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INSIGHT: Congress looks anew at reining-in runaway regulators

ICIS News : 7-Mar-13 16:14

By Joe Kamalick

Congress mulls new rules for regulatorsWASHINGTON (ICIS)--Members of Congress this week launched a renewed effort to rein-in what many consider to be runaway federal rulemaking, especially by the Environmental Protection Agency (EPA).  

The House Judiciary Committee heard testimony on the appropriately named REINS Act, “Regulations from the Executive in Need of Scrutiny Act”, HR-367.

Under the bill, once Congress has passed a law, the president has signed it and a regulatory agency is about to issue a “major rule” implementing the statute, those regulations first would have to be put before Congress for review and an up-or-down vote by both the Senate and the House ­­– and then approved by the president.

Sponsored by Representative Todd Young (Republican-Indiana) and cosponsored by 146 other House members, the REINS Act would apply only to major rulemaking, defined as a regulatory programme that would cost $100m (€77m) annually or would have significant adverse effects on competition, employment, investment, productivity or innovation.

Testifying at the hearing in support of the measure, George Mason University law professor Eric Claeys said that the bill was needed because a flood of major rulemaking is in large part responsible for one of the worst and slowest post-recession recoveries.

“It is possible that the costs of complying with existing regulations are impeding economic growth,” Claeys said.

“By one account, the costs of complying with existing regulations in 2008 were estimated to be $1,750bn (on a gross domestic product of $14,300bn),” he said, citing a study by the US Small Business Administration (SBA).

In addition, data from the White House Office of Management and Budget (OMB) suggest that “over the last four years, the total regulatory cost burden on US economic actors has increased $52bn”, he added.

Members of Congress, Claeys said, “may reasonably conclude that major rules are not necessary unless members of Congress decide for themselves that the benefits claimed for such rules really outweigh their possible tendencies to retard economic growth”.

He also argued that as enabling statutes age, “it becomes possible and even likely that the agency may use rulemaking to implement policies extremely remote from those anticipated by the legislative coalition that originally enacted the statute”.

Claeys cited the EPA’s moves to regulate and restrict emissions of carbon dioxide and other greenhouse gases as a possible example of an agency’s twisting the intent of Congress when it drafted the Clean Air Act (CAA) more than 40 years ago in 1970.

He noted that EPA “now reads those [CAA] provisions at least to permit it and perhaps to require it to make rules on greenhouse gases”.

However, Claeys added, quoting another study, “the EPA has taken it upon itself to amend the Clean Air Act’s numerical emission thresholds that trigger stationary source permitting requirements so as to ensure a ‘common sense’ approach to emissions control that Congress never conceived, let alone adopted”.

He also argued that the lack of congressional approval for major rulemaking allows an agency to pursue policies and enforcement that Congress did not intend.

“For example, the  House of  Representatives passed a cap-and-trade environmental bill in the 111th Congress, but the debate provoked opposition substantial enough that the Senate majority leader dropped the bill and let it die,” he said.

“Nevertheless, in December 2010, the EPA initiated rulemaking proceedings for greenhouse gases,” he said.

Another witness, Washington University law professor Ronald Levin, argued against the REINS Act, saying: “My concern would be … that the REINS Act would give rise to enormous risks of impasse”.

Levin said that if a major rulemaking had to get approval by the issuing agency, the House of Representatives, the Senate and finally the president, “the chances of effective rulemaking would be much diminished”.

“The challenge of securing agreement from all the relevant actors (the agency, the Senate, the House and the president) would be daunting enough if they all basically agreed about the purposes to be achieved,” Levin said.

“In today’s ideologically polarised environment, however, one could not assume even that much,” he added.

Levin and others also oppose the bill on grounds that most members of Congress lack the necessary expertise or scientific background to judge whether a specific proposed rule is appropriate.

And, too, members of Congress would likely vote on a particular proposed rule on a political basis. Finally, the critics argue, Congress does not have the time to consider in detail what could be scores of new major rules each year.

But, Claeys contends, “none of these arguments has merit”.

Citing instances in which agency rulemaking was based on thin scientific data, he argued that “Congress may reasonably conclude that, in at least a significant number of rulemakings, agencies are making judgements with information so scant that the judgements are not really ‘scientific’ or ‘expert-based’ and are instead political.”

Claeys contends that in any event, agency rulemaking is every bit as subject to political and stakeholder influences as the legislative process.

“For economically consequential legislative rules,” he said, “Congress may proceed to conclude that it is no longer necessary and proper that federal agencies make controversial political trade-offs without further review and approval by Congress.”

He also dismisses criticism that Congress does not have time to vote on proposed major rules, noting that in the 112th Congress (2010-2012) the House took more than 1,600 votes. Based on the last ten years’ worth of rulemaking, the REINS Act would oblige legislators to make an additional 100-200 votes, an increase of 3% to 6%.

“Members of this House may reasonably conclude that a few extra votes each Congress are an acceptable price to pay to make the federal government more responsible to the people for the policies it implements by major rules,” Claeys said.

According to James Gattuso of the Heritage Foundation, there is abundant need for the REINS Act as federal regulatory agencies continue to increase the number of major rules they issue.

He told the Judiciary Committee that during President Barack Obama’s first four years in office, more than 130 major rules were adopted, imposing annual costs of some $700bn.

By comparison, he said, in then-President George W Bush’s first term, about 50 major rules were issued, with approximately $15bn in new annual costs.

And, said Gattuso, “according to the latest unified agenda of federal regulations, 131 new major regulations are already in the pipeline.”.

However, he added, “while regulatory growth has accelerated under President Obama, it did not start with his administration.”

“Each year for the past 30 years, according to the Office of Management and Budget, the burden of regulations imposed on Americans and the economy has grown,” he said, concluding: “Regulatory growth is not a short-term phenomenon confined to an outlier presidency, it is a long-term, persistent trend.”

Prospects for the REINS Act are not promising.  An earlier version of the bill was passed by the House in 2011 but it stalled and died in the Senate Homeland Security Committee.

($1 = €0.77)

Paul Hodges studies key influences shaping the chemical industry in Chemicals and the Economy

By Joe Kamalick
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