Agency Regulations, Recommendation 95-3 (adopted June 15, 1995).
\132\Id.
\133\Id. at 1-2.
---------------------------------------------------------------------------
The GAO has likewise reported that the ``most critical
barrier'' to effective retrospective review is agencies'
``difficulty in devoting the time and staff resources required
for reviews while also carrying out other mission
activities.''\134\ Much like ACUS' recommendation that
retrospective review be selective and flexible, GAO found that
``it is not necessary or even desirable for agencies to expend
their time and resources reviewing all of their
regulations.''\135\ Rather, agencies should ``conduct
substantive reviews of a small number of regulations that
agencies and the public identify as needing attention.''\136\
---------------------------------------------------------------------------
\134\GAO Report, supra note 13, at 7.
\135\Id.
\136\Id.
---------------------------------------------------------------------------
Unlike the retrospective review advocated by ACUS and the
GAO, the SCRUB Act's mandate of an unlimited and unbalanced
review of all regulations would create immense bureaucratic
hurdles to effective retrospective review. By requiring
agencies to assess the cost of every new rule, the SCRUB Act
would drown agencies in red tape. Furthermore, even the
conservative proponents of regulatory cut-go acknowledge that
legislation like the SCRUB Act is ``uncharted policy
territory'' with major shortcomings.\137\ Noting that potential
perils of regulatory cut-go, the conservative Competitive
Enterprise Institute (CEI) recommended that Congress should
proceed in a step-by-step experiment through pilot programs to
test the feasibility of regulatory cut-go.\138\ CEI also noted
that the result of this process could be to ``make regulation
less accountable.''\139\ Acknowledging that legislation like
SCRUB Act could spawn substantial paperwork burdens and fines,
CEI observed that Congress may even need to create a separate
regulatory audit agency, similar to the Internal Revenue
Service (IRS), to ``promulgate rules to standardize accounting
procedures and reporting requirements'' for costs to
agencies.\140\
---------------------------------------------------------------------------
\137\Marlo Lewis, Reviving Regulatory Reform: Options for the
President and Congress, Competitive Enterprise Institute (Dec. 2004)
84, http://cei.org/pdf/4446.pdf.
\138\Id. at 3, 84.
\139\Id. at 75.
\140\Id. at 82.
---------------------------------------------------------------------------
H.R. 4874 SECTION-BY-SECTION EXPLANATION
A description of the bill's principal substantive
provisions follows.
Title II--Regulatory Cut-Go
Sec. 201. Cut-Go Procedures. Section 201(a) requires an
agency, before it promulgates a new rule, to repeal rules that
the Commission has classified to be repealed so that the annual
costs of the new rule to the U.S. economy is offset by the
repeal of the current rule. An agency may also preemptively
repeal such rules identified by the Commission, or offset the
costs of a new rule by repealing a rule listed in the
Commission's report, but must achieve a net reduction in costs
imposed by the agency's rules. This may require repealing
additional rules of the agency listed in the Commission report.
Sec. 202. Applicability. Once the agency has repealed all
the rules identified by the Commission, then it no longer needs
to go through the offset process.
Sec. 203. OIRA Certification of Cost-Benefit Calculations.
The OIRA Administrator must review and certify the accuracy of
agency determinations of the costs of new rules issued under
section 201. Such certification must be included in the
administrative record of the relevant rulemaking by the agency
promulgating the rule and submitted to Congress.
Title III--Retrospective Review of New Rules
Sec. 301. Plan for Future Review. Section 301 requires the
agency, when promulgating a final rule, to include a plan
providing for the review of such rule not later than 10 years
after the date on when such rule is promulgated. The review
must be substantially similar to the review required under
section 101(h) of the bill. For non-major rules, the agency's
plan must include procedures and standards to enable the agency
to determine whether to eliminate unnecessary regulatory costs
to the economy. When feasible, the agency must include a
proposed plan for review of a proposed rule in its notice of
proposed rulemaking and receive public comment on the plan.
Title IV--Judicial Review
Sec. 401. Judicial Review. Section 401 makes agency
compliance for immediate repeals and cut-go repeals are subject
to judicial review under chapter 7 of title 5 of the U.S. Code.
Title V--Miscellaneous Provisions
Sec. 501. Definitions. Section 501 sets forth various
definitions. For example, it defines ``agency'' to include
independent agencies. With respect to major rules, it employs a
similar, but different definition for that term as used in the
Congressional Review Act.\141\
---------------------------------------------------------------------------
\141\For example, section 804 of the Congressional Review Act
defines a major rule as:
any rule that the Administrator of the Office of Information and
Regulatory Affairs of the Office of Management and Budget finds has
---------------------------------------------------------------------------
resulted in or is likely to result in--
(A) an annual effect on the economy of $100,000,000 or
more;
(B) a major increase in costs or prices for consumers,
individual industries, Federal, State, or local government
agencies, or geographic regions; or
(C) significant adverse effects on competition, employment,
investment, productivity, innovation, or on the ability of
United States-based enterprises to compete with foreign-
based enterprises in domestic and export markets.
Sec. 502. Effective Date. Section 502 sets forth the
effective date as the date of enactment.
CONCLUSION
The bill relies on the false premise that regulations
undermine economic growth because of their attendant
bureaucratic red tape. Yet, ironically, H.R. 4874 would drown
agencies in additional layers of red-tape by making it nearly
impossible to establish any new rule, no matter how pressing,
or issue any guidance on existing rules. By requiring every
agency to assess the costs of new rules or informal guidance
and tasking the Office of Information and Regulatory Affairs
(OIRA) with certifying each of these assessments, the SCRUB Act
would waste untold resources and water-down existing oversight
of Federal rulemaking. The SCRUB Act would force agencies to
make dangerous false choices between using existing rules to
protect the public health, or enduring years of delays and
regulatory burdens through the bill's unworkable cut-go mandate
to respond to emerging threats or develop better rules to
address existing threats.
Rather than streamline rulemaking or eliminate unnecessary
rules through a thoughtful retrospective review process, this
bill would result in years of delays and substantial regulatory
uncertainty by requiring a new rulemaking process for any rule
eliminated. Moreover, even conservative supporters of
regulatory cut-go acknowledge that it would generate
substantial regulatory costs in itself, perhaps even requiring
an equivalent of the Internet Revenue Service to audit for
compliance. In the process, H.R. 4874 would divert billions of
dollars from agency budgets, undermining agencies' missions and
wasting taxpayer dollars on a redundant and inefficient
accounting experiment. This review would likely be the most
costly in U.S. history without any evidence that it would
create a single job beyond the Commission itself. Put simply,
the bill prioritizes corporate profits over the health and
safety of Americans.
For the foregoing reasons, we strongly oppose H.R. 4874 and
we urge our colleagues to join us in opposition.
John Conyers, Jr.
Jerrold Nadler.
Robert C. ``Bobby'' Scott.
Zoe Lofgren.
Sheila Jackson Lee.
Steve Cohen.
Henry C. ``Hank'' Johnson, Jr.
Judy Chu.
Luis V. Gutierrez.
Karen Bass.
Cedric Richmond.
Hakeem Jeffries.
[all]