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112th Congress                                                   Report
                        HOUSE OF REPRESENTATIVES
 1st Session                                                    112-294

======================================================================



 
                 REGULATORY ACCOUNTABILITY ACT OF 2011

                                _______
                                

 November 22, 2011.--Committed to the Committee of the Whole House on 
            the State of the Union and ordered to be printed

                                _______
                                

Mr. Smith of Texas, from the Committee on the Judiciary, submitted the 
                               following

                              R E P O R T

                             together with

                            DISSENTING VIEWS

                        [To accompany H.R. 3010]

      [Including cost estimate of the Congressional Budget Office]

    The Committee on the Judiciary, to whom was referred the 
bill (H.R. 3010) to reform the process by which Federal 
agencies analyze and formulate new regulations and guidance 
documents, having considered the same, reports favorably 
thereon with an amendment and recommends that the bill as 
amended do pass.

                                CONTENTS

                                                                   Page
The Amendment....................................................     2
Purpose and Summary..............................................    10
Background and Need for the Legislation..........................    10
Hearings.........................................................    36
Committee Consideration..........................................    36
Committee Votes..................................................    37
Committee Oversight Findings.....................................    42
New Budget Authority and Tax Expenditures........................    42
Congressional Budget Office Cost Estimate........................    42
Performance Goals and Objectives.................................    47
Advisory on Earmarks.............................................    47
Section-by-Section Analysis......................................    47
Changes in Existing Law Made by the Bill, as Reported............    52
Committee Jurisdiction Letters...................................    67
Dissenting Views.................................................    70

                             The Amendment

    The amendment is as follows:
  Strike all after the enacting clause and insert the 
following:

SECTION 1. SHORT TITLE.

  This Act may be cited as the ``Regulatory Accountability Act of 
2011''.

SEC. 2. DEFINITIONS.

  Section 551 of title 5, United States Code, is amended--
          (1) in paragraph (13), by striking ``and'' at the end;
          (2) in paragraph (14), by striking the period at the end and 
        inserting a semicolon; and
          (3) by adding at the end the following:
          ``(15) `major rule' means any rule that the Administrator of 
        the Office of Information and Regulatory Affairs determines is 
        likely to impose--
                  ``(A) an annual cost on the economy of $100,000,000 
                or more, adjusted annually for inflation;
                  ``(B) a major increase in costs or prices for 
                consumers, individual industries, Federal, State, 
                local, or tribal government agencies, or geographic 
                regions;
                  ``(C) significant adverse effects on competition, 
                employment, investment, productivity, innovation, or on 
                the ability of United States-based enterprises to 
                compete with foreign-based enterprises in domestic and 
                export markets; or
                  ``(D) significant impacts on multiple sectors of the 
                economy;
          ``(16) `high-impact rule' means any rule that the 
        Administrator of the Office of Information and Regulatory 
        Affairs determines is likely to impose an annual cost on the 
        economy of $1,000,000,000 or more, adjusted annually for 
        inflation;
          ``(17) `guidance' means an agency statement of general 
        applicability and future effect, other than a regulatory 
        action, that sets forth a policy on a statutory, regulatory or 
        technical issue or an interpretation of a statutory or 
        regulatory issue;
          ``(18) `major guidance' means guidance that the Administrator 
        of the Office of Information and Regulatory Affairs finds is 
        likely to lead to--
                  ``(A) an annual cost on the economy of $100,000,000 
                or more, adjusted annually for inflation;
                  ``(B) a major increase in costs or prices for 
                consumers, individual industries, Federal, State, local 
                or tribal government agencies, or geographic regions;
                  ``(C) significant adverse effects on competition, 
                employment, investment, productivity, innovation, or on 
                the ability of United States-based enterprises to 
                compete with foreign-based enterprises in domestic and 
                export markets; or
                  ``(D) significant impacts on multiple sectors of the 
                economy;
          ``(19) the `Information Quality Act' means section 515 of 
        Public Law 106-554, the Treasury and General Government 
        Appropriations Act for Fiscal Year 2001, and guidelines issued 
        by the Administrator of the Office of Information and 
        Regulatory Affairs or other agencies pursuant to the Act; and
          ``(20) the `Office of Information and Regulatory Affairs' 
        means the office established under section 3503 of chapter 35 
        of title 44 and any successor to that office.''.

SEC. 3. RULE MAKING.

  (a) Section 553(a) of title 5, United States Code, is amended by 
striking ``(a) This section applies'' and inserting ``(a) 
Applicability.--This section applies''.
  (b) Section 553 of title 5, United States Code, is amended by 
striking subsections (b) through (e) and inserting the following:
  ``(b) Rule Making Considerations.--In a rule making, an agency shall 
make all preliminary and final factual determinations based on evidence 
and consider, in addition to other applicable considerations, the 
following:
          ``(1) The legal authority under which a rule may be proposed, 
        including whether a rule making is required by statute, and if 
        so, whether by a specific date, or whether the agency has 
        discretion to commence a rule making.
          ``(2) Other statutory considerations applicable to whether 
        the agency can or should propose a rule or undertake other 
        agency action.
          ``(3) The specific nature and significance of the problem the 
        agency may address with a rule (including the degree and nature 
        of risks the problem poses and the priority of addressing those 
        risks compared to other matters or activities within the 
        agency's jurisdiction), whether the problem warrants new agency 
        action, and the countervailing risks that may be posed by 
        alternatives for new agency action.
          ``(4) Whether existing rules have created or contributed to 
        the problem the agency may address with a rule and whether 
        those rules could be amended or rescinded to address the 
        problem in whole or part.
          ``(5) Any reasonable alternatives for a new rule or other 
        response identified by the agency or interested persons, 
        including not only responses that mandate particular conduct or 
        manners of compliance, but also--
                  ``(A) the alternative of no Federal response;
                  ``(B) amending or rescinding existing rules;
                  ``(C) potential regional, State, local, or tribal 
                regulatory action or other responses that could be 
                taken in lieu of agency action; and
                  ``(D) potential responses that--
                          ``(i) specify performance objectives rather 
                        than conduct or manners of compliance;
                          ``(ii) establish economic incentives to 
                        encourage desired behavior;
                          ``(iii) provide information upon which 
                        choices can be made by the public; or
                          ``(iv) incorporate other innovative 
                        alternatives rather than agency actions that 
                        specify conduct or manners of compliance.
          ``(6) Notwithstanding any other provision of law--
                  ``(A) the potential costs and benefits associated 
                with potential alternative rules and other responses 
                considered under section 553(b)(5), including direct, 
                indirect, and cumulative costs and benefits and 
                estimated impacts on jobs, economic growth, innovation, 
                and economic competitiveness;
                  ``(B) means to increase the cost-effectiveness of any 
                Federal response; and
                  ``(C) incentives for innovation, consistency, 
                predictability, lower costs of enforcement and 
                compliance (to government entities, regulated entities, 
                and the public), and flexibility.
  ``(c) Advance Notice of Proposed Rule Making for Major Rules, High-
impact Rules, and Rules Involving Novel Legal or Policy Issues.--In the 
case of a rule making for a major rule or high-impact rule or a rule 
that involves a novel legal or policy issue arising out of statutory 
mandates, not later than 90 days before a notice of proposed rule 
making is published in the Federal Register, an agency shall publish 
advance notice of proposed rule making in the Federal Register. In 
publishing such advance notice, the agency shall--
          ``(1) include a written statement identifying, at a minimum--
                  ``(A) the nature and significance of the problem the 
                agency may address with a rule, including data and 
                other evidence and information on which the agency 
                expects to rely for the proposed rule;
                  ``(B) the legal authority under which a rule may be 
                proposed, including whether a rule making is required 
                by statute, and if so, whether by a specific date, or 
                whether the agency has discretion to commence a rule 
                making;
                  ``(C) preliminary information available to the agency 
                concerning the other considerations specified in 
                subsection (b); and
                  ``(D) in the case of a rule that involves a novel 
                legal or policy issue arising out of statutory 
                mandates, the nature of and potential reasons to adopt 
                the novel legal or policy position upon which the 
                agency may base a proposed rule;
          ``(2) solicit written data, views or argument from interested 
        persons concerning the information and issues addressed in the 
        advance notice; and
          ``(3) provide for a period of not fewer than 60 days for 
        interested persons to submit such written data, views, or 
        argument to the agency.
  ``(d) Notices of Proposed Rule Making; Determinations of Other Agency 
Course.--(1) Before it determines to propose a rule, and following 
completion of procedures under subsection (c), if applicable, the 
agency shall consult with the Administrator of the Office of 
Information and Regulatory Affairs. If the agency thereafter determines 
to propose a rule, the agency shall publish a notice of proposed rule 
making, which shall include--
          ``(A) a statement of the time, place, and nature of public 
        rule making proceedings;
          ``(B) reference to the legal authority under which the rule 
        is proposed;
          ``(C) the terms of the proposed rule;
          ``(D) a description of information known to the agency on the 
        subject and issues of the proposed rule, including but not 
        limited to--
                  ``(i) a summary of information known to the agency 
                concerning the considerations specified in subsection 
                (b);
                  ``(ii) a summary of additional information the agency 
                provided to and obtained from interested persons under 
                subsection (c);
                  ``(iii) a summary of any preliminary risk assessment 
                or regulatory impact analysis performed by the agency; 
                and
                  ``(iv) information specifically identifying all data, 
                studies, models, and other evidence or information 
                considered or used by the agency in connection with its 
                determination to propose the rule;
          ``(E)(i) a reasoned preliminary determination of need for the 
        rule based on the information described under subparagraph (D); 
        and
          ``(ii) an additional statement of whether a rule is required 
        by statute;
          ``(F) a reasoned preliminary determination that the benefits 
        of the proposed rule meet the relevant statutory objectives and 
        justify the costs of the proposed rule (including all costs to 
        be considered under subsection (b)(6)), based on the 
        information described under subparagraph (D);
          ``(G) a discussion of--
                  ``(i) the alternatives to the proposed rule, and 
                other alternative responses, considered by the agency 
                under subsection (b);
                  ``(ii) the costs and benefits of those alternatives 
                (including all costs to be considered under subsection 
                (b)(6));
                  ``(iii) whether those alternatives meet relevant 
                statutory objectives; and
                  ``(iv) why the agency did not propose any of those 
                alternatives; and
          ``(H)(i) a statement of whether existing rules have created 
        or contributed to the problem the agency seeks to address with 
        the proposed rule; and
          ``(ii) if so, whether or not the agency proposes to amend or 
        rescind any such rules, and why.
        All information provided to or considered by the agency, and 
        steps to obtain information by the agency, in connection with 
        its determination to propose the rule, including any 
        preliminary risk assessment or regulatory impact analysis 
        prepared by the agency and all other information prepared or 
        described by the agency under subparagraph (D) and, at the 
        discretion of the President or the Administrator of the Office 
        of Information and Regulatory Affairs, information provided by 
        that Office in consultations with the agency, shall be placed 
        in the docket for the proposed rule and made accessible to the 
        public by electronic means and otherwise for the public's use 
        when the notice of proposed rule making is published.
  ``(2)(A) If the agency undertakes procedures under subsection (c) and 
determines thereafter not to propose a rule, the agency shall, 
following consultation with the Office of Information and Regulatory 
Affairs, publish a notice of determination of other agency course. A 
notice of determination of other agency course shall include 
information required by paragraph (1)(D) to be included in a notice of 
proposed rule making and a description of the alternative response the 
agency determined to adopt.
  ``(B) If in its determination of other agency course the agency makes 
a determination to amend or rescind an existing rule, the agency need 
not undertake additional proceedings under subsection (c) before it 
publishes a notice of proposed rule making to amend or rescind the 
existing rule.
All information provided to or considered by the agency, and steps to 
obtain information by the agency, in connection with its determination 
of other agency course, including but not limited to any preliminary 
risk assessment or regulatory impact analysis prepared by the agency 
and all other information that would be required to be prepared or 
described by the agency under paragraph (1)(D) if the agency had 
determined to publish a notice of proposed rule making and, at the 
discretion of the President or the Administrator of the Office of 
Information and Regulatory Affairs, information provided by that Office 
in consultations with the agency, shall be placed in the docket for the 
determination and made accessible to the public by electronic means and 
otherwise for the public's use when the notice of determination is 
published.
  ``(3) After notice of proposed rule making required by this section, 
the agency shall provide interested persons an opportunity to 
participate in the rule making through submission of written data, 
views, or arguments with or without opportunity for oral presentation, 
except that--
          ``(A) if a hearing is required under paragraph (4)(B) or 
        subsection (e), opportunity for oral presentation shall be 
        provided pursuant to that requirement; or
          ``(B) when other than under subsection (e) of this section 
        rules are required by statute or at the discretion of the 
        agency to be made on the record after opportunity for an agency 
        hearing, sections 556 and 557 shall apply, and paragraph (4), 
        the requirements of subsection (e) to receive comment outside 
        of the procedures of sections 556 and 557, and the petition 
        procedures of subsection (e)(6) shall not apply.
The agency shall provide not fewer than 60 days for interested persons 
to submit written data, views, or argument (or 120 days in the case of 
a proposed major or high-impact rule).
  ``(4)(A) Within 30 days of publication of notice of proposed rule 
making, a member of the public may petition for a hearing in accordance 
with section 556 to determine whether any evidence or other information 
upon which the agency bases the proposed rule fails to comply with the 
Information Quality Act.
  ``(B)(i) The agency may, upon review of the petition, determine 
without further process to exclude from the rule making the evidence or 
other information that is the subject of the petition and, if 
appropriate, withdraw the proposed rule. The agency shall promptly 
publish any such determination.
  ``(ii) If the agency does not resolve the petition under the 
procedures of clause (i), it shall grant any such petition that 
presents a prima facie case that evidence or other information upon 
which the agency bases the proposed rule fails to comply with the 
Information Quality Act, hold the requested hearing not later than 30 
days after receipt of the petition, provide a reasonable opportunity 
for cross-examination at the hearing, and decide the issues presented 
by the petition not later than 60 days after receipt of the petition. 
The agency may deny any petition that it determines does not present 
such a prima facie case.
  ``(C) There shall be no judicial review of the agency's disposition 
of issues considered and decided or determined under subparagraph 
(B)(ii) until judicial review of the agency's final action. There shall 
be no judicial review of an agency's determination to withdraw a 
proposed rule under subparagraph (B)(i) on the basis of the petition.
  ``(D) Failure to petition for a hearing under this paragraph shall 
not preclude judicial review of any claim based on the Information 
Quality Act under chapter 7 of this title.
  ``(e) Hearings for High-impact Rules.--Following notice of a proposed 
rule making, receipt of comments on the proposed rule, and any hearing 
held under subsection (d)(4), and before adoption of any high-impact 
rule, the agency shall hold a hearing in accordance with sections 556 
and 557, unless such hearing is waived by all participants in the rule 
making other than the agency. The agency shall provide a reasonable 
opportunity for cross-examination at such hearing. The hearing shall be 
limited to the following issues of fact, except that participants at 
the hearing other than the agency may waive determination of any such 
issue:
          ``(1) Whether the agency's asserted factual predicate for the 
        rule is supported by the evidence.
          ``(2) Whether there is an alternative to the proposed rule 
        that would achieve the relevant statutory objectives at a lower 
        cost (including all costs to be considered under subsection 
        (b)(6)) than the proposed rule.
          ``(3) If there is more than one alternative to the proposed 
        rule that would achieve the relevant statutory objectives at a 
        lower cost than the proposed rule, which alternative would 
        achieve the relevant statutory objectives at the lowest cost.
          ``(4) Whether, if the agency proposes to adopt a rule that is 
        more costly than the least costly alternative that would 
        achieve the relevant statutory objectives (including all costs 
        to be considered under subsection (b)(6)), the additional 
        benefits of the more costly rule exceed the additional costs of 
        the more costly rule.
          ``(5) Whether the evidence and other information upon which 
        the agency bases the proposed rule meets the requirements of 
        the Information Quality Act.
          ``(6) Upon petition by an interested person who has 
        participated in the rule making, other issues relevant to the 
        rule making, unless the agency determines that consideration of 
        the issues at the hearing would not advance consideration of 
        the rule or would, in light of the nature of the need for 
        agency action, unreasonably delay completion of the rule 
        making. An agency shall grant or deny a petition under this 
        paragraph within 30 days of its receipt of the petition.
No later than 45 days before any hearing held under this subsection or 
sections 556 and 557, the agency shall publish in the Federal Register 
a notice specifying the proposed rule to be considered at such hearing, 
the issues to be considered at the hearing, and the time and place for 
such hearing, except that such notice may be issued not later than 15 
days before a hearing held under subsection (d)(4)(B).
  ``(f) Final Rules.--(1) The agency shall adopt a rule only following 
consultation with the Administrator of the Office of Information and 
Regulatory Affairs to facilitate compliance with applicable rule making 
requirements.
  ``(2) The agency shall adopt a rule only on the basis of the best 
reasonably obtainable scientific, technical, economic, and other 
evidence and information concerning the need for, consequences of, and 
alternatives to the rule.
  ``(3)(A) Except as provided in subparagraph (B), the agency shall 
adopt the least costly rule considered during the rule making 
(including all costs to be considered under subsection (b)(6)) that 
meets relevant statutory objectives.
  ``(B) The agency may adopt a rule that is more costly than the least 
costly alternative that would achieve the relevant statutory objectives 
only if the additional benefits of the more costly rule justify its 
additional costs and only if the agency explains its reason for doing 
so based on interests of public health, safety or welfare that are 
clearly within the scope of the statutory provision authorizing the 
rule.
  ``(4) When it adopts a final rule, the agency shall publish a notice 
of final rule making. The notice shall include--
          ``(A) a concise, general statement of the rule's basis and 
        purpose;
          ``(B) the agency's reasoned final determination of need for a 
        rule to address the problem the agency seeks to address with 
        the rule, including a statement of whether a rule is required 
        by statute and a summary of any final risk assessment or 
        regulatory impact analysis prepared by the agency;
          ``(C) the agency's reasoned final determination that the 
        benefits of the rule meet the relevant statutory objectives and 
        justify the rule's costs (including all costs to be considered 
        under subsection (b)(6));
          ``(D) the agency's reasoned final determination not to adopt 
        any of the alternatives to the proposed rule considered by the 
        agency during the rule making, including--
                  ``(i) the agency's reasoned final determination that 
                no alternative considered achieved the relevant 
                statutory objectives with lower costs (including all 
                costs to be considered under subsection (b)(6)) than 
                the rule; or
                  ``(ii) the agency's reasoned determination that its 
                adoption of a more costly rule complies with subsection 
                (f)(3)(B);
          ``(E) the agency's reasoned final determination--
                  ``(i) that existing rules have not created or 
                contributed to the problem the agency seeks to address 
                with the rule; or
                  ``(ii) that existing rules have created or 
                contributed to the problem the agency seeks to address 
                with the rule, and, if so--
                          ``(I) why amendment or rescission of such 
                        existing rules is not alone sufficient to 
                        respond to the problem; and
                          ``(II) whether and how the agency intends to 
                        amend or rescind the existing rule separate 
                        from adoption of the rule;
          ``(F) the agency's reasoned final determination that the 
        evidence and other information upon which the agency bases the 
        rule complies with the Information Quality Act; and
          ``(G)(i) for any major rule or high-impact rule, the agency's 
        plan for review of the rule no less than every ten years to 
        determine whether, based upon evidence, there remains a need 
        for the rule, whether the rule is in fact achieving statutory 
        objectives, whether the rule's benefits continue to justify its 
        costs, and whether the rule can be modified or rescinded to 
        reduce costs while continuing to achieve statutory objectives.
          ``(ii) review of a rule under a plan required by clause (i) 
        of this subparagraph shall take into account the factors and 
        criteria set forth in subsections (b) through (f) of section 
        553 of this title.
All information considered by the agency in connection with its 
adoption of the rule, and, at the discretion of the President or the 
Administrator of the Office of Information and Regulatory Affairs, 
information provided by that Office in consultations with the agency, 
shall be placed in the docket for the rule and made accessible to the 
public for the public's use no later than when the rule is adopted.
  ``(g) Exceptions From Notice and Hearing Requirements.--(1) Except 
when notice or hearing is required by statute, the following do not 
apply to interpretive rules, general statements of policy, or rules of 
agency organization, procedure, or practice:
          ``(A) Subsections (c) through (e).
          ``(B) Paragraphs (1) through (3) of subsection (f).
          ``(C) Subparagraphs (B) through (H) of subsection (f)(4).
  ``(2)(A) When the agency for good cause, based upon evidence, finds 
(and incorporates the finding and a brief statement of reasons therefor 
in the rules issued) that compliance with subsection (c), (d), or (e) 
or requirements to render final determinations under subsection (f) of 
this section before the issuance of an interim rule is impracticable or 
contrary to the public interest, including interests of national 
security, such subsections or requirements to render final 
determinations shall not apply to the agency's adoption of an interim 
rule.
  ``(B) If, following compliance with subparagraph (A) of this 
paragraph, the agency adopts an interim rule, it shall commence 
proceedings that comply fully with subsections (d) through (f) of this 
section immediately upon publication of the interim rule, shall treat 
the publication of the interim rule as publication of a notice of 
proposed rule making and shall not be required to issue supplemental 
notice other than to complete full compliance with subsection (d). No 
less than 270 days from publication of the interim rule (or 18 months 
in the case of a major rule or high-impact rule), the agency shall 
complete rule making under subsections (d) through (f) of this 
subsection and take final action to adopt a final rule or rescind the 
interim rule. If the agency fails to take timely final action, the 
interim rule will cease to have the effect of law.
  ``(C) Other than in cases involving interests of national security, 
upon the agency's publication of an interim rule without compliance 
with subsections (c), (d), or (e) or requirements to render final 
determinations under subsection (f) of this section, an interested 
party may seek immediate judicial review under chapter 7 of this title 
of the agency's determination to adopt such interim rule. The record on 
such review shall include all documents and information considered by 
the agency and any additional information presented by a party that the 
court determines necessary to consider to assure justice.
  ``(3) When the agency for good cause finds (and incorporates the 
finding and a brief statement of reasons therefor in the rules issued) 
that notice and public procedure thereon are unnecessary, including 
because agency rule making is undertaken only to correct a de minimis 
technical or clerical error in a previously issued rule or for other 
noncontroversial purposes, the agency may publish a rule without 
compliance with subsections (c), (d), (e), or (f)(1)-(3) and (f)(4)(B)-
(F). If the agency receives significant adverse comment within 60 days 
after publication of the rule, it shall treat the notice of the rule as 
a notice of proposed rule making and complete rule making in compliance 
with subsections (d) and (f).
  ``(h) Additional Requirements for Hearings.--When a hearing is 
required under subsection (e) or is otherwise required by statute or at 
the agency's discretion before adoption of a rule, the agency shall 
comply with the requirements of sections 556 and 557 in addition to the 
requirements of subsection (f) in adopting the rule and in providing 
notice of the rule's adoption.
  ``(i) Date of Publication of Rule.--The required publication or 
service of a substantive final or interim rule shall be made not less 
than 30 days before the effective date of the rule, except--
          ``(1) a substantive rule which grants or recognizes an 
        exemption or relieves a restriction;
          ``(2) interpretive rules and statements of policy; or
          ``(3) as otherwise provided by the agency for good cause 
        found and published with the rule.
  ``(j) Right to Petition.--Each agency shall give an interested person 
the right to petition for the issuance, amendment, or repeal of a rule.
  ``(k) Rule Making Guidelines.--(1)(A) The Administrator of the Office 
of Information and Regulatory Affairs shall establish guidelines for 
the assessment, including quantitative and qualitative assessment, of 
the costs and benefits of proposed and final rules and other economic 
issues or issues related to risk that are relevant to rule making under 
this title. The rigor of cost-benefit analysis required by such 
guidelines shall be commensurate, in the Administrator's determination, 
with the economic impact of the rule.
  ``(B) To ensure that agencies use the best available techniques to 
quantify and evaluate anticipated present and future benefits, costs, 
other economic issues, and risks as accurately as possible, the 
Administrator of the Office of Information and Regulatory Affairs shall 
regularly update guidelines established under paragraph (1)(A) of this 
subsection.
  ``(2) The Administrator of the Office of Information and Regulatory 
Affairs shall also issue guidelines to promote coordination, 
simplification and harmonization of agency rules during the rule making 
process and otherwise. Such guidelines shall assure that each agency 
avoids regulations that are inconsistent or incompatible with, or 
duplicative of, its other regulations and those of other Federal 
agencies and drafts its regulations to be simple and easy to 
understand, with the goal of minimizing the potential for uncertainty 
and litigation arising from such uncertainty.
  ``(3) To ensure consistency in Federal rule making, the Administrator 
of the Office of Information and Regulatory Affairs shall--
          ``(A) issue guidelines and otherwise take action to ensure 
        that rule makings conducted in whole or in part under 
        procedures specified in provisions of law other than those of 
        subchapter II of this title conform to the fullest extent 
        allowed by law with the procedures set forth in section 553 of 
        this title; and
          ``(B) issue guidelines for the conduct of hearings under 
        subsections 553(d)(4) and 553(e) of this section, including to 
        assure a reasonable opportunity for cross-examination. Each 
        agency shall adopt regulations for the conduct of hearings 
        consistent with the guidelines issued under this subparagraph.
  ``(4) The Administrator of the Office of Information and Regulatory 
Affairs shall issue guidelines pursuant to the Information Quality Act 
to apply in rule making proceedings under sections 553, 556, and 557 of 
this title. In all cases, such guidelines, and the Administrator's 
specific determinations regarding agency compliance with such 
guidelines, shall be entitled to judicial deference.
  ``(l) Inclusion in the Record of Certain Documents and Information.--
The agency shall include in the record for a rule making, and shall 
make available by electronic means and otherwise, all documents and 
information prepared or considered by the agency during the proceeding, 
including, at the discretion of the President or the Administrator of 
the Office of Information and Regulatory Affairs, documents and 
information communicated by that Office during consultation with the 
Agency.
  ``(m) Monetary Policy Exemption.--Nothing in subsection (b)(6), 
subparagraphs (F) and (G) of subsection (d)(1), subsection (e), 
subsection (f)(3), and subparagraphs (C) and (D) of subsection (f)(5) 
shall apply to rule makings that concern monetary policy proposed or 
implemented by the Board of Governors of the Federal Reserve System or 
the Federal Open Market Committee.''.

SEC. 4. AGENCY GUIDANCE; PROCEDURES TO ISSUE MAJOR GUIDANCE; 
                    PRESIDENTIAL AUTHORITY TO ISSUE GUIDELINES FOR 
                    ISSUANCE OF GUIDANCE.

  (a) In General.--Chapter 5 of title 5, United States Code, is amended 
by inserting after section 553 the following new section:

``Sec. 553a. Agency guidance; procedures to issue major guidance; 
                    authority to issue guidelines for issuance of 
                    guidance

  ``(a) Before issuing any major guidance, or guidance that involves a 
novel legal or policy issue arising out of statutory mandates, an 
agency shall--
          ``(1) make and document a reasoned determination that--
                  ``(A) assures that such guidance is understandable 
                and complies with relevant statutory objectives and 
                regulatory provisions (including any statutory 
                deadlines for agency action);
                  ``(B) summarizes the evidence and data on which the 
                agency will base the guidance;
                  ``(C) identifies the costs and benefits (including 
                all costs to be considered during a rule making under 
                section 553(b) of this title) of conduct conforming to 
                such guidance and assures that such benefits justify 
                such costs; and
                  ``(D) describes alternatives to such guidance and 
                their costs and benefits (including all costs to be 
                considered during a rule making under section 553(b) of 
                this title) and explains why the agency rejected those 
                alternatives; and
          ``(2) confer with the Administrator of the Office of 
        Information and Regulatory Affairs on the issuance of such 
        guidance to assure that the guidance is reasonable, 
        understandable, consistent with relevant statutory and 
        regulatory provisions and requirements or practices of other 
        agencies, does not produce costs that are unjustified by the 
        guidance's benefits, and is otherwise appropriate.
Upon issuing major guidance, or guidance that involves a novel legal or 
policy issue arising out of statutory mandates, the agency shall 
publish the documentation required by subparagraph (1) by electronic 
means and otherwise.
  ``(b) Agency guidance--
          ``(1) is not legally binding and may not be relied upon by an 
        agency as legal grounds for agency action;
          ``(2) shall state in a plain, prominent and permanent manner 
        that it is not legally binding; and
          ``(3) shall, at the time it is issued or upon request, be 
        made available by the issuing agency to interested persons and 
        the public by electronic means and otherwise.
Agencies shall avoid the issuance of guidance that is inconsistent or 
incompatible with, or duplicative of, the agency's governing statutes 
or regulations, with the goal of minimizing the potential for 
uncertainty and litigation arising from such uncertainty.
  ``(c) The Administrator of the Office of Information and Regulatory 
Affairs shall have authority to issue guidelines for use by the 
agencies in the issuance of major guidance and other guidance. Such 
guidelines shall assure that each agency avoids issuing guidance 
documents that are inconsistent or incompatible with, or duplicative 
of, the law, its other regulations, or the regulations of other Federal 
agencies and drafts its guidance documents to be simple and easy to 
understand, with the goal of minimizing the potential for uncertainty 
and litigation arising from such uncertainty.''.
  (b) Clerical Amendment.--The table of sections for chapter 5 of title 
5, United States Code, is amended by inserting after the item relating 
to section 553 the following new item:

``553a. Agency guidance; procedures to issue major guidance; authority 
to issue guidelines for issuance of guidance.''''.

SEC. 5. HEARINGS; PRESIDING EMPLOYEES; POWERS AND DUTIES; BURDEN OF 
                    PROOF; EVIDENCE; RECORD AS BASIS OF DECISION.

  Section 556 of title 5, United States Code, is amended by striking 
subsection (e) and inserting the following:
  ``(e)(1) The transcript of testimony and exhibits, together with all 
papers and requests filed in the proceeding, constitutes the exclusive 
record for decision in accordance with section 557 and shall be made 
available to the parties and the public by electronic means and, upon 
payment of lawfully prescribed costs, otherwise. When an agency 
decision rests on official notice of a material fact not appearing in 
the evidence in the record, a party is entitled, on timely request, to 
an opportunity to show the contrary.
  ``(2) Notwithstanding paragraph (1) of this subsection, in a 
proceeding held under this section pursuant to section 553(d)(4) or 
553(e), the record for decision shall also include any information that 
is part of the record of proceedings under section 553.
  ``(f) When an agency conducts rule making under this section and 
section 557 directly after concluding proceedings upon an advance 
notice of proposed rule making under section 553(c), the matters to be 
considered and determinations to be made shall include, among other 
relevant matters and determinations, the matters and determinations 
described in subsections (b) and (f) of section 553.
  ``(g) Upon receipt of a petition for a hearing under this section, 
the agency shall grant the petition in the case of any major rule, 
unless the agency reasonably determines that a hearing would not 
advance consideration of the rule or would, in light of the need for 
agency action, unreasonably delay completion of the rule making. The 
agency shall publish its decision to grant or deny the petition when it 
renders the decision, including an explanation of the grounds for 
decision. The information contained in the petition shall in all cases 
be included in the administrative record. This subsection shall not 
apply to rule makings that concern monetary policy proposed or 
implemented by the Board of Governors of the Federal Reserve System or 
the Federal Open Market Committee.''.

