On the economic analysis of regulations at independent regulatory commissions

Administrative Law Review

Volumn 63, Issue SPECIAL, 2011, Pages 213-240

  Fraas, Arthur ^a   Lutter, Randall ^a  

^a NONE

Author keywords

[No Author keywords available]

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EID: 84866261372     PISSN: 00018368     EISSN: None     Source Type: Journal    
DOI: None     Document Type: Conference Paper

References (93)

1. Exec. Order No. 12, 866, 3 C. F. R. 638 (1994)
2. reprinted as amended in 5 U. S. C. § 601 app. at 745-49 (2006) (requiring agencies to engage in cost-benefit analysis and empowering the Office of Information and Regulatory Affairs (OIRA) to ensure the agencies do so).
3. Exec. Order No. 13, 563, 76 Fed. Reg. 3821 (Jan. 18, 2011) (reaffirming Executive Order 12, 866 and instructing agencies to apply its principles with the "best available techniques").
4. Exec. Order 12, 291, 3 C. F. R. 127(1982), revoked by Exec.
5. Order 12, 866, 3 C. F. R. 638.
6. See Exec. Order No. 12, 291, 3 C. F. R. 127 (1982)
7. (including within its purview all executive branch agencies under 44 U. S. C. § 3502 (1) (1982), but excluding the independent regulatory agencies listed in § 3502 (2)), revoked by Exec.
8. Order No. 12, 866, 3 C. F. R. at 649; see also Exec.
9. Order No. 12, 866, 3 C. F. R. at 641 (exempting independent regulatory agencies from the Order's purview).
10. See Paperwork Reduction Act, 44 U. S. C. § 3502 (5) (2006).
11. This practice may change, however, with President Obama's Executive Order 13, 579, which states that regulatory decisions by independent regulatory commissions "should be made only after consideration of their costs and benefits (both quantitative and qualitative) ". Exec. Order No. 13, 579, 76 Fed. Reg. 41, 587 (July 14, 2011).
12. See Dodd-Frank Wall Street Reform and Consumer Protection Act, Pub. L. No. 111-203, 124 Stat. 1376 (2010)
13. (codified throughout 12 U. S. C).
14. See generally CURTIS W. COPELAND, CONG. RESEARCH SERV., R41472, RULEMAKING REQUIREMENTS AND AUTHORITIES IN THE DODD-FRANK WALL STREET REFORM AND CONSUMER PROTECTION ACT (2010) (presenting a comprehensive examination of rulemaking in the Dodd-Frank Act and providing appendixes listing all identified mandatory and discretionary rulemaking provisions).
15. Press Release, U. S. Commodity Futures Trading Comtn'n, CFTC Releases List of Areas of Rulemaking for Over-the-Counter Derivatives (July 21, 2011), http://www.cftc.gov/PressRoom/Pressreleases/pr5856-10.html.
16. Regulatory Flexibility Act, 5 U. S. G. §§ 601-612 (2006).
17. Paperwork Reduction Act, 44 U. S. C. §§ 3501-3521.
18. See Alfred E. Kahn, THE ECONOMICS OF REGULATION: PRINCIPLES AND INSTITUTIONS (1971).
19. See George J. Stigler, The Theory of Economic Regulation, 2 BELL J. OF ECON. & MGMT. SCI. 3 (1971).
20. STEPHEN BREYER, REGULATION AND ITS REFORM (1984).
21. See Kenneth J. Arrow et al., Is There a Role for Benefit-Cost Analysis in Environmental, Health, and Safety Regulation?, 272 SCIENCE 221 (1996).
22. See Robert W. Hahn & Patrick M. Dudley, How Well Does the U. S. Government Do Benefit-Cost Analysis?, 1 REV. OFENVTL. ECON. & POL'Y 192 (2007).
