Bipartisan Senate Regulatory Accountability Act Adds Another Important Element to Reform Efforts

On April 26, Senators Rob Portman (R-OH) and Heidi Heitkamp (D-ND) introduced a bipartisan bill, the Regulatory Accountability Act of 2017 that would codify several existing Executive Orders ("EO") and impose new requirements on agency rulemaking processes. The bill, co-sponsored by Senators Orin Hatch (R-UT) and Joe Manchin (D-WV), would amend the 1946 Administrative Procedure Act in ways that are in some cases more stringent and in others more moderate than counterpart Regulatory Accountability Act legislation passed by the House in January 2017, H.R. 5. Both the Senate bill and H.R. 5 are complicated proposals that would impose landmark changes on the federal rulemaking process and modify the way final agency action may be legally challenged. 

Principal features of the Senate bill include:

  • Codification of the requirement found in EO 12866 that the benefits of a rule must outweigh its costs. The bill would require assessment of not only direct costs, but in addition, indirect and cumulative costs to the extent practicable when any major ($100+ million/year) or high-impact ($1+ billion/year) rule is issued. If an authorizing statute requires an agency to use a different process (e.g., the Clean Air Act National Ambient Air Quality Standards do not allow consideration of costs), a "savings clause" dictates that the specific statute would override these cost-benefit requirements.  [H.R. 5 would override the specific statutory requirement.]
  • Provision for public comment before proposal of any major or high-impact rules. 
  • A requirement that for major and high-impact rules, the agency must consider a "reasonable" number of alternatives to a proposed rule (with three alternatives presumed to be reasonable) and choose the "most cost-effective" approach unless the agency explains the additional benefits and how they justify greater costs. [H.R. 5 would require consideration of "any reasonable alternatives."] The bill does not define the term "cost-effective," but the Office of Management and Budget's Circular A-4 includes the standard definition used in federal rulemaking and a discussion of methods for comparing cost-effectiveness of alternatives.
  • An obligation for the agency to rely on the "best reasonably available scientific, technical, or economic information" for both proposed and final rules. [H.R. 5 imposes this requirement only on final rules.]
  • An additional step in high-impact rulemakings, requiring a public hearing on "genuinely disputed" factual issues. For major rules, hearings would also be held unless the agency concluded a hearing would not materially advance the process or would unreasonably delay the rulemaking. 
  • A revised appellate review requirement for factual determinations in high-impact rules, specifying a substantial evidence standard, and allowing deference only to the extent of "evidence that a reasonable mind could accept as adequate to support a conclusion based on the record as a whole." [H.R. 5 would eliminate "Chevron" agency deference altogether.]
  • Provision for remand of rules for conforming agency action. [H.R. 5 would allow courts only to vacate successfully challenged rules.]
  • A requirement for retrospective review for all major and high-impact rules, not more than ten years after promulgation.  [H.R. 5 includes a requirement for reports every five years on the costs and benefits of major rules.]

Senate passage will depend on attracting support from six additional Democrats, and that effort will doubtless require tweaks to the bill. Assuming the proposal surmounts that hurdle, negotiations to reconcile the Senate and House versions will necessitate further modifications. Opponents are already mobilizing, arguing that any provisions that make it harder to promulgate regulations protective of health and the environment cannot be justified. And even more issues must be addressed in squaring these legislative proposals with the impacts of regulatory reform Executive Orders the Trump Administration continues to propound (see "EPA Doubles Down on Regulatory Reform Outreach, But is More Necessarily Better?"  for a link to analyses of these EOs and their implementation).  

Regulated entities now find themselves in a whirlwind of possibilities for major change. Interests may differ among affected parties, and informed strategies are necessary to maximize a favorable outcome. Successful approaches depend on a clear, sophisticated assessment of these initiatives and development of a plan for effective engagement. 

Clark Hill attorneys are experienced in working with clients to develop effective legal strategies and advocacy approaches to address the current complex regulatory environment. For more information, please contact Karen C. Bennett at kbennett@clarkhill.com | (202) 572-8676; Jane C. Luxton at jluxton@clarkhill.com | (202) 572-8674; Kenneth von Schaumburg at kvonschaumburg@clarkhill.com | (202) 772-0904; William J. Walsh at wwalsh@clarkhill.com | (202) 772-0924; or another member of Clark Hill's Environment, Energy & Natural Resources practice group.