SEC. 6. ACTIONS REVIEWABLE.

  Section 704 of title 5, United States Code, is amended--
          (1) by striking ``Agency action made'' and inserting ``(a) 
        Agency action made''; and
          (2) by adding at the end the following: ``Denial by an agency 
        of a correction request or, where administrative appeal is 
        provided for, denial of an appeal, under an administrative 
        mechanism described in subsection (b)(2)(B) of the Information 
        Quality Act, or the failure of an agency within 90 days to 
        grant or deny such request or appeal, shall be final action for 
        purposes of this section.
  ``(b) Other than in cases involving interests of national security, 
notwithstanding subsection (a) of this section, upon the agency's 
publication of an interim rule without compliance with section 553(c), 
(d), or (e) or requirements to render final determinations under 
subsection (f) of section 553, an interested party may seek immediate 
judicial review under this chapter of the agency's determination to 
adopt such rule on an interim basis. Review shall be limited to whether 
the agency abused its discretion to adopt the interim rule without 
compliance with section 553(c), (d), or (e) or without rendering final 
determinations under subsection (f) of section 553.''.

SEC. 7. SCOPE OF REVIEW.

  Section 706 of title 5, United States Code is amended--
          (1) by striking ``To the extent necessary'' and inserting 
        ``(a) To the extent necessary'';
          (2) in paragraph (2)(A) of subsection (a) (as designated by 
        paragraph (1) of this section), by inserting after ``in 
        accordance with law'' the following: ``(including the 
        Information Quality Act)''; and
          (3) by adding at the end the following:
  ``(b) The court shall not defer to the agency's--
          ``(1) interpretation of an agency rule if the agency did not 
        comply with the procedures of section 553 or sections 556-557 
        of chapter 5 of this title to issue the interpretation;
          ``(2) determination of the costs and benefits or other 
        economic or risk assessment of the action, if the agency failed 
        to conform to guidelines on such determinations and assessments 
        established by the Administrator of the Office of Information 
        and Regulatory Affairs under section 553(k);
          ``(3) determinations made in the adoption of an interim rule; 
        or
          ``(4) guidance.
  ``(c) The court shall review agency denials of petitions under 
section 553(e)(6) or any other petition for a hearing under sections 
556 and 557 for abuse of agency discretion.''.

SEC. 8. ADDED DEFINITION.

  Section 701(b) of title 5, United States Code, is amended--
          (1) in paragraph (1), by striking ``and'' at the end;
          (2) in paragraph (2), by striking the period at the end, and 
        inserting ``; and''; and
          (3) by adding at the end the following:
          ``(3) `substantial evidence' means such relevant evidence as 
        a reasonable mind might accept as adequate to support a 
        conclusion in light of the record considered as a whole, taking 
        into account whatever in the record fairly detracts from the 
        weight of the evidence relied upon by the agency to support its 
        decision.''.

SEC. 9. EFFECTIVE DATE.

  The amendments made by this Act to--
          (1) sections 553, 556, and 704 of title 5, United States 
        Code;
          (2) subsection (b) of section 701 of such title;
          (3) paragraphs (2) and (3) of section 706(b) of such title; 
        and
          (4) subsection (c) of section 706 of such title;
shall not apply to any rule makings pending or completed on the date of 
enactment of this Act.

                          Purpose and Summary

    The Regulatory Accountability Act of 2011 (``the Bill'' or 
``the Act'') will promote job creation and economic growth by 
requiring regulatory agencies to lower the costs of regulation 
while meeting statutory objectives; to improve agencies' 
decision-making processes and enhance regulatory transparency 
and accountability; and to strengthen judicial review of agency 
action.

                Background and Need for the Legislation

                            I. INTRODUCTION

    On September 22, 2011, Representative Lamar Smith (R-TX) 
introduced H.R. 3010, with Representative Howard Coble (R-NC) 
and Representative Collin Peterson (D-MN) as original co-
sponsors. The Act currently has 29 additional co-sponsors.
    Government regulation is a fact of American life in the 
21st Century. It is also true that wasteful, excessive and 
unnecessary regulations undermine job creation and economic 
growth. A recent Small Business Administration study found that 
Federal regulations impose an annual cost on the American 
economy of $1.75 trillion dollars, which is equal to about 14% 
of the national income\1\ and ``nearly twice as much as all 
individual income taxes collected last year.''\2\ ``Had every 
U.S. household paid an equal share of the Federal regulatory 
burden, each would have owed $15,586 in 2008.''\3\ Another 
study found that ``[e]ach million-dollar increase in the 
regulatory budget costs the economy 420 private sector 
jobs.''\4\ This burden, coupled with uncertainty over what 
additional Federal regulations may be imposed in the near term, 
have been cited as key factors holding back economic recovery 
and the creation of new jobs. For example, President Clinton 
recently recognized that over-regulation is inimical to job 
creation, by proposing that the Federal Government grant states 
waivers from environmental regulations for construction 
projects.\5\
---------------------------------------------------------------------------
    \1\See Nicole V. Crain & W. Mark Crain, The Impact of Regulatory 
Costs on Small Firms, Small Business Administration, 6 & 48 (Sept. 
2010), available at http://www.sba.gov/sites/default/files/rs371tot.pdf 
(last accessed Nov. 18, 2011).
    \2\James Gattuso, Diane Katz & Stephen Keen, Red Tape Rising: 
Obama's Torrent of New Regulation, Heritage Foundation (Oct. 26, 2010), 
available at http://www.heritage.org/research/reports/2010/10/red-tape-
rising-obamas-torrent-of-new-regulation (last accessed Nov. 18, 2011).
    \3\Crain & Crain, note 1 supra, at iv.
    \4\T. Randolph Beard et al., Regulatory Expenditures, Economic 
Growth and Jobs: An Empirical Study, Phoenix Center for Advanced Legal 
& Economic Policy Studies, 5 (Apr. 2011), available at http://
www.phoenix-center.org/PolicyBulletin/PCPB28Final.pdf (last accessed 
Nov. 18, 2011).
    \5\Bill Clinton, It's Still the Economy, Stupid, Newsweek, June 19, 
2011, available at http://www.thedailybeast.com/newsweek/2011/06/19/it-
s-still-the-economy-stupid.html (last accessed Nov. 18, 2011).
---------------------------------------------------------------------------
    The future threat of excessive Federal regulations--such as 
those intended to implement the Patient Protection and 
Affordable Care Act\6\ and the Dodd-Frank Wall Street Reform 
and Consumer Protection Act\7\--have created immense burdens 
and uncertainty for the economy--chilling job creation, 
investment and economic growth and suppressing America's 
economic freedom and standing among the world's economies.\8\ 
Nor does the regulatory deluge show any sign of slackening:
---------------------------------------------------------------------------
    \6\Pub. L. No. 111-148, 124 Stat. 119 (2010). ``The health care law 
provides for the creation of nearly 160 boards, bureaus, bureaucracies, 
and commissions. . . . Overall, the Federal Government is expected to 
issue roughly 10,000 pages of new regulations to govern the 
implementation of the new law.'' ObamaCare: A Budget-Busting, Job-
Killing Health Care Law, Jan. 6, 2011, at 7-8, available at http://
www.speaker.gov/UploadedFiles/ObamaCareReport .pdf (last accessed Nov. 
18, 2011).
    \7\Pub.L. No. 111-203, 124 Stat. 1376 (2010). ``[T]he Dodd-Frank 
Act is the most farreaching financial regulatory undertaking since the 
1930's, authorizing or requiring agencies to enact 447 new rules and 
complete 63 reports and 59 studies.'' Michael J. Ryan, Jr., U.S. 
Capital Markets Competitiveness: The Unfinished Agenda, Summer 2011, at 
3, available at https://www.uschamber.com/sites/default/files/reports/
1107_UnfinishedAgenda_WEB.pdf (last accessed Nov. 18, 2011).
    \8\See, e.g., Editorial, The Uncertainty Principle, Wall St. J., 
July 14, 2010, available at http://online.wsj.com/article/
SB10001424052748704288204575363162664835780.html?KEYWORDS=
rulemakings (last accessed Nov. 18, 2011); Jobs for America: an Open 
Letter to the President of the United States, the United States 
Congress, and the American People, Chamber of Commerce, (July 14, 
2010), available at http://www.uschamber.com/sites/default/files/hill-
letters/100713_jobs_openletter.pdf (last accessed Nov. 18, 2011) 
(stating, e.g., that, substantially due to regulatory uncertainty, 
American corporations are sitting on well over $1 trillion that they 
could otherwise invest); Terry Miller & Kim R. Holmes, ``Mostly 
Free''--The Startling Decline of America's Economic Freedom and What to 
Do About It, Heritage Foundation (July 14, 2010), available at http://
thf_media.s3.amazonaws.com/2010/pdf/sr0082.pdf (last accessed Nov. 18, 
2011); Terry Miller, The U.S. Loses Ground on Economic Freedom, Wall 
St. J., Jan. 12, 2011, available at http://online.wsj.com/article/
SB1000142405274870377970457607419321
4999486.html?utm_source=Newsletter&utm;_medium=Email&utm;_campaign=Heritag
e%2B
Hotsheet (last accessed Nov. 18, 2011); Heritage Foundation & Wall 
Street Journal, 2011 Index of Economic Freedom: Executive Highlights 
(Jan. 2011) at 6 (placing America as ninth in economic freedom among 
countries surveyed and recording a further decline in U.S. economic 
freedom).

        President Obama's December 2010 Unified Agenda of 
        Regulatory and Deregulatory Activities does not presage 
        a slow-down in activity. The Agenda lists 4,225 
        regulatory actions under development by Federal 
        regulatory agencies. That is 182 more entries than the 
        previous year, representing a 5-percent increase in 
        activity. The regulatory road ahead looks even more 
        ambitious when one focuses on the largest regulations. 
        The Agenda reveals a twenty percent increase in 
        economically significant regulations, or forty more 
        regulations with impacts of over $100 million under 
        development now than at this time last year. Of the 224 
        economically significant rules listed in the 2010 
        Agenda, forty-eight appear there for the first time. 
        There are 100 more economically significant regulations 
        listed in last December's Agenda than there were in 
        1995 (the first year for which electronic data are 
        available).\9\
---------------------------------------------------------------------------
    \9\Susan E. Dudley, Prospects for Regulatory Reform in 2011, 11 
Engage 7, 9-10 (2011).

``[T]hrough the end of March 2011, the Obama Administration 
added close to $40 billion in new costs to the economy, more 
than twice the Bush rate.''\10\
---------------------------------------------------------------------------
    \10\James L. Gattuso, Obama's Red Tape: Tsunami or Ripple?, 
Heritage Foundation (Nov. 8, 2011), available at http://
www.heritage.org/Research/Reports/2011/11/Obamas-Regulations-Red-Tape-
Tsunami-or-Ripple (last accessed Nov. 18, 2011).
---------------------------------------------------------------------------
    The regulatory burden currently weighing down the American 
economy is largely caused by inadequate administrative law. The 
Administrative Procedure Act (``APA''), known as the 
``constitution'' of agency rulemaking, imposes only a few 
light-handed constraints on most agency rulemaking proceedings. 
For example, the APA does not require an agency to consider the 
costs or benefits of a proposed regulation.
    The APA has not been updated in the 65 years since it was 
enacted on June 11, 1946. The American economy, however, has 
changed a great deal since the end of the Second World War. 
``Regulation has grown in scope and impact far beyond anything 
the framers of the APA (or for that matter the New Deal) could 
have anticipated. The APA has not kept up, and special-purpose 
administrative agencies have acquired an unsettling degree of 
power over our economy and society.''\11\
---------------------------------------------------------------------------
    \11\H.R. 3010, the ``Regulatory Accountability Act of 2011'': 
Hearing Before the House Committee on the Judiciary, 112th Cong. (Oct. 
25, 2011) (records on file with the Committee) (Testimony of 
Christopher DeMuth).
---------------------------------------------------------------------------
    In the 109th Congress, the Subcommittee on Commercial and 
Administrative Law documented a host of potential rulemaking 
reforms to modernize the APA.\12\ Continuing this effort, this 
year the Subcommittee on Courts, Commercial and Administrative 
Law held a series of four hearings to discuss how Congress 
could improve the APA to create jobs and promote economic 
growth by improving agencies' decision-making processes and 
enhancing regulatory transparency and accountability.
---------------------------------------------------------------------------
    \12\H. Comm. on the Judiciary, 109th Cong., Interim Rep. on the 
Administrative Law, Process and Procedure Project for the 21st Century 
(Comm. Print 2010).
---------------------------------------------------------------------------
    On February 28, 2011, the Subcommittee held a hearing 
entitled, ``The APA at 65: Is Reform Needed to Create Jobs, 
Promote Economic Growth and Reduce Costs?''\13\ Witnesses at 
this hearing were Susan E. Dudley, director of George 
Washington University's Regulatory Studies Center and former 
Administrator of the Office of Information and Regulatory 
Affairs (``OIRA'') (2007-09); Jeffrey A. Rosen, Esq., Kirkland 
& Ellis LLP and former general counsel to the Office of 
Management and Budget (``OMB'') (2006-09); and Professor Peter 
L. Strauss, Betts Professor of Law, Columbia University Law 
School.
---------------------------------------------------------------------------
    \13\APA at 65: Is Reform Needed to Create Jobs, Promote Economic 
Growth, and Reduce Costs?: Hearing Before the House Committee on the 
Judiciary, Subcommittee on Courts, Commercial and Administrative Law, 
112th Cong. (Feb. 28, 2011).
---------------------------------------------------------------------------
    On March 29, 2011, the Subcommittee held a hearing 
entitled, ``Raising the Agencies' Grades: Protecting the 
Economy, Assuring Regulatory Quality and Improving Assessments 
of Regulatory Need.''\14\ At this hearing the Subcommittee 
heard testimony from Jerry Ellig, Ph.D., director of the 
Regulatory Report Card project at George Mason University's 
Mercatus Center, and former deputy director and acting director 
of the Office of Policy Planning at the Federal Trade 
Commission; Richard A. Williams, Ph.D., Director of Policy 
Research at the Mercatus Center and former OMB and FDA 
regulatory development and review official; and Professor 
Robert L. Glicksman, J.B. and Maurice C. Shapiro Professor of 
Environmental Law at The George Washington University Law 
School.
---------------------------------------------------------------------------
    \14\Raising the Agencies' Grades--Protecting the Economy, Assuring 
Regulatory Quality and Improving Assessments of Regulatory Need: 
Hearing Before the House Committee on the Judiciary, Subcommittee on 
Courts, Commercial and Administrative Law, 112th Cong. (Mar. 29, 2011).
---------------------------------------------------------------------------
    On May 4, 2011, the Subcommittee held a hearing entitled, 
``Cost-Justifying Regulations: Protecting Jobs and the Economy 
by Presidential and Judicial Review of Costs and 
Benefits.''\15\ Witnesses at this hearing were John D. Graham, 
Dean of Indiana University's School of Public and Environmental 
Affairs and former OIRA Administrator (2001-06); Jeffrey R. 
Holmstead, Esq., Bracewell & Giuliani LLP and former 
Environmental Protection Agency Assistant Administrator for Air 
and Radiation (2001-05); Harold Furchtgott-Roth, Ph.D., former 
Commissioner, Federal Communications Commission (1997-2001); 
and Sally Katzen, Visiting Professor, New York University 
School of Law, Senior Advisor at the Podesta Group, and former 
OIRA Administrator (1993-98).
---------------------------------------------------------------------------
    \15\Cost-Justifying Regulations: Protecting Jobs and the Economy by 
Presidential and Judicial Review of Costs and Benefits: Hearing Before 
the House Committee on the Judiciary, Subcommittee on Courts, 
Commercial and Administrative Law, 112th Cong. (May 4, 2011).
---------------------------------------------------------------------------
    On May 31, 2011, the Subcommittee held a hearing entitled, 
``Formal Rulemaking and Judicial Review: Protecting Jobs and 
the Economy with Greater Regulatory Transparency and 
Accountability.''\16\ The Subcommittee heard testimony from 
Noel J. Francisco, Esq., former White House Associate Counsel 
(2001-03), Deputy Assistant Attorney General for the Department 
of Justice's Office of Legal Counsel (2003-05), and current 
member, Government Regulation Practice Group, Jones Day LLP; 
Edward W. Warren, Esq., Environmental Practice Group, Kirkland 
& Ellis LLP; and Professor Matthew Stephenson, Harvard Law 
School.
---------------------------------------------------------------------------
    \16\Formal Rulemaking and Judicial Review: Protecting Jobs and the 
Economy with Greater Regulatory Transparency and Accountability: 
Hearing Before the House Committee on the Judiciary, Subcommittee on 
Courts, Commercial and Administrative Law, 112th Cong. (May 31, 2011).
---------------------------------------------------------------------------
    Finally, on October 25, 2011, the Full Committee held a 
legislative hearing on the Bill.\17\ The Committee heard 
testimony from the Honorable C. Boyden Gray, Esq., Boyden Gray 
& Associates, former Counsel to the President (1989-93) and 
Ambassador to the European Union (2006-07); Arnold Baker, Chair 
of the National Black Chamber of Commerce and CEO of Baker 
Ready-Mix, a concrete supply company in New Orleans; the 
Honorable Christopher C. DeMuth, former OIRA Administrator 
(1981-84) and President of the American Enterprise Institute 
(1986-2008); and Professor Sidney Shapiro, University 
Distinguished Chair in Law, Wake Forest University School of 
Law.
---------------------------------------------------------------------------
    \17\H.R. 3010, note 11 supra.
---------------------------------------------------------------------------

 II. THE ADMINISTRATIVE PROCEDURE ACT: ORIGINAL INTENT AND HISTORY OF 
                                PRACTICE

A. LEarly History of Rulemaking under the APA
    As originally conceived and practiced under the APA, the 
rulemaking process would begin when an agency proposed a rule 
under Section 553, 5 U.S.C., drawing upon any available sources 
of information or analysis, including expertise from business 
or consumer representatives, academicians, or from the agency 
itself. The agency would then publish a Notice of Proposed 
Rulemaking (NPRM) in the Federal Register and open the matter 
to written comment for an unspecified period. During that time, 
any interested person could introduce into the record ``data, 
views, or arguments'' regarding the proposed rule.\18\ The 
agency had discretion to hold oral hearings or to take 
additional procedural steps to develop the rule.
---------------------------------------------------------------------------
    \18\5 U.S.C. Sec. 553(c). The APA does not specify the length of 
the comment period. Presidential executive orders since the Carter 
Administration have suggested a period of not less than 60 days ``in 
order to afford the public a meaningful opportunity to comment on any 
proposed regulation.'' See, e.g., Exec. Order No. 12866, 58 Fed. Reg. 
51,735, Sec. 6(a)(1) (Oct. 4, 1993).
---------------------------------------------------------------------------
    After considering the proposed rule in light of the 
comments, the agency could withdraw the proposal, publish a 
revision, or promulgate a final rule accompanied by a concise 
statement of basis and purpose explaining its action. In this 
original APA model, the final statement also could draw upon 
sources of information or arguments not previously raised or 
revealed.\19\
---------------------------------------------------------------------------
    \19\See, e.g., Pac. Coast European Conf. v. United States, 350 F.2d 
197, 205 (9th Cir. 1965).
---------------------------------------------------------------------------
    On review, a court would uphold the agency action if it 
found that the rule was within the scope of the agency's 
authority and was not arbitrary and capricious. In other words, 
the court would uphold the rule if the agency could construct a 
plausible supporting hypothesis connected to the agency record. 
Agencies had no duty to consider all possible alternatives. 
They were expected to demonstrate that their policies were 
``rational'' in a minimal sense.\20\ This standard of review 
gave agencies immense discretion and was mitigated only by the 
countervailing limitation that the supporting rationale had to 
be provided by the agency itself. A reviewing court would 
neither invent a hypothesis upon which the agency could have 
acted\21\ nor accept inventions counsel might develop in the 
context of an appeal.\22\
---------------------------------------------------------------------------
    \20\See, e.g., NLRB v. Seven-Up Bottling Co., 344 U.S. 344, 346-47 
(1953) (order will be upheld unless it is attempting to achieve ends 
other than those set forth in statute); SEC v. Chenery Corp., 332 U.S. 
194, 207 (1947) (order will be overturned only if it lacks ``any 
rational and statutory foundation'').
    \21\See, e.g., SEC v. Chenery Corp., 318 U.S. 80, 93-94 (1943).
    \22\See, e.g., Burlington Truck Lines, Inc. v. United States, 371 
U.S. 156, 168-69 (1962).
---------------------------------------------------------------------------
    During this era, no one thought the comments required by 
Section 553 were intended to constitute a complete record for 
decision either by the agency or by the reviewing court.\23\ 
Under the original APA model, the agency acted primarily on the 
basis of its expertise, using whatever internal processes and 
information it desired.\24\ Requiring comment simply gave the 
agency the opportunity to hear views of knowledgeable outsiders 
before exercising its own independent judgment; comments were 
regarded solely as ``instruments for the education of the 
administrator.''\25\ The agency was free, at the time of 
review, to support a rule with a ``record'' not based on the 
information available to various decision-makers during the 
rule's formation.\26\ These post hoc rationalizations were 
acceptable, although courts at the time may have examined them 
with skepticism.\27\ The agency could base its decision on 
expertise, unstated political considerations, or an 
inarticulable intuition.\28\ If questions of fact, rather than 
agency policy judgments, were determinative of the regulation's 
validity, then an enforcement proceeding was deemed an adequate 
forum for review.\29\ In such proceedings, it was assumed the 
challenger could assail the rule as applied to his particular 
situation. Thus, under the original APA model, settlement of 
issues of policy and fact were not based on the rulemaking 
record.
---------------------------------------------------------------------------
    \23\See Nathaniel L. Nathanson, Probing the Mind of the 
Administrator: Hearing Variations and Standards of Judicial Review 
Under the Administrative Procedure Act and Other Federal Statutes, 75 
Colum. L. Rev. 721, 755 (1975) (``there is not the slightest indication 
that the purpose of the notice-and-comment proceeding was to develop a 
record by which a reviewing court could test the validity of the rule 
which the Administrator finally adopted.'').
    \24\See Martin Shapiro, On Predicting the Future of Administrative 
Law, 6 Regulation 18, 19-20 (May/June 1982).
    \25\Nathanson, note 23 supra, at 755.
    \26\See William F. Pederson, Jr., Formal Records and Informal 
Rulemaking, 85 Yale L.J. 38, 62-65 (1975).
    \27\See, e.g., FTC v. Sperry & Hutchinson Co., 405 U.S. 233, 246-50 
(1972).
    \28\See James V. DeLong, Informal Rulemaking and the Integration of 
Law and Policy, 65 Va. L. Rev. 257, 272 (1979).
    \29\See Admin. procedure in Gov't agencies, S. Doc. No. 77-8, at 
115-20 (1st Sess. 1941); Nathanson, note 23 supra, at 755-57; Colin S. 
Diver, Policymaking Paradigms in Administrative Law, 95 Harv. L. Rev. 
393, 405 (1981).
---------------------------------------------------------------------------
    Professor Martin Shapiro has characterized the rule of the 
agencies and courts during this period and the reasons for this 
posture as follows:

        In the early 1930's the New Deal created a government 
        based on concentrating power in the hands of 
        technically expert administrative agencies. By the 
        early 1940's administrative law had been well shaped to 
        express this theory. The new judges enunciated a theory 
        of review that was a restatement of Progressive 
        political theory. Power must be concentrated to be 
        effective; and it must be wielded by experts in order 
        to achieve rational results. Thus judges, who were not 
        technically expert, must defer to the agencies, who 
        were. The central doctrines of the administrative law 
        of the 1940's were the twin presumptions that agencies 
        had correctly found the facts and had correctly found 
        the law. Given such presumptions, there was nothing for 
        the judges to do. They effectively transferred their 
        power over regulation to the agencies at the same time 
        they gave constitutional approval to the delegation of 
        congressional regulatory power to the same agencies. 
        Voila technocracy--rule by expert agencies.\30\
---------------------------------------------------------------------------
    \30\Shapiro, note 24 supra, at 19.
---------------------------------------------------------------------------
B. LDevelopments since the 1960's
    Criticism of the original rulemaking model had begun to 
swell by the 1960's. Presidential commissions,\31\ jurists,\32\ 
academicians,\33\ and ``public interest advocates''\34\ all 
expressed skepticism about both the substance and form of 
government decision-making. This skepticism was fueled by the 
immense growth of the Federal Government, in terms of both its 
power and resources. The product of many agencies' 
deliberations, these critics argued, was not a flexible policy, 
but no policy at all and which in some instances resulted in 
favoritism or uncertainty. The proliferation of the 
government's reach also raised questions regarding the 
continued validity of the notion of the ``expert'' 
administrator.
---------------------------------------------------------------------------
    \31\See James M. Landis, Report on Regulatory Agencies to the 
President Elect (Government Printing Office, 1960); American Bar 
Association, Commission to Study the FTC, Report of the ABA Commission 
to Study the Federal Trade Commission (Sept. 15, 1969); Roy L. Ash, A 
New Regulatory Framework: Report on Selected Independent Agencies 
(Government Printing Office, 1971).
    \32\See, e.g., Henry J. Friendly, The Federal Administrative 
Agencies: The Need for Better Definition of Standards, 75 Harv. L. Rev. 
1263 (1962); Samuel Estreicher, Pragmatic Justice: The Contributions of 
Judge Harold Leventhal to Administrative Law, 80 Colum. L. Rev. 894 
(1980).
    \33\See, e.g., Kenneth Culp Davis, Discretionary Justice: A 
Preliminary Inquiry (Baton Rouge: Louisiana State Univ. Press ed., 
1969); Murray Edelman, The Symbolic Uses of Politics 22-26 (Univ. of 
Illinois Press ed., 1964); Theodore J. Lowi, The End of Liberalism: The 
Second Republic of the United States 92-126 (W. W. Norton & Co., Inc. 
ed., 2d ed. 1979).
    \34\See, e.g., Edward F. Cox, Richard C. Fellmeth & John E. Schulz, 
The Nader Report on the Federal Trade Commission (Grove Press ed., 
1969); Robert C. Fellmeth, The Interstate Commerce Omission, the public 
interest and the ICC; The Ralph Nader study group report on the 
Interstate Commerce Commission and transportation (Grossman ed., 1970).
---------------------------------------------------------------------------
    The cumulative effect of these criticisms was essentially 
an overhaul of the structure of administrative regulation. Led 
by the courts, beginning in the mid-1960's and accelerating 
rapidly during the early years of the 1970's, a new consensus 
about agency policymaking emerged.\35\ The key doctrinal shift 
was enhanced emphasis on rulemaking as a method of formulating 
policy. Doubts about some agencies' legal authority to issue 
binding rules were erased by a series of judicial 
decisions.\36\ Congress joined in this trend by granting broad 
rulemaking power in new regulatory statutes\37\ and by 
increasingly resorting to ``action-forcing'' techniques to 
compel prospective adoption of policies.\38\ Courts invoked a 
variety of legal grounds--due process,\39\ organic statutes and 
internal agency procedures,\40\ or abuse of discretion\41\--for 
finding an obligation to proceed by rulemaking. Informal 
rulemaking became the presumptive and judicially preferred mode 
of policymaking procedure.\42\
---------------------------------------------------------------------------
    \35\See, e.g., Richard B. Stewart, The Reformation of American 
Administrative Law, 88 Harv. L. Rev. 1667 (1975); Paul R. Verkuil, The 
Emerging Concept of Administrative Procedure, 78 Colum. L. Rev. 258 
(1978); DeLong, note 28 supra.
    \36\See In re Permian Basin Area Rate Cases, 390 U.S. 747 (1968); 
Fed. Power Comm'n v. Texaco, Inc., 377 U.S. 33 (1964); Nat'l Petroleum 
Refiners Ass'n v. FTC, 482 F.2d 672 (D.C. Cir. 1973).
    \37\See, e.g., Consumer Product Safety Act, 15 U.S.C. Sec. 2051.
    \38\See Richard B. Stewart & James E. Krier, Environmental Law and 
Policy 371-73 (Bobbs-Merrill ed., 2d ed. 1978).
    \39\See, e.g., Soglin v. Kauffman, 418 F.2d 163, 168 (7th Cir. 
1969); Holmes v. N.Y. Housing Auth., 398 F.2d 262, 264-65 (2d Cir. 
1968); Hornsby v. Allen, 326 F.2d 605, 609-10 (5th Cir. 1964).
    \40\See, e.g., Morton v. Ruiz, 415 U.S. 199, 231-36 (1974).
    \41\See Bokat v. Sureck, 637 F.2d 1315, 1317 (9th Cir. 1981).
    \42\Cf. United States v. Fla. E. Coast Ry. Co., 410 U.S. 224 
(1973).
---------------------------------------------------------------------------
    The courts not only demanded greater use of rulemaking for 
policymaking, but also radically transformed the ways in which 
agencies make rules and courts review them. Led by the U.S. 
Court of Appeals for the District of Columbia Circuit,\43\ 
creative judicial interpretation of the APA and of the 
agencies' organic statutes made rulemaking more accessible. 
First, the courts lowered barriers for public access to 
agencies and to courts by relaxing standing, ripeness, and 
exhaustion rules.\44\ Those rules originally had been designed 
to exclude from the rulemaking process everyone except those 
few individuals who had suffered direct legal injury by 
government action. Now, any interest group can gain access to 
the decision-making process of government by asserting a small 
or indirect potential injury.
---------------------------------------------------------------------------
    \43\See, e.g., Auto. Parts & Accessories Ass'n v. Boyd, 407 F.2d 
330 (D.C. Cir. 1968); Am. Airlines v. Civil Aeronautics Bd., 359 F. 2d 
624 (D.C. Cir. 1966); Mobil Oil Corp. v. Fed. Power Comm'n, 483 F.2d 
1238 (D.C. Cir. 1973).
    \44\See, e.g., Barlow v. Collins, 397 U.S. 159 (1970); Ass'n of 
Data Processing Serv. Orgs. Inc., v. Camp, 397 U.S. 150 (1970) 
(standing); Gardner v. Toilet Goods Ass'n, 387 U.S. 167 (1967); Abbott 
Labs. v. Gardner, 387 U.S. 136 (1967) (ripeness); see generally Ralph 
F. Fuchs, Prerequisites to Judicial Review of Administrative Agency 
Action, 51 Ind. L.J. 817 (1976).
---------------------------------------------------------------------------
    Next, courts attempted to ensure more meaningful access by 
judicial construction of Section 553's spare and cryptic notice 
and comment requirements. The courts now required a rulemaking 
record which had to contain the material on which the agency 
based its decision.\45\ Even if the record as it stood would 
support the agency decision, the court could find an abuse of 
discretion if other, unrevealed sources affected the rulemaking 
process.\46\ The courts also required agencies to place the 
relevant materials, particularly those of a complicated or 
technical nature, on the record at a time and in a form that 
would allow other parties an opportunity to evaluate them.\47\ 
Last-minute additions to the record were insufficient because 
they deprived participants of the opportunity to respond.\48\ 
Interested parties had to have the opportunity to test the 
bases of the agency's position--factual, technical, analytical 
or theoretical.\49\ Although the timely entry of material into 
the record would suffice in most cases, some decisions stated 
that an agency should allow cross-examination or a specific 
opportunity for rebuttal if such procedures are the best method 
of illuminating issues.\50\
---------------------------------------------------------------------------
    \45\United States v. Nova Scotia Food Prod. Corp., 568 F.2d 240, 
251-52 (2d Cir. 1977); Indus. Union Dept. v. Hodgson, 499 F.2d 267, 
475-76, 488 (D.C. Cir. 1974); Portland Cement Assoc. v. Ruckelshaus, 
486 F.2d 375, 393 n.67 (D.C. Cir. 1973). See generally William F. 
Pederson, Jr., Formal Records and Informal Rulemaking, 85 Yale L.J. 38 
(1975).
    \46\U.S. Lines, Inc. v. Fed. Mar. Comm'n, 584 F.2d 519, 526 (D.C. 
Cir. 1978); Sangamon Valley TV Corp. v. United States, 269 F.2d 221, 
224 (D.C. Cir. 1959). But cf. Action for Children's Television v. FCC, 
564 F.2d 458, 477-78 (D.C. Cir. 1977).
    \47\Portland Cement, 486 F.2d at 392-94, 402; Home Box Office, Inc. 
v. FCC, 567 F.2d 9, 54-55 (D.C. Cir. 1977); Nova Scotia Food, 568 F.2d 
at 252; Int'l Harvester Co. v. Ruckelshaus, 478 F.2d 615, 631-32 (D.C. 
Cir. 1973).
    \48\U.S. Lines, Inc. v. Fed. Mar. Comm'n, 584 F.2d 519, 533-36, 
541-42 (D.C. Cir. 1978); Envtl. Def. Fund, Inc. v. Blum, 458 F. Supp. 
650, 658-60 (D.D.C. 1978).
    \49\See Home Box Office, 567 F.2d at 35-36; Mobil Oil Corp. v. Fed. 
Power Comm'n, 483 F.2d 1238, 1259-60 (D. C. Cir. 1973).
    \50\See, e.g., Bunker Hill Co. v. E.P.A., 572 F.2d 1286, 1305 n.41 
(9th Cir. 1977). In Vermont Yankee Nuclear Power Corp v. Natural 
Resources Defense Council, 435 U.S. 519 (1978), the Supreme Court 
precluded the invalidation of rules solely because an agency failed to 
use specific procedures not required by section 553. The decision, 
however, did not overturn all the law of informal rulemaking that had 
been developed by the lower courts, and did not affect continuing 
strict scrutiny of agency adherence to the procedural requirements in 
the APA or in agency regulations and the obligation of agencies to 
engage in ``reasoned decisionmaking,'' which was to include the 
consideration of alternatives. See Motor Vehicle Mfrs. Ass'n of U.S. v. 
State Farm Mut. Auto. Ins. Co., 463 U.S. 29 (1983).
---------------------------------------------------------------------------
    Finally, the courts developed a series of requirements on 
the agency's final statement of basis and purpose:

