Monday, August 29, 2011

Majority Leader Says House Will Move Regulatory Reform Legislation This Year

The regulatory relief agenda in the House of Representatives will include repeal of specific regulations, as well as fundamental and structural reform of the federal rulemaking system through legislation like the REINS Act and the Regulatory Flexibility Improvements Act, said Majority Leader Eric Cantor (R-VA). He expects that both bills will be on the House floor in late November and early December.

Regulations from the Executive in Need of Scrutiny Act (REINS), HR 10, would require Congress to take an up-or-down, stand-alone vote on all new major regulations before they can be enforced. Major regulations are defined as those that have resulted in or are likely to result in an annual effect on the economy of $100 million or more; a major increase in costs or prices, or significant adverse effects on competition, employment, investment, productivity, innovation, or U.S. competitiveness.

The Act provides that if a joint resolution of approval of a major rule is not enacted by the end of 70 session days or legislative days after the agency proposing the rule submits its report on such rule to Congress, the rule must be deemed not approved and must not take effect. However, HR 10 allows a major rule to take effect for 90 calendar days without such approval if the President determines that the rule is necessary because of an imminent threat to health or safety or other emergency, for the enforcement of criminal laws, for national security, or to implement an international trade agreement.

Responding to concerns that the legislation would set up the filibustering of federal agency regulations, New York Law School Professor David Schoenbrod testified before the Judiciary Committee that REINS limits debate on the vote approving the regulation and all related motions to two hours in the House and Senate and that there is no realistic way around this time limit. The Judiciary Committee has jurisdiction over H.R. 10. House Judiciary Committee Chairman Lamar Smith (R-TX)has signed on as the bill’s lead co-sponsor.

HR 10 has the bipartisan support of 149 co-sponsors. Senator Rand Paul (R-KY) has introduced a companion bill in the Senate as S. 299, which currently has the bipartisan support of 27 co-sponsors

The Regulatory Flexibility Improvements Act (HR 527) has already been reported out of the Judiciary Committee and is designed to expand and enhance the Regulatory Flexibility Act (RFA) of 1980, which require federal agencies to prepare a regulatory flexibility analysis so the agencies will know how a proposed regulation will affect small businesses before it is adopted. Currently, the law allows an agency to avoid preparing a regulatory flexibility analysis if the agency head certifies that the new regulation will not have a significant economic impact on a substantial number of small businesses. But none of these terms is defined in the law, noted Judiciary Committee Chair Lamar Smith, who added that agencies routinely take advantage of this by issuing boilerplate certifications.

According to Chairman Smith, the sponsor of HR 527, the legislation would fix this problem by requiring the SBA to define these terms uniformly for all agencies, and by requiring agencies to justify a certification in detail and to give the legal and factual grounds for the certification. The legislation would also require agencies to document all economic impacts, direct and indirect, that a new regulation could have on small businesses. It restricts agencies’ ability to waive Regulatory Flexibility Act requirements.

Importantly, HR 527 would also require each federal agency to publish in the Federal Register a plan for the periodic review of existing and new rules that have a significant impact on a substantial number of small entities to determine whether such rules should be continued, changed, or rescinded.
Current law requires only three agencies, OSHA, the EPA, and the Consumer Financial Protection Bureau, to consider the input of small business advocacy review panels before issuing new major regulations. The legislation would require all federal agencies to use advocacy review panels. According to Chairman Smith, this gives small businesses more opportunity to be heard before major new regulatory burdens are imposed.

HR 527 would require the SBA Chief Counsel for Advocacy to issue rules governing federal agency compliance with RFA requirements; and authorize the Chief Counsel to modify or amend such rules, to intervene in agency adjudication relating to such rules, and to inform an agency of the impact of its rulemaking on small entities.
The legislation would revise requirements for agency notification of the SBA Chief Counsel for Advocacy prior to the publication of any proposed rule. Federal agencies would be required to provide the Chief Counsel with all materials prepared or utilized in making the proposed rule, and information on the potential adverse and beneficial economic impacts of the proposed rule on small entities.

The Regulatory Flexibility Improvements Act would define "economic impact" with respect to a proposed or final regulation as any direct economic effect on small entities from such regulation and any indirect economic effect on small entities that is reasonably foreseeable and that results from such. HR 527 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.

It would also expand elements of initial and final regulatory flexibility analyses under the RFA to include estimates and descriptions of the cumulative economic impact of a proposed rule on a small entity. HR 527 would repeal provisions allowing a waiver or delay of the completion of an initial regulatory flexibility analysis.