23. See RES. FOR THE FUTURE, REFORMING REGULATORY IMPACT ANALYSIS (Winston Harrington et al. eds., 2009), www.rff.org/RFF/Documents/RFF. RIA. V4.low-res.pdf.
24. See Jerry Ellig & John Morrall, Assessing the Quality of Regulatory Analysis: A New Evaluation and Data Set for Policy Research (Mercatus Ctr., George Mason Univ., Working Paper No. 10-75, 2010), available at http://mercatus.org/sites/default/files/publications/wpl075-assessing-the- quality-of-regulatory-analysis.pdf.
25. See Art Fraas & Randall Lutter, The Challenges of Improving the Economic Analysis of Pending Regulations: The Experience of 0MB Circular A-4, 3 ANN. REV. OF RESOURCE ECON. (forthcoming 2011).
26. Congressional Review Act, 5 U. S. C. §§ 801-808 (2006).
27. Regulatory Flexibility Act, 5 U. S. C. §§ 602-612 (2006).
28. Paperwork Reduction Act, 44 U. S. C. §§ 3501-3521 (2006).
29. See Administrative Procedure Act (APA), 5 U. S. C. §§ 551-559, 701-706 (2006).
30. U. S. C. § 5 802. The Office of Management and Budget's (OMB's) Administrator of OIRA determines whether a rule is classified as major. Id. § 804 (2). The Congressional Review Act (CRA) provides an expedited review process for disapproval of major rules in the Senate. See id. § 801.
31. Id. § 801 (a) (2) (A). For a searchable database for major rules and reports, see Congressional Review Act Resources, GOV'T ACCOUNTABILITY OFFICE, http://www.gao.gov/legal/congressact/congress.html (last visited Sept. 4, 2011).
32. See Regulatory Flexibility Act, 5 U. S. C. §§ 603-605, 607, 609 (2006) (requiring agencies to perform a regulatory flexibility analysis).
33. See Unfunded Mandates Reform Act of 1995 §§ 202-208, 2 U. S. C. §§ 1532-1538 (2006) (requiring, for example, agencies to issue cost analyses and justifications for rules that might result in aggregate state and local government expenditures above 8100 million in any one year).
34. Exec. Order No. 13, 132, 3 C. F. R. 206 (2000)
35. reprinted in 5 U. S. C. § 601 app. at 750-52 (2006) (issued to "further the policies of the Unfunded Mandates Reform Act" and discussing federalism concerns).
36. Note that the independent regulatory agencies are not subject to the provisions of the Unfunded Mandates Reform Act § 421, 2 U. S. C. § 658 (1) (2006)
37. or of Executive Order 13, 132, 3 C. F. R. at 207.
38. See 5 U. S. C. § 611.
39. See Paperwork Reduction Act, 44 U. S. C. § 3603 (2006).
40. See id. § 3504 (c) (5); 5 C. F. R. § 1320. 11 (2010).
41. See, e.g., Investment Company Act § 2, 15 U. S. C. § 80a-2 (c) (2006);
42. Securities Act § 2, 15 U. S. C. § 77b (b);
43. see also Enhanced Disclosure and New Prospectus Delivery Option for Registered Open-End Management Investment Companies, 74 Fed. Reg. 4546, 4582 Qan. 26, 2009)
44. (to be codified at 3 C. F. R. pts. 230, 232, 239, 274).
45. Commodity Exchange Act § 15 (a), 7 U. S. C. § 19 (a) (2006).
46. Registration of Swap Dealers and Major Swap Participants, 75 Fed. Reg. 71, 379, 71, 386-87 (proposed Nov. 23, 2010)
47. (to be codified at 17 C. F. R. pts. 3, 23, 170);
48. see also Amendments to Commodity Pool Operator and Commodity Trading Advisor Regulations Resulting from the Dodd-Frank Act, 76 Fed. Reg. 11, 701, 11, 703 (proposed Mar. 3, 2011) (containing identical language).