        The ``concise and general statement'' required by 
        section 553 must be sufficiently complete and detailed 
        to enable the court to accomplish its reviewing 
        function, assuring itself that the agency has engaged 
        in reasoned decisionmaking, has given serious thought 
        to alternative rulings, and has provided reasoned 
        explanations for controversial normative and empirical 
        determinations. In short, ``the reviewing court must 
        satisfy itself that the requisite dialogue occurred and 
        that it was not a sham.''\51\
---------------------------------------------------------------------------
    \51\Natural Res. Def. Council v. U.S. Nuclear Regulatory Comm'n, 
547 F.2d 633, 658 n.3 (D.C. Cir. 1976) (Tamm, J., concurring) (quoting 
J. Skelly Wright, The Courts and the Rulemaking Process: The Limits of 
Judicial Review, 59 Cornell L. Rev. 375, 381 (1974)), rev'd sub nom., 
Vermont Yankee Nuclear Power Corp. v. Natural Res. Def. Council, 435 
U.S. 519 (1978). The Supreme Court specifically approved Judge Tamm's 
characterization of the role of the reviewing court.

Thus, the agency's statement must identify the major issues in 
the proceeding; explain the agency's reasoning on those issues; 
and establish that the agency has indeed identified and taken a 
hard look at all the relevant factors.\52\ For important 
conclusions, the statement must point to specific materials in 
the record. Vague allusions to material on file or to the 
agency's general expertise will not suffice.\53\
---------------------------------------------------------------------------
    \52\Auto. Parts, 407 F.2d at 338; Nova Scotia Food, 568 F.2d at 
252-53.
    \53\U.S. Lines, 584 F.2d at 533-35.
---------------------------------------------------------------------------
    Courts also have held that, when preparing the final 
statement, agencies must answer cogent comments in terms of the 
particular record.\54\ A significant part of the statement's 
function is seen as responding to public comments and 
explaining how the agency resolved the problems raised. The 
obligation to respond to serious objections may even extend to 
criticisms that might have been made, but were not. The agency 
itself may have to refute serious arguments against its 
positions or contentions.\55\
---------------------------------------------------------------------------
    \54\Office of Commc'n of United Church of Christ v. FCC, 560 F.2d 
529, 532-33 (2d Cir. 1977).
    \55\Motor Vehicle Mfrs., 463 U.S. at 43.
---------------------------------------------------------------------------
    The rulemaking revolution of the 1970's is now the status 
quo. In essence, courts now seek to ensure that agencies listen 
and respond to citizen comments by reading the APA's ``concise 
and general statement'' language as a requirement that they 
conduct a dialogue with the public, and that the agency's 
statement contains responses to the comments received. The hope 
is that if the agency must respond to public comments, it 
actually will listen to the public. Thus, courts have attempted 
to force agencies to grant real access to the public by 
demanding that they respond in detail to what the public has 
said to it. Nevertheless, and as the Subcommittee's hearings 
revealed, it remains energetically disputed whether the 
administrative rulemaking process is fully responsive to the 
public and to the information put before the agencies.

     III. DEVELOPMENTS IN EXECUTIVE BRANCH PRACTICE: THE ADVENT OF 
             PRESIDENTIAL REVIEW AND COST-BENEFIT ANALYSIS

    Since the early 1970's, presidents of both parties have 
required agencies to evaluate the costs and benefits of 
proposed regulations. But the breadth and depth of these cost-
benefit analysis requirements for Executive Branch agencies 
have waxed and waned over the course of eight presidential 
administrations.
A. LNixon and Ford Administrations
    In 1971, President Nixon established a ``Quality of Life 
Review'' program in which executive departments and independent 
agencies submitted all ``significant'' draft proposed and final 
rules pertaining to ``environment quality, consumer protection, 
and occupational and public health and safety'' to OMB.\56\ In 
their submissions, agencies were required to provide a summary 
of their proposals, including their principal objectives, the 
alternatives that they considered, and a comparison of the 
expected benefits and costs of those alternatives.
---------------------------------------------------------------------------
    \56\This requirement was formally established through an October 
1971 memorandum from then-OMB Director George Schultz. According to 
some observers, the requirements were routinely imposed only on the 
EPA.
---------------------------------------------------------------------------
    In 1974, President Ford issued Executive Order 11821, 
requiring agencies to prepare an ``inflation impact statement'' 
for each ``major'' proposed rule and directing OMB to identify 
major rules that may have a significant impact on 
inflation.\57\ Executive Order 11821 specified that OMB must 
consider costs, effects on productivity, effects on 
competition, and effects on supplies of important products and 
services.\58\
---------------------------------------------------------------------------
    \57\Exec. Order No. 11,821, Inflation Impact Statements, 39 Fed. 
Reg. 41501 (Nov. 29, 1974). The order also required such statements for 
agency-proposed major legislation.
    \58\Id. Sec. 3.
---------------------------------------------------------------------------
B. LCarter Administration
    President Carter's Executive Order 12044 required agencies 
to publish semiannual agendas of any significant rules under 
development or review, and to prepare a regulatory analysis for 
all rules with at least a $100 million impact on the 
economy.\59\ The analysis was to contain a succinct statement 
of the problem, a description of the alternative approaches 
considered, and the ``economic consequences'' of those 
alternatives.\60\ OMB was instructed to ``assure the effective 
implementation of this Order,'' but was not given specific 
review responsibilities.\61\
---------------------------------------------------------------------------
    \59\Exec. Order No. 12,044, Improving Government Regulations, 43 
Fed. Reg. 12661 (Mar. 23, 1978).
    \60\Id. Sec. 3(b).
    \61\Id. Sec. 5(c).
---------------------------------------------------------------------------
C. LReagan and George H.W. Bush Administrations
    Shortly after taking office, President Reagan issued the 
most detailed Executive Order up to that time regarding cost-
benefit analysis. Executive Order 12291 greatly increased the 
scope and importance of presidential review of Federal 
regulations.\62\ Administratively, President Reagan 
consolidated new regulatory review authority in the OMB's 
Office of Information and Regulatory Affairs (``OIRA''). 
Substantively, the Executive Order required Cabinet departments 
(but not independent regulatory agencies) to:
---------------------------------------------------------------------------
    \62\Exec. Order No. 12,291, Federal Regulation, 46 Fed. Reg. 13193 
(Feb. 17, 1981). See generally Erik D. Olson, The Quiet Shift of Power: 
Office of Management & Budget Supervision of Environmental Protection 
Agency Rulemaking Under Executive Order 12,291, 4 Va. J. Nat. Resources 
L. 1 (1984) (describing effect of this Order).

         LRefrain from taking regulatory action 
        ``unless the potential benefits to society for the 
        regulation outweigh the potential costs to society,'' 
        identify regulatory objectives to maximize net benefits 
        to society, and select the regulatory alternative that 
        involves the least net cost to society;\63\
---------------------------------------------------------------------------
    \63\Exec. Order No. 12,291, Sec. 2.

         LPrepare a ``regulatory impact analysis'' for 
        each ``major'' rule, defined as any regulation likely 
        to result in (among other things) an annual effect on 
        the economy of $100 million. Those analyses were 
        required to describe the potential benefits and costs 
        of the rule, alternative approaches that could achieve 
        the regulatory goal at lower cost (and why they were 
        not selected), and the rule's net benefits. The issuing 
        agency was to make the initial determination of whether 
        a rule was ``major,'' but the Executive Order gave OMB 
        the authority to require a rule to be considered 
        ``major'';\64\ and
---------------------------------------------------------------------------
    \64\Id. Sec. 3.

         LSend a copy of each draft proposed and final 
        rule to OMB before publication in the Federal Register. 
        The Order authorized OMB to review ``any preliminary or 
        final regulatory impact analysis, notice of proposed 
        rulemaking, or final rule based on the requirements of 
        this Order.'' Non-major rules had to be submitted to 
        OMB 10 days before publication, but major rules had to 
        be submitted up to 60 days in advance.\65\
---------------------------------------------------------------------------
    \65\Id. Sec. 3(c).

    In 1985, President Reagan consolidated in OIRA the White 
House's review of agencies' regulatory development agendas.\66\ 
The basic regulatory framework developed by the Reagan 
Administration was continued through the George H.W. Bush 
Administration.
---------------------------------------------------------------------------
    \66\Exec. Order No. 12,498, Regulatory Planning Process, 50 Fed. 
Reg. 1036 (Jan. 4, 1985).
---------------------------------------------------------------------------
D. LClinton Administration
    In September 1993, President Clinton replaced Executive 
Order 12291 with Executive Order 12866, which is still in 
effect today.\67\ This executive order carried forward the 
coordinated planning process for Federal agencies' development 
and promulgation of regulations; required yearly planning of 
regulatory proposals; mandated coordination of proposals with 
OMB and among agencies; required reviews to assure that 
proposed regulations were necessary and cost-beneficial; and, 
called for the naming of Regulatory Policy Officers who would 
report to agency heads and carry out hands-on oversight 
throughout the regulatory process.
---------------------------------------------------------------------------
    \67\Exec. Order No. 12,866, Regulatory Planning and Review, 58 Fed. 
Reg. 51735 (Sept. 30, 1993).
---------------------------------------------------------------------------
    Specifically regarding cost-benefit analysis, in its 
statement of regulatory philosophy Executive Order 12866 
directs agencies to assess all costs and benefits of available 
regulatory alternatives, including both quantitative and 
qualitative measures.\68\ It also provides that agencies should 
select regulatory approaches that maximize net benefits (unless 
a statute requires another approach).\69\ When permissible and 
applicable, the Order states that agencies should adhere to a 
set of principles when developing rules, including, for 
example:
---------------------------------------------------------------------------
    \68\Id. Sec. 1(a).
    \69\Id.

         LIdentify the problem, such as the failures of 
        private markets or public institutions, and its 
---------------------------------------------------------------------------
        significance, that warrants new regulations;

         LConsider the degree and nature of risk when 
        setting regulatory priorities;

         LAdopt regulations only upon a ``reasoned 
        determination that the benefits of the intended 
        regulation justify its costs'' while ``recognizing that 
        some costs and benefits are difficult to quantify'';

         LTailor regulations to impose the least burden 
        on society needed to achieve regulatory objectives; 
        and,

         LBase regulatory decisions on the ``best 
        reasonably obtainable'' data.\70\
---------------------------------------------------------------------------
    \70\Id. Sec. Sec. 1(b)(1), (4), (6) & (11).

    Executive Order 12866 limits OIRA reviews to actions 
identified by the rulemaking agency or OIRA as ``significant'' 
---------------------------------------------------------------------------
regulatory actions, which are defined as:

        [A]ny regulatory action that is likely to result in a 
        rule that may (1) Have an annual effect on the economy 
        of $100 million or more or adversely affect in a 
        material way the economy, a sector of the economy, 
        productivity, competition, jobs, the environment, 
        public health or safety, or State, local, or tribal 
        governments or communities; (2) Create a serious 
        inconsistency or otherwise interfere with an action 
        taken or planned by another agency; (3) Materially 
        alter the budgetary impact of entitlements, grants, 
        user fees, or loan programs or the rights and 
        obligations of recipients thereof; or (4) Raise novel 
        legal or policy issues arising out of legal mandates, 
        the President's priorities, or the principles set forth 
        in this Executive order.\71\
---------------------------------------------------------------------------
    \71\Id. Sec. 3(f).

By focusing OIRA review on significant rules, the number of 
draft proposed and final rules that OIRA reviewed fell from 
between 2,000 and 3,000 per year under Executive Order 12291 to 
between 500 and about 700 rules per year under Executive Order 
12866.\72\
---------------------------------------------------------------------------
    \72\United States General Accounting Office, Rulemaking: OMB's Role 
in Reviews of Agencies' Draft Rules and the Transparency of Those 
Reviews, GAO 03-929, at 24 (Sept. 2003), available at http://
www.gao.gov/new.items/d03929.pdf (last accessed Nov. 18, 2011).
---------------------------------------------------------------------------
E. LGeorge W. Bush Administration
    In his first term, President George W. Bush left Executive 
Order 12866 largely in place, except for some minor 
administrative revisions mainly designed to remove the Vice 
President from the regulatory review process.\73\ In 2007, 
however, President Bush expanded its scope by bringing major 
agency guidance documents within the OIRA review process.\74\ 
President Bush also required agencies to calculate a best 
estimate of the cumulative costs and benefits associated with 
all of the regulations planned for a given year, whereas 
Executive Order 12866 had only required regulation-by-
regulation cost-benefit analysis.\75\
---------------------------------------------------------------------------
    \73\Exec. Order No. 13,258, Amending Executive Order 12866 on 
Regulatory Planning and Review, 67 Fed. Reg. 9385 (Feb. 26, 2002).
    \74\Exec. Order No. 13,422, Further Amendment to Executive Order 
12866 on Regulatory Planning and Review, 72 Fed. Reg. 2763 (Jan. 18, 
2007).
    \75\See id. Sec. 4(c).
---------------------------------------------------------------------------
    Additionally, Executive Order 13422 required that 
Regulatory Policy Officers be drawn from the ranks of the 
Presidential appointees.\76\ This was controversial: Democrats 
and various interest groups accused President Bush of unduly 
politicizing the regulatory process, instituting hurdles in the 
way of agency efforts to protect public health, safety and 
welfare, and shifting authority to the President at the expense 
of the agencies and Congress. Steven Aitken, then-Acting 
Administrator of OIRA, responded in testimony to Congress that 
this aspect of the Executive Order would have little practical 
effect, because ``the fact is that, in many departments and 
major agencies, the Regulatory Policy Officer has been a 
Presidential appointee.''\77\ Acting Administrator Aitken 
further clarified ``that the term `Presidential appointee' 
should not be confused with `political appointee.'''\78\
---------------------------------------------------------------------------
    \76\See id. Sec. 5(b).
    \77\Amending Executive Order 12866: Good Governance or Regulatory 
Usurpation?: Hearing Before the H. Comm. on the Judiciary, Subcomm. on 
Commercial and Administrative Law, 110th Cong., at 41 (Feb. 13, 2007).
    \78\Id.
---------------------------------------------------------------------------
F. LObama Administration
    Promptly upon taking office, President Obama revoked 
Executive Order 13422, thus restoring Executive Order 12866 
from the Clinton Administration as the core charter for 
presidential review of rulemaking.\79\ In January 2011, 
President Obama issued Executive Order 13563, reaffirming 
Executive Order 12866's principles while adding a number of 
additional provisions.\80\ Executive Order 13563 states, ``Our 
regulatory system . . . must take into account benefits and 
costs, both quantitative and qualitative.''\81\ Specifically 
regarding cost-benefit analysis, it purports to ``supplement'' 
and ``reaffirm'' Executive Order 12866:
---------------------------------------------------------------------------
    \79\Exec. Order No. 13,497, Revocation of Certain Executive Orders 
Concerning Regulatory Planning and Review, 74 Fed. Reg. 6113 (Jan. 30, 
2009).
    \80\Exec. Order No. 13,563, Improving Regulation and Regulatory 
Review, 76 Fed. Reg. 3821 (Jan. 18, 2011).
    \81\Id. Sec. 1(a).

        [E]ach agency must, among other things: (1) propose or 
        adopt a regulation only upon a reasoned determination 
        that its benefits justify its costs (recognizing that 
        some benefits and costs are difficult to quantify); (2) 
        tailor its regulations to impose the least burden on 
        society, consistent with obtaining regulatory 
        objectives, taking into account, among other things, 
        and to the extent practicable, the costs of cumulative 
        regulations; (3) select, in choosing among alternative 
        regulatory approaches, those approaches that maximize 
        net benefits (including potential economic, 
        environmental, public health and safety, and other 
        advantages; distributive impacts; and equity); (4) to 
        the extent feasible, specify performance objectives, 
        rather than specifying the behavior or manner of 
        compliance that regulated entities must adopt; and (5) 
        identify and assess available alternatives to direct 
        regulation, including providing economic incentives to 
        encourage the desired behavior, such as user fees or 
        marketable permits, or providing information upon which 
        choices can be made by the public.\82\
---------------------------------------------------------------------------
    \82\Id. Sec. 1(b).
---------------------------------------------------------------------------

             IV. SUGGESTIONS TO UPDATE AND IMPROVE THE APA

    During this first Session of the 112th Congress, the 
Subcommittee on Courts, Commercial and Administrative Law held 
four hearings regarding the need for APA reform and received 
testimony from thirteen witnesses: administrative law scholars 
and practitioners alike, many of whose testimony was informed 
by years of public service in regulatory and Executive Branch 
agencies. The Full Committee also heard testimony about the Act 
itself from four distinguished witnesses. The witnesses' 
suggestions to reform the APA can be organized broadly under 
three categories: helping agencies make better regulations; 
enhancing the accountability of regulatory agencies; and, 
increasing the transparency of the regulatory process. These 
suggestions are discussed below.
A. LHelping Agencies Make Better Regulations
            i. LCodifying established rulemaking principles from the 
                    Executive Orders
    ``Whereas Congress has never amended the APA in a material 
way, the Executive Branch has frequently created its own 
requirements for how Federal agencies ought to function, and 
established a variety of principles, requirements, coordination 
mechanisms, and the like . . . .''\83\ Over the last 30 years, 
presidents from both parties have issued executive orders that 
require regulatory agencies to take steps in addition to those 
required by the APA. Executive Orders 12291, 12866, 13422 and 
13563 all required regulatory agencies in the Executive Branch 
to conduct regulatory impact analyses, including cost-benefit 
analysis requirements, and to coordinate rulemaking with OIRA. 
Other requirements of the orders include consideration of 
reasonable alternatives to proposed rules, identification of 
the least burdensome alternative, and consideration of whether 
it would be more appropriate to defer to State and local 
authorities than to issue a Federal rule.
---------------------------------------------------------------------------
    \83\APA at 65, note 13 supra, at 31 (Testimony of Jeffrey Rosen).
---------------------------------------------------------------------------
    Enforcing the requirements of these executive orders, 
however, has been up to White House discretion, not to the 
courts; an agency's compliance is not judicially reviewable by 
any court.\84\ As a result, ``agency regulatory analysis is 
often incomplete and seldom used in decisions. This pattern 
persists across administrations, suggesting that the source of 
the problem is institutional, not political.''\85\ In the 
Mercatus Center's Regulatory Report Card project, Drs. Ellig 
and Williams ``examine[d] how well the executive-branch 
regulatory agencies do what presidents have been telling them 
to do for more than three decades.''\86\ Overall, Drs. Ellig 
and Williams found that the quality of agencies' regulatory 
impact analysis is lacking,\87\ and that agencies rarely 
utilize the analysis in the decision-making process.\88\ 
Specifically, in evaluating 34 major rulemakings conducted by 
17 agencies from 2008 through 2011, the highest average score 
obtained by any agency (the Department of Justice) was a meager 
35 points out of 60. The Social Security Administration earned 
the worst performance with a score of seven points.
---------------------------------------------------------------------------
    \84\See Exec. Order No. 12,866, Sec. 10 (``Judicial Review. Nothing 
in this Executive order shall affect any otherwise available judicial 
review of agency action. This Executive order is intended only to 
improve the internal management of the Federal Government and does not 
create any right or benefit, substantive or procedural, enforceable at 
law or equity by a party against the United States, its agencies or 
instrumentalities, its officers or employees, or any other person.''); 
see also Air Transp. Ass'n of Am. v. FAA, 169 F.3d 1, 8 (D.C. Cir. 
1999) (Executive Order 12893, ``which requires a `systematic analysis 
of expected benefits and costs' . . . for infrastructure investments of 
Federal agencies,'' also ``provides that it is `intended only to 
improve the internal management of the executive branch and does not 
create any right . . . enforceable against the United States,''' and so 
``is not subject to judicial review''); Michigan v. Thomas, 805 F.2d 
176, 187 (6th Cir. 1986) (this language evinces ``clear and unequivocal 
intent that agency compliance with Executive Order 12,291 not be 
subject to judicial review''); Alliance for Natural Health U.S. v. 
Sebelius, 775 F. Supp. 2d 114, 135 n.10 (D.D.C. 2011) (agency 
compliance with Executive Order 12866 is not subject to judicial 
review); Idaho Mining Ass'n v. Browner, 90 F. Supp. 2d 1078, 1102 (D. 
Idaho 2000) (same); Trawler Diane Marie, Inc. v. Brown, 918 F. Supp. 
921, 932 (E.D.N.C. 1995) (same), aff'd sub. nom. Trawler Diane Marie, 
Inc. v. Kantor, 91 F.3d 134 (4th Cir. 1996); Louisiana ex rel. Guste v. 
Verity, 681 F. Supp. 1178, 1181-82 (E.D. La. 1988) (``this Court may 
not review the agency's compliance with'' Executive Order 12291), 
aff'd, 850 F.2d 211 (5th Cir. 1988); Ishtyaq v. Nelson, 627 F. Supp. 
13, 24 (E.D.N.Y. 1983) (same).
    \85\Raising the Agencies' Grades, note 14 supra, at 20 (Testimony 
of Jerry Ellig).
    \86\Id. at 21.
    \87\Id. at 23 (``One of the major areas where regulatory analysis 
is weakest is identification of the systemic problem the regulation is 
supposed to solve.'').
    \88\Id. at 21 (``All too often, agency economists have to conduct 
regulatory analysis after most major decisions about
    regulations have already been made. The analysis then becomes an 
advocacy document written to justify
    the agency's decisions, or a mere paperwork exercise to fulfill 
requirements imposed by the Office of
    Management and Budget.'').
---------------------------------------------------------------------------
    Dr. Williams observed that agencies only have an incentive 
to regulate; there is no incentive not to issue a new 
regulation.\89\ Drawing upon his 27 years of experience as an 
FDA economist, Dr. Williams testified that ``there is no 
discussion [within agencies] of whether or not a regulation is 
required. There is also no discussion as to whether there is a 
failure of the market or some other reason for regulatory 
intervention; whether the market will solve the problem in the 
near future without intervention (baseline analysis); or if 
there is a need for federal, as opposed to some other level of 
government, intervention.''\90\ Consequently, ``the regulatory 
analysis analyzes a decision, not a problem.''\91\
---------------------------------------------------------------------------
    \89\Id. at 73-74.
    \90\Id. at 74.
    \91\Ibid.
---------------------------------------------------------------------------
    Mr. DeMuth explained,

        Federal regulation today presents a political problem 
        and an economic problem. The political problem is that 
        regulatory agencies often operate under extremely broad 
        grants of authority from Congress. . . . The economic 
        problem is that regulatory agencies are single-purpose 
        organizations operating with scant restraint on the 
        resources their decisions command. The costs and 
        benefits of regulation are realized almost entirely in 
        the private sector. . . . The cost-benefit standard 
        addresses these problems by imposing a resource 
        constraint that is the regulatory analogue of the 
        budget constraint on spending programs; by applying a 
        decision rule that is the best approximation of how a 
        representative legislature should want otherwise 
        unspecified lawmaking discretion to be exercised; and 
        by promoting transparency and accountability.\92\
---------------------------------------------------------------------------
    \92\H.R. 3010, note 11 supra (Testimony of Christopher DeMuth).

Ambassador Gray cited new regulations from the Commodity 
Futures Trading Commission, charged with implementing the Dodd-
Frank Wall Street Reform and Consumer Protection Act, and the 
Federal Communications Commission's net neutrality regulation, 
as examples of the need to require independent agencies to 
perform cost-benefit analysis: ``Only by requiring Federal 
agencies to calculate the costs and benefits of their 
regulations, and then subjecting those projections to the 
scrutiny of public comment, can we know with greater certainty 
whether new regulatory initiatives, especially landmark 
initiatives affecting economic growth and energy 
infrastructure, do more harm than good.''\93\
---------------------------------------------------------------------------
    \93\Id. (Testimony of C. Boyden Gray).
---------------------------------------------------------------------------
    Dr. Ellig testified, ``[r]egulatory analysis needs to be 
legislatively required for all Federal agencies, including 
independent agencies.''\94\ An independent regulatory agency is 
constitutionally part of the Executive Branch but is insulated 
from direct presidential control because by statute its 
``members are not subject to the plenary removal power of the 
President.''\95\ The Board of Governors of the Federal Reserve 
System, the Federal Communications Commission, the Federal 
Trade Commission, the Securities and Exchange Commission, and 
the Nuclear Regulatory Commission are examples of independent 
regulatory agencies.\96\
---------------------------------------------------------------------------
    \94\Raising the Agencies' Grades, note 14 supra, at 20.
    \95\Cass R. Sunstein, Constitutionalism after the New Deal, 101 
Harv. L. Rev. 421, 492 (1987).
    \96\See, e.g., 44 U.S.C. Sec. 3502(5) (listing independent 
regulatory agencies for the purposes of the Paperwork Reduction Act of 
1995).
---------------------------------------------------------------------------
    ``President Reagan considered subjecting the independent 
agencies to [Executive Order 12291], but ultimately declined to 
do so, partly because of concerns about legal authority, but 
mostly because of fears of an adverse congressional reaction. 
The independent agencies were asked voluntarily to comply with 
Executive Order 12291, but not one of them formally 
acknowledged their willingness to do so.''\97\ In Executive 
Order 12866, President Clinton required independent regulatory 
agencies to contribute to the Unified Regulatory Agenda, but he 
did not take the next step of requiring them to conduct cost-
benefit analysis of proposed major rules, like other Executive 
Branch agencies.
---------------------------------------------------------------------------
    \97\Richard H. Pildes & Cass R. Sunstein, Reinventing the 
Regulatory State, 62 U. Chi. L. Rev. 1, 15 (1995).
---------------------------------------------------------------------------
    On July 11, 2011, President Obama issued an Executive Order 
that independent agencies ``should comply'' with the ``general 
requirements'' of Executive Order 13563 ``to the extent 
permitted by law.''\98\ Whether this gesture will bring 
independent agencies to heel is very much in doubt. For 
example, by letter of September 8, 2011, Commissioner Nord of 
the Consumer Product Safety Commission informed OIRA 
Administrator Cass Sunstein that ``a majority of the 
Commissioners at this agency have proactively decided to ignore 
the President's direction [to conduct cost-benefit analysis for 
new regulations].''\99\ Independent regulatory agencies--such 
as those charged with enacting the 447 new rules and completing 
63 reports and 59 studies authorized or required by Dodd-
Frank\100\--thus may escape the good-government requirements of 
these Executive Orders, including the cost-benefit analysis 
requirements.
---------------------------------------------------------------------------
    \98\Exec. Order No. 13,579, Regulation and Independent Regulatory 
Agencies, 76 Fed. Reg. 41587 (July 11, 2011).
    \99\Letter on file with the Committee.
    \100\Ryan, note 7 supra, at 3.
---------------------------------------------------------------------------
    The proposal to codify some or all of the Executive Orders' 
decision-making criteria also was endorsed by Mr. Rosen,\101\ 
Ms. Dudley,\102\ Prof. Strauss,\103\ Dean Graham,\104\ Mr. 
Holmstead,\105\ and Dr. Furchtgott-Roth.\106\ Similarly, at a 
hearing before the Subcommittee on Commercial and 
Administrative Law in the 111th Congress, Ms. Katzen endorsed 
extending the cost-benefit analysis requirements of Executive 
Order 12,866 to independent agencies.\107\ Current OIRA 
Administrator Sunstein also has endorsed requiring independent 
regulatory agencies to perform cost-benefit analysis, as well 
as granting limited judicial review to the cost-benefit 
analyses performed by government agencies.\108\
---------------------------------------------------------------------------
    \101\APA at 65, note 13 supra, at 33-35.
    \102\Id. at 20-21.
    \103\Id. at 47.
    \104\Cost-Justifying Regulations, note 15 supra, at 6.
    \105\Id. at 16.
    \106\Id. at 38.
    \107\Federal Rulemaking and the Regulatory Process: Hearing Before 
the H. Comm. on the Judiciary, Subcommittee on Commercial and 
Administrative Law, 111th Cong., at 28 (2010).
    \108\Robert W. Hahn & Cass R. Sunstein, A New Executive Order for 
Improving Federal Regulation? Deeper and Wider Cost-Benefit Analysis, 
John M. Olin Law and Economics Working Paper No. 150, Univ. of Chicago 
Law School (2002), available at http://www.law.uchicago.edu/files/
files/150.CRS__Cost-Benefit.pdf (last accessed Nov. 18, 2011). See also 
Peter L. Strauss & Cass R. Sunstein, The Role of the President and OMB 
in Informal Rulemaking, 38 Admin. L. Rev. 181, 205 (1986) (``The same 
considerations that justify a coordinating presidential role with 
respect to `executive' agencies apply with full force to those 
characterized as `independent.' For these reasons, we believe that 
Executive Orders 12,291 and 12,498 should be applied to the latter set 
of agencies.'').
---------------------------------------------------------------------------
            ii. LImproving the process for notice-and-comment 
                    rulemaking
    In his testimony to the Subcommittee on May 4, 2011, Dr. 
Furchtgott-Roth discussed the importance of having a 
functional, transparent notice-and-comment rulemaking process:

        One of the most important aspects of the Notice of 
        Proposed Rulemaking process is to obtain guidance from 
        the public about how best to craft a rule. A Federal 
        agency should solicit ideas from the public first 
        rather than develop a predetermined rule before seeking 
        public comment. An agency that can articulate in detail 
        the possible costs and benefits to various segments of 
        our economy of each proposed rule and alternatives to 
        it demonstrates some thoughtful analysis behind the 
        proposed rule. And the agency can explain other forms 
        of the rule, including no new rule, that can be 
        considered.\109\
---------------------------------------------------------------------------
    \109\Cost-Justifying Regulations, note 15 supra, at 37.

