Thoughts on the Regulatory Accountability Act

The Regulatory Accountability Act incorporates many bipartisan solutions to problems that have plagued the expansion of the federal regulatory system. The ideas expressed in the bill are certainly worthy of continued analysis and discussion.

Read more in the Bloomberg View column by Cass Sustein:


A Regulatory Reform Bill That Everyone Should Like
Look! Bipartisanship is alive, and cranking out good ideas.


The executive branch under President Donald Trump is not issuing a lot of new regulations, but congressional Republicans, joined by some Democrats, have been thinking seriously about regulatory reform. They’ve produced an intelligent, constructive, complex, imperfect bill – the Regulatory Accountability Act of 2017 – that deserves careful attention.

Over the last 30 years, Republican and Democratic presidents have converged on three excellent ideas. The first is that before issuing expensive new regulations, agencies should catalogue their costs and benefits, and should proceed if (and only if) the benefits justify the costs. The second is that before issuing new regulations, agencies should allow ample time for public participation, and should pay close attention to what members of the public have to say. The third is that agencies should scrutinize existing regulations with the help of cost-benefit analysis, and consider simplifying or junking them.

In 2011, President Barack Obama codified these ideas through executive order. 1 But executive orders do not apply to the “independent” agencies, such as the Federal Trade Commission, the Securities and Exchange Commission and the Federal Communications Commission. And if the goal is enduring reform, legislation is the best way to go.

The Regulatory Accountability Act, introduced by Senators Rob Portman of Ohio, a Republican, and Heidi Heitkamp of North Dakota, a Democrat, and passed last month by the Senate Committee on Homeland Security and Governmental Affairs, takes cost-benefit analysis and public participation seriously. Though progressive groups have raised some legitimate (if overheated) concerns, most of its provisions deserve bipartisan support.

For major rules, generally defined as those with an economic effect of $100 million or more, the act would require all agencies to specify and consider the costs and benefits of both the proposal and reasonable alternatives.

For such rules, the act would also require agencies to provide the public with an explanation of how the benefits justify the costs. The act can easily be read to mean that when the benefits do justify the costs, agencies are required to proceed – which is also a good idea.

For all rules, agencies would be required to give the public access to studies, models, scientific literature and other information that they developed or on which they relied. Agencies would be required to provide the public with a comment period of at least 60 days. These excellent requirements don’t go much beyond Obama’s executive order, but insofar as they would apply to the independent agencies, they would be a real advance.

The act would also give citizens a right to petition agencies for the issuance of new rules, and for the amendment or repeal of existing rules. Indeed, it would require agencies to seek suggestions from the public for reconsidering rules “on a continuing basis.”

The act would impose new limits on agency issuance of “guidance documents” – public pronouncements that are not technically binding, but that disclose the agency’s judgments about policy and law, and that often lead people to change their behavior. Guidance documents are often issued without any serious analysis of their impact. By requiring agencies to analyze the costs and benefits of the most burdensome guidance documents, and to show that the benefits justify the costs, the act would reduce that problem.

At the same time, the act is hardly perfect, and it should be rethought in at least four ways.

  1. Cost-benefit analysis is a terrific idea, but quantifying everything can be a real challenge. How easy is it to put a dollar value on the benefits of increasing security at airports, of reducing prison rape, of disclosing the risks of smoking or of making public buildings more accessible to people who use wheelchairs? Recent executive orders have allowed agencies to consider “qualitative” factors and also to give weight to human dignity and to equity. That’s a good idea.
  2. For the most expensive rules, the act requires agencies not only to demonstrate that the benefits justify the costs, but also that they have chosen the most cost-effective alternative, unless they can show (among other things) that the additional benefits justify the additional costs. That’s confusing, not least because cost-effectiveness is never defined. It would be better to say that the agency should have to “maximize net benefits” — which would mean that if several approaches have benefits in excess of costs, agencies should choose the one whose net benefits are highest.
  3. The act would give citizens a mechanism to ask agencies to hold an elaborate, formal, public hearing for the most expensive rules. If agencies decline to hold such a hearing, they would have to offer a detailed explanation. That sounds great, but it might tie agencies up in knots. Sure, written public comments are often indispensable to getting rules right. But formal public hearings can turn into circuses. There isn’t a lot of evidence that their benefits always justify their costs – so this provision should be softened or (better still) deleted.
  4. The act would intensify judicial scrutiny of agency decisions. That’s a mistake. Sure, courts can and do play a valuable role in policing agency decisions for arbitrariness. But increasing the policymaking authority of the federal judiciary isn’t the best idea, especially in light of the highly technical nature of many regulatory questions.

The good news is that Portman and Heitkamp have produced a bill that reflects much of the learning of the last three decades, that emphasizes the importance of science and economics, and that could ultimately lead to higher benefits and lower costs. Its flaws need to be corrected – but it has a lot of promise.