Regulatory: Battles on all fronts

Congressional Republicans have set their sights on rescinding many of the Obama administration's rules.

In the last two weeks, Congressional Republicans have expanded their challenges to the Obama administration beyond the environmental and financial services areas and have proposed the first fundamental changes to the process of rulemaking since the Administrative Procedure Act since was adopted in 1946.

Republican proposals would rescind or delay rules alleged to restrict economic growth; codify cost-benefit analysis as a governing regulatory principle for all agencies, including the independent regulatory commissions; and require agencies to consider the cumulative impact of their rules on regulated entities.

The attacks on specific rules still have a low probability of passage, but it is significant that the frustration with regulations is now being channeled toward long-term changes to the overall regulatory process.

Environment

The House has adopted bills that would repeal recent EPA rules limiting hazardous air pollutants from Portland cement plants (H.R. 2681), coal-and oil-fired electric generating plants, and restricting transportation of particulates and ozone emissions from upwind States (H.R. 2401). This week, the House is scheduled to consider two additional bills invalidating the EPA’s rule to restrict emissions from industrial boilers (H.R. 2250) and preventing the EPA from regulating hazardous waste ash generated by coal-fired power plants (H.R. 2273).

H.R. 2401, the Transparency in Regulatory Analysis of Impacts on the Nation Act, adopted on Sept. 23, also would create a Cabinet-level Committee of agencies to analyze the cumulative impact of nine specific air pollution rules with respect to their costs and benefits, their effects on electricity and fuel prices, and their consequences for the international competitiveness of energy intensive industries. It further would amend a critical provision of the Clean Air Act to require the EPA to take feasibility and costs into account in issuing all future National Ambient Air Quality Standards.

Financial Services

Difficulties in implementing the Dodd-Frank financial reform legislation have prompted Republican senators to propose significant changes in the rulemaking process for financial regulations. Under the Financial Regulatory Responsibility Act (S. 1615), the 10 principal financial service regulators would be required to conduct a 12 part economic analysis of all future rules and would be prohibited from issuing a rule if the costs did not exceed the benefits under those tests.

The bill also would concentrate all legal challenges to financial service rules in the D. C. Circuit, in recognition of that court’s expertise in reviewing cost-benefit analyses demonstrated in Judge Ginsburg’s recent opinion rejecting the SEC’s proxy access rule in Business Roundtable v. SEC.         

On Oct. 4, Sen. Crapo introduced an amendment that would delay for one year, until July 16, 2012, the deadline for issuance of rules by the CFTC and the SEC regulating the $600 trillion derivatives market under Dodd-Frank.   

The Regulatory Process (Generally)

On Sept. 22, Sen.Portman introduced the Regulatory Accountability Act (S. 1606), which would amend the Administrative Procedure Act in critical respects. The bill would codify the White House regulatory review process; require agencies to follow the cost-benefit principles that govern that program and make their analyses judicially reviewable; and extend the cost-benefit requirement to independent regulatory commissions that are exempt from the President’s program.

For “high impact” rules which have effects exceeding $1 billion, any interested party could require the agency to conduct an on-the-record rulemakin—with exhibits, testimony and cross-examination—to address the cost-benefit considerations. The collective proposals would make it substantially more difficult for agencies to issue the most significant rules.

These proposals for procedural reforms call into question the basic mechanisms under which rules have been adopted since the modern generation of regulatory statutes emerged in the early 1970s. 

Contributing Author

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John Cooney

John F. Cooney is a partner in the Washington, D.C., office of Venable.

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