    Drawing on his experience at the FCC, Dr. Furchtgott-Roth 
described how that independent regulatory agency falls short in 
its decision-making processes.\110\ Specifically regarding 
cost-benefit analysis, Mr. Holmstead remarked, ``I have also 
seen, however, that Federal agencies sometimes do not use 
[cost-benefit analysis] to inform their regulatory decision, 
but rather to justify actions they may want to take for other 
reasons.''\111\ To support his statement that ``[f]ederal 
agencies need to do a much better job of understanding the full 
impact their regulations will have on businesses and jobs--
along with possible alternatives--before they impose the most 
costly new rules,'' Mr. Baker cited the EPA's new Fly Ash, 
Greenhouse Gas, and Cement Maximum Achievable Control 
Technology rules.\112\ Taken together, these rules will cause a 
33% price increase for one component of Mr. Baker's business, 
severely impacting his bottom line and hampering his ability to 
create jobs in New Orleans.
---------------------------------------------------------------------------
    \110\Id. at 38 (``Perhaps partly because it is not covered by the 
executive orders, the FCC does not directly weigh or even itemize the 
benefits and costs of a particular regulation. The FCC does not 
systematically consider alternative forms of regulation including no 
regulation. The FCC certainly does not focus on the alternative with 
the greatest net benefit. The only presentation of the costs and 
benefits of a regulation is an appendix for the Regulatory Flexibility 
Act. This appendix is at best an afterthought: a short, rarely read 
boilerplate passage that is outside the deliberative process. Sometimes 
it is forgotten altogether. I have seen little change in the regulatory 
analyses at the FCC since I left the Commission.'').
    \111\Id. at 15.
    \112\H.R. 3010, note 11 supra (Testimony of Arnold Baker).
---------------------------------------------------------------------------
    In the Regulatory Report Card project, Drs. Ellig and 
Williams found that agencies do a poor job of both analyzing 
the problem they are trying to solve\113\ and then applying 
whatever analysis is conducted to the drafting of a new 
regulation.\114\ This is not to say that agencies are ignorant 
of how to make good decisions. Drs. Ellig and Williams found 
that in 2008 and 2009, across Republican and Democratic 
administrations, ``a few regulatory analyses received a score 
of `5' [out of 5] for employing potential best 
practices.''\115\ This shows that ``[t]he knowledge required to 
produce better regulatory analysis exists, dispersed throughout 
agencies in the Federal Government. OMB Circular A-4 also 
summarizes a great deal of this knowledge. What's lacking are 
institutional incentives to produce good analysis and use it to 
guide decisions.''\116\
---------------------------------------------------------------------------
    \113\Raising the Agencies' Grades, note 14 supra, at 23 (Testimony 
of Jerry Ellig) (``One of the major areas where regulatory analysis is 
weakest is identification of the systemic problem the regulation is 
supposed to solve (criterion 6). This is a key weakness. . . . If the 
agency cannot identify and demonstrate the existence of a systemic 
problem that a regulation might solve, how can it assess whether the 
regulation is likely to solve the problem or identify alternative 
solutions that might be more effective?''); id. at 74 (Testimony of 
Richard Williams) (``Discussion of whether there is a problem and 
whether Federal regulation is the best way to solve that problem is 
`off the table.' That is, there is no discussion of whether or not a 
regulation is required. There is also no discussion as to whether there 
is a failure of the market or some other reason for regulatory 
intervention; whether the market will solve the problem in the near 
future without intervention (baseline analysis); or if there is a need 
for federal, as opposed to some other level of government, 
intervention.'').
    \114\Id. at 74 (Testimony of Richard Williams) (regulatory impact 
analysis ``is generally begun after the decision on how to regulate has 
been announced. That is a key part of the problem: the regulatory 
analysis analyzes a decision, not a problem.''); id. at 25 (Testimony 
of Jerry Ellig) (``But the average scores on our Use criteria are 
relatively low--less than 2.5 out of a possible 5 points on each of 
these criteria. Even under our relatively liberal definition of `use,' 
agencies claim to use the regulatory impact analysis for significant 
decisions only about 20 percent of the time at best. . . .'').
    \115\Id. at 27 (Testimony of Jerry Ellig).
    \116\Ibid.
---------------------------------------------------------------------------
            iii. LBringing major guidance within the rulemaking process
    In 2007, President Bush expanded the scope of Executive 
Order 12866 to bring major agency guidance documents within the 
OIRA review process.\117\ Promptly upon taking office, however, 
President Obama revoked this Executive Order, thus excluding 
major guidance documents from the OIRA review process.\118\
---------------------------------------------------------------------------
    \117\Exec. Order No. 13,422, Further Amendment to Executive Order 
12866 on Regulatory Planning and Review, 72 Fed. Reg. 2763 (Jan. 18, 
2007).
    \118\Exec. Order No. 13,497, Revocation of Certain Executive Orders 
Concerning Regulatory Planning and Review, 74 Fed. Reg. 6113 (Jan. 30, 
2009).
---------------------------------------------------------------------------
    In his testimony on May 31, 2011, Mr. Francisco described 
how current judicial review doctrines encourage agencies to 
issue broad, ambiguous regulations, and then interpret those 
regulations through mere guidance documents, which do not have 
to be promulgated through any established processes.\119\ Under 
these circumstances, a court will defer to the agency's 
interpretation of its own ambiguous regulation even though the 
guidance document does not have the force of law. On May 4, 
Dean Graham and Mr. Holmstead both recommended requiring 
agencies to follow some decision-making criteria when issuing 
significant guidance documents.\120\
---------------------------------------------------------------------------
    \119\Formal Rulemaking and Judicial Review, note 16 supra, at 179-
80 (discussing Bowles v. Seminole Rock & Sand Co., 325 U.S. 410, 414 
(1945) and Auer v. Robbins, 519 U.S. 452, 461 (1997)).
    \120\Cost-Justifying Regulations, note 15 supra, at 7 (Testimony of 
John Graham) (``Third, I recommend that Congress expand the scope of 
the statutory mandate to include significant guidance documents as well 
as legislative rules, at least in cases where the agency's action to 
issue a guidance document has the same practical effect on regulated 
parties as a regulation.''); id. at 18 (Testimony of Jeffrey Holmstead) 
(``I also recommend that the Subcommittee go beyond just rules and 
regulations to require that significant guidance documents are subject 
to analysis and interagency review.'').
---------------------------------------------------------------------------
B. LEnhancing Regulatory Accountability
            i. LModernizing judicial review doctrines
    The ``substantial evidence'' standard of review for agency 
decisions pre-existed the APA. The Attorney General's Manual on 
the Administrative Procedure Act, published shortly after 
Congress adopted the APA in 1946, describes Section 706(2)(E), 
5 U.S.C., as ``a general codification of the substantial 
evidence rule which, either by statute or judicial rule, has 
long been applied to the review of Federal administrative 
action.''\121\ The seminal case interpreting the APA's 
``substantial evidence'' test is Universal Camera Corp. v. 
NLRB, 340 U.S. 474 (1951). In Universal Camera, the Court 
observed that, pre-APA, ``substantial evidence'' was akin to 
what is known as the jury standard, the most deferential 
standard of review for findings of fact. As the Court put it, 
substantial evidence ``must be enough to justify, if the trial 
were to a jury, a refusal to direct a verdict when the 
conclusion sought to be drawn from it is one of fact for the 
jury.''\122\ The Court, however, held that although ``retention 
of the familiar `substantial evidence' terminology indicates 
that no drastic reversal of attitude was intended,'' by 
adopting the APA ``Congress expressed a mood'' that ``courts 
must now assume more responsibility for the reasonableness and 
fairness of Labor Board decisions than some courts have shown 
in the past.''\123\ The Court further held that ``substantial 
evidence'' is to be measured in light of the whole record, not 
on one piece of evidence taken in isolation.\124\
---------------------------------------------------------------------------
    \121\Quoted in Gary Lawson, Federal Administrative Law 207-08 (West 
ed., 5th ed. 2009).
    \122\340 U.S. at 477 (citing N.L.R.B. v. Columbian Enameling & 
Stamping Co., 306 U.S. 292, 300 (1939)).
    \123\Id. at 489, 487, 490.
    \124\Id. at 488 (``The substantiality of evidence must take into 
account whatever in the record fairly detracts from its weight.'').
---------------------------------------------------------------------------
    The Universal Camera statement of the ``substantial 
evidence'' standard remains good law. According to one scholar, 
``No verbal formula adequately expresses the quantum of 
evidence needed to satisfy this new test, but one can fairly 
say that the substantial evidence standard, as articulated by 
the Court in Universal Camera and as applied day-to-day by the 
lower courts that have followed it, is less deferential than 
the jury standard but more deferential than the clearly 
erroneous standard of Fed. R. Civ. P. 52(a).''\125\ In 
Allentown Mack Sales & Service, Inc. v. NLRB, 522 U.S. 359 
(1998), the Supreme Court stated that the question posed by the 
substantial evidence standard is ``whether on this record it 
would have been possible for a reasonable jury to reach the 
Board's conclusion.''\126\ Taken literally, Allentown Mack 
suggests a more deferential gloss on the ``substantial 
evidence'' standard than Universal Camera. Congress could 
resolve this ambiguity by defining the term ``substantial 
evidence'' in the APA itself.
---------------------------------------------------------------------------
    \125\Lawson, note 121 supra, at 386.
    \126\522 U.S. at 366-67.
---------------------------------------------------------------------------
    When reviewing factual findings made at informal 
proceedings, the APA directs courts to accept those findings 
unless they are ``arbitrary, capricious, an abuse of 
discretion, or otherwise not in accordance with law.''\127\ 
Whether this ``arbitrary or capricious'' standard of review 
differs in content from the ``substantial evidence'' standard 
is unsettled. Justice Scalia, then a judge on the U.S. Court of 
Appeals for the District of Columbia Circuit, stated they are 
substantively equivalent.\128\ This remains the view of the 
D.C. Circuit,\129\ and it is shared by Justice Breyer.\130\
---------------------------------------------------------------------------
    \127\5 U.S.C. Sec. 706(2)(A).
    \128\See Ass'n of Data Processing Serv. Orgs., Inc. v. Bd. of 
Governors of Fed. Reserve Sys., 745 F.2d 677, 683, 683-84, 685 (D.C. 
Cir. 1984) (``[I]n their application to the requirement of factual 
support the substantial evidence test and the arbitrary or capricious 
test are one and the same. . . . When the arbitrary or capricious 
standard is performing that function of assuring factual support, there 
is no substantive difference between what it requires and what would be 
required by the substantial evidence test, since it is impossible to 
conceive of a `nonarbitrary' factual judgment supported only by 
evidence that is not substantial in the APA sense. . . . What we have 
said suggests that the normal (APA) meaning of the `substantial 
evidence' terminology connotes a substantive standard no different from 
the arbitrary or capricious test.'').
    \129\See, e.g., Safe Extensions, Inc. v. FAA, 509 F.3d 593, 604 
(D.C. Cir. 2007) (``Nonetheless, . . . the agency's decision still must 
be supported by substantial evidence--otherwise it would be arbitrary 
and capricious. For `it is impossible to conceive of a `nonarbitrary' 
factual judgment supported only by evidence that is not substantial in 
the APA sense.'') (citations omitted).
    \130\Stephen G. Breyer et al., Administrative Law and Regulatory 
Policy 384 (Aspen Publishers, Inc. ed., 6th ed. 2006) (``It is 
increasingly thought that the two tests are the same.'') (quoted in 
Notes, Rationalizing Hard Look Review After the Fact, 122 Harv. L. Rev. 
1909, 1910 n.6 (May 2009)).
---------------------------------------------------------------------------
    Chevron, U.S.A., Inc. v. Natural Resources Defense Council, 
Inc., 467 U.S. 837 (1984), famously establishes a two-step 
process for courts to employ when confronted with an agency's 
interpretation of its statutory authority in rulemaking:

        First, always, is the question whether Congress has 
        directly spoken to the precise question at issue. If 
        the intent of Congress is clear, that is the end of the 
        matter; for the court, as well as the agency, must give 
        effect to the unambiguously expressed intent of 
        Congress. If, however, the court determines Congress 
        has not directly addressed the precise question at 
        issue, the court does not simply impose its own 
        construction on the statute, as would be necessary in 
        the absence of an administrative interpretation. 
        Rather, if the statute is silent or ambiguous with 
        respect to the specific issue, the question for the 
        court is whether the agency's answer is based on a 
        permissible construction of the statute.\131\
---------------------------------------------------------------------------
    \131\467 U.S. at 842-43.

An agency's re-interpretation of its own previous 
interpretation of an ambiguous statute does not preclude 
Chevron deference. Such a re-interpretation is still reviewed 
under the lenient ``permissible construction'' standard applied 
at Chevron step two.\132\
---------------------------------------------------------------------------
    \132\See Nat'l Cable & Telecomm. Ass'n v. Brand X Internet Servs., 
545 U.S. 967 (2005).
---------------------------------------------------------------------------
    Neither informal ruling letters,\133\ nor an agency's 
interpretive rules,\134\ receive Chevron deference. The Supreme 
Court has ``recognized a very good indicator of delegation 
meriting Chevron treatment [exists] in express congressional 
authorizations to engage in the process of rulemaking or 
adjudication that produces regulations or rulings for which 
deference is claimed.''\135\ ``It is fair to assume generally 
that Congress contemplates administrative action with the 
effect of law [and thus compelling Chevron deference] when it 
provides for a relatively formal administrative procedure 
tending to foster the fairness and deliberation that should 
underlie a pronouncement of such force.''\136\ In other words, 
congressional intent to delegate power to an agency to make 
rules with the force of law is the ``touchstone'' for 
determining whether the Chevron analysis is triggered.\137\
---------------------------------------------------------------------------
    \133\See United States v. Mead Corp., 533 U.S. 218 (2001).
    \134\See Gonzales v. Oregon, 546 U.S. 243 (2006).
    \135\Mead Corp., 533 U.S. at 229.
    \136\See id.
    \137\Nathan Alexander Sales & Jonathan H. Adler, The Rest Is 
Silence: Chevron Deference, Agency Jurisdiction, and Statutory 
Silences, 2009 U. Ill. L. Rev. 1497, 1526 (2009).
---------------------------------------------------------------------------
    Another unsettled issue is how much deference a court 
should give to an agency's interpretation of its own 
regulations. In Bowles v. Seminole Rock & Sand Co., 325 U.S. 
410 (1945), the Court was called upon to interpret a wartime 
price control regulation issued by the Administrator of the 
Office of Price Administration, which required that each seller 
could charge no more for a commodity than it charged in March 
1942. Maximum Price Regulation No. 188 refined this General 
Maximum Price Regulation to define the phrase ``highest price 
charged during March 1942.'' The Court explained, ``In this 
case the only problem is to discover the meaning of certain 
portions of Maximum Price Regulation No. 188.''\138\ ``Since 
this involves an interpretation of an administrative regulation 
a court must necessarily look to the administrative 
construction of the regulation if the meaning of the words used 
is in doubt. The intention of Congress or the principles of the 
Constitution in some situations may be relevant in the first 
instance in choosing between various constructions. But the 
ultimate criterion is the administrative interpretation, which 
becomes of controlling weight unless it is plainly erroneous or 
inconsistent with the regulation.''\139\ Thus, the Court 
deferred to the Administrator's interpretation of Maximum Price 
Regulation No. 188. The Court directly re-affirmed the holding 
of Seminole Rock in Auer v. Robbins, 519 U.S. 452 (1997). 
Notably, Justice Scalia--the author of Auer--recently admitted 
that he has ``become increasingly doubtful of its 
validity.''\140\
---------------------------------------------------------------------------
    \138\325 U.S. at 414.
    \139\Id. at 413-14.
    \140\Talk Am., Inc. v. Michigan Bell Tel. Co., 131 S. Ct. 2254, 
2266 (2011) (Scalia, J., concurring) (``When Congress enacts an 
imprecise statute that it commits to the implementation of an executive 
agency, it has no control over that implementation (except, of course, 
through further, more precise, legislation). The legislative and 
executive functions are not combined. But when an agency promulgates an 
imprecise rule, it leaves to itself the implementation of that rule, 
and thus the initial determination of the rule's meaning. . . . `When 
the legislative and executive powers are united in the same person, or 
in the same body of magistrates, there can be no liberty; because 
apprehensions may arise, lest the same monarch or senate should enact 
tyrannical laws, to execute them in a tyrannical manner.''') (quoting 
Montesquieu, The Spirit of the Laws).
---------------------------------------------------------------------------
    It is important to note that Seminole Rock deference only 
applies if the regulation itself is ambiguous. If the 
regulation is not ambiguous, then the court applies the 
regulation according to its plain language and the agency's 
interpretation--whether in an opinion letter, policy statement, 
agency manual, enforcement guidelines, or another document 
lacking the force of law--is ``entitled to respect'' under 
Skidmore v. Swift & Co., 323 U.S. 134 (1944), but only, as 
Skidmore states, insofar as the agency interpretation has the 
``power to persuade.''\141\
---------------------------------------------------------------------------
    \141\323 U.S. at 140 (cited in Christensen v. Harris County, 529 
U.S. 576, 587-88 (2000)).
---------------------------------------------------------------------------
    Some scholars have advocated overturning Seminole Rock 
deference altogether, and giving Skidmore deference to all 
informal agency documents, whether the underlying regulation 
they purport to interpret is ambiguous or not.\142\ In dissent, 
Justice Thomas also has noted the perverse incentives created 
by giving maximum deference to ambiguous regulations.\143\
---------------------------------------------------------------------------
    \142\See, e.g., John F. Manning, Constitutional Structure and 
Judicial Deference to Agency Interpretations of Agency Rules, 96 Colum. 
L. Rev. 612 (1996); William Funk, Legislating for Nonlegislative Rules, 
56 Admin. L. Rev. 1023, 1034 (2004); Peter L. Strauss, Within Marbury: 
The Importance of Judicial Limits on the Executive's Power To Say What 
the Law Is, 116 Yale L.J. Pocket Part 59, 65 n.23 (2006) (citing, inter 
alia, Manning, supra, and Thomas Jefferson Univ., note 143 infra).
    \143\See Thomas Jefferson Univ. v. Shalala, 512 U.S. 504, 525 
(1994) (Thomas, J., dissenting) (``Here, far from resolving ambiguity 
in the Medicare program statutes, the Secretary has merely replaced 
statutory ambiguity with regulatory ambiguity. It is perfectly 
understandable, of course, for an agency to issue vague regulations, 
because to do so maximizes agency power and allows the agency greater 
latitude to make law through adjudication rather than through the more 
cumbersome rulemaking process. Nonetheless, agency rules should be 
clear and definite so that affected parties will have adequate notice 
concerning the agency's understanding of the law.'').
---------------------------------------------------------------------------
    At its February 28 and May 31 hearings, the Subcommittee 
received testimony that ``federal courts in general are 
exceedingly deferential'' to regulatory agencies in the 
Executive Branch.\144\ Messrs. Rosen\145\ and Francisco\146\ 
both testified to this effect, and they both commented on the 
apparently counter-intuitive system whereby agency decisions 
made by informal rulemaking receive a lower standard of 
judicial review, and therefore a greater degree of judicial 
deference, than agency decisions made by more rigorous formal 
rulemaking.\147\ Similarly, in her written responses to the 
Subcommittee's Questions for the Record from the May 4 hearing, 
Ms. Katzen observed, ``Even though there are occasional 
newsworthy stories of courts' remanding regulatory actions to 
the issuing agencies, for the most part courts defer to agency 
expertise so long as the basis for the decision is recorded and 
documented.''\148\
---------------------------------------------------------------------------
    \144\APA at 65, note 13 supra, at 35 (Testimony of Jeffrey Rosen).
    \145\Ibid.
    \146\Formal Rulemaking and Judicial Review, note 16 supra, at 179 
(``Over time, however, the balance between deference and judicial 
oversight has tended strongly toward deference and away from rigorous 
judicial review. This shift toward ever-increasing deference weakens 
the primary check on agency discretion.'').
    \147\APA at 65, note 13 supra, at 39 (Testimony of Jeffrey Rosen); 
Formal Rulemaking and Judicial Review, note 16 supra, at 175 (Testimony 
of Noel Francisco).
    \148\Cost-Justifying Regulations, note 15 supra, at 70.
---------------------------------------------------------------------------
    Consistent with academic criticism, Mr. Francisco 
specifically questioned the deference doctrines established by 
the Supreme Court in Bowles v. Seminole Rock & Sand Co., 325 
U.S. 410 (1945), and Auer v. Robbins, 519 U.S. 452 (1997).\149\ 
Mr. Francisco also objected to the notion, over which the 
courts of appeals are split, that a court should defer to an 
agency's interpretation of its own jurisdiction.\150\
---------------------------------------------------------------------------
    \149\Formal Rulemaking and Judicial Review, note 16 supra, at 179-
81.
    \150\Id. at 180 (citing Sales & Adler, note 135 supra, at 1518 
(``In all, four courts of appeals have concluded that Chevron is fully 
applicable to jurisdictional interpretations: the Second, Third, 
Fourth, and Ninth Circuits. The Federal and Seventh Circuits have 
declined to extend Chevron deference. The D.C. and Eighth Circuits 
appear to have resolved the issue both ways. After initially signaling 
that Chevron is inapplicable to jurisdictional questions, the courts 
have shown their willingness to extend deference in more recent cases. 
The question remains unresolved in the remaining circuits.'')); Cass R. 
Sunstein, Law and Administration after Chevron, 90 Colum. L. Rev. 2071, 
2099 (Dec. 1990) (``[C]ourts should probably refuse to defer to agency 
decisions with respect to issues of jurisdiction--again, if we assume 
that the distinction between jurisdictional and nonjurisdictional 
questions is easily administrable. The principal reason is that 
Congress would be unlikely to want agencies to have the authority to 
decide on the extent of their own powers. To accord such power to 
agencies would be to allow them to be judges in their own cause, in 
which they are of course susceptible to bias.'')).
---------------------------------------------------------------------------
            ii. LReviewing ``Interim-Final'' Rules
    The APA allows an agency to make what is known as an 
``interim-final rule'' ``when the agency for good cause finds 
(and incorporates the finding and a brief statement of reasons 
therefore in the rules issued) that notice and public procedure 
thereon are impracticable, unnecessary, or contrary to the 
public interest.''\151\ The interim-final rule is effective 
immediately, but ``[t]he adopting agency declares that it will 
consider . . . public comments'' after the interim-final rule 
is issued, ``will modify the rule in light of those comments, 
and will then adopt a final rule.''\152\ Because interim-final 
rules necessarily ``restrict public participation''\153\ and 
``hinder APA procedures,''\154\ both Ms. Dudley and Mr. Rosen 
suggested that Congress examine this aspect of the APA.
---------------------------------------------------------------------------
    \151\5 U.S.C. Sec. 553(b)(3)(B).
    \152\Michael Asimow, Interim-Final Rules: Making Haste Slowly, 51 
Admin. L. Rev. 703, 704 (Summer 1999).
    \153\APA at 65, note 13 supra, at 37 (Testimony of Jeffrey Rosen).
    \154\Id. at 21 (Testimony of Susan Dudley).
---------------------------------------------------------------------------
C. LIncreasing Regulatory Transparency
            i. LRequiring advance notice of potential rulemakings
    At the Subcommittee's March 29, 2011, hearing, Drs. Ellig 
and Williams both testified that agencies often make the 
decision to regulate behind closed doors, away from the public 
eye and before commencing the legally required regulatory 
process.\155\ ``This doesn't mean that no stakeholders have 
influence over the early decisions. Generally, those that have 
petitioned for and favor regulations are heard from early in 
the process to help shape the initial decisions.''\156\ For 
example, the Center for Progressive Reform recently accused the 
Administration of ``put[ting] the cart before the horse'' by 
directly negotiating fuel economy and greenhouse gas emission 
standards with automakers, which ``short-circuited'' the 
notice-and-comment rulemaking process and reduced it to an 
empty formality.\157\ Consequently, ``the number the President 
will roll out [54.5 mpg by 2025] was the result of raw 
political wrangling, not the rational policymaking process that 
the Administration purports to pride itself on.''\158\ This is 
consistent with Professor Strauss's testimony at the February 
28 hearing:
---------------------------------------------------------------------------
    \155\Raising the Agencies' Grades, note 14 supra, at 21 (Testimony 
of Jerry Ellig) (``All too often, agency economists have to conduct 
regulatory analysis after most major decisions about regulations have 
already been made. The analysis then becomes an advocacy document 
written to justify the agency's decisions, or a mere paperwork exercise 
to fulfill requirements imposed by the Office of Management and 
Budget.''); id. at 74 (Testimony of Richard Williams) (``But that 
analysis is generally begun after the decision on how to regulate has 
been announced. That is a key part of the problem: the regulatory 
analysis analyzes a decision, not a problem.'').
    \156\Id. at 78 (Testimony of Richard Williams).
    \157\Amy Sinden & Lena Pons, White House Flouts Agency Heads, Rolls 
Out Backroom Deal on Fuel Economy Standard, CPRBlog (July 29, 2011), 
http://www.progressivereform.org/
CPRBlog.cfm?idBlog=7426C8E2-CF0F-8446-72B4F05FF595E94B (last accessed 
Nov. 18, 2011).
    \158\Id.; see also Letter from Hon. Darrell Issa, Chairman of the 
House Committee on Oversight and Government Reform, to Hon. Kathryn 
Ruemmler, Counsel to the President (Aug. 11, 2011) (letter on file with 
Committee).
---------------------------------------------------------------------------
    Often what occurs before a notice of proposed rulemaking 
has been published produces commitments that, in the words of 
President George H.W. Bush's General Counsel at the EPA, 
convert notice and comment rulemaking into a form of Kabuki 
theater--`a highly stylized process for displaying in a formal 
way the essence of something which in real life takes place in 
other venues.'\159\
---------------------------------------------------------------------------
    \159\APA at 65, note 13 supra, at 48-49 (quoting E. Donald Elliott, 
Re-Inventing Rulemaking, 41 Duke L.J. 1490, 1492 (June 1992)).
---------------------------------------------------------------------------
    Dr. Williams observes that this phenomenon is a result of 
the agency's overriding incentive to regulate whenever 
possible, and that what is needed is ``to decouple the agency's 
decision from both early analysis of and democratic input into 
a problem. That is, initially, agencies should perform 
regulatory analysis and make that analysis available for public 
comment. There should be no discussion of the agency's 
preferred solutions in this document.''\160\ Specifically, Dr. 
Williams recommended requiring agencies to give:
---------------------------------------------------------------------------
    \160\Raising the Agencies' Grades, note 14 supra, at 77.

         LA clear definition of the problem that the 
        agency seeks to solve and the evidence it relied on to 
---------------------------------------------------------------------------
        define the problem;

         LAn explanation, supported by evidence, of why 
        a Federal solution is necessary;

         LThe possible ways to solve the problem; and

         LA preliminary estimate of the benefits and 
        costs of each option.\161\
---------------------------------------------------------------------------
    \161\Id. at 78.

