Executive Orders on Financial Regulatory Process Reform Shine Light on Path to Legislation

As Congress considered a number of bills that would reform the regulatory process, the two Executive Orders issued by President Obama during his first term in office remain fixed stars to navigate towards teh final enactment of regulatory reform legislation. President Obama has been a strong champion of reform of the federal regulatory process. This is evidenced by the Executive Order No. 13563, 76 Fed. Reg. 3,821 (Jan. 21, 2011) and Executive Order No. 13579, 76 Fed. Reg. 41,587 (July 14, 2011).

EO No. 13563 set out general requirements directed to executive agencies concerning public participation, integration and innovation, flexible approaches, and science. It also reaffirmed that executive agencies should 

conduct a cost-benefit analysis of regulations. EO No.13579 states that independent regulatory agencies should follow EO No. 13563. To facilitate the periodic review of existing significant regulations, EO No.13579 said that independent regulatory agencies should consider how best to promote retrospective analysis of  rules that may be outmoded, ineffective, insufficient, or excessively burdensome, and to modify, streamline, expand, or repeal them in accordance with what has been learned.

One of the more promising pieces of legislation to emerge in the 113th Congress is the  Independent Agency Regulatory Analysis Act, S. 1173, would require independent federal agencies, such as the SEC and CFTC, to conduct a cost-benefit analysis of new regulations and tailor new regulations to minimize unnecessary burdens on the economy. The bill would 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. 

S. 1173 is strongly bi-partisan and is sponsored by Senators Mark Warner (D-VA), Susan Collins (R-ME) and Rob Portman (R-OH). It contains a key role for OIRA, an office in OMB which the Administration has elevated into a new prominence.