The current regulatory approval process lacks transparency and objectivity. While past executive orders and Office of Management and Budget (OMB) directives require that economically significant regulations undergo a regulatory impact analysis to determine whether the rule is justified, these analyses are fraught with issues. Regulatory agencies often fail to conduct thorough analyses on their own, while OMB’s cost-benefit analyses tend to reflect the administration’s normative judgments.
- Requires federal agencies to conduct a regulatory impact analysis that is “transparent, replicable, and objective” for economically significant rules;
- Requires agencies to consider sunset dates for regulations based on whether the rule could become outdated or excessively burdensome over time; and
- Subjects regulatory impact analyses to judicial review.
The bill codifies and strengthens the requirement for thorough regulatory impact analyses in addition to instituting an enforcement mechanism which previous executive orders lack. Agencies would be required to justify economically significant regulations by pointing out the market failure that the rule would address, and by describing how the rule would address the issue. They must also consider whether existing laws or regulations contributed to the issue.
Regulatory impact analyses would be required to quantify as far as possible the rule’s costs and benefits as well as considering alternatives to the rule, including whether the issue could be addressed by tort law instead of regulation. The approval process must consider the cumulative regulatory burden on the regulated entity and the regulation’s effect on different sizes of businesses. Unless otherwise required by law, agencies can only issue new rules if the benefits exceed the costs by a “reasoned determination.” If an agency does not select the least burdensome rule among the alternatives, it must justify its decision.
Legislation is stronger and longer-lasting than executive orders. By codifying these requirements into law, the bill seeks to prevent regulatory agencies from circumventing or simply ignoring similar directives that were previously given by executive order. To further enforce these requirements, regulatory impact analyses would be subject to judicial review, better ensuring that agencies are thorough and objective in their analysis.
For far too long, federal regulatory agencies have been allowed to issue thousands of burdensome regulations with little oversight and few constraints. The Regulatory Transparency Act would bring some crucial accountability and transparency to the regulatory approval process.
This post is part of an occasional series looking at regulatory reform bills in Congress. Previous posts cover the REINS Act, GOOD Act, Less Is More Resolution, Article I Regulatory Budget Act, ALERT Act, Separation of Powers Restoration Act, Small Business Regulatory Flexibility Improvements Act, and the Regulatory Accountability Act