    Dr. Ellig concurs in these recommendations.\162\ Mr. Rosen 
also testified, ``[g]reater use of the Advanced Notice of 
Proposed Rule-making and similar advance processes would be a 
good thing.''\163\ Ms. Dudley recommended Congress consider 
this proposal as well.\164\ Relatedly, on May 4, 2011, Mr. 
Holmstead described how potentially collusive litigation 
between regulatory agencies and interested parties can 
undermine the regulatory process.\165\
---------------------------------------------------------------------------
    \162\Id. at 28.
    \163\APA at 65, note 13 supra, at 37.
    \164\Id. at 20.
    \165\Cost-Justifying Regulations, note 15 supra, at 18.
---------------------------------------------------------------------------
            ii. LEnhancing the effectiveness of the Information Quality 
                    Act
    Congress enacted the Information Quality Act as Section 515 
of the Treasury and General Government Appropriations Act for 
Fiscal Year 2001.\166\ The IQA requires the OMB Director to 
``issue guidelines . . . that provide policy and procedural 
guidance to Federal agencies for ensuring and maximizing the 
quality, objectivity, utility, and integrity of information 
(including statistical information) disseminated by Federal 
agencies in fulfillment of the purposes and provisions of'' the 
Paperwork Reduction Act.\167\ Further, the IQA instructs that 
Federal agencies shall ``issue guidelines ensuring and 
maximizing the quality, objectivity, utility, and integrity of 
information (including statistical information) disseminated by 
the agency,'' to ``establish administrative mechanisms allowing 
affected persons to seek and obtain correction of information 
maintained and disseminated by the agency'' and to report both 
``the number and nature of complaints received by the agency 
regarding the accuracy of information disseminated'' and ``how 
such complaints were handled.''\168\
---------------------------------------------------------------------------
    \166\See Pub. L. No. 106-554.
    \167\Id. Sec. 515(a).
    \168\Id. Sec. 515(b).
---------------------------------------------------------------------------
    The U.S. Court of Appeals for the Fourth Circuit has held, 
``[n]either the Act itself nor its very limited legislative 
history provide a mechanism for judicial review of information 
quality or any avenue for judicial relief.''\169\ Several lower 
courts also have held that an agency's failure to comply with 
the IQA is not judicially reviewable.\170\
---------------------------------------------------------------------------
    \169\Salt Inst. v. Thompson, 345 F. Supp. 2d 589, 593 (E.D. Va. 
2004), aff'd sub nom. Salt Inst. v. Leavitt, 440 F.3d 156, 159 (4th 
Cir. 2006) (``By its terms, [the IQA] creates no legal rights in any 
third parties. Instead, it orders the Office of Management and Budget 
to draft guidelines concerning information quality and specifies what 
those guidelines should contain. Because the statute upon which 
appellants rely does not create a legal right to access to information 
or to correctness, appellants have not alleged an invasion of a legal 
right and, thus, have failed to establish an injury in fact sufficient 
to satisfy Article III.''). But cf. Prime Time Int'l Co. v. Vilsack, 
599 F.3d 678 (D.C. Cir. 2010) (affirming the dismissal of appellant's 
IQA challenge not because the IQA ``creates no legal rights in any 
third party'' as the district court held, but pursuant to OMB's 
decision ``to exclude documents prepared and distributed in the context 
of adjudicative proceedings'' from the IQA).
    \170\See, e.g., San Luis & Delta-Mendota Water Auth. v. Salazar, 
760 F. Supp. 2d 855, 964 (E.D. Cal. 2010); Habitat for Horses v. 
Salazar, 745 F. Supp. 2d 438, 455-56 (S.D.N.Y. 2010); In re Operation 
of the Missouri River Sys. Litig., 363 F. Supp. 2d 1145, 1174-75 (D. 
Minn. 2004).
---------------------------------------------------------------------------
    On February 28, 2011, Mr. Rosen recommended Congress 
clarify that judicial review is available under the IQA.\171\ 
Ms. Dudley suggested Congress ``consider amending the IQA to 
make agency decisions reviewable.''\172\ In the same vein, on 
May 31, 2011, Mr. Francisco suggested that one way to enhance 
the effectiveness of the IQA would be to incorporate it into 
the APA.\173\
---------------------------------------------------------------------------
    \171\APA at 65, note 13 supra, at 39.
    \172\Id. at 18.
    \173\Formal Rulemaking and Judicial Review, note 16 supra, at 183.
---------------------------------------------------------------------------
            iii. LImproving the record to support significant rules
    The APA establishes two basic methods for agencies to take 
action: rulemaking and adjudication, with formal and informal 
procedures for each method. In rulemakings, formal procedures 
are required when a statute requires rules ``to be made on the 
record after opportunity for an agency hearing.''\174\ Formal 
rulemaking entails some trial-like procedures and ``requires 
the agency to provide private parties potentially affected by 
the rule with an oral hearing in which they can present 
witnesses and cross examine opposing witnesses.''\175\
---------------------------------------------------------------------------
    \174\5 U.S.C. Sec. Sec. 553(c), 556 & 557.
    \175\Edward Rubin, It's Time to Make the Administrative Procedure 
Act Administrative, 89 Cornell L. Rev. 95, 106 (2003) (citing 5 U.S.C. 
Sec. 556(d)).
---------------------------------------------------------------------------
    ``Agencies made little use of rulemaking in the first two 
decades following enactment of the APA. The New Deal agencies 
viewed themselves as akin to special purpose courts. They 
eschewed the opportunity to issue rules in favor of near 
exclusive reliance on adjudicatory proceedings.''\176\ As 
discussed earlier in this Report, in the 1960's and 1970's 
agencies began to utilize rulemaking under the APA more 
frequently. This shift from adjudication towards rulemaking was 
due in part to a growing belief among administrative law 
scholars that rulemaking is superior to adjudication, and in 
part to a new wave of regulatory agencies created by Congress 
(e.g., the Environmental Protection Agency and the Occupational 
Safety and Health Administration).\177\ ``These agencies 
differed from their 1930's predecessors in important respects. 
The New Deal agencies were headed by commissions that included 
members from both political parties serving statutory terms; 
the new ones were generally headed by a single administrator 
serving at the President's pleasure. While most of the older 
agencies regulated single industries, the new ones regulated 
wide sectors of the economy.''\178\
---------------------------------------------------------------------------
    \176\Richard J. Pierce, Jr., Rulemaking and the Administrative 
Procedure Act, 32 Tulsa L.J. 185, 187 (1996).
    \177\Id. at 188-90.
    \178\H.R. 3010, note 11 supra (Testimony of Christopher DeMuth).
---------------------------------------------------------------------------
    Despite the growing trend toward rulemaking and away from 
adjudication, rulemaking typically still remained of the formal 
variety. The Attorney General's Manual on the Administrative 
Procedure Act explains that when a statute requires an agency 
to formulate a rule after a ``hearing,'' ``the agencies and the 
courts have long assumed that the agency's action must be based 
upon the record made in the hearing,'' and therefore that the 
organic statute requires formal rulemaking.\179\ Thus, 
``[u]ntil 1973, most agencies believed that they were required 
to use formal rulemaking procedures, including an oral 
evidentiary hearing, if a statute authorized them to act only 
after providing an opportunity for a `hearing.' This belief, 
reinforced by some judicial decisions, acted as a powerful 
deterrent to the use of rulemakings by the many agencies whose 
statutes conditioned their power to act on provision of a 
`hearing.'''\180\
---------------------------------------------------------------------------
    \179\Quoted in Lawson, note 121 supra, at 207-08.
    \180\Pierce, note 176 supra, at 194.
---------------------------------------------------------------------------
    Today, however, agencies ``avoid formal rulemaking whenever 
possible. The United States Supreme Court facilitated the 
avoidance of formal rulemaking procedures through a series of 
decisions that made clear that formal rulemaking procedures are 
seldom required by due process, the APA, or an agency's organic 
statute.''\181\ In United States v. Allegheny-Ludlum Steel 
Corp., 406 U.S. 742 (1972), the Supreme Court held that the 
words ``after hearing'' in a statute did not require the agency 
to hold a formal hearing in order to make a rule establishing 
certain railroad rates. The Court based its conclusion on the 
fact that the Interstate Commerce Act ``does not require that 
such rules `be made on the record,''' which is the particular 
phrase used for formal rulemaking in the APA.\182\
---------------------------------------------------------------------------
    \181\Richard E. Levy & Sidney A. Shapiro, Administrative Procedure 
and the Decline of the Trial, 51 Kan. L. Rev. 473, 485 (2003).
    \182\406 U.S. at 757 (citing 5 U.S.C. Sec. 553(c)). See also United 
States v. Florida E. Coast Ry. Co., 410 U.S. 224, 241 (1973) 
(``Similarly, even where the statute requires that the rulemaking 
procedure take place `on the record after opportunity for an agency 
hearing,' thus triggering the applicability of Sec. 556. . . .'').
---------------------------------------------------------------------------
    Consequently, ``formal rulemaking has turned out to be a 
null set;''\183\ it has ``virtually disappeared as a procedural 
category.''\184\ It is studiously eschewed by agencies. 
``Congress rarely requires this technique, and courts avoid 
interpreting statutes to require it, even in the rare cases 
where the statute seems to do so.''\185\ Lower courts may deny 
that their analysis of whether formal rulemaking is required 
``turn[s], mechanically, on the absence of magic words,''\186\ 
but the fact remains that ``since [Florida East Coast Railway] 
was decided, no statute that does not contain the magic words 
`on the record' has been found to require formal 
rulemaking.''\187\
---------------------------------------------------------------------------
    \183\Rubin, note 175 supra, at 106.
    \184\Lawson, note 121 supra, at 229.
    \185\Rubin, note 175 supra, at 107.
    \186\St. Louis Fuel & Supply Co. v. FERC, 890 F.2d 446, 448 (D.C. 
Cir. 1989).
    \187\Lawson, note 121 supra, at 229.
---------------------------------------------------------------------------
    Notwithstanding the trend of court decisions and agency 
practice, formal rulemaking continues to offer the advantages 
that it more rigorously proves facts and more transparently 
reveals agency decision-making. As rulemaking subjects have 
become more complex and the real costs of agency rules have 
risen ever higher, there has been renewed interest in using 
some formal rulemaking procedures to assure better agency fact-
finding and decision-making.
    At the Subcommittee's February 28, 2011, hearing, Mr. Rosen 
discussed how formal rulemaking--i.e., rulemaking based on 
formal agency hearings--was specifically contemplated by the 
APA, but has become a dead letter over the past several 
decades.\188\ Mr. Rosen testified that the formal procedures 
discussed in 5 U.S.C. Sec. Sec. 556 and 557 (with evidence 
presentation and cross-examination) ``can be especially 
beneficial for issues involving complex empirical or scientific 
issues.''\189\ Mr. Rosen added, ``[t]here is no better tool 
than cross-examination to expose unsupportable factual 
assertions and assure the public that only the best science 
underlies agency action.''\190\ One option Mr. Rosen suggested 
is that ``all `major rules' above a certain threshold could be 
subject to formal rulemaking. . . .''\191\ Ms. Dudley suggested 
that ``legislators might consider amending the APA to [] expand 
the use of formal rulemaking procedures.''\192\
---------------------------------------------------------------------------
    \188\APA at 65, note 13 supra, at 35, 38.
    \189\Id. at 35.
    \190\Id. at 38.
    \191\Ibid.
    \192\Id. at 17.
---------------------------------------------------------------------------
    On May 31, 2011, Mr. Francisco observed that ``[f]ormal 
rulemaking is often called `rulemaking on a record' because 
these trial-type proceedings provide much more opportunity for 
the agency to develop a formal record before issuing a final 
rule.''\193\ Mr. Francisco also explained that formal 
rulemaking is subject to a higher standard of judicial review 
than informal rulemaking, i.e., ``substantial evidence'' versus 
``arbitrary or capricious'' review.\194\ Mr. Francisco 
suggested that Congress consider legislation to put ``a renewed 
emphasis on formal rulemaking procedures.''\195\
---------------------------------------------------------------------------
    \193\Formal Rulemaking and Judicial Review, note 16 supra, at 177.
    \194\Id. at 178.
    \195\Ibid.
---------------------------------------------------------------------------
    Also on May 31, Mr. Warren testified at length in favor of 
``mak[ing] carefully-tailored amendments to the Administrative 
Procedure Act (`APA') which would permit slightly more formal 
procedures for major rules currently reviewed by [OIRA] under 
Executive Orders 12866 and 13563.'' Believing ``that additional 
procedures are warranted in the interest of improving the 
agency work product,''\196\ Mr. Warren suggested that the 
additional formal procedures should be ``in addition to, not in 
lieu of,'' the procedures for informal rulemaking.\197\
---------------------------------------------------------------------------
    \196\Id. at 39.
    \197\Ibid.
---------------------------------------------------------------------------

                                Hearings

    This year the Subcommittee on Courts, Commercial and 
Administrative Law held a series of four hearings featuring 
thirteen witnesses to consider how the APA could be improved to 
create jobs and promote economic growth by improving agencies' 
decision-making processes and enhancing regulatory transparency 
and accountability. The Subcommittee's hearings were held on 
February 28, March 29, May 4 and May 31, 2011, and the 
witnesses are listed earlier in this Report. On October 25, 
2011, the Full Committee held a legislative hearing on the 
Bill, with testimony from four witnesses, also listed above.

                        Committee Consideration

    On November 3, 2011, the Committee met in open session and 
ordered the bill, H.R. 3010, favorably reported with an 
amendment in the nature of a substitute, by a rollcall vote of 
16 to 6, a quorum being present.

                            Committee Votes

    In compliance with clause 3(b) of rule XIII of the Rules of 
the House of Representatives, the Committee advises that the 
following rollcall votes occurred during the Committee's 
consideration of H.R. 3010.
    1. Amendment #8, offered by Mr. Watt. The Amendment would 
strike Section 3(e) from the Act, which requires hearings for 
high-impact rules. Defeated 13 to 16.

                                                 ROLLCALL NO. 1
----------------------------------------------------------------------------------------------------------------
                                                                       Ayes            Nays           Present
----------------------------------------------------------------------------------------------------------------
Mr. Smith, Chairman.............................................                              X
Mr. Sensenbrenner, Jr...........................................                              X
Mr. Coble.......................................................                              X
Mr. Gallegly....................................................                              X
Mr. Goodlatte...................................................
Mr. Lungren.....................................................
Mr. Chabot......................................................
Mr. Issa........................................................
Mr. Pence.......................................................
Mr. Forbes......................................................                              X
Mr. King........................................................                              X
Mr. Franks......................................................                              X
Mr. Gohmert.....................................................                              X
Mr. Jordan......................................................                              X
Mr. Poe.........................................................                              X
Mr. Chaffetz....................................................                              X
Mr. Griffin.....................................................                              X
Mr. Marino......................................................                              X
Mr. Gowdy.......................................................                              X
Mr. Ross........................................................
Ms. Adams.......................................................
Mr. Quayle......................................................                              X
Mr. Amodei......................................................                              X
Mr. Conyers, Jr., Ranking Member................................              X
Mr. Berman......................................................
Mr. Nadler......................................................              X
Mr. Scott.......................................................              X
Mr. Watt........................................................              X
Ms. Lofgren.....................................................              X
Ms. Jackson Lee.................................................              X
Ms. Waters......................................................              X
Mr. Cohen.......................................................              X
Mr. Johnson.....................................................              X
Mr. Pierluisi...................................................              X
Mr. Quigley.....................................................              X
Ms. Chu.........................................................
Mr. Deutch......................................................              X
Ms. Sanchez.....................................................              X
(Vacant)........................................................
                                                                 -----------------------------------------------
    Total.......................................................             13              16
----------------------------------------------------------------------------------------------------------------

    2. Amendment #12, offered by Mr. Nadler. The Amendment 
would exempt from the Act ``any proposed rule, final rule, or 
guidance made by the Nuclear Regulatory Commission under the 
Atomic Energy Act.'' Defeated 13 to 16.

                                                 ROLLCALL NO. 2
----------------------------------------------------------------------------------------------------------------
                                                                       Ayes            Nays           Present
----------------------------------------------------------------------------------------------------------------
Mr. Smith, Chairman.............................................                              X
Mr. Sensenbrenner, Jr...........................................                              X
Mr. Coble.......................................................                              X
Mr. Gallegly....................................................                              X
Mr. Goodlatte...................................................
Mr. Lungren.....................................................
Mr. Chabot......................................................
Mr. Issa........................................................
Mr. Pence.......................................................
Mr. Forbes......................................................                              X
Mr. King........................................................                              X
Mr. Franks......................................................                              X
Mr. Gohmert.....................................................                              X
Mr. Jordan......................................................                              X
Mr. Poe.........................................................                              X
Mr. Chaffetz....................................................                              X
Mr. Griffin.....................................................                              X
Mr. Marino......................................................                              X
Mr. Gowdy.......................................................                              X
Mr. Ross........................................................
Ms. Adams.......................................................
Mr. Quayle......................................................                              X
Mr. Amodei......................................................                              X
Mr. Conyers, Jr., Ranking Member................................              X
Mr. Berman......................................................
Mr. Nadler......................................................              X
Mr. Scott.......................................................              X
Mr. Watt........................................................              X
Ms. Lofgren.....................................................              X
Ms. Jackson Lee.................................................              X
Ms. Waters......................................................
Mr. Cohen.......................................................              X
Mr. Johnson.....................................................              X
Mr. Pierluisi...................................................              X
Mr. Quigley.....................................................              X
Ms. Chu.........................................................              X
Mr. Deutch......................................................              X
Ms. Sanchez.....................................................              X
(Vacant)........................................................
                                                                 -----------------------------------------------
    Total.......................................................             13              16
----------------------------------------------------------------------------------------------------------------

    3. Amendment #10, offered by Mr. Cohen. The Amendment would 
strike Section 7 from the Act, which pertains to the scope of 
judicial review. Defeated 14 to 18.

                                                 ROLLCALL NO. 3
----------------------------------------------------------------------------------------------------------------
                                                                       Ayes            Nays           Present
----------------------------------------------------------------------------------------------------------------
Mr. Smith, Chairman.............................................                              X
Mr. Sensenbrenner, Jr...........................................                              X
Mr. Coble.......................................................                              X
Mr. Gallegly....................................................                              X
Mr. Goodlatte...................................................
Mr. Lungren.....................................................
Mr. Chabot......................................................                              X
Mr. Issa........................................................
Mr. Pence.......................................................                              X
Mr. Forbes......................................................                              X
Mr. King........................................................                              X
Mr. Franks......................................................                              X
Mr. Gohmert.....................................................                              X
Mr. Jordan......................................................
Mr. Poe.........................................................                              X
Mr. Chaffetz....................................................                              X
Mr. Griffin.....................................................                              X
Mr. Marino......................................................                              X
Mr. Gowdy.......................................................                              X
Mr. Ross........................................................                              X
Ms. Adams.......................................................
Mr. Quayle......................................................                              X
Mr. Amodei......................................................                              X
Mr. Conyers, Jr., Ranking Member................................              X
Mr. Berman......................................................
Mr. Nadler......................................................              X
Mr. Scott.......................................................              X
Mr. Watt........................................................              X
Ms. Lofgren.....................................................              X
Ms. Jackson Lee.................................................              X
Ms. Waters......................................................              X
Mr. Cohen.......................................................              X
Mr. Johnson.....................................................              X
Mr. Pierluisi...................................................              X
Mr. Quigley.....................................................              X
Ms. Chu.........................................................              X
Mr. Deutch......................................................              X
Ms. Sanchez.....................................................              X
(Vacant)........................................................
                                                                 -----------------------------------------------
    Total.......................................................             14              18
----------------------------------------------------------------------------------------------------------------

    4. Amendment #5, offered by Mr. Nadler. The Amendment would 
strike Section 3 from the Act, which requires agencies to 
consult with OIRA during the rulemaking process. Defeated 13 to 
20.

                                                 ROLLCALL NO. 4
----------------------------------------------------------------------------------------------------------------
                                                                       Ayes            Nays           Present
----------------------------------------------------------------------------------------------------------------
Mr. Smith, Chairman.............................................                              X
Mr. Sensenbrenner, Jr...........................................                              X
Mr. Coble.......................................................                              X
Mr. Gallegly....................................................                              X
Mr. Goodlatte...................................................
Mr. Lungren.....................................................
Mr. Chabot......................................................                              X
Mr. Issa........................................................
Mr. Pence.......................................................                              X
Mr. Forbes......................................................                              X
Mr. King........................................................                              X
Mr. Franks......................................................                              X
Mr. Gohmert.....................................................
Mr. Jordan......................................................                              X
Mr. Poe.........................................................                              X
Mr. Chaffetz....................................................                              X
Mr. Griffin.....................................................                              X
Mr. Marino......................................................                              X
Mr. Gowdy.......................................................                              X
Mr. Ross........................................................                              X
Ms. Adams.......................................................                              X
Mr. Quayle......................................................                              X
Mr. Amodei......................................................                              X
Mr. Conyers, Jr., Ranking Member................................              X
Mr. Berman......................................................
Mr. Nadler......................................................              X
Mr. Scott.......................................................              X
Mr. Watt........................................................              X
Ms. Lofgren.....................................................              X
Ms. Jackson Lee.................................................              X
Ms. Waters......................................................              X
Mr. Cohen.......................................................              X
Mr. Johnson.....................................................              X
Mr. Pierluisi...................................................                              X
Mr. Quigley.....................................................              X
Ms. Chu.........................................................              X
Mr. Deutch......................................................              X
Ms. Sanchez.....................................................              X
(Vacant)........................................................
                                                                 -----------------------------------------------
    Total.......................................................             13              20
----------------------------------------------------------------------------------------------------------------

    5. Amendment #2, offered by Mr. Cohen. The Amendment would 
specify that the cost-benefit analysis requirements in Sections 
3 and 4 apply only if they do not conflict with any other law. 
Defeated 14 to 15.

                                                 ROLLCALL NO. 5
----------------------------------------------------------------------------------------------------------------
                                                                       Ayes            Nays           Present
----------------------------------------------------------------------------------------------------------------
Mr. Smith, Chairman.............................................                              X
Mr. Sensenbrenner, Jr...........................................                              X
Mr. Coble.......................................................                              X
Mr. Gallegly....................................................                              X
Mr. Goodlatte...................................................
Mr. Lungren.....................................................
Mr. Chabot......................................................                              X
Mr. Issa........................................................
Mr. Pence.......................................................
Mr. Forbes......................................................
Mr. King........................................................                              X
Mr. Franks......................................................                              X
Mr. Gohmert.....................................................
Mr. Jordan......................................................
Mr. Poe.........................................................                              X
Mr. Chaffetz....................................................                              X
Mr. Griffin.....................................................                              X
Mr. Marino......................................................                              X
Mr. Gowdy.......................................................                              X
Mr. Ross........................................................
Ms. Adams.......................................................                              X
Mr. Quayle......................................................                              X
Mr. Amodei......................................................                              X
Mr. Conyers, Jr., Ranking Member................................              X
Mr. Berman......................................................
Mr. Nadler......................................................              X
Mr. Scott.......................................................              X
Mr. Watt........................................................              X
Ms. Lofgren.....................................................              X
Ms. Jackson Lee.................................................              X
Ms. Waters......................................................              X
Mr. Cohen.......................................................              X
Mr. Johnson.....................................................              X
Mr. Pierluisi...................................................              X
Mr. Quigley.....................................................              X
Ms. Chu.........................................................              X
Mr. Deutch......................................................              X
Ms. Sanchez.....................................................              X
(Vacant)........................................................
                                                                 -----------------------------------------------
    Total.......................................................             14              15
----------------------------------------------------------------------------------------------------------------

    6. Reporting H.R. 3010 as amended. The Act will improve and 
reform the Federal regulatory process to reduce unnecessary 
burdens on job creators. Approved 16 to 6.

                                                 ROLLCALL NO. 6
----------------------------------------------------------------------------------------------------------------
                                                                       Ayes            Nays           Present
----------------------------------------------------------------------------------------------------------------
Mr. Smith, Chairman.............................................              X
Mr. Sensenbrenner, Jr...........................................
Mr. Coble.......................................................              X
Mr. Gallegly....................................................              X
Mr. Goodlatte...................................................              X
Mr. Lungren.....................................................
Mr. Chabot......................................................
Mr. Issa........................................................              X
Mr. Pence.......................................................
Mr. Forbes......................................................              X
Mr. King........................................................              X
Mr. Franks......................................................              X
Mr. Gohmert.....................................................
Mr. Jordan......................................................
Mr. Poe.........................................................              X
Mr. Chaffetz....................................................              X
Mr. Griffin.....................................................              X
Mr. Marino......................................................              X
Mr. Gowdy.......................................................              X
Mr. Ross........................................................              X
Ms. Adams.......................................................              X
Mr. Quayle......................................................
Mr. Amodei......................................................              X
Mr. Conyers, Jr., Ranking Member................................
Mr. Berman......................................................
Mr. Nadler......................................................
Mr. Scott.......................................................                              X
Mr. Watt........................................................
Ms. Lofgren.....................................................
Ms. Jackson Lee.................................................
Ms. Waters......................................................                              X
Mr. Cohen.......................................................
Mr. Johnson.....................................................                              X
Mr. Pierluisi...................................................                              X
Mr. Quigley.....................................................
Ms. Chu.........................................................                              X
Mr. Deutch......................................................
Ms. Sanchez.....................................................                              X
(Vacant)........................................................
                                                                 -----------------------------------------------
    Total.......................................................             16               6
----------------------------------------------------------------------------------------------------------------

                      Committee Oversight Findings

    In compliance with clause 3(c)(1) of rule XIII of the Rules 
of the House of Representatives, the Committee advises that the 
findings and recommendations of the Committee, based on 
oversight activities under clause 2(b)(1) of rule X of the 
Rules of the House of Representatives, are incorporated in the 
descriptive portions of this report.

               New Budget Authority and Tax Expenditures

    Clause 3(c)(2) of rule XIII of the Rules of the House of 
Representatives is inapplicable because this legislation does 
not provide new budgetary authority or increased tax 
expenditures.

               Congressional Budget Office Cost Estimate

    In compliance with clause 3(c)(3) of rule XIII of the Rules 
of the House of Representatives, the Committee sets forth, with 
respect to the bill, H.R. 3010, the following estimate and 
comparison prepared by the Director of the Congressional Budget 
Office under section 402 of the Congressional Budget Act of 
1974:

                                     U.S. Congress,
                               Congressional Budget Office,
                                 Washington, DC, November 21, 2011.
Hon. Lamar Smith, Chairman,
Committee on the Judiciary,
House of Representatives, Washington, DC.
    Dear Mr. Chairman: The Congressional Budget Office has 
prepared the enclosed cost estimate for H.R. 3010, the 
Regulatory Accountability Act of 2011.
    If you wish further details on this estimate, we will be 
pleased to provide them. The CBO staff contacts are Sean 
Dunbar, who can be reached at 226-9010, and Susanne S. Mehlman, 
who can be reached at 226-2860.
            Sincerely,
                                      Douglas W. Elmendorf,
                                                  Director.

Enclosure

cc:
        Honorable John Conyers, Jr.
        Ranking Member
H.R. 3010--Regulatory Accountability Act of 2011.



As ordered reported by the House Committee on the Judiciary on 
                        November 3, 2011




                                SUMMARY

    H.R. 3010 would amend the Administrative Procedures Act 
(APA), which is the law that governs how Federal agencies 
propose and establish regulations. Enacting this legislation 
would codify many practices aimed at increasing regulatory 
transparency and accountability that are currently required 
under several executive orders. However, this legislation also 
would impose some new requirements on Federal agencies related 
to the rulemaking process and would extend some of the current 
requirements under the executive orders to additional Federal 
agencies. Except for changes permitting judicial review for 
compliance with the Information Quality Act (enacted as part of 
the Consolidated Appropriations Acts, 2001 [Public Law 106-
554]), the changes contained in this legislation would not 
apply to any rulemaking pending or completed on the date of 
enactment.
    CBO estimates that implementing H.R. 3010 would cost about 
$70 million over the 2012-2016 period, assuming appropriation 
of the necessary funds. Such funding would cover the 
governmentwide costs of additional personnel, contractor costs, 
and other administrative expenses associated with meeting the 
new requirements under the legislation.
    CBO also expects that enacting H.R. 3010 could delay the 
issuance of some final rules each year. As a result, CBO and 
the staff of the Joint Committee on Taxation (JCT) expect that 
enacting H.R. 3010 could have effects on both direct spending 
and revenues. Therefore, pay-as-you-go procedures apply to the 
legislation. However, given the large number of major rules 
issued each year and the extent to which rules vary in their 
nature and scope, we cannot determine the level of costs or 
savings stemming from delaying the effective date of some 
rules. In addition, while enacting the bill could affect direct 
spending and revenues if agencies not funded through annual 
appropriations incur additional costs, CBO estimates that any 
net increase in spending or change in revenues for those 
agencies would not be significant.
    CBO expects that H.R. 3010 would impose no 
intergovernmental or private-sector mandates as defined in the 
Unfunded Mandates Reform Act (UMRA).

                ESTIMATED COST TO THE FEDERAL GOVERNMENT

    The estimated budgetary impact of H.R. 3010 on 
discretionary spending is shown in the following table. The 
costs of this legislation fall within all budget functions that 
include agencies that issue regulations.

                                     By Fiscal Year, in Millions of Dollars
----------------------------------------------------------------------------------------------------------------
                                                                     2012   2013   2014   2015   2016  2012-2016
----------------------------------------------------------------------------------------------------------------

CHANGES IN SPENDING SUBJECT TO APPROPRIATION
 
Estimated Authorization Level                                           5     10     15     20     20        70

Estimated Outlays                                                       4      9     14     20     20        67
----------------------------------------------------------------------------------------------------------------

    Enacting H.R. 3010 also would affect direct spending and 
revenues, but CBO and JCT cannot determine the extent or sign 
of those effects.

                           BASIS OF ESTIMATE

    For this estimate, CBO assumes that the legislation will be 
enacted near the beginning of calendar year 2012, that the 
necessary amounts will be appropriated near the start of each 
fiscal year, and that spending will follow historical patterns 
for regulatory analysis activities.
Background
    CBO is unaware of any comprehensive information on current 
spending for regulatory activities governmentwide. However, 
according to the Congressional Research Service, Federal 
agencies issue 3,000 to 4,000 final rules each year. Most are 
promulgated by the Departments of Transportation, Homeland 
Security, and Commerce, and the Environmental Protection Agency 
(EPA). Agencies that issue the most major rules (those with an 
estimated economic impact on the economy of more than $100 
million per year) include the Department of Health and Human 
Services, the Department of Agriculture, and EPA.
    H.R. 3010 would amend the APA to codify certain practices 
currently required under several executive orders, including 
Executive Orders 12866, 13563, and 13422. (Those instructions 
require agencies in the executive branch to analyze the impacts 
of regulations (including costs and benefits), to coordinate 
with the Office of Information and Regulatory Affairs (OIRA) 
during the rulemaking, and to perform other activities and 
analyses related to the rulemaking process.) The legislation 
would add several definitions to the APA, including major rule, 
major guidance, and high-impact rule.
    A major rule would be defined as any rule, as determined by 
OIRA, likely to impose:An annual cost on the economy of $100 
million or more, adjusted annually for inflation;

         LA major increase in costs or prices for 
        consumers, individual industries, Federal, State, 
        local, or tribal government agencies, or geographic 
        regions;

         LSignificant adverse effects on competition, 
        employment, investment, productivity, innovation, or on 
        the ability of United States-based enterprises to 
        compete with foreign-based enterprises in domestic and 
        export markets; or

         LSignificant impacts on multiple sectors of 
        the economy.

