Time to Apply Office of Management and Budget Regulatory Review to Independent Agencies

Alden Abbott —  15 October 2015

Last June, in Michigan v. EPA, the Supreme Court commendably recognized cost-benefit analysis as critical to any reasoned evaluation of regulatory proposals by federal agencies.  (For more on the merits and limitations of this holding, see my June 29 blog.)  The White House (Office of Management and Budget) office that evaluates proposed federal regulations, the Office of Information and Regulatory Affairs (OIRA), does not, however, currently assess independent agencies’ regulations (the Heritage Foundation has argued that independent agencies should be subjected to Executive Branch regulatory review).  This is most unfortunate, because the economic impact of independent agencies’ regulations (such as those promulgated by the Federal Communications Commission, the Consumer Financial Protection Bureau, among many other “independent” entities) is enormous.

Recent research lends strong support to the case for OIRA review of independent agency regulations.  As former OIRA Administrator Susan Dudley (currently Director of the George Washington University Regulatory Studies Center) explained in recent testimony before the Senate Homeland Security and Government Affairs Committee, independent agencies have done an extremely poor job in evaluating the economic effects of their regulatory initiatives:

“The Administrative Conference of the United States recommended in 2013 that independent regulatory agencies adopt more transparent and rigorous regulatory analyses practices for major rules.  OIRA observed in its most recent regulatory report to Congress that “the independent agencies still continue to struggle in providing monetized estimates of benefits and costs of regulation.”  According to available government data, more than 40 percent of the rules developed by independent agencies over the last 10 years provided no information on either the costs or the benefits expected from their implementation.”

This poor record provides strong justification for legislative proposals (such as, the Independent Agency Regulatory Analysis Act of 2015 (S. 1607), which explicitly authorizes presidents to require independent regulatory agencies to comply with regulatory analysis requirements.  They also lend further support to congressional proposals (such as the REINS Act, which passed the House in August 2015) that would require congressional approval of new “major” regulations promulgated by federal agencies, including independent agencies.  For a more extensive discussion of the costs of overregulation and needed regulatory reforms, see the Heritage Foundation’s memorandum “Red Tape Rising: Six Years of Escalating Regulation Under Obama.

There is also a substantial constitutional argument that pursuant to the U.S. Constitution’s Executive Vesting Clause (Article II, Section 1, Clause 1) and Take Care Clause (Article II, Section 3), the President could direct that OIRA review independent agencies’ regulatory proposals, but an assessment of that interesting proposition is beyond the scope of this commentary.

Alden Abbott

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I am a Senior Legal Fellow at the Heritage Foundation. I write on antitrust, domestic and international regulatory policy, and law and economics. I am an Adjunct Faculty Member at George Mason Law School.