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.