Recently filed legislation, the Regulatory Accountability Act, seeks to modernize the federal regulatory process.

The bill was introduced late last month by U.S. Senators Rob Portman (R-Ohio) and Heidi Heitkamp (D-N.D.). The current law that provides the basic framework for this process is the Administrative Procedure Act has not been reformed in any significant way in nearly 70 years.

The Regulatory Accountability Act would “reform the federal regulatory process to cut red tape so federal programs operate as intended, and are effective and efficient for those just trying to do their jobs,” the senators said in a statement. The measure, they said, is based on bipartisan executive orders from the past five presidents.

Require effective cost-benefit analysis

The bill would codify the duty to analyze the costs and benefits of new regulations. It would also require agencies to adopt the most cost-effective approach to achieve their objectives. 

To hold agencies accountable, the bill would permit a judicial check on an agency’s cost-benefit analysis of major rules—the 40 to 80 costliest regulations out of the more than 3,000 issued each year.  This review would be deferential, but the courts would ensure that agencies do not rely on irrational assumptions or treat cost-benefit analysis as a mere afterthought.

Improve transparency and accountability in the federal regulatory process

The bill would invite early public participation on major rules and require federal agencies to disclose the information they rely upon, ensuring that there is greater transparency in the rulemaking process.

The legislation also would ensure that agencies use “sound scientific and technical data” to justify new rules, in keeping with calls for agencies to use the “best available science” to craft regulations.

Provide certainty for businesses and consumers

Many of the requirements the regulatory system operates under are contained in executive orders, which can easily be changed by the sitting president.

Codification of the key bipartisan regulatory executive orders that have been in place from President Reagan through President Obama today would provide certainty to federal agencies, as well as businesses and consumers.

Federal agencies would also be required to better consider the concerns of people and businesses on the ground that regulations would directly impact.

Create an automatic review process for major regulations

The bill would require federal agencies to build in an automatic review for the largest, most significant rules at least once every 10 years to ensure that those rules are still meeting regulatory objectives and work as intended, and to consider whether they could be improved to produce better results or be more cost-effective.

Allow federal agency hearings on the most significant regulations

The measure would require federal agencies to follow a more evidence-based approach in crafting rules that will cost more than $1 billion annually.

This legislation would give those impacted by the regulations access to an agency hearing to test the key disputed facts underlying these mega-rules. While it would require additional work on the front end, the result would be lower costs and more stable regulatory outcomes.

Senators Orrin Hatch (R-Utah) and Joe Manchin (D-W.V.) are original cosponsors of the bill.

"Can you imagine if we still used telecommunications systems from World War II? They might get the job done, but they would be slow, potentially faulty, and incredibly inefficient,’ Heitkamp said in a statement. “The same goes for the current 70-year old law which still governs the way federal agencies propose and establish regulations.”

Portman cited the example of a small family owned business in Alliance, Ohio in describing the need for the regulatory procedure overhaul.

“They told me recently that complying with one regulation is now costing this small company almost $1 million bucks that they don’t have,” he said. “The cost of just complying with this one new regulation is about 10 percent of their annual revenues. Otherwise, that roughly $1 million bucks would have been invested in plant, equipment, and people. In other words, they would be able to create more jobs and modernize their facility if not for that compliance cost.”

“Regulation has its place, no question about it. We need regulations,” he added. “We need reasonable laws to protect health and the environment, prevent dishonest business practices, but let’s make sure as we regulate more and more that we have smart regulations, regulations that make sense.”

Portman, like Heitkamp, blamed the lack of any significant review of the Administrative Procedures Act over the past 70 years.

" The APA] is something that you would expect would sort of change with the times, but simply hasn’t. And that doesn’t make sense,” he said. “It doesn’t make any sense not to update our regulations policy because we live in a growing and dynamic economy. Things are changing. And we have changed a lot in the last 70 years. We didn’t have things like microwave ovens or color TV’s. Our economy was 10 percent of the size it is today.”

“We’re still using the same regulatory process that was put in place for a totally different kind of economy,” he added. “In those 70 years, we have also learned a lot about how to regulate in a way that is more cost-effective, more efficient, and we need to put that into practice. So a reform of our regulatory process is long overdue.”