House Passes Latest Bill Seeking to Curb Regulatory Efforts

On December 7 the House of Representatives passed the latest bill targeting regulations that have significant adverse economic impacts on businesses. Approved by a 241-184 vote, the Regulations from the Executive in Need of Scrutiny (REINS) Act of 2011 (H.R. 10) would require congressional approval of any major rulemaking effort, defined in the bill as a rule or interim final rule that has or will likely result in an annual economic impact of $100 million or more; a major increase in costs or prices; or significant adverse effects on competition, employment, investment, productivity, innovation, or U.S. competitiveness. Under current law, a rule will automatically take and remain in effect unless Congress passes and the President signs a joint resolution disapproving the rule.

The REINS Act is the latest regulatory relief bill to clear the House. Last week, the House approved two measures that would require federal agencies to take additional steps to ensure that their regulations are not unduly burdensome on businesses. On December 1, the House of Representatives passed by a vote of 263-159 the Regulatory Flexibility Improvements Act of 2011 (H.R. 527), a bill that would, among other things, amend the Regulatory Flexibility Act of 1980 (RFA) to mandate that agencies describe and take into consideration alternatives to their proposed regulations to minimize any adverse impact on small entities, expand the number of rules covered by the RFA, and allow small businesses to take a more active role in the regulatory approval process.

Introduced by Rep. Lamar Smith (R-TX) last February, the bill seeks to accomplish the following:

• Expand the definition of a ‘‘rule’’ for rulemaking purposes to include agency guidance documents and policy statements.
• Redefine the phrase ‘‘economic impact’’ under the RFA. The RFA requires agencies to prepare a regulatory flexibility analysis if the agency determines that the rule will have a ‘‘significant economic impact on a substantial number of small entities.’’ The bill would clarify that “economic impact” includes both direct and indirect effects that are reasonably foreseeable.
• Provide small businesses, through the Small Business Administration (SBA), with new powers to oversee the regulatory process. For instance, the SBA’s Chief Counsel would have the power to review proposed agency actions, suggest alternatives, and issue rules governing federal agency compliance with RFA requirements.
• Repeal the RFA provisions permitting agencies to waive or delay the completion of an initial regulatory flexibility analysis.
• Require all federal agencies to create small business review panels.

Another bill introduced by Sen. Smith, the Regulatory Accountability Act (H.R. 3010), cleared the House on Dec. 2 by a vote of 253-167. This bill would also reform the process by which agencies consider and draft regulations and guidance documents. Among other provisions, this legislation would:

• Require agencies to conduct a cost-benefit analysis for any proposed rule.
• Require agencies to publish an advance notice of proposed rulemaking for any rule that would have an economic impact of $100 million or more.
• Require agencies to take a number of steps before adopting a final rule, including adopting only the least-cost alternative considered during the rulemaking process, unless the agency can justify why a more costly rule is necessary to serve the interests of public health, safety or welfare, and that this explanation is “clearly within the scope of the statutory provision that authorizes the rule and the more costly rule’s additional benefits justify its additional costs.”

Although companion legislation (S. 299, 1938, 1606) to all three of these regulatory bills have been introduced in the Senate, they will not likely advance this term. Even if these regulatory bills are eventually approved by the Senate, President Obama has threatened to veto them.