Lawmakers propose overhaul of regulatory rulemaking process

September 23, 2011

The Hill

Vicki Needham

A bipartisan group of lawmakers outlined a plan on Thursday to overhaul the federal regulatory process and ensure businesses aren't overly burdened and providing a boost to economic growth. 

Sens. Rob Portman (R-Ohio) and Mark Pryor (D-Ark), along with House Judiciary Committee Chairman Lamar Smith (R-Texas), and Rep. Collin Peterson (D-Minn.), ranking member on the House Agriculture Committee, unveiled legislation they say would change the current rulemaking process to lower the costs and improve the quality of new regulations.

"This common-sense, bipartisan legislation will cut back on unnecessary red tape by building economic reality-checks into every step of the regulatory process," Portman said. "It’s an immediate step Washington can take to help unleash the forces of job creation again in America.”  

Thomas Donohue, U.S. Chamber of Commerce president and chief executive, announced support for the legislation, especially as the economy slows. 

“Given the precarious condition of America’s economy and continued weakness in job creation, the Chamber believes that regulations must be narrowly tailored, supported by strong and credible data and evidence, and impose the least burden possible, while still implementing Congressional intent," he said in a statement. 

The bill "would restore needed checks and balances to the regulatory process and give job creators the certainty they need," he said. 

About a month ago, the Obama administration said it would examine and possibly eliminate hundreds of regulations to save businesses $10 billion over five years, create jobs and kick-start the slumping economy. 

Peterson argued interest groups get into the mix too much, making it  difficult to get regulations written correctly because the groups use them "to interpret the law in their best interest, instead of following the intent of the law."

"By bringing transparency and accountability to the regulatory process, the American people will be allowed to have a voice in these policy decisions,” Peterson said. 

Smith estimated that federal regulations cost the economy about $1.75 trillion a year and are "a barrier to economic growth and job creation."

But Smith's quoted figure, which is from a September 2010 study by the Small Business Administration's Office of Advocacy and conducted by economists Mark Crain and Nicole Crain, has been debunked by several follow up reports. 

About 70 percent of the $1.75 trillion came from a regression analysis that was based on opinion polling about the perceived regulatory climate in different countries. 

In February, the Center for Progressive Reform, a liberal think tank focused on regulatory policy, put out a paper detailing the flaws in SBA’s report. 

The non-partisan Congressional Research Service also published its own critique of the SBA study in April. 

The bill calls for that prior to proposing any major rule, at least $100 million a year, agencies would be required to issue an advance public notice that explains the problem they intend to address and calls for public comment on the need for a new rule and potential options the agencies should consider.

The bill requires better scientific and technical data, reduces the amount of "closed-door regulating" to ensure agencies don't misuse guidance documents and builds basic cost-benefit analysis principles into each step of the rulemaking process drawn from the longstanding, bipartisan Executive Order framework created by the Reagan and Clinton administrations and reaffirmed by Obama in January. 

This legislation also requires agencies to adopt the least costly regulations that achieves the policy goals set out by Congress. 

Finally, the bill requires agencies to hold formal hearings to test the assumptions and evidence on the most expensive of the newly proposed rules. 

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