Statement of Business Roundtable Regarding H.R. 2122, the Regulatory Accountability Act of 2013 | Business Roundtable

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Smart regulation is integral to protecting the economy and the American workforce. A smarter regulatory process would provide broad societal value, inspire business confidence and accelerate investment. At present, however, U.S. businesses, both small and large, are increasingly burdened by the cumulative impact of regulations issued under the current process. While each of these rules was well-intentioned, their collective effect has begun to hobble the U.S. economy:

  • Compliance costs money. Federal agencies regularly issue rules costing hundreds of millions and even billions of dollars annually. These costs are added to businesses’ ongoing compliance expenditures – expenditures that their foreign competitors may not have to make. It is crucial that regulatory requirements be justified, cost-effective and understandable.
  • Innovation is vital to our future. American businesses are the world’s most innovative, and that innovation maintains our competitive advantage and preserves our standard of living. Rules that require particular technologies or approaches, or that fail to keep up with technological evolution can jeopardize future innovation.
  • Investment requires certainty. If companies are uncertain what regulators will require or how to comply with rules, they will be reluctant to commit capital to new or expanded productive investments. But this sort of investment is key to getting our economy going again for all Americans.

The solution is smarter regulation. As detailed in our report, Achieving Smarter Regulation1 a smarter regulatory system would encourage greater and earlier public participation, ensure that agencies use quality information, and promote more objective analysis of the benefits and costs of rules. It would contain accountability mechanisms to make sure that agencies actually follow regulatory requirements. It would treat independent regulatory boards and commissions the same as executive branch agencies.

H.R. 2122 would implement the key recommendations of Achieving Smarter Regulation.

Greater and Earlier Public Engagement

Notice and comment rulemaking has been described as “one of the greatest inventions of modern government,”2 and represents the most important example of “crowd-sourcing” by the federal government, but it can be improved. Right now, the first inkling most citizens may get of an agency’s thinking is when the agency publishes a Notice of Proposed Rulemaking in the Federal Register. Yet by then the agency has already invested substantial resources in the option or options that it is proposing, and it can be difficult for an agency to change course significantly.

The most important reform Congress can make in this connection is to require agencies to give the public earlier notice of the problem they are trying to solve, so that those with the greatest understanding of the issues and the potentially affected activities can provide agencies with the benefit of that knowledge when agencies can still readily make optimum use of it.

H.R. 2122 requires agencies to issue an Advance Notice of Proposed Rulemaking whenever they anticipate that a rule will impose costs of $100 million or more annually, have other major economic impacts, or involve novel legal or policy issues. Such a notice would give interested persons ample insight into the agency’s intentions and adequate time to respond. The Senate version of the bill accomplishes this same goal via an alternative “notice of initiation” process.

The bill’s provisions regarding interim rules also will guarantee that, even where agencies may properly dispense with notice and comment before finalizing a rule, they must seek and consider comments afterward, at least in cases where someone has an adverse comment.

Business Roundtable also supports minimum comment periods along the lines of those in H.R. 2122.

Better Quality Information

A regulation can only be as good as the information on which it is based. The notice and comment process recognizes that members of the public generally have the best information about topics on which agencies plan to regulate. The regulatory system should enable members of the public not only to provide information, but also to help gauge the quality of the information upon which agencies rely (or propose to rely) – to ensure that it is the best available and meets fundamental quality standards.

Most fundamentally, H.R. 2122 requires agencies to adopt rules only on the best reasonably obtainable information. It also calls upon the Office of Management and Budget (OMB) to issue guidelines applying the Information Quality Act (IQA) to rulemaking. This requirement would eliminate any doubt that IQA applies to rulemaking, and ensure that rules are based on quality information. A “mini-trial” process would enable IQA issues to be resolved early on in the rulemaking process rather than after the fact. Finally, H.R. 2122 would confirm that agency IQA decisions outside the rulemaking context are reviewable in court – a needed clarification.

More Objective Cost/Benefit Analysis

Cost/benefit analysis of economically significant rules issued by executive branch agencies, overseen by OMB, has been required by every administration, of both parties, for decades. Careful review of regulatory and non-regulatory alternatives is the only way to ensure that agencies only regulate when the benefits of regulation justify the costs, and that agencies adopt the least costly regulatory alternatives that meet the objectives of the underlying statute. Wherever possible, agencies should adopt performance-based rules and use economic incentives and publication of information in lieu of command-and-control approaches.

H.R. 2122 would codify these practices and standards. OMB would be required to issue guidelines regarding the assessment of costs, risks, and benefits, and agencies would be required to provide reasoned explanations of how they evaluated the guidelines and other considerations specified in the bill. H.R. 2122 would also backstop OMB’s customary oversight role by authorizing courts also to take account of agency compliance by eliminating any deference to agencies that do not follow the guidelines.

Currently, rulemaking by independent regulatory boards and commissions is not subject to OMB oversight, even though both the Administrative Conference of the United States and the American Bar Association have supported such oversight.3 H.R. 2122 would correct that inconsistency.

1 BRT, Achieving Smarter Regulation (Sept. 2011), available at {page_7}studies-and-reports/achieving-smarter-regulation/.
2 Kenneth Culp Davis, ADMINISTRATIVE LAW TREATISE § 6:15, at 283 (Supp. 1970).
3 See Administrative Conference of the United States, Recommendation 88-9, “Presidential Review of Agency Rulemaking,” 54 Fed. Reg. 5207 (Feb. 2, 1989), ¶ 2; American Bar Association, Recommendation 302 (Aug. 7-8, 1990).