    This definition of a major rule differs from the one 
contained in the Congressional Review Act (CRA) of 1996, which 
defines a major rule as one having an annual effect on the 
economy instead of an annual cost as defined in H.R. 3010.
    The legislation would define the term major guidance issued 
by Federal agencies using the same criteria as that used for a 
major rule. A high-impact rule would be defined as any rule 
that OIRA determines is likely to impose an annual cost on the 
economy of $1 billion or more. That threshold would be adjusted 
annually for inflation.
    Enacting H.R. 3010 also would add several new requirements 
that would broadly change the current rulemaking process. For 
all major and high-impact rules as well as rules that involve 
``novel legal or policy issues,'' agencies would be required to 
publish an advance notice of proposed rulemaking (ANPRM) in the 
Federal Register 90 days prior to publishing a Notice of 
Proposed Rulemaking (NPRM). The legislation specifies minimum 
requirements for the ANPRM, including a period of not less than 
60 days during which interested parties may submit data, views, 
or argument to the agency. A pre-proposal process occurs on a 
voluntary basis for some rules under current law, as guided by 
Executive Order 13563.
    The NPRM process, as defined in the APA, would be amended 
to codify certain requirements in place under Executive Orders 
12866 and 13563. While many agencies subject to the executive 
orders may already be implementing those practices for certain 
rules, some independent agencies outside the purview of 
executive orders may face an increase in workload with respect 
to the rulemaking process. For all agencies, H.R. 3010 would 
increase requirements for documenting cost-benefit analyses as 
well as placing other supporting documentation in the docket 
for the proposed rule. Furthermore, the legislation would 
incorporate into the rulemaking process a remedy for members of 
the public to petition for a hearing to determine if any 
information used by the agency in developing the proposed rule 
violates the Information Quality Act.
    The legislation would require agencies to hold a hearing 
for all high-impact rules. The hearing would occur after 
comments have been received on the proposed rule and after any 
hearings were held under the NPRM process but before adoption 
of the rule. The hearing could be waived if all participants-
not including the agency-agree.
Spending Subject to Appropriation
    Based on information from several Federal agencies, CBO 
estimates that more resources would be needed for Federal 
agencies to produce additional guidance documents and cost-
benefit analyses, support judicial reviews and hearings, and 
perform other administrative tasks related to the rulemaking 
process. Eventually, CBO estimates that Federal agencies would 
spend about $20 million annually to meet the requirements under 
this legislation. We expect that it would take about three 
years to reach that level of effort.
Direct Spending
    CBO expects that enacting H.R. 3010 would delay a number of 
major and high-impact rules from taking effect each year. 
Therefore, in assessing the budgetary effects of H.R. 3010, CBO 
considered the costs and savings that would be realized if 
anticipated major and high-impact rules were delayed. Delaying 
the issuance of some major or high-impact rules, which would 
delay when they take effect, could result in costs, while 
delaying others could result in savings. CBO expects that the 
rules with the largest effects on Federal spending would be 
those related to Federal health programs, particularly 
Medicare; thus, enacting H.R. 3010 could significantly affect 
Medicare spending relative to current law.
    CBO cannot determine the level of costs or savings in 
direct spending over the 2012-2021 period. However, we expect 
that such budgetary effects would largely be driven by delaying 
annual updates to payment schedules for providing Medicare 
services and other routine revisions to aspects of other 
government programs.
Revenues
    Enacting H.R. 3010 also would affect revenues by changing 
the way the Internal Revenue Service could issue its 
nonregulatory guidance and by slowing down rulemaking 
generally. JCT expects those delays would reduce revenue 
collections in some cases and increase them in others. However, 
JCT cannot determine the level of costs or savings of those 
possible effects.

                      PAY-AS-YOU-GO CONSIDERATIONS

    The Statutory Pay-As-You-Go Act of 2010 establishes budget-
reporting and enforcement procedures for legislation affecting 
direct spending or revenues. Pay-as-you-go procedures apply to 
H.R. 3010 because enacting the legislation would affect direct 
spending and revenues. CBO and JCT cannot determine the level 
of costs or savings associated with those effects.

              INTERGOVERNMENTAL AND PRIVATE-SECTOR IMPACT

    CBO expects that H.R. 3010 would impose no 
intergovernmental or private-sector mandates as defined in 
UMRA. By potentially delaying Federal rules, the bill could 
affect public or private entities in a number of other ways, 
for example by slowing reimbursements or delaying the 
implementation of regulatory requirements. While the costs and 
savings associated with such effects could be significant, 
because we cannot predict the nature or number of regulations 
that could be delayed, CBO has no basis for estimating the 
level of costs or savings that would result.

                         ESTIMATE PREPARED BY:

Federal Spending: Sean Dunbar and Susanne S. Mehlman
Impact on State, Local, and Tribal Governments: Elizabeth Cove 
    Delisle
Impact on the Private Sector: Paige Piper/Bach

                         ESTIMATE APPROVED BY:

Theresa Gullo
Deputy Assistant Director for Budget Analysis

Holly Harvey
Deputy Assistant Director for Budget Analysis

                    Performance Goals and Objectives

    The Committee states that pursuant to clause 3(c)(4) of 
rule XIII of the Rules of the House of Representatives, H.R. 
3010 will create jobs and promote economic growth by improving 
agencies' decision-making processes and enhancing regulatory 
transparency and accountability.

                          Advisory on Earmarks

    In accordance with clause 9 of rule XXI of the Rules of the 
House of Representatives, H.R. 3010 does not contain any 
congressional earmarks, limited tax benefits, or limited tariff 
benefits as defined in clause 9(e), 9(f), or 9(g) of Rule XXI.

                      Section-by-Section Analysis

    The following discussion describes the bill as reported by 
the Committee.
    Sec. 1. Short Title. Section 1 designates H.R. 3010 the 
``Regulatory Accountability Act of 2011.''
    Sec. 2. Definitions. Section 2 adds to the APA definitions 
of the following terms: ``major rule,'' based in part on the 
definition given to that term in Section 1(b) of Executive 
Order 12866 (narrowing the term to include rules that ``impose 
costs'' of $100 million or more annually on the economy, rather 
than rules that have annual ``effects'' of $100 million or 
more, and including rules with ``significant impacts on 
multiple sectors of the economy''), and in part on the 
definition used in H.R. 10, the ``Regulations from the 
Executive in Need of Scrutiny Act''; ``high-impact rule'' as 
any rule likely to impose an annual cost of $1 billion or more 
on the economy; ``guidance,'' based on the definition given to 
that term in Section 3(g) of Executive Order 13422; ``major 
guidance,'' based on the definition given to the term 
``significant guidance document'' in Section 3(h) of Executive 
Order 13422; ``Information Quality Act,'' as Section 515 of 
Public Law 106-554 and its implementing OMB and agency 
guidelines; and, the ``Office of Information and Regulatory 
Affairs.''
    Sec. 3. Rulemaking. Section 3 updates and reforms the 
rulemaking process in Section 553, U.S.C. 5. At Section 553(b), 
the Act incorporates into the APA universally applicable 
rulemaking principles rooted in Executive Orders 12291, 12866, 
13422 and 13563, making them statutorily mandatory and 
judicially enforceable. In a rulemaking, the agency must 
consider:

         LThe legal authority for the rule and other 
        relevant statutory considerations (5 U.S.C. 
        Sec. 553(b)(1)-(2));

         LThe specific nature of the problem, whether 
        it genuinely warrants new regulations, and 
        countervailing risks that may be posed by alternatives 
        for new agency action (5 U.S.C. Sec. 553(b)(3));

         LWhether the problem could be addressed by 
        repealing or modifying existing regulations (5 U.S.C. 
        Sec. 553(b)(4));

         LPotential alternatives to adopting a new 
        regulation, including no Federal response and a 
        regional/State/local/tribal response (5 U.S.C. 
        Sec. 553(b)(5));

         LNotwithstanding any other law, the potential 
        costs and benefits--direct, indirect and cumulative--
        associated with each alternative, as well as estimated 
        impacts on jobs, economic growth, innovation and 
        economic competitiveness (5 U.S.C. Sec. 553(b)(6)).

The last of these terms overrides provisions of existing law 
that limit agencies from considering costs in a small number of 
rulemaking settings. The term does not, however, require 
agencies to base their final rulemaking decisions in those 
settings on cost considerations, irrespective of other 
statutory considerations.
    Consistent with President Obama's call in Executive Order 
13563 for earlier, more transparent outreach to the public and 
affected entities, the Bill requires Advance Notices of 
Proposed Rulemaking (ANPRs) 90 days before an agency may 
propose any major or high-impact rule or a rule involving novel 
legal or policy issues that arise from statutory mandates. 
ANPRs must disclose in writing information already known to the 
agency and the legal basis for a potential rulemaking. The 
agency must solicit information from interested persons and 
allow the public 60 days to submit written views about the 
information and issues discussed in the advance notice. (5 
U.S.C. Sec. 553(c)) For a rule involving novel legal or policy 
issues, the agency must disclose the nature of and reasons to 
adopt the novel legal or policy position. This builds upon 
Executive Orders 12866 and 13563 and gives the public an 
opportunity to offer views on rules that involve novel legal or 
policy issues early in the rulemaking process, when agencies 
could profit significantly from them. In parallel, Section 4 
requires agencies to consult with OIRA before issuing major 
guidance based on novel legal or policy issues that arise from 
statutory mandates.
    The Act contains improved Notice of Proposed Rulemaking 
requirements that assure major and high-impact proposed rules 
are built upon the sound, transparent decision-making platform 
made possible by the ANPR process and that other proposed rules 
also rest on a more robust and transparent decision-making 
platform. Before proposing a rule, the agency is required to 
consult with OIRA. These requirements will crystallize for 
public comment the agency's preliminary determinations of 
whether a Federal regulation is needed; whether the benefits of 
the proposed rule meet statutory objectives and justify its 
costs, and whether the agency has conducted a preliminary risk 
assessment or regulatory impact analysis; whether alternatives 
exist that could achieve statutory objectives at lower costs; 
whether and why the agency has not proposed a lower-cost 
alternative; whether existing regulations or other laws have 
produced or contributed to the problem the agency seeks to 
correct with new regulation; and, if so, whether modification 
or repeal of those other regulations or laws could resolve the 
problem more effectively than a new rule. (5 U.S.C. 
Sec. 553(d)(1))
    After concluding the ANPR process, if applicable, an agency 
may alternatively publish a Determination of Other Agency 
Course, describing the alternative response the agency chose 
rather than to issue a new rule. The agency must consult with 
OIRA, and disclose all information provided to or considered by 
the agency in its decision-making process, including but not 
limited to any preliminary risk assessment or regulatory impact 
analysis. (5 U.S.C. Sec. 553(d)(2))
    If the agency proceeds with the rulemaking, then the agency 
must give interested parties at least 60 days to submit written 
data, views or arguments related to the proposed rule, and 120 
days to do so for any proposed major or high-impact rule. (5 
U.S.C. Sec. 553(d)(3))
    The Bill also provides an early opportunity for quick 
administrative appeals of whether the key studies or other 
information on which agencies base their proposed rules meet 
vital standards set under the Information Quality Act. (5 
U.S.C. Sec. 553(d)(4))
    For any high-impact rule, after following the steps 
prescribed by Section 553(d)(1)-(3), the Act requires agencies 
to hold limited formal hearings with opportunities for cross-
examination on the most critical factual issues for proposed 
rules that impose a $1 billion burden on the economy. These 
issues concern the key information on ``whether the agency's 
asserted factual predicate for the rule is supported by the 
evidence''; whether there is a lower-cost alternative for 
regulation that achieves statutory objectives, and why the 
agency did not choose it; and whether the final information on 
which the agency relies satisfies the Information Quality Act. 
The agency must publish public notice of the hearing not less 
than 45 days in advance. Upon petition, hearings or issues may 
be waived by participants in the rulemaking other than the 
agency. Issues also may be added to hearings on high-impact 
rules, and hearings may be granted on major rules, upon 
petition and at the agency's discretion.
    The Act contains improved requirements at the final 
rulemaking stage as well. In adopting a final rule, an agency 
must:

         LConsult with the OIRA Administrator; (5 
        U.S.C. Sec. 553(f)(1))

         LRely only on the best reasonably obtainable 
        scientific, technical and economic information; (5 
        U.S.C. Sec. 553(f)(2))

         LAdopt only the least-cost alternative 
        considered during rulemaking that meets statutory 
        objectives, unless the agency explains why a more 
        costly rule is justified to serve interests of public 
        health, safety or welfare clearly within the scope of 
        the statutory provision that authorizes the rule and 
        the more costly rule's additional benefits justify its 
        additional costs; (5 U.S.C. Sec. 553(f)(3))

         LPublish a notice of final rulemaking giving: 
        ``a concise, general statement of the rule's basis and 
        purpose,'' an explanation of the need for the rule, the 
        costs and benefits, any final risk assessment or 
        regulatory impact analysis, and why the agency did not 
        adopt an alternative rule or amend or rescind an 
        existing rule. The agency must rest on specific, final 
        determinations on the critical issues considered during 
        formal rulemaking hearings, based on data that meets 
        the strictures of the Information Quality Act; (5 
        U.S.C. Sec. 553(f)(4))

         LPublish plans for periodic review of high-
        impact and major rules to determine whether the 
        agency's final rule still is needed, achieves statutory 
        objectives, and produces benefits that justify its 
        costs or whether the rule could be modified or 
        rescinded. (5 U.S.C. Sec. 553(f)(4)(G))

    The Bill seeks to prevent the abuse of ``interim-final 
rules.'' The Bill allows agencies in cases of public urgency to 
issue ``interim-final rules'' that are effective before full 
rulemaking procedures are completed, but also requires prompt 
subsequent completion of full rulemaking procedures and allows 
affected entities to seek rapid judicial review of agency 
decisions to adopt interim-final rules (except for national 
security rules). An agency may forego the rulemaking process 
when the ``rulemaking is undertaken only to correct a de 
minimis technical or clerical error in a previously issued rule 
or for other noncontroversial purposes.'' To prevent abuse of 
this feature, if the agency receives significant adverse 
comment on such rules within 60 days, then it must conduct 
normal notice-and-comment rulemaking. (5 U.S.C. Sec. 553(g))
    The Act requires publication of a substantive final or 
interim rule no less than 30 days before its effective date. (5 
U.S.C. Sec. 553(i)) ``Each agency shall give an interested 
person the right to petition for the issuance, amendment, or 
repeal of a rule.'' (5 U.S.C. Sec. 553(j))
    OIRA is required to issue guidelines for agencies to follow 
as they assess scientific and economic issues in rulemaking, 
including cost-benefit analysis and assessment of risks; as 
they observe statute-specific rulemaking regimes in conjunction 
with the generally applicable procedures of the APA as amended; 
to assure better coordination, simplification and coordination 
by agencies in rulemaking; and, as they conduct hearings under 
sections 553, 556 and 557 of title 5. (5 U.S.C. Sec. 553(k))
    The agency must include in the rulemaking record ``all 
documents and information prepared or considered by the agency 
during the proceeding'' including, at the discretion of the 
President or the OIRA Administrator, communications from OIRA 
to the agency. The record shall be made available to the public 
online whenever feasible, but if not then by other electronic 
means, and otherwise. (5 U.S.C. Sec. 553(l))
    The Bill exempts the Board of Governors of the Federal 
Reserve System and the Federal Open Markets Committee from 
performing cost-benefit analysis or holding formal hearings for 
monetary policy rules. This parallels an exemption for such 
rules granted by Congress in the Congressional Review Act.\198\ 
(5 U.S.C. Sec. 553(m))
---------------------------------------------------------------------------
    \198\See 5 U.S.C. Sec. 807.
---------------------------------------------------------------------------
    Sec. 4. Agency Guidance. The Bill contains reforms to curb 
agency abuse of purportedly non-binding ``guidance''--
particularly guidance with major economic impacts--to avoid 
statutory rulemaking requirements. Specifically, when issuing 
major guidance, the agency must consult with OIRA; document 
that the guidance is ``understandable and complies with 
relevant statutory objectives and regulatory provisions''; 
summarize the underlying evidence; identify the costs and 
benefits of the guidance; and, describe alternatives to the 
guidance, their costs and benefits, and why the agency rejected 
them. This documentation must be published online or made 
available to the public by electronic means, or otherwise. The 
Act specifies that agency guidance is not legally binding, and 
requires agencies to disclose this on its guidance. Agencies 
should not issue guidance that is duplicative of, or 
inconsistent or incompatible with, existing statutes or 
regulations. (5 U.S.C. Sec. 553a)
    Sec. 5. Hearings. The Bill adopts technical changes to 
existing APA requirements for formal, on-the-record rulemaking 
hearings that support hearing-based reforms in Section 3. (5 
U.S.C. Sec. 556)
    Sec. 6. Actions Reviewable. The Act clarifies that an 
agency's denial of an Information Quality Act correction 
petition, or an agency's failure to grant or deny such petition 
within 90 days, is reviewable by a court as a final action. The 
Act provides for immediate judicial review of agency decisions 
to establish ``interim-final rules'' before complying with 
normal rulemaking requirements. An abuse of discretion standard 
will apply in such review. (5 U.S.C. Sec. 704)
    Sec. 7. Scope of Review. Section 7 clarifies the scope and 
standards of judicial review available under the APA. First, 
courts may review agency action for violations of the 
Information Quality Act. Further, Section 7 prohibits judicial 
deference to agency guidance and other interpretive statements 
rendered outside of the rulemaking process; agency 
determinations of cost-benefit issues, other economic 
assessments or risk assessments that do not comply with 
applicable OIRA guidelines; and, agency determinations of law 
and fact to support interim-final rules. Section 7 allows 
agency denials of petitions for hearings or consideration of 
specific issues in hearings to be reviewed for abuse of 
discretion. (5 U.S.C. Sec. 706).
    The Bill otherwise preserves traditional principles of 
judicial review and deference, including with respect to cost-
benefit analysis. As discussed above, the requirements for 
agencies to consider costs and benefits in rulemaking, found in 
Section 3 of the Bill, supersede other statutory provisions 
that in limited circumstances preclude agencies from 
considering the costs of a new regulation. If, however, only 
one regulatory alternative considered in a rulemaking can 
achieve the relevant statutory objectives, cost considerations 
will not constrain the agency from adopting that alternative. 
By contrast, if there is more than one alternative for the rule 
that can achieve the relevant statutory objectives, then the 
required consideration of costs will place the agency in a 
position to adopt the alternative that achieves those 
objectives at the lowest cost. This determination is judicially 
reviewable, but a court is entitled to give Chevron deference 
to the agency's interpretation of the relevant statutory 
objectives. A court is also entitled to defer to the agency's 
determination of which alternative achieved those objectives at 
the lowest cost, provided that the agency has followed the 
applicable OIRA guidelines for how to assess costs and benefits 
or other economic issues or risks. Regardless of whether the 
court grants the agency an extra margin of deference under 
Chevron or other applicable deference doctrines, the court will 
review the agency's determination under the APA's ``arbitrary 
or capricious standard''--or, if the agency rule was based on a 
hearing, under the ``substantial evidence'' standard. This 
follows traditional rules for judicial review of the 
determinations on which agencies base final rules.
    Sec. 8. Added Definition. The Act codifies the definition 
of the term ``substantial evidence'' given by the Supreme Court 
in Universal Camera Corp. v. NLRB, 340 U.S. 474 (1951). (5 
U.S.C. Sec. 701(b))
    Sec. 9. Effective Date. In general, the Bill's provisions 
do not apply to any rulemaking pending or completed on the date 
of enactment. Exceptions are made for the Act's amendments to 
establish definitions in Section 551, 5 U.S.C.; to prohibit 
judicial deference to agency interpretations of regulations 
outside of rulemaking; and, to guarantee judicial review of 
Information Quality Act violations.

         Changes in Existing Law Made by the Bill, as Reported

  In compliance with clause 3(e) of rule XIII of the Rules of 
the House of Representatives, changes in existing law made by 
the bill, as reported, are shown as follows (existing law 
proposed to be omitted is enclosed in black brackets, new 
matter is printed in italics, existing law in which no change 
is proposed is shown in roman):

                      TITLE 5, UNITED STATES CODE

PART I--THE AGENCIES GENERALLY

           *       *       *       *       *       *       *


                  CHAPTER 5--ADMINISTRATIVE PROCEDURE

                    SUBCHAPTER I--GENERAL PROVISIONS

Sec.
500. Administrative practice; general provisions.
     * * * * * * *

                 SUBCHAPTER II--ADMINISTRATIVE PROCEDURE

     * * * * * * *
553a. Agency guidance; procedures to issue major guidance; authority to 
          issue guidelines for issuance of guidance.

           *       *       *       *       *       *       *


                SUBCHAPTER II--ADMINISTRATIVE PROCEDURE

Sec. 551. Definitions

   For the purpose of this subchapter--
          (1) * * *

           *       *       *       *       *       *       *

          (13) ``agency action'' includes the whole or a part 
        of an agency rule, order, license, sanction, relief, or 
        the equivalent or denial thereof, or failure to act; 
        [and]
          (14) ``ex parte communication'' means an oral or 
        written communication not on the public record with 
        respect to which reasonable prior notice to all parties 
        is not given, but it shall not include requests for 
        status reports on any matter or proceeding covered by 
        this subchapter[.];
          (15) ``major rule'' means any rule that the 
        Administrator of the Office of Information and 
        Regulatory Affairs determines is likely to impose--
                  (A) an annual cost on the economy of 
                $100,000,000 or more, adjusted annually for 
                inflation;
                  (B) a major increase in costs or prices for 
                consumers, individual industries, Federal, 
                State, local, or tribal government agencies, or 
                geographic regions;
                  (C) significant adverse effects on 
                competition, employment, investment, 
                productivity, innovation, or on the ability of 
                United States-based enterprises to compete with 
                foreign-based enterprises in domestic and 
                export markets; or
                  (D) significant impacts on multiple sectors 
                of the economy;
          (16) ``high-impact rule'' means any rule that the 
        Administrator of the Office of Information and 
        Regulatory Affairs determines is likely to impose an 
        annual cost on the economy of $1,000,000,000 or more, 
        adjusted annually for inflation;
          (17) ``guidance'' means an agency statement of 
        general applicability and future effect, other than a 
        regulatory action, that sets forth a policy on a 
        statutory, regulatory or technical issue or an 
        interpretation of a statutory or regulatory issue;
          (18) ``major guidance'' means guidance that the 
        Administrator of the Office of Information and 
        Regulatory Affairs finds is likely to lead to--
                  (A) an annual cost on the economy of 
                $100,000,000 or more, adjusted annually for 
                inflation;
                  (B) a major increase in costs or prices for 
                consumers, individual industries, Federal, 
                State, local or tribal government agencies, or 
                geographic regions;
                  (C) significant adverse effects on 
                competition, employment, investment, 
                productivity, innovation, or on the ability of 
                United States-based enterprises to compete with 
                foreign-based enterprises in domestic and 
                export markets; or
                  (D) significant impacts on multiple sectors 
                of the economy;
          (19) the ``Information Quality Act'' means section 
        515 of Public Law 106-554, the Treasury and General 
        Government Appropriations Act for Fiscal Year 2001, and 
        guidelines issued by the Administrator of the Office of 
        Information and Regulatory Affairs or other agencies 
        pursuant to the Act; and
          (20) the ``Office of Information and Regulatory 
        Affairs'' means the office established under section 
        3503 of chapter 35 of title 44 and any successor to 
        that office.

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Sec. 553. Rule making

  [(a) This section applies] (a) Applicability._This section 
applies, according to the provisions thereof, except to the 
extent that there is involved--
          (1) * * *

