Why The Regulatory Accountability Act Could Destroy The Federal Government's Ability To Act. Really.

This sounds like environmental group hyperbole. Unfortunately, it is not.  

Many Republicans in Congress have co-sponsored the Regulatory Accountability Act, (RAA), H.R. 3010 in the House; S.1606 in the Senate – a bill that could make it impossible, yes, impossible, to implement any legislation.  Do they understand just how much damage they’re doing? It’s hard to tell.

How does the RAA grind the government to a permanent halt?

First, laws are seldom self-implementing. Agencies need to determine the details.  For instance, the Clean Water Act requires EPA to determine the level of treatment for each specific industry group based on what the best available and affordable technology for that industry. The alternatives to having the agency make such decisions would be either to have no standards -- a situation that caused the original water pollution problems of the 19th and first half of the 20th century– or have Congress itself make hundreds of technical determinations – a nightmare.  So the agencies have to make these decisions to make the law work, protecting the public.  The regulators use technical experts and go through an open process with public comments to determine what is actually feasible. 

Today, the regulatory process has become so overly complex that it commonly takes 6-10 years to issue a single standard for environmental protection, worker safety or food safety.  The RAA would add so many hoops and obstacles that virtually no major new standards could be written. 

Let’s look at just one section of this legislative proposal.  As my colleague Daniel Rosenberg has shown, the RAA takes language from the Toxic Substances Control Act (TSCA) that requires use of the “least costly alternative.” This is the exact language that has made TSCA unworkable and ineffective since it’s an impossible standard to meet. As Daniel wrote: 

[In] 1991 a federal court overturned EPA’s ban on existing uses of asbestos (it allowed a ban on any new uses).  The court held that EPA had not met the “least burdensome” test by conducting a thorough cost-benefit analysis of each of the potential regulatory options at the agency’s disposal, and demonstrating that the one it chose was the least costly effective approach.   As a result, products containing asbestos are still used in this country, though it is banned in over 50 countries.  And, in the 20 years since the court’s decision in the asbestos case, EPA has not proposed to regulate another toxic chemical.

The essential problem is that there is always someone ready to claim they are advocating a less costly alternative.  In the TSCA example, EPA rule called for a ban on almost all uses. The Court implied that EPA needed to do analysis of an infinite number of less “burdensome” alternatives from a narrower ban to just a notice to users. To make it worse, the RAA specifically says EPA must perform a cost benefit analysis on every single alternative that anyone submits.  This may sound ok if cost benefit analysis grew on trees.  But they are time consuming and incredibly expensive.  Therefore any lobbyist or K Street lawyer could require an agency to do an almost infinite number of analyses with literally millions of variables.

A Problem with Cost Benefit Analysis – They are Costly and the Bias is to Overstate Costs and Understate Benefits.

Cost benefit analysis can be a useful tool, but history has shown that for various reasons, almost without fail, cost end up being significantly less than Agencies predict and benefits are undercounted as my colleague Wesley Warren has testified.  And  cost benefit analyses are very expensive and take years to produce.

For instance, in its rule to prevent pollution from the residues of coal burning (coal ash) EPA did a cost benefit analysis looking at the economic impact of reducing exposure to one chemical, arsenic. The second most dangerous chemical that the rule would limit exposure to is hexavalent chromium.  EPA looked at all the costs of the rule but only the benefit of getting rid of arsenic. It couldn’t afford to study more than one chemical. EPA was also afraid, based on some court rulings to make an educated guess of what the benefit of removing hexavalent chromium would be so to protect themselves from being arbitrary or caprious, the Agency use a benefit value of zero.  If it were required to do a full cost benefit on each possible alternative that anyone with an email account suggests, the process would collapse.  That is what the RAA requires. To make matters even more difficult, the bill requires data that would be great to know but impossible to predict. The bill requires:

“the potential costs and benefits associated with potential alternative rules . . including direct, indirect, and cumulative costs and benefits and estimated impacts on jobs, economic growth, innovation, and economic competitiveness. . .”

The science of economics can’t make those predictions with any modicum of accuracy; our economic system is infinitely complicated with millions of variables. Passing a law that requires science or economics to do things it can’t do, doesn’t make them possible; it purposely throws a monkey wrench into the system to stop the regulatory system. 

Then to double down on this impossible requirement of an acceptable cost benefit analysis or analyses, the bill allows judges to replace the agency’s judgment with its own. This is an unbelievable grant of power to the courts but that provision doesn’t concern me; I don’t expect any rule to get that far if the RAA is in place. 

Of all the anti-regulatory bills introduced this year, this is the one on which the Administrative Law Section of the American Bar Association weighed in on with scathing criticism.  And a group of distinguished law professors and administrative law practitioners disagreed with the ABA for not being scathing enough!  In the discussion of the bill, the ABA goes on for 40 pages.  The ABA found numerous provisions with the same problems as the ones I’ve discussed here – they use nice sounding language to hide procedural obstacles that would stop the federal government from protecting our citizens from pollution, tainted food, unsafe cars or planes or bankers who take our economic to the abyss.  The many specific problems with the bill are also outlined in a document from the Coalition on Sensible Safeguards, a group on which I serve on the Executive Committee.

If this bill ever became law, industry, at least beyond coal and utilities, would eventually be sorry.  They will have to convince consumers that the product they are selling is safe because it got a seal of approval in France or China or Canada.  Made in America will mean “buy at your own risk.” 

I find it hard to believe that 6 senators and  32 members of the House have co-sponsored this bill. Hopefully, they just don’t understand the bill’s true impact.  The only thing worse would be if they do.