Regulatory Accountability Act Threatens Essential Public Protections
For the past six decades, our nation's system of public protections has developed safeguards that protect us from health and safety threats. Now, however, the misleadingly titled Regulatory Accountability Act could turn this system on its head, allowing more special interest influence and inviting endless rounds of litigation.
The Regulatory Accountability Act (RAA) is an attempt to fundamentally rewrite and expand the Administrative Procedure Act (APA), a sixty-five-year-old statute that can be considered a kind of constitution for administrative agencies and the regulatory process. There are now more than 110 separate procedural requirements in the rulemaking process; the RAA would add more than 60 new procedural and analytical requirements. For the country's most important rules, the RAA would add no fewer than 21 to 39 months to the rulemaking process.
The RAA would grind to a halt the rulemaking process at the core of implementing the nation's public health, workplace safety, and environmental standards. Rules that somehow make it through the RAA's process would tilt against the public interest and in favor of powerful special interests.
While the additional requirements would add tremendous cost and many years of delay to the process, they would do little to actually improve the quality of rules generated. In fact, experts in administrative law have written that they "seriously doubt that agencies would be able to respond to delegations of rulemaking authority or to congressional mandates to issue rules if this bill were to be enacted." The current Office of Information and Regulatory Affairs (OIRA) Administrator, Cass Sunstein, once wrote that "the costs of investigation and inquiry are never zero; to the contrary, they are often very high." The costs of these delays should be counted not just in days and dollars, however: regulations save lives, prevent illness and injury, and stabilize our economy.
Experience at the state level has demonstrated that an RAA-style approach not only wastes time and resources, but actually harms the rulemaking process. After California adopted an RAA-like set of requirements in 1979, the state's rulemaking process became slow, cumbersome, and resource-intensive. State agencies generate boilerplate findings because they do not have the time or resources to perform meaningful analyses. The process is so technical that experienced, specialized lawyers have to supervise every step. As a result, agencies can complete work on fewer regulations – and public health and safety is threatened.
Making the "Least Costly" Rule the Default Choice
The RAA requires that an agency default to the "least costly" rule unless it can demonstrate – out of all the possible alternatives – that additional benefits of a more costly alternative justify the additional costs and offer a public health, safety, environmental, or welfare justification clearly drawn from the authorizing statute. This would override more than two dozen deliberate and long-honored precedents – in fact, most well known health, safety, and environmental statutes – that direct agencies to prioritize health and safety criteria to protect Americans.
The "least costly" default requirement is not a novel idea but is closely analogous to the standard found in the Toxic Substances Control Act (TSCA). This act has actually kept toxic substances from being regulated. For example, even though everyone agrees that asbestos is a serious threat to human health, the U.S. Environmental Protection Agency (EPA) has not been able to issue a rule that meets the TSCA standard and could protect Americans from asbestos. In fact, the CEO of SC Johnson has said, "Your child has a better chance of becoming a major league baseball player than a chemical has of being regulated [under TSCA]."
Super-Mandating Cost-Benefit Analysis
The RAA's requirement that, for any proposed rule, agencies consider all of the "potential costs and benefits associated with potential alternative rules … , including direct, indirect, and cumulative costs and benefits," would apply "[n]otwithstanding any other provision of law." This would rewrite "much, perhaps most, of the safety and health legislation now on the books." The problems with the RAA's emphasis on cost-benefit analysis as the most important deciding factor are only compounded by how the analyses would be performed. The RAA omits language, found in Executive Order 12866 and other executive orders, that reiterates that some of the most important considerations cannot be quantified. Certain types of benefits are difficult to quantify, and certain types of costs are inherently speculative. In addition, empirical research has demonstrated not only that the economic benefits of most rules vastly outweigh their costs, but also that cost-benefit analyses typically overestimate costs and underestimate benefits.
In a telling example of the problems with the RAA's cost-benefit analysis super-mandate, the U.S. Supreme Court has ruled that the Occupational Safety and Health Act prohibits the Occupational Safety and Health Administration (OSHA) from basing health standards on a strict cost-benefit determination, since protection of health should be the primary consideration. The RAA would override this requirement, making it more difficult to protect workers from chronic health hazards like silicosis.
Shifting to Formal Rulemaking Processes
It is no accident that most agencies now use informal (i.e., notice-and-comment) rulemaking. Formal rulemaking is generally considered to be expensive, time-consuming, and an inefficient way to resolve most issues during rulemaking. Both the American Bar Association and the Administrative Conference of the United States have denounced formal rulemaking as inappropriate for virtually all agency decisions.