           *       *       *       *       *       *       *

  [(b) General notice of proposed rule making shall be 
published in the Federal Register, unless persons subject 
thereto are named and either personally served or otherwise 
have actual notice thereof in accordance with law. The notice 
shall include--
          [(1) a statement of the time, place, and nature of 
        public rule making proceedings;
          [(2) reference to the legal authority under which the 
        rule is proposed; and
          [(3) either the terms or substance of the proposed 
        rule or a description of the subjects and issues 
        involved.
Except when notice or hearing is required by statute, this 
subsection does not apply--
          [(A) to interpretative rules, general statements of 
        policy, or rules of agency organization, procedure, or 
        practice; or
          [(B) when the agency for good cause finds (and 
        incorporates the finding and a brief statement of 
        reasons therefor in the rules issued) that notice and 
        public procedure thereon are impracticable, 
        unnecessary, or contrary to the public interest.
  [(c) After notice required by this section, the agency shall 
give interested persons an opportunity to participate in the 
rule making through submission of written data, views, or 
arguments with or without opportunity for oral presentation. 
After consideration of the relevant matter presented, the 
agency shall incorporate in the rules adopted a concise general 
statement of their basis and purpose. When rules are required 
by statute to be made on the record after opportunity for an 
agency hearing, sections 556 and 557 of this title apply 
instead of this subsection.
  [(d) The required publication or service of a substantive 
rule shall be made not less than 30 days before its effective 
date, except--
          [(1) a substantive rule which grants or recognizes an 
        exemption or relieves a restriction;
          [(2) interpretative rules and statements of policy; 
        or
          [(3) as otherwise provided by the agency for good 
        cause found and published with the rule.
  [(e) Each agency shall give an interested person the right to 
petition for the issuance, amendment, or repeal of a rule.]
  (b) Rule Making Considerations.--In a rule making, an agency 
shall make all preliminary and final factual determinations 
based on evidence and consider, in addition to other applicable 
considerations, the following:
          (1) The legal authority under which a rule may be 
        proposed, including whether a rule making is required 
        by statute, and if so, whether by a specific date, or 
        whether the agency has discretion to commence a rule 
        making.
          (2) Other statutory considerations applicable to 
        whether the agency can or should propose a rule or 
        undertake other agency action.
          (3) The specific nature and significance of the 
        problem the agency may address with a rule (including 
        the degree and nature of risks the problem poses and 
        the priority of addressing those risks compared to 
        other matters or activities within the agency's 
        jurisdiction), whether the problem warrants new agency 
        action, and the countervailing risks that may be posed 
        by alternatives for new agency action.
          (4) Whether existing rules have created or 
        contributed to the problem the agency may address with 
        a rule and whether those rules could be amended or 
        rescinded to address the problem in whole or part.
          (5) Any reasonable alternatives for a new rule or 
        other response identified by the agency or interested 
        persons, including not only responses that mandate 
        particular conduct or manners of compliance, but also--
                  (A) the alternative of no Federal response;
                  (B) amending or rescinding existing rules;
                  (C) potential regional, State, local, or 
                tribal regulatory action or other responses 
                that could be taken in lieu of agency action; 
                and
                  (D) potential responses that--
                          (i) specify performance objectives 
                        rather than conduct or manners of 
                        compliance;
                          (ii) establish economic incentives to 
                        encourage desired behavior;
                          (iii) provide information upon which 
                        choices can be made by the public; or
                          (iv) incorporate other innovative 
                        alternatives rather than agency actions 
                        that specify conduct or manners of 
                        compliance.
          (6) Notwithstanding any other provision of law--
                  (A) the potential costs and benefits 
                associated with potential alternative rules and 
                other responses considered under section 
                553(b)(5), including direct, indirect, and 
                cumulative costs and benefits and estimated 
                impacts on jobs, economic growth, innovation, 
                and economic competitiveness;
                  (B) means to increase the cost-effectiveness 
                of any Federal response; and
                  (C) incentives for innovation, consistency, 
                predictability, lower costs of enforcement and 
                compliance (to government entities, regulated 
                entities, and the public), and flexibility.
  (c) Advance Notice of Proposed Rule Making for Major Rules, 
High-Impact Rules, and Rules Involving Novel Legal or Policy 
Issues.--In the case of a rule making for a major rule or high-
impact rule or a rule that involves a novel legal or policy 
issue arising out of statutory mandates, not later than 90 days 
before a notice of proposed rule making is published in the 
Federal Register, an agency shall publish advance notice of 
proposed rule making in the Federal Register. In publishing 
such advance notice, the agency shall--
          (1) include a written statement identifying, at a 
        minimum--
                  (A) the nature and significance of the 
                problem the agency may address with a rule, 
                including data and other evidence and 
                information on which the agency expects to rely 
                for the proposed rule;
                  (B) the legal authority under which a rule 
                may be proposed, including whether a rule 
                making is required by statute, and if so, 
                whether by a specific date, or whether the 
                agency has discretion to commence a rule 
                making;
                  (C) preliminary information available to the 
                agency concerning the other considerations 
                specified in subsection (b); and
                  (D) in the case of a rule that involves a 
                novel legal or policy issue arising out of 
                statutory mandates, the nature of and potential 
                reasons to adopt the novel legal or policy 
                position upon which the agency may base a 
                proposed rule;
          (2) solicit written data, views or argument from 
        interested persons concerning the information and 
        issues addressed in the advance notice; and
          (3) provide for a period of not fewer than 60 days 
        for interested persons to submit such written data, 
        views, or argument to the agency.
  (d) Notices of Proposed Rule Making; Determinations of Other 
Agency Course.--(1) Before it determines to propose a rule, and 
following completion of procedures under subsection (c), if 
applicable, the agency shall consult with the Administrator of 
the Office of Information and Regulatory Affairs. If the agency 
thereafter determines to propose a rule, the agency shall 
publish a notice of proposed rule making, which shall include--
          (A) a statement of the time, place, and nature of 
        public rule making proceedings;
          (B) reference to the legal authority under which the 
        rule is proposed;
          (C) the terms of the proposed rule;
          (D) a description of information known to the agency 
        on the subject and issues of the proposed rule, 
        including but not limited to--
                  (i) a summary of information known to the 
                agency concerning the considerations specified 
                in subsection (b);
                  (ii) a summary of additional information the 
                agency provided to and obtained from interested 
                persons under subsection (c);
                  (iii) a summary of any preliminary risk 
                assessment or regulatory impact analysis 
                performed by the agency; and
                  (iv) information specifically identifying all 
                data, studies, models, and other evidence or 
                information considered or used by the agency in 
                connection with its determination to propose 
                the rule;
          (E)(i) a reasoned preliminary determination of need 
        for the rule based on the information described under 
        subparagraph (D); and
          (ii) an additional statement of whether a rule is 
        required by statute;
          (F) a reasoned preliminary determination that the 
        benefits of the proposed rule meet the relevant 
        statutory objectives and justify the costs of the 
        proposed rule (including all costs to be considered 
        under subsection (b)(6)), based on the information 
        described under subparagraph (D);
          (G) a discussion of--
                  (i) the alternatives to the proposed rule, 
                and other alternative responses, considered by 
                the agency under subsection (b);
                  (ii) the costs and benefits of those 
                alternatives (including all costs to be 
                considered under subsection (b)(6));
                  (iii) whether those alternatives meet 
                relevant statutory objectives; and
                  (iv) why the agency did not propose any of 
                those alternatives; and
          (H)(i) a statement of whether existing rules have 
        created or contributed to the problem the agency seeks 
        to address with the proposed rule; and
          (ii) if so, whether or not the agency proposes to 
        amend or rescind any such rules, and why.
        All information provided to or considered by the 
        agency, and steps to obtain information by the agency, 
        in connection with its determination to propose the 
        rule, including any preliminary risk assessment or 
        regulatory impact analysis prepared by the agency and 
        all other information prepared or described by the 
        agency under subparagraph (D) and, at the discretion of 
        the President or the Administrator of the Office of 
        Information and Regulatory Affairs, information 
        provided by that Office in consultations with the 
        agency, shall be placed in the docket for the proposed 
        rule and made accessible to the public by electronic 
        means and otherwise for the public's use when the 
        notice of proposed rule making is published.
  (2)(A) If the agency undertakes procedures under subsection 
(c) and determines thereafter not to propose a rule, the agency 
shall, following consultation with the Office of Information 
and Regulatory Affairs, publish a notice of determination of 
other agency course. A notice of determination of other agency 
course shall include information required by paragraph (1)(D) 
to be included in a notice of proposed rule making and a 
description of the alternative response the agency determined 
to adopt.
  (B) If in its determination of other agency course the agency 
makes a determination to amend or rescind an existing rule, the 
agency need not undertake additional proceedings under 
subsection (c) before it publishes a notice of proposed rule 
making to amend or rescind the existing rule.
All information provided to or considered by the agency, and 
steps to obtain information by the agency, in connection with 
its determination of other agency course, including but not 
limited to any preliminary risk assessment or regulatory impact 
analysis prepared by the agency and all other information that 
would be required to be prepared or described by the agency 
under paragraph (1)(D) if the agency had determined to publish 
a notice of proposed rule making and, at the discretion of the 
President or the Administrator of the Office of Information and 
Regulatory Affairs, information provided by that Office in 
consultations with the agency, shall be placed in the docket 
for the determination and made accessible to the public by 
electronic means and otherwise for the public's use when the 
notice of determination is published.
  (3) After notice of proposed rule making required by this 
section, the agency shall provide interested persons an 
opportunity to participate in the rule making through 
submission of written data, views, or arguments with or without 
opportunity for oral presentation, except that--
          (A) if a hearing is required under paragraph (4)(B) 
        or subsection (e), opportunity for oral presentation 
        shall be provided pursuant to that requirement; or
          (B) when other than under subsection (e) of this 
        section rules are required by statute or at the 
        discretion of the agency to be made on the record after 
        opportunity for an agency hearing, sections 556 and 557 
        shall apply, and paragraph (4), the requirements of 
        subsection (e) to receive comment outside of the 
        procedures of sections 556 and 557, and the petition 
        procedures of subsection (e)(6) shall not apply.
The agency shall provide not fewer than 60 days for interested 
persons to submit written data, views, or argument (or 120 days 
in the case of a proposed major or high-impact rule).
  (4)(A) Within 30 days of publication of notice of proposed 
rule making, a member of the public may petition for a hearing 
in accordance with section 556 to determine whether any 
evidence or other information upon which the agency bases the 
proposed rule fails to comply with the Information Quality Act.
  (B)(i) The agency may, upon review of the petition, determine 
without further process to exclude from the rule making the 
evidence or other information that is the subject of the 
petition and, if appropriate, withdraw the proposed rule. The 
agency shall promptly publish any such determination.
  (ii) If the agency does not resolve the petition under the 
procedures of clause (i), it shall grant any such petition that 
presents a prima facie case that evidence or other information 
upon which the agency bases the proposed rule fails to comply 
with the Information Quality Act, hold the requested hearing 
not later than 30 days after receipt of the petition, provide a 
reasonable opportunity for cross-examination at the hearing, 
and decide the issues presented by the petition not later than 
60 days after receipt of the petition. The agency may deny any 
petition that it determines does not present such a prima facie 
case.
  (C) There shall be no judicial review of the agency's 
disposition of issues considered and decided or determined 
under subparagraph (B)(ii) until judicial review of the 
agency's final action. There shall be no judicial review of an 
agency's determination to withdraw a proposed rule under 
subparagraph (B)(i) on the basis of the petition.
  (D) Failure to petition for a hearing under this paragraph 
shall not preclude judicial review of any claim based on the 
Information Quality Act under chapter 7 of this title.
  (e) Hearings for High-Impact Rules.--Following notice of a 
proposed rule making, receipt of comments on the proposed rule, 
and any hearing held under subsection (d)(4), and before 
adoption of any high-impact rule, the agency shall hold a 
hearing in accordance with sections 556 and 557, unless such 
hearing is waived by all participants in the rule making other 
than the agency. The agency shall provide a reasonable 
opportunity for cross-examination at such hearing. The hearing 
shall be limited to the following issues of fact, except that 
participants at the hearing other than the agency may waive 
determination of any such issue:
          (1) Whether the agency's asserted factual predicate 
        for the rule is supported by the evidence.
          (2) Whether there is an alternative to the proposed 
        rule that would achieve the relevant statutory 
        objectives at a lower cost (including all costs to be 
        considered under subsection (b)(6)) than the proposed 
        rule.
          (3) If there is more than one alternative to the 
        proposed rule that would achieve the relevant statutory 
        objectives at a lower cost than the proposed rule, 
        which alternative would achieve the relevant statutory 
        objectives at the lowest cost.
          (4) Whether, if the agency proposes to adopt a rule 
        that is more costly than the least costly alternative 
        that would achieve the relevant statutory objectives 
        (including all costs to be considered under subsection 
        (b)(6)), the additional benefits of the more costly 
        rule exceed the additional costs of the more costly 
        rule.
          (5) Whether the evidence and other information upon 
        which the agency bases the proposed rule meets the 
        requirements of the Information Quality Act.
          (6) Upon petition by an interested person who has 
        participated in the rule making, other issues relevant 
        to the rule making, unless the agency determines that 
        consideration of the issues at the hearing would not 
        advance consideration of the rule or would, in light of 
        the nature of the need for agency action, unreasonably 
        delay completion of the rule making. An agency shall 
        grant or deny a petition under this paragraph within 30 
        days of its receipt of the petition.
No later than 45 days before any hearing held under this 
subsection or sections 556 and 557, the agency shall publish in 
the Federal Register a notice specifying the proposed rule to 
be considered at such hearing, the issues to be considered at 
the hearing, and the time and place for such hearing, except 
that such notice may be issued not later than 15 days before a 
hearing held under subsection (d)(4)(B).
  (f) Final Rules.--(1) The agency shall adopt a rule only 
following consultation with the Administrator of the Office of 
Information and Regulatory Affairs to facilitate compliance 
with applicable rule making requirements.
  (2) The agency shall adopt a rule only on the basis of the 
best reasonably obtainable scientific, technical, economic, and 
other evidence and information concerning the need for, 
consequences of, and alternatives to the rule.
  (3)(A) Except as provided in subparagraph (B), the agency 
shall adopt the least costly rule considered during the rule 
making (including all costs to be considered under subsection 
(b)(6)) that meets relevant statutory objectives.
  (B) The agency may adopt a rule that is more costly than the 
least costly alternative that would achieve the relevant 
statutory objectives only if the additional benefits of the 
more costly rule justify its additional costs and only if the 
agency explains its reason for doing so based on interests of 
public health, safety or welfare that are clearly within the 
scope of the statutory provision authorizing the rule.
  (4) When it adopts a final rule, the agency shall publish a 
notice of final rule making. The notice shall include--
          (A) a concise, general statement of the rule's basis 
        and purpose;
          (B) the agency's reasoned final determination of need 
        for a rule to address the problem the agency seeks to 
        address with the rule, including a statement of whether 
        a rule is required by statute and a summary of any 
        final risk assessment or regulatory impact analysis 
        prepared by the agency;
          (C) the agency's reasoned final determination that 
        the benefits of the rule meet the relevant statutory 
        objectives and justify the rule's costs (including all 
        costs to be considered under subsection (b)(6));
          (D) the agency's reasoned final determination not to 
        adopt any of the alternatives to the proposed rule 
        considered by the agency during the rule making, 
        including--
                  (i) the agency's reasoned final determination 
                that no alternative considered achieved the 
                relevant statutory objectives with lower costs 
                (including all costs to be considered under 
                subsection (b)(6)) than the rule; or
                  (ii) the agency's reasoned determination that 
                its adoption of a more costly rule complies 
                with subsection (f)(3)(B);
          (E) the agency's reasoned final determination--
                  (i) that existing rules have not created or 
                contributed to the problem the agency seeks to 
                address with the rule; or
                  (ii) that existing rules have created or 
                contributed to the problem the agency seeks to 
                address with the rule, and, if so--
                          (I) why amendment or rescission of 
                        such existing rules is not alone 
                        sufficient to respond to the problem; 
                        and
                          (II) whether and how the agency 
                        intends to amend or rescind the 
                        existing rule separate from adoption of 
                        the rule;
          (F) the agency's reasoned final determination that 
        the evidence and other information upon which the 
        agency bases the rule complies with the Information 
        Quality Act; and
          (G)(i) for any major rule or high-impact rule, the 
        agency's plan for review of the rule no less than every 
        ten years to determine whether, based upon evidence, 
        there remains a need for the rule, whether the rule is 
        in fact achieving statutory objectives, whether the 
        rule's benefits continue to justify its costs, and 
        whether the rule can be modified or rescinded to reduce 
        costs while continuing to achieve statutory objectives.
          (ii) review of a rule under a plan required by clause 
        (i) of this subparagraph shall take into account the 
        factors and criteria set forth in subsections (b) 
        through (f) of section 553 of this title.
All information considered by the agency in connection with its 
adoption of the rule, and, at the discretion of the President 
or the Administrator of the Office of Information and 
Regulatory Affairs, information provided by that Office in 
consultations with the agency, shall be placed in the docket 
for the rule and made accessible to the public for the public's 
use no later than when the rule is adopted.
  (g) Exceptions From Notice and Hearing Requirements.--(1) 
Except when notice or hearing is required by statute, the 
following do not apply to interpretive rules, general 
statements of policy, or rules of agency organization, 
procedure, or practice:
          (A) Subsections (c) through (e).
          (B) Paragraphs (1) through (3) of subsection (f).
          (C) Subparagraphs (B) through (H) of subsection 
        (f)(4).
  (2)(A) When the agency for good cause, based upon evidence, 
finds (and incorporates the finding and a brief statement of 
reasons therefor in the rules issued) that compliance with 
subsection (c), (d), or (e) or requirements to render final 
determinations under subsection (f) of this section before the 
issuance of an interim rule is impracticable or contrary to the 
public interest, including interests of national security, such 
subsections or requirements to render final determinations 
shall not apply to the agency's adoption of an interim rule.
  (B) If, following compliance with subparagraph (A) of this 
paragraph, the agency adopts an interim rule, it shall commence 
proceedings that comply fully with subsections (d) through (f) 
of this section immediately upon publication of the interim 
rule, shall treat the publication of the interim rule as 
publication of a notice of proposed rule making and shall not 
be required to issue supplemental notice other than to complete 
full compliance with subsection (d). No less than 270 days from 
publication of the interim rule (or 18 months in the case of a 
major rule or high-impact rule), the agency shall complete rule 
making under subsections (d) through (f) of this subsection and 
take final action to adopt a final rule or rescind the interim 
rule. If the agency fails to take timely final action, the 
interim rule will cease to have the effect of law.
  (C) Other than in cases involving interests of national 
security, upon the agency's publication of an interim rule 
without compliance with subsections (c), (d), or (e) or 
requirements to render final determinations under subsection 
(f) of this section, an interested party may seek immediate 
judicial review under chapter 7 of this title of the agency's 
determination to adopt such interim rule. The record on such 
review shall include all documents and information considered 
by the agency and any additional information presented by a 
party that the court determines necessary to consider to assure 
justice.
  (3) When the agency for good cause finds (and incorporates 
the finding and a brief statement of reasons therefor in the 
rules issued) that notice and public procedure thereon are 
unnecessary, including because agency rule making is undertaken 
only to correct a de minimis technical or clerical error in a 
previously issued rule or for other noncontroversial purposes, 
the agency may publish a rule without compliance with 
subsections (c), (d), (e), or (f)(1)-(3) and (f)(4)(B)-(F). If 
the agency receives significant adverse comment within 60 days 
after publication of the rule, it shall treat the notice of the 
rule as a notice of proposed rule making and complete rule 
making in compliance with subsections (d) and (f).
  (h) Additional Requirements for Hearings.--When a hearing is 
required under subsection (e) or is otherwise required by 
statute or at the agency's discretion before adoption of a 
rule, the agency shall comply with the requirements of sections 
556 and 557 in addition to the requirements of subsection (f) 
in adopting the rule and in providing notice of the rule's 
adoption.
  (i) Date of Publication of Rule.--The required publication or 
service of a substantive final or interim rule shall be made 
not less than 30 days before the effective date of the rule, 
except--
          (1) a substantive rule which grants or recognizes an 
        exemption or relieves a restriction;
          (2) interpretive rules and statements of policy; or
          (3) as otherwise provided by the agency for good 
        cause found and published with the rule.
  (j) Right to Petition.--Each agency shall give an interested 
person the right to petition for the issuance, amendment, or 
repeal of a rule.
  (k) Rule Making Guidelines.--(1)(A) The Administrator of the 
Office of Information and Regulatory Affairs shall establish 
guidelines for the assessment, including quantitative and 
qualitative assessment, of the costs and benefits of proposed 
and final rules and other economic issues or issues related to 
risk that are relevant to rule making under this title. The 
rigor of cost-benefit analysis required by such guidelines 
shall be commensurate, in the Administrator's determination, 
with the economic impact of the rule.
  (B) To ensure that agencies use the best available techniques 
to quantify and evaluate anticipated present and future 
benefits, costs, other economic issues, and risks as accurately 
as possible, the Administrator of the Office of Information and 
Regulatory Affairs shall regularly update guidelines 
established under paragraph (1)(A) of this subsection.
  (2) The Administrator of the Office of Information and 
Regulatory Affairs shall also issue guidelines to promote 
coordination, simplification and harmonization of agency rules 
during the rule making process and otherwise. Such guidelines 
shall assure that each agency avoids regulations that are 
inconsistent or incompatible with, or duplicative of, its other 
regulations and those of other Federal agencies and drafts its 
regulations to be simple and easy to understand, with the goal 
of minimizing the potential for uncertainty and litigation 
arising from such uncertainty.
  (3) To ensure consistency in Federal rule making, the 
Administrator of the Office of Information and Regulatory 
Affairs shall--
          (A) issue guidelines and otherwise take action to 
        ensure that rule makings conducted in whole or in part 
        under procedures specified in provisions of law other 
        than those of subchapter II of this title conform to 
        the fullest extent allowed by law with the procedures 
        set forth in section 553 of this title; and
          (B) issue guidelines for the conduct of hearings 
        under subsections 553(d)(4) and 553(e) of this section, 
        including to assure a reasonable opportunity for cross-
        examination. Each agency shall adopt regulations for 
        the conduct of hearings consistent with the guidelines 
        issued under this subparagraph.
  (4) The Administrator of the Office of Information and 
Regulatory Affairs shall issue guidelines pursuant to the 
Information Quality Act to apply in rule making proceedings 
under sections 553, 556, and 557 of this title. In all cases, 
such guidelines, and the Administrator's specific 
determinations regarding agency compliance with such 
guidelines, shall be entitled to judicial deference.
  (l) Inclusion in the Record of Certain Documents and 
Information.--The agency shall include in the record for a rule 
making, and shall make available by electronic means and 
otherwise, all documents and information prepared or considered 
by the agency during the proceeding, including, at the 
discretion of the President or the Administrator of the Office 
of Information and Regulatory Affairs, documents and 
information communicated by that Office during consultation 
with the Agency.
  (m) Monetary Policy Exemption.--Nothing in subsection (b)(6), 
subparagraphs (F) and (G) of subsection (d)(1), subsection (e), 
subsection (f)(3), and subparagraphs (C) and (D) of subsection 
(f)(5) shall apply to rule makings that concern monetary policy 
proposed or implemented by the Board of Governors of the 
Federal Reserve System or the Federal Open Market Committee.

Sec. 553a. Agency guidance; procedures to issue major guidance; 
                    authority to issue guidelines for issuance of 
                    guidance

  (a) Before issuing any major guidance, or guidance that 
involves a novel legal or policy issue arising out of statutory 
mandates, an agency shall--
          (1) make and document a reasoned determination that--
                  (A) assures that such guidance is 
                understandable and complies with relevant 
                statutory objectives and regulatory provisions 
                (including any statutory deadlines for agency 
                action);
                  (B) summarizes the evidence and data on which 
                the agency will base the guidance;
                  (C) identifies the costs and benefits 
                (including all costs to be considered during a 
                rule making under section 553(b) of this title) 
                of conduct conforming to such guidance and 
                assures that such benefits justify such costs; 
                and
                  (D) describes alternatives to such guidance 
                and their costs and benefits (including all 
                costs to be considered during a rule making 
                under section 553(b) of this title) and 
                explains why the agency rejected those 
                alternatives; and
          (2) confer with the Administrator of the Office of 
        Information and Regulatory Affairs on the issuance of 
        such guidance to assure that the guidance is 
        reasonable, understandable, consistent with relevant 
        statutory and regulatory provisions and requirements or 
        practices of other agencies, does not produce costs 
        that are unjustified by the guidance's benefits, and is 
        otherwise appropriate.
Upon issuing major guidance, or guidance that involves a novel 
legal or policy issue arising out of statutory mandates, the 
agency shall publish the documentation required by subparagraph 
(1) by electronic means and otherwise.
  (b) Agency guidance--
          (1) is not legally binding and may not be relied upon 
        by an agency as legal grounds for agency action;
          (2) shall state in a plain, prominent and permanent 
        manner that it is not legally binding; and
          (3) shall, at the time it is issued or upon request, 
        be made available by the issuing agency to interested 
        persons and the public by electronic means and 
        otherwise.
Agencies shall avoid the issuance of guidance that is 
inconsistent or incompatible with, or duplicative of, the 
agency's governing statutes or regulations, with the goal of 
minimizing the potential for uncertainty and litigation arising 
from such uncertainty.
  (c) The Administrator of the Office of Information and 
Regulatory Affairs shall have authority to issue guidelines for 
use by the agencies in the issuance of major guidance and other 
guidance. Such guidelines shall assure that each agency avoids 
issuing guidance documents that are inconsistent or 
incompatible with, or duplicative of, the law, its other 
regulations, or the regulations of other Federal agencies and 
drafts its guidance documents to be simple and easy to 
understand, with the goal of minimizing the potential for 
uncertainty and litigation arising from such uncertainty.

           *       *       *       *       *       *       *


Sec. 556. Hearings; presiding employees; powers and duties; burden of 
                    proof; evidence; record as basis of decision

  (a) * * *

           *       *       *       *       *       *       *

  [(e) The transcript of testimony and exhibits, together with 
all papers and requests filed in the proceeding, constitutes 
the exclusive record for decision in accordance with section 
557 of this title and, on payment of lawfully prescribed costs, 
shall be made available to the parties. When an agency decision 
rests on official notice of a material fact not appearing in 
the evidence in the record, a party is entitled, on timely 
request, to an opportunity to show the contrary.]
  (e)(1) The transcript of testimony and exhibits, together 
with all papers and requests filed in the proceeding, 
constitutes the exclusive record for decision in accordance 
with section 557 and shall be made available to the parties and 
the public by electronic means and, upon payment of lawfully 
prescribed costs, otherwise. When an agency decision rests on 
official notice of a material fact not appearing in the 
evidence in the record, a party is entitled, on timely request, 
to an opportunity to show the contrary.
  (2) Notwithstanding paragraph (1) of this subsection, in a 
proceeding held under this section pursuant to section 
553(d)(4) or 553(e), the record for decision shall also include 
any information that is part of the record of proceedings under 
section 553.
  (f) When an agency conducts rule making under this section 
and section 557 directly after concluding proceedings upon an 
advance notice of proposed rule making under section 553(c), 
the matters to be considered and determinations to be made 
shall include, among other relevant matters and determinations, 
the matters and determinations described in subsections (b) and 
(f) of section 553.
  (g) Upon receipt of a petition for a hearing under this 
section, the agency shall grant the petition in the case of any 
major rule, unless the agency reasonably determines that a 
hearing would not advance consideration of the rule or would, 
in light of the need for agency action, unreasonably delay 
completion of the rule making. The agency shall publish its 
decision to grant or deny the petition when it renders the 
decision, including an explanation of the grounds for decision. 
The information contained in the petition shall in all cases be 
included in the administrative record. This subsection shall 
not apply to rule makings that concern monetary policy proposed 
or implemented by the Board of Governors of the Federal Reserve 
System or the Federal Open Market Committee.

           *       *       *       *       *       *       *


CHAPTER 7--JUDICIAL REVIEW

           *       *       *       *       *       *       *


Sec. 701. Application; definitions

  (a) * * *
  (b) For the purpose of this chapter--
          (1) ``agency'' means each authority of the Government 
        of the United States, whether or not it is within or 
        subject to review by another agency, but does not 
        include--
                  (A) * * *

           *       *       *       *       *       *       *

                  (H) functions conferred by sections 1738, 
                1739, 1743, and 1744 of title 12; subchapter II 
                of chapter 471 of title 49; or sections 1884, 
                1891-1902, and former section 1641(b)(2), of 
                title 50, appendix; [and]
          (2) ``person'', ``rule'', ``order'', ``license'', 
        ``sanction'', ``relief'', and ``agency action'' have 
        the meanings given them by section 551 of this 
        title[.]; and
          (3) ``substantial evidence'' means such relevant 
        evidence as a reasonable mind might accept as adequate 
        to support a conclusion in light of the record 
        considered as a whole, taking into account whatever in 
        the record fairly detracts from the weight of the 
        evidence relied upon by the agency to support its 
        decision.

           *       *       *       *       *       *       *


Sec. 704. Actions reviewable

  [Agency action made] (a)   Agency action made reviewable by 
statute and final agency action for which there is no other 
adequate remedy in a court are subject to judicial review. A 
preliminary, procedural, or intermediate agency action or 
ruling not directly reviewable is subject to review on the 
review of the final agency action. Except as otherwise 
expressly required by statute, agency action otherwise final is 
final for the purposes of this section whether or not there has 
been presented or determined an application for a declaratory 
order, for any form of reconsideration, or, unless the agency 
otherwise requires by rule and provides that the action 
meanwhile is inoperative, for an appeal to superior agency 
authority. Denial by an agency of a correction request or, 
where administrative appeal is provided for, denial of an 
appeal, under an administrative mechanism described in 
subsection (b)(2)(B) of the Information Quality Act, or the 
failure of an agency within 90 days to grant or deny such 
request or appeal, shall be final action for purposes of this 
section.
  (b) Other than in cases involving interests of national 
security, notwithstanding subsection (a) of this section, upon 
the agency's publication of an interim rule without compliance 
with section 553(c), (d), or (e) or requirements to render 
final determinations under subsection (f) of section 553, an 
interested party may seek immediate judicial review under this 
chapter of the agency's determination to adopt such rule on an 
interim basis. Review shall be limited to whether the agency 
abused its discretion to adopt the interim rule without 
compliance with section 553(c), (d), or (e) or without 
rendering final determinations under subsection (f) of section 
553.

           *       *       *       *       *       *       *


Sec. 706. Scope of review

   [To the extent necessary] (a) To the extent necessary to 
decision and when presented, the reviewing court shall decide 
all relevant questions of law, interpret constitutional and 
statutory provisions, and determine the meaning or 
applicability of the terms of an agency action. The reviewing 
court shall--
          (1) * * *
          (2) hold unlawful and set aside agency action, 
        findings, and conclusions found to be--
                  (A) arbitrary, capricious, an abuse of 
                discretion, or otherwise not in accordance with 
                law (including the Information Quality Act);

           *       *       *       *       *       *       *

  (b) The court shall not defer to the agency's--
          (1) interpretation of an agency rule if the agency 
        did not comply with the procedures of section 553 or 
        sections 556-557 of chapter 5 of this title to issue 
        the interpretation;
          (2) determination of the costs and benefits or other 
        economic or risk assessment of the action, if the 
        agency failed to conform to guidelines on such 
        determinations and assessments established by the 
        Administrator of the Office of Information and 
        Regulatory Affairs under section 553(k);
          (3) determinations made in the adoption of an interim 
        rule; or
          (4) guidance.
  (c) The court shall review agency denials of petitions under 
section 553(e)(6) or any other petition for a hearing under 
sections 556 and 557 for abuse of agency discretion.

                     Committee Jurisdiction Letters





                               __________
                               
                               


                               __________

                            Dissenting Views

                              INTRODUCTION

    H.R. 3010, the ``Regulatory Accountability Act of 2011,'' 
amends the Administrative Procedure Act (``APA'')\1\ in many 
problematic respects. We are very concerned that these drastic 
changes, if enacted, would seriously undermine the agency 
rulemaking process by hobbling the ability of agencies to 
effectively regulate consumer health and product safety, 
environmental protection, workplace safety, and financial 
services industry misconduct, among other matters. More than 50 
leading administrative law academics,\2\ the Administrative Law 
and Regulatory Practice Section of the American Bar Association 
(``ABA''),\3\ the AFL-CIO,\4\ the Union of Concerned 
Scientists,\5\ U.S. PIRG,\6\ American Association for 
Justice,\7\ the Alliance for Justice,\8\ the American 
Association of University Professors,\9\ and the Coalition for 
Sensible Safeguards (``Coalition''), representing more than 60 
organizations,\10\ share many of our concerns about the bill. 
The Coalition, for example, observes that H.R. 3010 represents 
``the biggest threat to environmental standards, workplace 
safety rules, public health, and financial reform regulations 
to appear in decades.''\11\ Similarly, the AFL-CIO states that 
this legislation ``would upend more than 40 years of labor, 
health, safety and environmental laws and threaten new needed 
protections.''\12\
---------------------------------------------------------------------------
    \1\5 U.S.C. Sec. Sec. 551-59, 701-06, 1305, 3105, 3344, 5372, 7521 
(2011).
    \2\Letter from 52 administrative law academics to House Judiciary 
Committee Chair Lamar Smith and House Judiciary Committee Ranking 
Member John Conyers, Jr., at 1 (Oct. 24, 2011) (on file with the H. 
Committee on the Judiciary, Democratic Staff) (``strenuously'' urging 
``rejection of this proposal).
    \3\American Bar Ass'n--Section of Administrative Law and Regulatory 
Practice, Comments on H.R. 3010, the Regulatory Accountability Act 
(Oct. 24, 2011) (on file with the H. Committee on the Judiciary, 
Democratic Staff).
    \4\Letter to House Judiciary Committee Chair Lamar Smith and House 
Judiciary Committee Ranking Member John Conyers, Jr. from William 
Samuel, Director, the American Federation of Labor and Congress of 
Industrial Organizations, at 1 (Nov. 1, 2011) (on file with the H. 
Committee on the Judiciary, Democratic Staff) (noting that the bill 
will ``cripple'' the regulatory process).
    \5\Letter to to House Judiciary Committee Chair Lamar Smith and 
House Judiciary Committee Ranking Member John Conyers, Jr. from 
Francesca T. Grifo, Senior Scientist and Director--Scientific Integrity 
Program, Union of Concerned Scientists (Nov. 3, 2011) (on file with the 
H. Committee on the Judiciary, Democratic Staff) (noting that the bill 
``jeopardizes'' the ability of agencies to provide public protections).
    \6\Letter to to House Judiciary Committee Chair Lamar Smith and 
House Judiciary Committee Ranking Member John Conyers, Jr. from Nasima 
Hossain, U.S. PIRG Public Health Advocate, at 1 (Nov. 2, 2011) (on file 
with the H. Committee on the Judiciary, Democratic Staff) (noting that 
the bill ``would override decades of legislation enacted by Congress to 
protect the public and American workers from harm'').
    \7\Email to House Members from Jennie Rasmussen, Federal Relations 
Counsel, American Association for Justice (Oct. 24, 2011) (on file with 
the H. Committee on the Judiciary, Democratic Staff).
    \8\Letter to to House Judiciary Committee Chair Lamar Smith and 
House Judiciary Committee Ranking Member John Conyers, Jr. from the 
Alliance for Justice, at 1 (Nov. 2, 2011) (on file with the H. 
Committee on the Judiciary, Democratic Staff) (noting that the ``bill 
is a dream come true for corporate special interests pushing to block 
or weaken regulatory safeguards in order to maximize short-term 
profits'').
    \9\Letter to to House Judiciary Committee Chair Lamar Smith and 
House Judiciary Committee Ranking Member John Conyers, Jr. from John W. 
Curtis, Director of Research and Public Policy, American Association of 
University Professors (Nov. 2, 2011) (on file with the H. Committee on 
the Judiciary, Democratic Staff) (expressing ``full-throated 
concurrence'' with the 52 administrative law professor letter of Oct. 
24, 2011 regarding H.R. 3010).
    \10\According to the Coalition, the following entities are members: 
Ability Production, AFL-CIO, Alliance for Justice, American Association 
of University Professors, American Federation of State, County and 
Municipal Employees, American Lung Association. American Rivers, 
American Values Campaign, Americans for Financial Reform, ATTIC, Inc., 
BlueGreen Alliance, Campaign for Contract Agriculture Reform (CCAR), 
Center for Food Safety, Center for Independent Living, Center for 
Science in the Public Interest, Citizens for Sludge-Free Land, Clean 
Air Watch, Clean Water Network, Consortium for Citizens with 
Disabilities, Consumer Federation of America, Consumers Union, 
CounterCorp, Cumberland Countians for Peace & Justice, Demos, Economic 
Policy Institute, Edmonds Institute, Free Press, Friends of the Earth, 
Green for All, Health Care for America Now, In the Public Interest, 
International Brotherhood of Teamsters, International Center for 
Technology Assessment, International Union, United Automobile, 
Aerospace & Agricultural Implement Workers of America (UAW), Jam On! 
Music Production & Recording, League of Conservation Voters, Los 
Angeles Alliance for a New Economy, National Center for Healthy 
Housing, National Consumers League, National Council for Occupational 
Safety and Health, National Employment Law Project, National Lawyers 
Guild, Louisville Chapter, National Women's Health Network, National 
Women's Law Center, Natural Resources Defense Council, Network for 
Environmental & Economic, Responsibility of United Church of Christ, 
New Jersey Work Environment Council, New York Committee for 
Occupational Safety and Health (NYCOSH), OMB Watch, Oregon PeaceWorks, 
People for the American Way, Protect All Children's Environment, Public 
Citizen, Reproductive Health Technologies Project, Safe Tables Our 
Priority (S.T.O.P.), Service Employees International Union, Southern 
Illinois Committee for Occupational Safety and Health. The Partnership 
for Working Families, Union of Concerned Scientists, Union Plus, United 
Food and Commercial Workers Union, U.S. Chamber Watch, U.S. PIRG, 
Waterkeeper Alliance, and Worksafe. Coalition for Sensible Safeguards 
website--About Us, available at http://www.sensiblesafeguards.org/
about_us (last visited Nov. 8, 2011).
    \11\Coalition for Sensible Safeguards, The Regulatory 
Accountability Act of 2011: Legislation Would Override and Threaten 
Decades of Public Protections, at 1 (undated) (on file with the H. 
Committee on the Judiciary, Democratic Staff).
    \12\Letter to House Judiciary Committee Chair Lamar Smith and House 
Judiciary Committee Ranking Member John Conyers, Jr. from William 
Samuel, Director, the American Federation of Labor and Congress of 
Industrial Organizations, at 1 (Nov. 1, 2011) (on file with the H. 
Committee on the Judiciary, Democratic Staff).
---------------------------------------------------------------------------
    Our principal concerns about H.R. 3010 include the 
following: (1) the bill is based on the faulty premise that 
regulations result in economically stifling costs; (2) if 
enacted, the bill's cumulative effect would be to halt agency 
rulemaking; (3) H.R. 3010 prioritizes cost-cutting over public 
health and safety by overriding existing statutes such as the 
Clean Air Act that prohibit or limit consideration of cost when 
promulgating rules and by unnecessarily expanding and codifying 
cost-benefit analysis requirements; (4) the bill dangerously 
concentrates unaccountable power in the Office of Information 
and Regulatory Affairs; and (5) the bill tilts the rulemaking 
playing field in industry's favor through several mechanisms, 
including expanded use of formal rulemaking; expanded and less 
deferential judicial review; providing numerous opportunities 
for the private sector to challenge agency compliance with the 
Information Quality Act, thereby encouraging dilatory tactics 
by opponents of regulation; and promoting a regulatory ``race 
to the bottom'' between the United States and developing 
nations that have lax regulatory structures.
    For these reasons, and others discussed below, we strongly 
oppose H.R. 3010 and must respectfully dissent.

