Monday, March 03, 2014

House Passes Bi-Partisan Omnibus Federal Agency Regulatory Reform Legislation

The House passed by a vote of 236 to 179 omnibus federal regulatory reform legislation. Ten Democratic members voted for the bill. The vehicle for this Omnibus legislation is H.R. 2804, now renamed the Achieving Less Excess in Regulation and Requiring Transparency Act (ALERRT) Act. The bill includes the original H.R. 2804, the All Economic Regulations are Transparent (ALERT) Act, sponsored by Rep. George Holding (D-NC). The original H.R. 2804 is now Title I of the Omnibus bill. The other sections of the bill are the Regulatory Accountability Act (Title II), the Regulatory Flexibility Improvements Act (Title III) and the Sunshine for Regulatory Decrees and Settlements Act (Title IV). House Judiciary Committee Chair Bob Goodlatte (R-VA), the author of Title II of the legislation, said on the passage of the bill that the ALERRT Act was born out of concern for burdensome and unnecessary regulations.

Title I. Title I is the All Economic Regulations are Transparent (ALERT) Act, which would direct federal agencies to release detailed information each month about their proposed regulations. Under current law, the Administration is required to release a Unified Agenda of Federal Regulatory and Regulatory Actions twice a year, which sets forth each governmental agency’s proposed regulations. According to Rep. Holding, the Obama administration has continuously failed to release its agenda on time, if at all. He noted that the Unified Agenda and Regulatory Plan is vital to businesses that rely on it to anticipate forthcoming regulations and the affect that these regulations will have on their operations and plans, But there is currently no enforcement mechanism ensuring that an Administration’s agenda is released in a timely and publically-accessible manner.

In addition, Title I would force agencies to release detailed information each month about their proposed regulations. The bill would provide consequences for failing to release the Unified Agenda on time, by preventing new rules from becoming effective if an agency fails to provide proper notice that a rule is impending. Agencies would also be required to publish information about their regulations on the internet, along with cost-benefit studies. This requirement is designed to give business owners the time they need to comply with new regulations, and fully evaluate the effects they have on their businesses.

Title II. Title II of H.R. 2804 is the Regulatory Accountability Act, which was introduced by House Judiciary Committee Chair Bob Goodlatte (R-VA). The Title, as standalone H.R. 2122, was approved by the Committee by a vote of 13-9. This is regulatory reform legislation that increases government accountability over independent federal agencies such as the SEC and CFTC. Specifically, the bill would require federal regulatory agencies to choose the lowest cost alternatives that meet statutory objectives and improve agency transparency and fact finding. Chairman Goodlatte said that overreaching federal regulations unnecessarily burden job creation, and that approval of the legislation is an absolutely vital reform to the regulatory system that keeps the U.S. globally competitive. The bill would reform the Administrative Procedure Act, which Chairman Goodlatte called the “constitution” of federal regulation, and would successfully promote a regulatory system that will thrive for generations to come.

Title II would require federal agencies to choose the lowest cost rulemaking alternative that meets statutory objectives, while permitting costlier rules when needed to protect public health, safety, or welfare, if the added benefits justify the added costs. It would improve agency fact-finding and identification of regulatory alternatives, and require regulators to use the best reasonably obtainable science.

Importantly, it would also require advance notice of proposed major rulemakings to increase public input before costly agency positions are proposed and become entrenched. It also would provide for on-the-record, but streamlined, administrative hearings in the highest-impact rulemakings, defined as those imposing $1 billion or more in annual costs. This is designed to allow interested parties to subject critical evidence to cross-examination.

Title III. Title III is the Regulatory Flexibility Improvements Act, which would revise the definition of "rule" in the Regulatory Flexibility Act to exclude a rule of particular and not general applicability relating to rates, wages, and other financial indicators and to define "economic impact" with respect to a proposed or final rule as any direct economic effect on small entities from such rule and any indirect economic effect on small entities that is reasonably foreseeable and that results from such rule.

It would also require initial and final regulatory flexibility analyses to describe alternatives to a proposed rule that minimize any adverse significant economic impact or maximize the beneficial significant economic impact on small entities. Moreover, the measure would require each federal agency to include in its regulatory flexibility agenda a description of the sector of the North American Industrial Classification System that is affected by a proposed agency rule which is likely to have a significant economic impact on a substantial number of small entities. It would also expand elements of initial and final regulatory flexibility analyses to include estimates and descriptions of the cumulative economic impact of a proposed rule on a small entity. Title III began as a standalone bill, H.R. 2542, introduced by Rep. Spencer Bachus (R-AL), the Chairman Emeritus of the Financial Services Committee.

Title IV. Title IV is the Sunshine for Regulatory Decrees and Settlements Act, originally introduced by Rep. Doug Collins (R-GA) as H.R. 1493. This measure would require federal agencies against which a covered civil action is brought to publish the notice of intent to sue and the complaint in a readily accessible manner, including by making such notice and complaint available online not later than 15 days after receiving service of such notice or complaint.

It would also require a court, in considering a motion to intervene in a covered civil action, to presume that the interests of the intervenor would not be adequately represented by the existing parties to the action and to consider the relationship of an intervenor that is a state, local, or tribal government to the defendant in such action.

It would require parties to a covered civil action to participate in mediation or alternative dispute resolution when attempting to settle an action and to include intervenors in such mediation or dispute resolution efforts.

Also, Title IV would require an agency seeking to enter a covered consent decree or settlement agreement to publish in the Federal Register and online, not later than 60 days after such decree or agreement is filed with a court: (1) the decree or agreement; and (2) a statement providing the statutory basis for the covered consent decree or settlement agreement and a description of the terms of such decree or agreement, including whether it provides for attorney fees. The agency would be required to accept public comments on a proposed consent decree or settlement agreement during the 60-day period.

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