House-passed regulatory reforms face uphill battle

The Republican-controlled House made good on promises by passing two far-reaching regulatory reform bills long sought by many in industry, though the White House has vowed to veto both bills.

On Friday, the House voted 253-167 for the Regulatory Accountability Act (H.R. 3010), a major reworking of the 1946 Administrative Procedures Act. It would codify requirements on agencies to pursue earlier public outreach, improved scientific data, less closed door regulating, more built-in cost benefit analysis and more formal reviews of evidence of the effects of proposed "high-impact rules" costing more than a $1 billion.

On Thursday, the House voted 263-159 for the Regulatory Flexibility Improvements Act (H.R. 527), which would require agencies to step up efforts to identify costs that new regulations could impose on small businesses, write the regulations in ways that reduce costs and increase input from small businesses in the process.

A Senate version of the accountability act, introduced by Sen. Rob Portman, R-Ohio, has not emerged from the Homeland Security and Governmental Affairs Committee.

"The Regulatory Flexibility Improvements Act responds to the administration's words about the need to protect small businesses from over-regulation," House Judiciary Committee Chairman Lamar Smith, R-Texas, said in a statement. "The bill makes carefully targeted reforms to the current law to ensure that agencies properly analyze how a new regulation will affect small businesses before adopting that regulation."

Rep. Sam Graves, R-Mo., cited several recent studies, including an October Gallup poll, that found complying with government regulations was the most important problem that small business owners faced.

"According to a 2010 Small Business Administration study, small firms bear a regulatory cost that is 36 percent higher than the cost of regulatory compliance for large businesses," said Graves, who chairs the Small Business Committee.

"Economic recovery begins with our small businesses, but this will not happen unless we rein in the mass of regulations coming from Washington," he said.

A White House statement issued before the vote Thursday said the Regulatory Flexibility Improvements Act "would impose unneeded and costly analytical and procedural requirements on agencies that would prevent them from performing their statutory responsibilities. It would also create needless regulatory and legal uncertainty and increase costs for businesses and further impede the implementation of common-sense protections for the American public."

Similar language was used in the White House critique of the Regulatory Accountability Act, charging that it would "require cumbersome 'formal' rule-making for a new category of rules, for which agencies would have to conduct quasi-adjudicatory proceedings. It would impose unnecessary new evidentiary standards as a condition of rule-making," the statement said. "It would subject the regulatory process to unneeded rounds of litigation . . . and undermine the executive branch's ability to adapt regulatory review to changing circumstances.

The Obama administration argued that its "deep commitment to promoting small business" and relieving regulatory burdens is reflected in the president's January executive order.

The Regulatory Flexibility Improvements Act was blasted by Scott Slesinger, legislative director of the Natural Resources Defense Council. He told Government Executive it "has nothing to do with small business but gives large businesses the opportunity to hide behind small business in analyzing the impact." It also would "give the SBA power to hold up regulations, making it a super-regulator," he said.

The Regulatory Accountability Act drew equally harsh criticism from Katherine McFate, president of the nonprofit OMB Watch. She wrote in a blog that it would "mandate new, duplicative agency reviews; overturn established administrative law practices; give corporate interests countless new ways to influence, slow, or simply stop the rule-making process; and allow judges to substitute their own judgments for those of scientific experts and agency staff."

. A vote on a third Republican backed regulatory reform bill, the Regulations from the Executive In Need of Scrutiny Act (H.R. 10), is likely next week.