Overall, formal rulemaking cuts agencies off from everyone except special interests with the resources to invest in achieving a particular outcome. Nevertheless, the RAA would automatically require formal rulemaking processes for rules with projected annual costs of more than $1 billion and would allow any interested party to demand formal rulemaking for major rules (those estimated to have annual costs of $100 million or more). The hearings would encompass not only the issues laid out in the RAA, but also any other issues raised by an interested person (unless the agency can determine within 30 days of the request that a hearing would be unproductive or would unreasonably delay completion of the rulemaking).
One of the most infamous examples of how formal rulemaking procedures fail to achieve any purpose aside from wasting resources and delaying regulations is the Food and Drug Administration's (FDA's) peanut butter rule. In 1961, FDA proposed a rule that peanut butter must contain 90 percent peanuts. The industry petitioned for a formal hearing to argue for the standard to be set at 87 percent. The formal hearing alone added almost five months to the rulemaking process and resulted in a transcript of approximately 8,000 pages primarily discussing whether peanut butter should contain 87 percent or 90 percent peanuts. FDA finalized the standard in July 1968 – yet the battle continued on for another two years while the industry challenged the rule in court. Formal rulemaking allowed the peanut butter industry to drag out the public's demand for accurate labeling of products by nine years.
This formal rulemaking process would also be adversarial in nature and allow for endless challenges to agency evidence and findings. It would make rulemaking more complicated, more litigious, and more costly. It would tilt the process in favor of employer interests that have the ability to expend significant legal resources on the process and disadvantage workers and small businesses that do not have similar resources.
Allowing Judicial Review of All Agency Judgments
The RAA would greatly expand the courts' ability to review agency judgments, empowering parties to challenge virtually every agency decision to proceed with a rule. If an agency decides to proceed with a review or makes a decision that the rule is not "high-impact" or "major," its decision can be reviewed by the courts. However, if the agency decides not to act, no request for judicial review can be made. In other words, the RAA discourages agencies from acting and turns judges into "super-regulators" who are empowered to substitute their own opinions for the findings of agencies.
Under the RAA, EPA's greenhouse gas endangerment finding, which, on Sept. 28, the EPA's Inspector General found "met statutory requirements for rulemaking," could be delayed and challenged in court. The IG noted that EPA should have made public its review of a technical support document used in the endangerment finding, even though EPA determined that the document was not a "highly influential scientific assessment" as defined by OMB's guidelines under the Information Quality Act (IQA). Even without the IG's findings, under the RAA, anyone could have called for an IQA hearing to publicly debate this point. The results of the hearing would be judicially reviewable. Moreover, even if someone did not petition for a hearing, he or she still could challenge EPA's science in court.
The RAA would create a much more stringent process for agencies to issue guidance documents. Before issuing a "major" guidance document, an agency would have to consider certain issues prescribed by the RAA – including, for example, a cost-benefit analysis considering all the direct, indirect, and cumulative costs associated with the guidance – and consult with OIRA. These requirements would likely lead agencies to delay issuing guidance, or in some cases forgo them altogether.
Nearly all guidance documents are welcomed, if not requested, by regulated entities because guidance allows an agency to explain and interpret the rules it is responsible for enforcing. Thus, making it harder for agencies to issue guidance would do little more than create unnecessary regulatory uncertainty. For example, statutory language that states that guidelines are non-binding would seriously undermine the ability of OSHA to enforce against serious hazards.
There may be hundreds of examples that demonstrate the combined impact of all of the RAA's provisions, but one is a pending rule at the U.S. Department of Agriculture (USDA) that would declare six highly-virulent, pathogenic strains of E. coli "adulterants" in beef products. The American Meat Institute opposed the USDA action in 2010. One of its arguments was that the new rule would "significantly impact international trade" with countries whose beef has been denied access to U.S. markets. The rule, according to this argument, would lead to retaliation, blocking the export of U.S. meat. If the RAA were in effect, the meat industry would have many new avenues to challenge and delay not only the rule itself, but also the USDA's scientific findings and its cost-benefit analyses.
The USDA rule has been roundly applauded by food safety advocates for protecting the American public from tainted meat. However, if the Regulatory Accountability Act were enacted, USDA would be forced to divert resources from finalizing and implementing the rule in a timely fashion and shifting them to performing cost-benefit analyses on every alternative that the industry (and its legions of attorneys) could devise and defending scientific findings to non-expert judges. Ultimately, the agency would be required to develop the final rule based on what would be cheapest for producers. More importantly, Americans would continue to be sickened and killed by E. coli infections that could have been prevented.
At its core, our system of standards and safeguards has been developed to protect Americans against very real threats to their health, safety, and well-being. The Regulatory Accountability Act is nothing less than an attempt to roll back our critical public safeguards and promote industry interests instead of protecting American citizens.
Editor's note: This article is based on Impacts of the Regulatory Accountability Act: Overturning 65 Years of Law and Leaving Americans Less Protected, a paper published by the Coalition for Sensible Safeguards on Nov. 16. OMB Watch's Jessica Randall was the lead author of the paper.