Legal Experts Expose Weak Regulatory Process for Independent Agencies
WASHINGTON, DC – The Homeland Security and Governmental Affairs Subcommittee on Regulatory Affairs and Federal Management, under the chairmanship of Senator James Lankford (R-OK), today held a hearing to examine how regulatory processes can be improved at independent regulatory agencies, which are structured to be independent from the influence of the President. Examples of independent regulatory agencies include the Federal Reserve Board, Securities Exchange Commission, Federal Deposit Insurance Corporation, Federal Communications Commission, and the Consumer Financial Protection Bureau.
Unlike Executive branch agencies, independent regulatory agencies are not subject to basic analytical requirements. Because of this, independent regulatory agencies do not conduct rigorous cost-benefit analysis or cumulative effect evaluation. For example, a 2015 Office of Management and Budget report found that only 10 of the 16 major rules issued by independent regulatory agencies in 2014 provided only some information on benefits and costs, while all major rules for Executive agencies are required to perform cost-benefit analysis.
“Regulations from independent agencies often have economic effects in the hundreds of millions of dollars, but unlike Executive branch agencies, independent agencies often do not conduct basic cost-benefit analysis. This is a problem,” said Chairman Lankford. “The message from today’s witnesses is loud and clear. Because regulations by independent agencies have the same impact on Americans as rules issued by Executive branch agencies, the rule-making process should be consistent. Independent agencies are not independent governments free from oversight and transparency requirements.”
Today’s hearing focused on how the regulatory process at independent regulatory agencies can be improved through better analysis of proposed rules, compliance with applicable statutory requirements, and increased retrospective review efforts.
Notable Comments from Witnesses:
Adam White, Fellow at the Hoover Institution stated, “Independent agencies play a much more significant role in the federal government today – especially after the Dodd-Frank Act, which not only creates the new Consumer Financial Protection Bureau but also expands significantly the powers of existing independent agencies such as the SEC, the CFTC, and the Federal Reserve Board of Governors.”
“Simply put, independent agencies are no longer the sleepy regulatory ratemakers and adjudicators that they once were. They now play a central role in modern regulatory policymaking, largely indistinguishable from executive agencies in terms of the regulations that they produce. Their exclusion from OIRA’s review authority reflects a regulatory world that no longer exists.”
Dr. Cary Coglianese, Professor and Director of the Penn Program on Regulation at the University of Pennsylvania Law School said, “As regulations ?affect the public and the economy regardless of whether they are issued by executive or independent agencies, it has been anomalous that benefit-cost analysis requirements have applied only to rules issued by executive agencies.”
“The practices that have emerged over the last five years for executive agencies under Executive Orders 13,563 and 13,610 provide a sustained foundation upon which agencies could be encouraged to build during the next administration and beyond…. OIRA is especially well-positioned to identify rules or issues where evaluation findings could help improve prospective regulatory impact analysis, and making suggestions to independent agencies about evaluations to undertake would not intrude on such agencies’ core policy autonomy.”
Robert R. Gasaway, Of Counsel at Kirkland & Ellis, LLP said, “I endorse requiring independent agencies to perform cost benefit analysis, such as those required by [Executive Orders] 12866 and 13563 [instructing regulatory review]. …it seems to me that more information is a good thing and that fears of harm from such a step are easily dispelled by the experience of the agencies already required to perform these analyses.”
CLICK HERE to read the hearing opening statements and view the full hearing video.