49. Office of the Inspector Gen., Commodity Futures Trading Commission, An Investigation Regarding Cost-Benefit Analyses Performed by the Commodity Futures Trading Commission in Connection with Rulemakings Undertaken Pursuant to the Dodd-Frank Act ex.1(2011), http://www.cftc.gov/ucm/groups/public/@aboutcftc/ documents/file/oig-jnvestigation-041511.pdf.
50. Congressional Review Act, 5 U. S. C. § 804 (2) (2006).
51. Commission Guidance Regarding Disclosure Related to Climate Change, 75 Fed. Reg. 6290 (Feb. 8, 2010)
52. (final rule codified at 17 C. F. R. pts. 211, 231, 241).
53. See Paperwork Reduction Act, 44 U. S. C. § 3502 (3) (A) (2006).
54. See Jeffrey A. Smith, Early Effects qfSEC's Climate Disclosure Release, LAW 360, (Dec. 3, 2010, 2:21 PM), available at http://www.cravath.com/files/ Uploads/Documents/Publications/3255245-l.pdf.
55. See Conflict Minerals, 75 Fed. Reg. 80, 948 (proposed Dec. 23, 2010)
56. (to be codified at 17 G. F. R. pts. 229, 249).
57. Publicly Available Consumer Product Safety Information Database, 75 Fed. Reg. 76, 832 (Dec. 9, 2010)
58. (to be codified at 16 C. F. R. pt. 1102).
59. CONSUMER PRODUCT SAFETY COMM'N, INCIDENT REPORT NO. 20110318-45390- 2147481244, http://www.saferproducts.gov/ViewIncident/1171696 (last visited Sept. 10, 2011).
60. See OFFICE OF MGMT. & BUDGET, EXEC. OFFICE OF THE PRES., CIRCULAR A-4 ON REGULATORY ANALYSIS (2003), http://www.whitehouse.gov/sites/default/files/ omb/assets/regulatory-matters-pdf/a-4.pdf. Circular A-4 purports to assist agencies in complying with Executive Order 12, 866, which does not include independent regulatory commissions (IRCs).
61. Some executive branch regulatory agencies, such as the Environmental Protection Agency (EPA) and the Department of Transportation, have issued such guidelines to supplement OMB Circular A-4. In December 2010, EPA issued its revised guidelines for economic analysis of regulations, saying that the agency would use the guidelines to evaluate the economic consequences of its regulations and policies. See generally NAT'L CTR. FOR ENVTL. ECON. OFFICE OF POLICY, ENVTL. PROT. AGENCY, GUIDELINES FOR PREPARING ECONOMIC ANALYSES 1-1 to 1-6(2010), http://yosemite.epa.gov/ee/epa/eerm.nsf/vwAN/EE-0568-50.pdf/ $file/EE-0568-50.pdf.
62. OFFICE OF MGMT. & BUDGET, EXEC. OFFICE OF THE PRESIDENT, DRAFT 2011 REPORT TO CONGRESS ON THE BENEFITS AND COSTS OF FEDERAL REGULATIONS AND UNFUNDED MANDATES ON STATE, LOCAL, AND TRIBAL ENTITIES 30 (2011) (examining the major rules issued by independent agencies), http://www.whitehouse.gov/sites/default/ files/omb/legislative/reports/Draft-2011-CBA-Report-AllSections.pdf. The draft report further notes:
63. see also Truth in Lending, 74 Fed. Reg. 5244, 5390 (Jan. 29, 2009)
64. (codified at 12 C. F. R. pt. 226).
65. The Board of Governors of the Federal Reserve is one of the few agencies with delegated authority under the Paperwork Reduction Act (PRA). See 44 U. S. C. § 3502 (5) (2006). Thus, the Board does not submit its information collection requests to OMB for review and approval.
66. Electronic Fund Transfers, 75 Fed. Reg. 16, 580 (Apr. 1, 2010)
