Signed by President Bill Clinton in 1995, the Unfunded Mandates Reform Act was bipartisan legislation that basically says that regulators have to evaluate a regulation’s cost and find less costly alternatives before adopting a major rule. In 1995, UMRA was imposed upon the executive agencies but not on independent federal agencies such as the SEC. Since the enactment of UNMA, those independent agencies have grown, and so have their regulations.
Unfunded mandates. H.R, 899 expands the scope of UNMA by closing current loopholes within UMRA that allow certain regulatory bodies to escape public reporting requirements and incentivize others to forego publicizing regulatory proposals. The legislation will correct this.
Specifically, H.R. 899 would impose stricter and more clearly defined requirements for how and when federal agencies must disclose the cost of federal mandates. It would ensure that those who will be affected by the regulations have the opportunity to weigh in on proposed mandates. In addition, the measure would equip Congress and the public with tools to better determine the true cost of regulations. It would also provide an accountability mechanism to ensure that the federal government and its independent regulatory agencies adhere to the provisions set forth by H.R. 899 and in its predecessor, UMRA.
Moreover, in order to ensure that agencies continue the regulatory look back process, H.R. 899 would allow a Chair or Ranking Member of any Congressional committee to request that any agency conduct a retrospective analysis of an existing federal regulatory mandate. This retrospective analysis provision is designed to educate Congress about the impact of a rule after it has been in effect, as well as to incentivize agencies to perform a proper analysis when first proposing regulations.
Rep. Foxx noted that, in order to ensure that agencies regulate responsibly, H.R. 899 essentially codifies most of the regulatory principles outlined in Executive Order 12866 issued by President Clinton and reaffirmed by President Obama in Executive Order 13563. Under Executive Order 12866, federal agencies must assess all costs and benefits of available regulatory alternatives, including the alternative of not regulating. Costs and benefits include both quantifiable measures and qualitative measures of costs and benefits that are difficult to quantify, but nevertheless essential to consider. Further, in choosing among alternative regulatory approaches, agencies should select those approaches that maximize net benefits, including potential economic, environmental, public health and safety, unless a statute requires another regulatory approach.
Finally, H.R. 899 would extend judicial review to the selection of the least costly or least burdensome regulatory alternative and to the principles of Executive Order 12866. In her testimony before Congress, former OIRA Administrator Susan Dudley advocated for expanding judicial review in this way to give agencies a greater incentive to carefully consider the least costly, most cost-effective or least burdensome alternative when regulating.
Statement of Administration Policy. While noting that his Administration is committed to ensuring that regulations are tailored to advance statutory goals in a manner that is efficient and cost-effective, and that minimizes uncertainty, President Obama said that he strongly opposes H.R. 899 because it would layer on additional, burdensome judicial review to the regulatory process and introduce needless uncertainty into agency decision-making and undermine the ability of agencies to provide critical public health and safety protections.