Regulatory Reform 2016: House to Vote on Key Measures This Week01/06/2016
Bills will increase transparency, reduce burden for small businesses
By Karen Kerrigan
As the New Year begins, small businesses continue to express concern over the economy’s persistent sluggishness. Weak economic performance can be traced to several factors, including the never-ending onslaught of new regulations from Washington, which drive uncertainty and higher costs, and disproportionately harm small businesses. But thankfully Congress is kicking off 2016 by considering important regulatory reform bills. We expect this will be a critical year for ramping up the discussion, and for real action in advancing long-term, structural solutions to a broken regulatory process.
The House of Representatives will start later this week by voting on H.R. 1155, the “Searching for and Cutting Regulations that are Unnecessarily Burdensome Act of 2015” (SCRUB Act), and H.R. 712, the “Sunshine for Regulatory Decrees and Settlements Act of 2015.” These bills aim to reduce regulatory burdens for small businesses and reform the egregiously unfair tactic, elevated to art form by certain pro-regulatory special interests, known as “sue and settle”—a longstanding problem that has only worsened under the Obama Administration. (See SBE Council’s support letters for H.R. 1155 here, and H.R. 712 here.)
These reforms respond to the American public’s disaffection and distrust of the regulatory process. A survey conducted by our Center for Regulatory Solutions (CRS) found that 72% of Americans believe regulations are “created in a closed, secretive process,” with 68% saying that federal rules are created by “out-of-touch” people pushing a political agenda. That is certainly true with “sue and settle.” Here’s how the House Judiciary Committee explained the tactic:
In sue-and-settle litigation, defendant regulatory agencies, such as the U.S. Environmental Protection Agency, typically have failed to meet mandatory statutory deadlines for new regulations or allegedly have unreasonably delayed discretionary action…When pro-regulatory interest groups and regulatory agencies engage in sue-and-settle practices, the end result is rulemaking that implements the priorities of pro-regulatory advocates, limits the discretion of succeeding Administrations, and takes place under schedules that render notice-and-comment rulemaking a formality, depriving regulated entities, the public and OIRA of sufficient opportunities to influence the content of final rules.
CRS has documented specific examples of sue and settle in a report titled “Sue and Settle: Regulation without Representation.” The Obama Administration had already entered into more than 70 sue-and-settle agreements, resulting in at least 100 new regulations, including EPA’s carbon mandates for power plants, commitments to list 250 species under the Endangered Species Act, and new rules for cement manufacturers.
According to the Judiciary Committee, H.R. 712 includes provisions that:
- Require “notices of intent to sue, complaints, consent decrees and settlement agreements, and attorneys’ fee agreements in lawsuits attempting to force regulatory action”;
- Give “to regulated entities, State, local and Tribal co-regulators, and the public more rights to participate in the shaping…sue-and-settle consent decrees and settlement agreements”;
- Provide “courts with more complete records and tools to review proposed sue-and-settle consent decrees and settlement agreements”; and
- Codifies “key restrictions to constrain the authority of the Department of Justice and defendant agencies to agree to sue-and-settle consent decrees and settlements that present separation-of-powers concerns.”
Small businesses also need relief from excessive and unnecessary regulations. Over the last four years, President Obama has issued several executive orders requiring agencies to engage in “retrospective review” of regulations that may be outmoded, ineffective, and no longer necessary, with the goal of taking them off the books. These steps were welcome, but as the Judiciary Committee found, “these executive orders have produced few meaningful results.” The Committee pointed to a 2014 study finding that the net result of these orders has been $13.7 billion in new burdens.
The SCRUB Act would create “an independent regulatory review commission” with authority to identify regulations that “merit repeal to reduce unnecessary regulatory cost burdens.” The Commission would recommend the “highest priority repeals for immediate action,” and, if a joint congressional resolution of approval is enacted, “agencies are required to execute these repeals within 60 days of enactment.” All other regulations recommended by the Commission for repeal “are placed into an inventory of regulations which the agencies must repeal over time through a ‘cut-go’ process as agencies promulgate new regulations.” Under this process, “the costs of each new regulation must be offset by cost-reductions associated with the repeal of regulations in the inventory, until each agency completes the repeals of its own regulations specified in the inventory.”
Both of these bills, if enacted, will improve and provide a needed check to the regulatory process, which means entrepreneurs and small businesses will enjoy a better business environment. In turn, this will strengthen investment, entrepreneurship and job creation, and reawaken a sluggish U.S. economy.
Karen Kerrigan is president & CEO of the Small Business & Entrepreneurship Council (SBE Council). The Center for Regulatory Solutions is a project of SBE Council.