Bi-partisan Senate legislation would require the SEC, CFTC and other independent federal agencies to analyze the costs and benefits of new regulations and tailor new regulations so as to minimize unnecessary burdens on the economy. The Independent Regulatory Analysis Act, S 3468, was introduced by Senators Rob Portman (R-OH), Mark Warner (D-VA) and Susan Collins (R-ME). Senator Portman said that, while independent federal agencies exercise vast power over financial services and other sectors of the economy, they are exempt from conducting a cost-benefit analysis of even major regulations. S 3468 would close this loophole for independent agencies by authorizing the President to bring them within the same regulatory review framework that applies to executive agencies. Senator Warner noted that basic cost-benefit principles should apply to all federal regulators, including independent agencies.
Thus, under the legislation, the SEC and other independent agencies would be required to evaluate costs and benefits of new regulations and adopt the least burdensome regulatory approach. They would also have to examine whether existing regulations have contribute to the problem the agency seeks to address. They must also base regulations on the best available economic and scientific data; and consider alternatives to direct regulation, including incentives and public disclosure.
For regulations that will have an economic impact of $100 million or more, the measure authorizes the president to require agencies to produce a regulatory impact analysis that take into account, among other things, the quantified costs and benefits of the proposed rule and less costly alternatives.
The legislation would set up an innovative approach to hold agencies accountable, by means of transparency and public scrutiny. The SEC and other independent agencies would submit significant proposed and final rules, along with supporting analysis, for review by the Office of Information and Regulatory Affairs (OIRA). Although OIRA would not have the power to reject a rule, it would evaluate the quality of the agencies’ cost-benefit analysis and place its assessment in the public record. If OIRA found that an agency failed to comply with the new requirements, the agency would be obligated to respond to OIRA’s assessment and justify its position and underlying analysis. Judicial review of the agency’s compliance would not be permitted, but the exchange between OIRA and the agency would be included in the rulemaking record.