Sen. Warner Says Cost-Benefit Analysis of Federal Regulations Should be Mandated for Both Independent and Executive Agencies

With regard to a cost-benefit analysis of federal regulations, Senator Mark Warner (D-VA) said that the notion that there should be a distinction between independent federal agencies like the SEC and CFTC and executive agencies does not pass muster. His remarks were made in defense of the Independent Regulatory Analysis Act, S 3468 at the Bipartisan Policy Center. Senator Warner has long championed regulatory reform. S 3468, introduced by Senator Warner, with Senators Rob Portman (R-OH) and Susan Collins (R-ME), would require independent federal agencies to conduct a cost-benefit analysis of new regulations and tailor new regulations to minimize unnecessary burdens on the economy. The bill would also provide for review by the Office of Information and Regulatory Affairs (OIRA) of every proposed and final economically significant regulation, pegged at economic impact of $100 million or more, followed by a public exchange of views between OIRA and the independent agency concerning the quality of the agency’s cost-benefit analysis. Although OIRA would not have the power to reject a regulation, it would place its evaluation of the agency’s cost-benefit analysis in the public record.

Senator Warner does not trust most cost-benefit analysis of federal regulations currently being done by either the federal agencies or the industry. Further, he noted that there is currently no independent retrospective review of the federal regulatory structure. There should be a look-back mechanism of three-five years to ascertain if the regulation is accomplishing its goal. The Senator wants regulatory effectiveness, not a regulatory moratorium.

He also said that the idea that there should be a cost-benefit analysis of a regulation at a threshold of $100 million is supported by heads of the Office of Information and Regulatory Affairs (OIRA) in both Democratic and Republican Administrations. The Senator acknowledged that the politicization of OIRA, which is housed in the executive branch, could interfere with the independent actions of independent federal agencies.  He wants to explore the idea of having an independent entity, like OMB, conduct an independent analysis of the cost-benefit analysis of regulations. There is currently no independent validation of the cost of regulations, he noted.

Recently, a bi-partisan group of former OIRA Administrators from the Clinton, Reagan and Bush 41 and 43 Administrations sent a letter to Senator Joseph Lieberman (I-CT), Chair of the Homeland Security and Government Affairs Committee, expressing their strong support for S 3468. The former OIRA chiefs noted that for 30 years Presidents of both parties have required executive agencies to consider regulatory impact, including a cost-benefit analysis, when crafting new regulations, with review by OIRA. These requirements have not been imposed on independent federal agencies, and the OIRA heads fear that independent agencies have typically not engaged in the economic analysis that has come to be expected from executive agencies. These agencies are not independent not because their method of regulation differs from executive agencies, noted the former OIRA Administrators, but rather because Congress has limited the power of the President to remove their top officials, either by statute or tradition.