The legislative agenda of the 114th Congress shows a growing concern that regulatory activities of both independent and executive branch agencies have pushed the envelope with respect to both their legal authority and sound regulatory policy. The Regulatory Accountability Act (S. 2006), which was introduced by Senators Portman, King, Collins and a number of other Senators last month, demonstrates the high level of this concern. A similar bill has already passed the House. As a former regulator who watched the process from a bullpen seat, Congress is right in directing its attention to how regulatory policy is made.
These bills show Congress’s concern that voices which should be part of policy development are not being heard or, at least, adequately considered. The legislation demonstrates a concern that regulatory activity is initiated with a particular policy outcome in mind, evidence that supports that outcome is given greater weight while contrary points of view are given short shrift.
The Consumer Product Safety Act, which sets out the authorities of the Consumer Product safety Commission (CPSC), provides historical support for these latest efforts to improve the regulatory process. In 1981, after hearing complaints that the CPSC was not giving adequate attention to stakeholder concerns, Congress imposed on the agency regulatory requirements that are the precursor to those found in the Regulatory Accountability Act. These requirements govern how the agency sets safety standards for specific consumer products, such as clothing, fireworks and bicycle helmets.
The law states that before the agency initiates rulemaking it must make some preliminary effort to assure itself that the rule is indeed needed by describing the potential costs and benefits of the proposed rule and a description of reasonable alternatives to the rule and why those alternatives should not be considered. Similar requirements are included in the Regulatory Accountability Act and they are entirely reasonable. Do we really want federal agencies beginning the rulemaking process without doing initial homework in the form of some upfront analysis to assure the public that the proposed direction is correct?
The Consumer Product Safety Act also requires that before the agency finalizes a rule, it must look at the costs and benefits of the regulatory alternatives it considered and why its chosen approach makes the most sense. The law tells the agency that it may not issue a rule unless it finds, among other things, that the rule imposes the least burdensome requirement needed to adequately address the risk. In other words, if the agency’s preferred regulatory approach is not the most efficient way to address a risk, then Congress expects the agency to change its approach.
Requiring an agency to change its regulatory behavior in response to the data in the record, including economic data developed through cost benefit analysis, is an essential element in any legislation designed to reform the regulatory process. Without this requirement, there may be little incentive for the agency to change its chosen regulatory approach.
Some argue that the procedures in S. 2006 will result in regulatory road blocks that only serve to slow down the process. But asking agencies to do their homework is not a regulatory roadblock. Do we want agencies to be able to regulate without regard for costs and benefits? Should not agencies have to change their preferred approach if the costs and benefits are not reasonably related? Do we want an agency to impose requirements that are more burdensome than they need to be and do so out of ignorance because it did not bother to consider alternatives? Or worse, do we want agencies to ignore those alternatives that do not support a predetermined policy objective? I do not think so.
Regulating is not and should not be easy. Requiring agencies to do the needed up-front hard work before issuing rules, as these reform bills direct, will result in better rules and is something we all should embrace.