Friday, July 27, 2012

President Obama Issues Veto Message on House-Passed Regulatory Freeze Legislation

The Obama Administration has issued a veto message on the Red Tape Reduction and Small Business Job Creation Act , HR 4078, which would prohibit any federal agency from taking any significant regulatory action until the Secretary of Labor reports that the Bureau of Labor Statistics average of monthly unemployment rates for any quarter after the enactment of the Act is 6 percent or less. HR 4078, which passed the House by a vote of 245-172, would also require the SEC to conduct a more thorough cost-benefit analysis of proposed regulations.

According to the Administration Statement of Policy, HR 4078 would undermine critical public health and safety protections, introduce needless complexity and uncertainty in agency decision-making, and interfere with agency performance of statutory mandates. The Administration is committed to ensuring that regulations are smart and effective, that they are tailored to advance statutory goals in the most cost-effective and efficient manner, and that they minimize uncertainty. But HR 4078  would impede the ability of federal agencies to protect public health, welfare, safety, and our environment, as well as to promote economic growth, innovation, competitiveness, and job creation.         

In the Administration’s view, the passage of HR 4078 would seriously undermine the existing regulatory framework. The Act would also add layers of procedural burdens that would interfere with agency performance of statutory mandates, unnecessarily delay important public health and safety protections, and undermine and potentially delay important environmental reviews. For example, HR 4078 would create excessively complex permitting processes that would hamper economic growth. It would also spawn excessive regulatory litigation, and introduce redundant processes for litigation settlements. It also addresses numerous problems that do not exist, such as a moratorium on "midnight" rules.

When a Federal agency promulgates a regulation, noted the Statement of Policy, the agency must adhere to the strong and well understood procedural requirements of federal law, including the Administrative Procedure Act, the Regulatory Flexibility Act, the Unfunded Mandates Reform Act, the Paperwork Reduction Act, and the Congressional Review Act. In addition, for decades, agency rulemaking has been governed by Executive Orders issued and followed by administrations of both political parties. These require regulatory agencies to promulgate regulations upon a reasoned determination that the benefits justify the costs, to consider regulatory alternatives, and to promote regulatory flexibility.

Through Executive Orders and the direction of the President, agencies must also ensure that they take into account the consequences of rulemaking on small businesses. Executive Order 13563 requires careful cost-benefit analysis, increased public participation, harmonization of rulemaking across agencies, flexible regulatory approaches, and a regulatory retrospective review. Through Executive Orders 13579 and 13610, the Administration also has taken important steps to promote systematic retrospective review of regulations by all agencies. Collectively, these requirements promote flexible, commonsense, cost-effective regulation.