67. (to be codified at 12 C. F. R. pt. 205).
68. Act of July 27, 2010, Pub. L. No. 111-209, 124 Stat. 2254.
69. Electronic Fund Transfers, 75 Fed. Reg. 50, 683 (Aug. 17, 2010)
70. (to be codified at 12 C. F. R. pt. 205).
71. Fair Credit Reporting Risk-Based Pricing Regulations, 75 Fed. Reg. 2724 (Jan. 15, 2010)
72. (to be codified at 12 G. F. R. pt. 222, 16 C. F. R. pt.s. 640, 698). The Fair and Accurate Credit Transactions Act of 2003 amends the Fair Credit Reporting Act.
73. See Fair and Accurate Credit Transactions Act of 2003, Pub. L. No. 108-159, 117 Stat. 1952.
74. See Fair Credit Reporting Risk-Based Pricing Regulations, 75 Fed. Reg. at 2724, 2752. The final rule also provides some alternative approaches for determining what is "materially less favorable" and some limited exceptions to the rule requirements.
75. See Power Reactor Security Requirements, 74 Fed. Reg. 13, 926 (Mar. 27, 2009)
76. (to be codified at 10 C. F. R. pts. 50, 52, 72, 73).
77. See OFFICE OF NUCLEAR SEC. & INCIDENT RESPONSE, OFFICE OF NUCLEAR REACTOR REGULATION, U. S. NUCLEAR REGULATORY COMM'N, REGULATORY ANALYSIS AND BACKFTT ANALYSIS, FINAL RULEMAKING: POWER REACTOR SECURITY REQUIREMENTS (2006), http://pbadupws.nrc.gov/docs/ML0816/ML081680069.pdf.
78. OFFICE OF NUCLEAR REGULATORY RESEARCH, U. S. NUCLEAR REGULATORY COMM'N, NUREG/BR-0058, REGULATORY ANALYSIS GUIDELINES OF THE U. S. NUCLEAR REGULATORY COMMISSION 1(2004), http://www.nrc.gov/reading-rm/doc-ollections/nuregs/ brochures/br0058/br0058r4.pdf.
79. See, e.g., Enhanced Disclosure and New Prospectus Delivery Option for Registered Open-End Management Investment Companies, 74 Fed. Reg. 4546, 4574-84 (Jan. 26, 2009)
80. (codified at 17 C. F. R. pt. 230, 232, 239, 274).
81. see Securities Exchange Act of 1934 §§ 3 (f), 23 (a) (2), 15 U. S. C. §§ 78c (f), 78w (a) (2) (2006);
82. Investment Advisers Act of 1940 § 202 (c), 15 U. S. C. §80b-2 (c) (2006).
83. The SEC rules are (1) Enhanced Disclosure and New Prospectus Delivery Option for Registered Open-End Management Investment Companies, 74 Fed. Reg. 4546;
84. (2) Amendments to Form ADV, 75 Fed. Reg. 49, 234 (Aug. 12, 2010)
85. (to be codified at 17 C. F. R. pts. 275, 279);
86. and (3) Amendments to Regulation SHO, 75 Fed. Reg. 11, 232 (Mar. 10, 2010)
87. (to be codified at 17 C. F. R. pt. 242).
88. Enhanced Disclosure and New Prospectus Delivery Option for Registered Open-End Management Investment Companies, 74 Fed. Reg. 4546.
89. Amendments to Regulation SHO, 75 Fed. Reg. 11, 232.
90. 75 Fed. Reg. 81, 766 Pec. 28, 2010)
91. (to be codified at 16 C. F. R. pts. 1219, 1220, 1500).
92. Data are from various OMB reports to Congress on the benefits and costs of federal regulation. For a compilation of OIRA reports to Congress, see Office of Management and Budget, OIRA Reports to Congress, WHITEHOUSE. GOV, http://www.whitehouse.gov/omb/inforeg-regpol-reports-congress (last visited Sep. 13, 2011). Years denote federal fiscal years (e.g., 2007 spans October 1, 2006, to September 30, 2007).
93. Rules promulgated by the FCC under the Telecommunications Act of 1996 are exempt from the definition of major rule. Congressional Review Act, 5 U. S. C. § 804 (2006).