                        CONCERNS WITH H.R. 3010

                I. H.R. 3010 IS BASED ON FALSE PREMISES

    H.R. 3010's proponents rely on unsupported assertions that 
regulations stifle economic growth and job creation and impose 
burdensome costs on business. Evidence, however, demonstrates 
that these assertions are completely unfounded.
A. LRegulations Have No Discernible Impact on Job Creation and They Do 
        Not Inhibit Business Development
    Proponents of deregulatory measures like H.R. 3010 wrongly 
and without any proof insist that regulations impose burdensome 
compliance costs on businesses and thereby stifle job creation. 
As the author of this legislation explained:

          The American people urgently need jobs that only 
        economic growth can give. Standing in the way of growth 
        and job creation is a wall of Federal regulation.

           *         *         *         *         *

          New regulatory burdens and uncertainty about the 
        economy have helped to keep trillions of dollars of 
        private sector capital on the sidelines. Companies 
        cannot safely invest if they cannot tell whether 
        tomorrow's regulations will make their investments 
        unprofitable.\13\
---------------------------------------------------------------------------
    \13\The Regulatory Accountability Act of 2011: Hearing on H.R. 3010 
Before the Subcomm. on Courts, Commercial and Admin. Law of the H. 
Comm. on the Judiciary, 112th Cong. (2011) [hereinafter ``H.R. 3010 
Hearing''] (remarks of Rep. Lamar Smith (R-TX), Chair, H. Comm. on the 
Judiciary).

These types of arguments are part of a deregulatory mantra 
embraced by conservatives.\14\
---------------------------------------------------------------------------
    \14\Bruce Bartlett, a senior policy analyst in the Reagan and 
George H.W. Bush Administrations, offers this explanation:

        Republicans have a problem. People are increasingly 
      concerned about unemployment, but Republicans have nothing 
      to offer them. The G.O.P. opposes additional government 
      spending for jobs programs and, in fact, favors big cuts in 
      spending that would be likely to lead to further layoffs at 
      all levels of government. . . .
        These constraints have led Republicans to embrace the 
      idea that government regulation is the principal factor 
      holding back employment. They assert that Barack Obama has 
      unleashed a tidal wave of new regulations, which has 
      created uncertainty among businesses and prevents them from 
      investing and hiring.
        No hard evidence is offered for this claim; it is simply 
      asserted as self-evident and repeated endlessly throughout 
      the conservative echo chamber.

Bruce Bartlett, Op-Ed., Misrepresentations, Regulations and Jobs, N.Y. 
Times Economix, Oct. 4, 2011, available at http://
economix.blogs.nytimes.com/2011/10/04/regulation-and-unemployment/.
    Nevertheless, the Majority's own witness at the legislative 
hearing on H.R. 3010 clearly debunked the myth that regulations 
stymie job creation. Christopher DeMuth, who appeared on behalf 
of the American Enterprise Institute, a conservative think 
tank, stated in his prepared testimony that the ``focus on jobs 
. . . can lead to confusion in regulatory debates'' and that 
``the employment effects of regulation, while important, are 
indeterminate.''\15\ If anything, regulations may promote job 
growth and put Americans back to work. For instance, the 
BlueGreen Alliance, notes:
---------------------------------------------------------------------------
    \15\H.R. 3010 Hearing (prepared statement of Christopher DeMuth, 
American Enterprise Institute).

          Studies on the direct impact of regulations on job 
        growth have found that most regulations result in 
        modest job growth or have no effect, and economic 
        growth has consistently surged forward in concert with 
        these health and safety protections. The Clean Air Act 
        is a shining example, given that the economy has grown 
        204% and private sector job creation has expanded 86% 
        since its passage in 1970.\16\
---------------------------------------------------------------------------
    \16\Letter to House Judiciary Committee Chair Lamar Smith and House 
Judiciary Committee Ranking Member John Conyers, Jr. from David A. 
Forster, Executive Director, BlueGreen Alliance, at 2 (Nov. 2, 2011) 
(on file with the H. Committee on the Judiciary, Democratic Staff).

Also in reference to the Clean Air Act, the White House Office 
of Management and Budget (``OMB'') recently observed that 40 
years of success with this measure ``have demonstrated that 
strong environmental protections and strong economic growth go 
hand in hand.''\17\ Similarly, the Natural Resources Defense 
Council and the United Auto Workers cite the fact that 
increased fuel economy standards have already led to the 
creation of more than 155,000 U.S. jobs.\18\
---------------------------------------------------------------------------
    \17\Executive Office of the President--Office of Management and 
Budget, Statement of Administration Policy on H.R. 2401, Transparency 
in Regulatory Analysis of Impacts on the Nation Act of 2011 (Sept. 21, 
2011).
    \18\Natural Resources Defense Council et al., Supplying Ingenuity: 
U.S. Suppliers of Clean, Fuel-Efficient Vehicle Technologies (2011), 
available at http://www.nrdc.org/transportation/autosuppliers/files/
SupplierMappingReport.pdf.
---------------------------------------------------------------------------
    To highlight the fallacy of the bill's premise that 
regulations result in job loss, Representative Henry C. 
``Hank'' Johnson (D-GA) had been prepared to offer an amendment 
at the full Committee markup that would have exempted from H.R. 
3010 any rule that OMB determines will result in net job 
creation. His amendment would have ensured that any rule that 
would help put unemployed Americans back to work could take 
effect without the unnecessary cost and delay that H.R. 3010 
would impose. While Representative Johnson was en route to the 
Committee markup for the explicit purpose of offering his 
amendment, however, the Majority declined to wait for his 
arrival and pressed forward to final approval of the bill.
    Another argument made by the bill's proponents--namely, 
that regulatory uncertainty hurts businesses--was similarly 
debunked by Bruce Bartlett, a senior policy analyst in the 
Reagan and George H.W. Bush Administrations. He observes:

        [R]egulatory uncertainty is a canard invented by 
        Republicans that allows them to use current economic 
        problems to pursue an agenda supported by the business 
        community year in and year out. In other words, it is a 
        simple case of political opportunism, not a serious 
        effort to deal with high unemployment.\19\
---------------------------------------------------------------------------
    \19\Bruce Bartlett, Op-Ed., Misrepresentations, Regulations and 
Jobs, N.Y. Times Economix Blog, Oct. 4, 2011, available at http://
economix.blogs.nytimes.com/2011/10/04/regulation-and-unemployment/
?scp=4&sq;=bartlett&st;=cse.

At the legislative hearing on H.R. 3010, Professor Sidney 
Shapiro similarly noted, ``All of the available evidence 
contradicts the claim that regulatory uncertainty is deterring 
business investment.''\20\ This may explain the findings of a 
July 2011 Wall Street Journal survey of business economists, 
which found that the ``main reason U.S. companies are reluctant 
to step up hiring is scant demand, rather than uncertainty over 
government policies.''\21\ Similarly, the most recent National 
Federation of Independent Business survey of its members 
likewise shows that ``poor sales''--not regulation--is the 
biggest problem.\22\ Indeed, the Main Street Alliance, an 
alliance of small businesses, observes:
---------------------------------------------------------------------------
    \20\H.R. 3010 Hearing (prepared statement of Prof. Sidney Shapiro, 
Wake Forest School of Law).
    \21\Phil Izzo, Dearth of Demand Seen Behind Weak Hiring, Wall St. 
J., July 18, 2011, available at http://online.wsj.com/article/
SB10001424052702303661904576452181063763332.html.
    \22\Press Release, Nat'l Federation of Independent Businesses, 
Small Business Confidence Takes Huge Hit: Optimism Index Now in Decline 
for Six Months Running (Sept. 13, 2011) (``Of those reporting negative 
sales trends, 45 percent blamed faltering sales, 5 percent higher labor 
costs, 15 percent higher materials costs, 3 percent insurance costs, 8 
percent lower selling prices and 10 percent higher taxes and regulatory 
costs.''), available at http://www.nfib.com/press-media/press-media-
item?cmsid=58190.

          In survey after survey and interview after interview, 
        Main Street small business owners confirm that what we 
        really need is more customers--more demand--not 
        deregulation. Policies that restore our customer base 
        are what we need now, not policies that shift more risk 
        and more costs onto us from big corporate actors.

           *         *         *         *         *

          To create jobs and get our country on a path to a 
        strong economic future, what small businesses need is 
        customers--Americans with spending money in their 
        pockets--not watered down standards that give big 
        corporations free reign to cut corners, use their 
        market power at our expense, and force small businesses 
        to lay people off and close up shop.\23\
---------------------------------------------------------------------------
    \23\Letter to House Judiciary Committee Chair Lamar Smith and House 
Judiciary Committee Ranking Member John Conyers, Jr. from Jim Houser, 
Co-Chair, The Main Street Alliance, et al., at 1-2 (Nov. 2, 2011) (on 
file with the H. Committee on the Judiciary, Democratic Staff).

In sum, there is no credible evidence that regulations depress 
job creation.\24\
---------------------------------------------------------------------------
    \24\See also Jia Lynn Yang, Does Government Regulation Really Kill 
Jobs? Economists Say Overall Effect Minimal, Wash. Post, Nov. 13, 2011, 
available at http://www.washingtonpost.com/business/economy/does-
government-regulation-really-kill-jobs-economists-say-overall-effect-
minimal/2011/10/19/gIQALRF5IN_story.html?hpid=z1 (``In 2010, 0.3 
percent of the people who lost their jobs in layoffs were let go 
because of `government regulations/intervention.' By comparison, 25 
percent were laid off because of a drop in business demand. . . . 
Economists who have studied the matter say that there is little 
evidence that regulations cause massive job loss in the economy, and 
that rolling them back would not lead to a boom in job creation.'').
---------------------------------------------------------------------------
B. LThe Claim that Regulations Impose Burdensome Costs is a Canard
    In addition to falsely claiming that regulations ``kill'' 
jobs, supporters of H.R. 3010 assert that regulations impose 
burdensome costs on businesses. For example, in nearly every 
hearing before the House Judiciary Committee and its 
Subcommittee on Courts, Commercial and Administrative Law 
(``CCAL'') regarding regulatory issues this Congress,\25\ 
Majority witnesses have cited the same widely discredited study 
by economists Mark and Nicole Crain (``Crain Study''), which 
claims that federal regulation imposes an annual cost of $1.75 
trillion on business.\26\
---------------------------------------------------------------------------
    \25\See, e.g., Hearing on H.R. 3010; Formal Rulemaking and Judicial 
Review: Protecting Jobs and the Economy with Greater Regulatory 
Transparency and Accountability: Hearing Before the Subcomm. on Courts, 
Commercial and Admin. Law of the H. Comm. on the Judiciary, 112th Cong. 
(2011) [hereinafter, ``Formal Rulemaking Hearing'']; Cost-Justifying 
Regulations: Protecting Jobs and the Economy by Presidential and 
Judicial Review of Costs and Benefits: Hearing Before the Subcomm. on 
Courts, Commercial and Admin. Law of the H. Comm. on the Judiciary, 
112th Cong. (2011) [hereinafter, ``Cost-Benefit Hearing'']; Raising the 
Agencies' Grades--Protecting the Economy, Assuring Regulatory Quality 
and Improving Assessments of Regulatory Need: Hearing Before the 
Subcomm. on Courts, Commercial and Admin. Law of the H. Comm. on the 
Judiciary, 112th Cong. (2011) [hereinafter, ``Scorecard Hearing'']; The 
APA at 65--Is Reform Needed to Create Jobs, Promote Economic Growth, 
and Reduce Costs?: Hearing Before the Subcomm. on Courts, Commercial 
and Admin. Law of the H. Comm. on the Judiciary, 112th Cong. (2011) 
[hereinafter, ``APA 65 Hearing''].
    \26\Nicole V. Crain & W. Mark Crain, The Impact of Regulatory Costs 
on Small Firms, Rep. No. SBAHQ-08-M-0466 (Sept. 2010), available at 
http://archive.sba.gov/advo/research/
    rs371tot.pdf.
---------------------------------------------------------------------------
    The Crain Study, however, has been thoroughly and 
repeatedly debunked and criticized for exaggerating regulatory 
costs. For example, the Center for Progressive Reform (``CPR'') 
notes that the $1.75 trillion cumulative burden cited by the 
study fails to account for any benefits of regulation.\27\ In 
addition, the study's methodology is seriously flawed with 
respect to how it calculated economic costs. The study, which 
relied on international public opinion polling by the World 
Bank on how friendly a particular country was to business 
interests, ignored actual data on costs imposed by Federal 
regulation in the United States.\28\
---------------------------------------------------------------------------
    \27\Sidney Shapiro, et al., Setting the Record Straight: The Crain 
and Crain Report on Regulatory Costs, Center for Progressive Reform 
White Paper #1103 (Feb. 2011).
    \28\Id.
---------------------------------------------------------------------------
    The Congressional Research Service (``CRS'') also conducted 
an extensive examination of the Crain Study and criticized much 
of its methodology.\29\ Moreover, CRS noted that the authors of 
the Crain Study themselves told CRS that their analysis was 
```not meant to be a decision-making tool for lawmakers or 
Federal regulatory agencies to use in choosing the `right' 
level of regulation. In no place in any of the reports do we 
imply that our reports should be used for this purpose. (How 
could we recommend this use when we make no attempt to estimate 
the benefits?)'''\30\ CRS concluded that ``a valid, reasoned 
policy decision can only be made after considering information 
on both costs and benefits'' of regulation.\31\ The Economic 
Policy Institute reached a similar conclusion.\32\
---------------------------------------------------------------------------
    \29\Curtis W. Copeland, Analysis of an Estimate of the Total Costs 
of Federal Regulations, Congressional Research Service Report for 
Congress, R41763 (Apr. 6, 2011).
    \30\Id. at 26 (quoting an e-mail from Nicole and W. Mark Crain to 
the author of the CRS report).
    \31\Id. The Economic Policy Institute also issued a critique of the 
Crain study outlining additional concerns with the study's methodology 
and data. See John Irons & Andrew Green, Flaws Call for Rejecting Crain 
and Crain Model: Cited $1.75 Trillion Cost of Regulations Is Not Worth 
Repeating, Economic Policy Institute, July 19, 2011, available at 
http://w3.epi-data.org/temp2011/IssueBrief308.pdf.
    \32\John Irons & Andrew Green, Flaws Call for Rejecting Crain and 
Crain Model: Cited $1.75 Trillion Cost of Regulations Is Not Worth 
Repeating, Economic Policy Institute, July 19, 2011, available at 
http://w3.epi-data.org/temp2011/IssueBrief308.pdf.
---------------------------------------------------------------------------
    Perhaps our greatest macroscopic concern about H.R. 3010 is 
that it will undermine government's ability to protect 
Americans from a wide range of harms, in complete disregard of 
the devastating impact that inadequate regulation has had on 
the health and economic well-being of Americans. Our Nation 
continues to struggle in the aftermath of the 2008 financial 
crisis and to deal with the ongoing costs of regulatory failure 
and underenforcement of current regulations. As observed by 
Americans for Financial Reform, it is estimated that the crisis 
has cost the United States economy ``trillions of dollars and 
millions of jobs, and led to millions of families losing their 
homes.''\33\ The BP oil spill and Massey coal mine explosion 
are further examples of regulatory failure. The supporters of 
H.R. 3010 appear, however, to suffer some form of collective 
amnesia about these devastating examples of regulatory failure.
---------------------------------------------------------------------------
    \33\Letter to House Judiciary Committee Chair Lamar Smith and House 
Judiciary Committee Ranking Member John Conyers, Jr. from Americans for 
Financial Reform, at 2 (on file with the H. Committee on the Judiciary, 
Democratic Staff).
---------------------------------------------------------------------------
    H.R. 3010's proponents downplay and, perhaps, even ignore 
the evidence demonstrating that whatever the costs of 
regulation, it results consistently in net benefits. ``Federal 
regulation, like taxing and spending,'' as CRS observed, ``is 
one of the basic tools of government used to implement public 
policy.''\34\ Impacting nearly every aspect of society, 
regulations have significant benefits as summarized in the 
following:
---------------------------------------------------------------------------
    \34\Curtis W. Copeland, The Federal Rulemaking Process: An 
Overview, Congressional Research Service Report for Congress, RL 32240, 
at 1 (Feb. 7, 2005).

        Agencies issue thousands of rules and regulations each 
        year to implement statutes enacted by Congress. The 
        public policy goals and benefits of regulations 
        include, among other things, ensuring that workplaces, 
        air travel, foods, and drugs are safe; that the 
        nation's air, water and land are not polluted; and that 
        the appropriate amount of taxes is collected. The costs 
        of these regulations are estimated to be in the 
        hundreds of billions of dollars, and the benefits 
        estimates are even higher.\35\
---------------------------------------------------------------------------
    \35\Regulatory Reform: Are Regulations Hindering Our 
Competitiveness?: Hearing Before the Subcomm. on Regulatory Affairs of 
the H. Comm. on Government Reform, 109th Cong. 56 (2005) (prepared 
statement of J. Christopher Mihm, Managing Director--Strategic Issues, 
U.S. Government Accountability Office) (emphasis added).

    Regulation routinely results in net benefits to society. 
This is in part because both the President and Congress have 
sought ways to oversee agency rulemaking to ensure that the 
rulemaking process is fair to affected parties and that the 
benefits of a rule outweigh its costs. Sally Katzen, a former 
Administrator of the Office of Information and Regulatory 
Affairs (``OIRA'') during the Clinton Administration, cited the 
OMB's annual reports to Congress concerning the costs and 
benefits of regulations from the Clinton, Bush, and Obama 
Administrations in support of this fact. These reports 
demonstrate that, even using OMB's highest estimate of costs 
and its lowest estimate of benefits, the regulations issued 
between fiscal years 1999 and 2009 produced a net benefit of 
$73 billion.\36\ The latest OMB report to Congress on the costs 
and benefits of regulations also concluded that for fiscal year 
2010, federal regulations cost between $6.5 billion and $12.5 
billion, but resulted in between $18.8 billion and $86.1 
billion in benefits.\37\ This overwhelming evidence undermines 
the unsupported assertion that regulatory costs are simply too 
burdensome.
---------------------------------------------------------------------------
    \36\REINS Act--Promoting Jobs and Expanding Freedom by Reducing 
Needless Regulation: Hearing Before the Subcomm. on Courts, Commercial 
and Admin. Law of the H. Comm. on the Judiciary, 112th Cong. 3 (2011) 
(statement of Sally Katzen).
    \37\Office of Management and Budget, 2011 Report to Congress on the 
Benefits and Costs of Federal Regulations and Unfunded Mandates on 
State, Local, and Tribal Entities at 21, available at http://
www.whitehouse.gov/sites/default/files/omb/inforeg/2011_cb/
2011_cba_report.pdf
---------------------------------------------------------------------------
C. LH.R. 3010 Is a Solution in Search of a Problem as the Current 
        Regulatory Process Has Worked Well
    The APA, enacted in 1946, establishes the minimum 
rulemaking\38\ and formal adjudication requirements for all 
executive branch administrative agencies. The APA also sets 
forth standards for judicial review of final agency actions. 
While the APA sets minimum standards, many agency actions may 
involve procedures that depart from or go beyond APA 
requirements. As one academic noted, ``[T]he American 
administrative system, by evolution and design, is 
characterized by a considerable degree of informality, agency 
discretion and procedural flexibility.''\39\ The APA's baseline 
procedural requirements are designed to maintain a balance 
between this type of agency flexibility and the requirements of 
due process. As more than 50 leading administrative law 
academics recently observed, ``The APA has served for 65 years 
as a kind of Constitution for administrative agencies and the 
affected public--flexible enough to accommodate the variety of 
agencies operating under it and the changes in modern 
life.''\40\
---------------------------------------------------------------------------
    \38\The APA defines ``rulemaking'' as the ``agency process for 
formulating, amending or repealing a rule.'' 5 U.S.C. Sec. 551(5) 
(2011). A ``rule,'' in turn, is defined as ``an agency statement of 
general or particular applicability and future effect designed to 
implement, interpret, or prescribe law or policy or describing the 
organization, procedure, or practice requirements of an agency.'' 5 
U.S.C. Sec. 551(4) (2011).
    \39\Gary J. Edles, Lessons from the Administrative Conference of 
the United States, 2 Eur. Pub. L. 571, 572 (1996).
    \40\Letter from 52 administrative law academics to House Judiciary 
Committee Chair Lamar Smith and House Judiciary Committee Ranking 
Member John Conyers, Jr., at 1 (Oct. 24, 2011) (on file with the H. 
Committee on the Judiciary, Democratic Staff).
---------------------------------------------------------------------------
    The informal notice-and-comment rulemaking process outlined 
in section 553 of the APA is the process that agencies follow 
for promulgating rules in the overwhelming majority of 
cases.\41\ Notice-and-comment rulemaking, while being flexible, 
is also subject to many procedural and analytical requirements, 
including those imposed by statutes other than the APA.\42\ 
Agencies, however, may choose or may be required by statute to 
use other rulemaking procedures, including formal rulemaking, 
negotiated rulemaking, and hybrid or expedited approaches, 
which generally tend to have greater procedural requirements 
and be subject to stricter judicial review than section 553 
notice-and-comment rulemaking.
---------------------------------------------------------------------------
    \41\Many commentators note that although notice-and-comment 
rulemaking is less rigid than formal rulemaking, it is still subject to 
numerous procedural and analytical requirements. If anything, the 
current process may already be too heavily proceduralized, or 
``ossified.'' See, e.g., Formal Rulemaking Hearing (statement of 
Matthew C. Stephenson, Harvard Law School) (``It turns out, however, 
that the term `informal rulemaking' is misleading. Nominally `informal' 
notice-and-comment rulemaking is in fact heavily proceduralized, to the 
point where many commentators describe this process as a kind of `paper 
hearing.' Agencies must provide a fairly detailed and specific 
proposal, or set of alternatives, in their initial published notice of 
proposed rulemaking. This notice must also disclose the scientific or 
evidentiary basis of the proposal, so that the agency's evidence can be 
subjected to critical scrutiny. Any interested party (indeed, any 
member of the public) may submit written comments on the agency's 
proposal. These submissions may criticize the agency's analysis and 
evidence, and may also suggest alternatives. Under Executive Order 
12866, executive branch agencies must also submit proposed rules, along 
with a detailed cost-benefit analysis, to the Office of Management and 
Budget for review. If the agency decides to promulgate a final rule, it 
must provide a detailed written explanation that includes responses to 
all material comments submitted by interested parties. If an agency 
fails to respond adequately to criticisms or proposed alternatives 
submitted by commenters, the agency risks judicial reversal. This 
creates powerful incentives for agencies to take comments seriously and 
to provide detailed responses. Furthermore, if the agency decides to 
change its policy substantially in response to comments, it may have to 
initiate a new round of notice-and-comment so that all parties have a 
fair opportunity to critique the new proposal. . . . Indeed, the more 
common criticism of notice-and-comment rulemaking is that it is too 
demanding of agencies. . . .'') (citations omitted); H.R. 3010 Hearing 
(statement of Prof. Sidney Shapiro, Wake Forest Law School) (``The 
regulatory system is already too ossified, and H.R. 3010 would only 
exacerbate this problem.'').
    \42\See, e.g., Regulatory Flexibility Act, 5 U.S.C. Sec. Sec. 603, 
604 (2011) (requiring assessments of regulatory impact of proposed and 
final rules on small entities); Unfunded Mandates Reform Act, 2 U.S.C. 
Sec. Sec. 1531-1538 (2011) (requiring assessments of regulatory impact 
on state and local government entities of proposed and final rules).
---------------------------------------------------------------------------

II. THE CUMULATIVE EFFECT OF H.R. 3010'S AMENDMENTS TO THE APA WILL BE 
   TO PROMOTE, NOT LIMIT, MORE UNCERTAINTY BY GREATLY EXTENDING THE 
                           RULEMAKING PROCESS

    Rather than reducing uncertainty, H.R. 3010 will 
substantially increase uncertainty by extending and multiplying 
the complexity of the rulemaking process.\43\ As a result, it 
will leave ``stakeholders (including businesses large and 
small) less able to plan effectively for the future.''\44\ It 
does this by adding more than ``60 new procedural and 
analytical requirements to the agency rulemaking process'' and 
expands section 553 of the APA by approximately tenfold.\45\ 
Whatever the merits of the individual amendments to the APA 
that are contained in H.R. 3010, the cumulative weight of all 
of the changes threatens to grind rulemaking to a halt. Many 
administrative law experts believe that the changes contained 
in H.R. 3010, taken as a whole, will pour ``sand in the gears'' 
of the rulemaking process.\46\ The bill's cost-benefit analysis 
requirements alone would slow down the rulemaking process, 
which some have already criticized as being ``already too 
ossified,'' and possibly bring rulemaking to a halt.\47\
---------------------------------------------------------------------------
    \43\H.R. 3010 Hearing (statement of Prof. Sidney Shapiro, Wake 
Forest Law School) (``It currently takes four to eight years for an 
agency to promulgate and enforce most significant rules, and the 
proposed procedures would likely add another two to three years to the 
process. Under H.R. 3010, the longest rulemakings could take more than 
12 years--spanning potentially four different presidential 
administrations--to complete. In the meantime, thousands of people 
would die and tens of thousands more would be injured or become ill 
because of the lack of regulation.'').
    \44\Letter from 52 administrative law academics to House Judiciary 
Committee Chair Lamar Smith and House Judiciary Committee Ranking 
Member John Conyers, Jr., at 2 (Oct. 24, 2011) (on file with the H. 
Committee on the Judiciary, Democratic Staff).
    \45\Id.
    \46\See, e.g., id. (``Collectively, the procedural and analytical 
requirements added by this bill would be enormously burdensome. . . . 
Not only new regulations, but amendments or recisions of rules could be 
deterred by the additional expense and complexity that would be added 
to the process. Enforcement of these requirements on judicial review is 
available to regulatory proponents and regulatory opponents alike, 
adding to the burden of defensive lawyering agencies must carry. Thus, 
both affirmative regulation and deregulation may be impeded.'').
    \47\H.R. 3010 Hearing (prepared statement of Prof. Sidney Shapiro, 
Wake Forest School of Law); see, e.g., American Bar Ass'n--Section of 
Administrative Law and Regulatory Practice, Comments on H.R. 3010, the 
Regulatory Accountability Act, at 1 (Oct. 24, 2011) (on file with the 
H. Committee on the Judiciary, Democratic Staff); Letter from 52 
administrative law academics to Lamar Smith, House Judiciary Committee 
Chair, and John Conyers, Jr., House Judiciary Committee Ranking Member, 
at 2 (Oct. 24, 2011) (on file with the H. Committee on the Judiciary, 
Democratic Staff); Administrative Conference of the United States 
Recommendation 93-4, 59 Fed. Reg. 4670, 4670 (1993) (concluding in 1993 
that the state of the rulemaking process ``has become increasingly less 
effective and more time-consuming.'')
---------------------------------------------------------------------------
    Likewise, the AFL-CIO observes that the bill ``adds dozens 
of new analytical and procedural requirements to the rulemaking 
process.''\48\ It is particularly concerned that the 
``development of major workplace safety rules already takes 6-
10 years'' and that H.R. 3010 ``will further delay these rules 
and cost workers their lives.''\49\ Congress delegated 
legislative authority to agencies to issue rules to protect the 
American public from a wide spectrum of harms. H.R. 3010 
effectively contravenes Congress's intent in delegating that 
authority in the first place.
---------------------------------------------------------------------------
    \48\Letter to House Judiciary Committee Chair Lamar Smith and House 
Judiciary Committee Ranking Member John Conyers, Jr. from William 
Samuel, Director, the American Federation of Labor and Congress of 
Industrial Organizations, at 1 (Nov. 1, 2011).
    \49\Id.
---------------------------------------------------------------------------
    If enacted, the bill's amendments to the APA ``would likely 
lead to rulemaking avoidance by agencies--increasing use of 
underground rules, case-by-case adjudication, or even 
prosecutorial actions, to achieve policies without having to 
surmount the additional sections presented [by the bill],'' as 
observed by more than 50 leading administrative law 
academics.\50\ The ABA's Administrative Law Section has also 
expressed similar concerns.\51\
---------------------------------------------------------------------------
    \50\Letter from 52 administrative law academics to Lamar Smith, 
House Judiciary Committee Chair, and John Conyers, Jr., House Judiciary 
Committee Ranking Member, at 1 (Oct. 24, 2011) (on file with the H. 
Committee on the Judiciary, Democratic Staff).
    \51\American Bar Ass'n--Section of Administrative Law and 
Regulatory Practice, Comments on H.R. 3010, the Regulatory 
Accountability Act, at 5 (Oct. 24, 2011) (on file with the H. Committee 
on the Judiciary, Democratic Staff) (noting that ``[c]ollectively, 
these requirements would be enormously burdensome'').
---------------------------------------------------------------------------
    In light of concerns about H.R. 3010's cumulative effect on 
rulemaking and on society, Representative Steve Cohen (D-TN) 
offered an amendment at markup that would have delayed H.R. 
3010's effective date to 90 days after the Administrative 
Conference of the United States--a neutral body of 
administrative law experts--submits a report to Congress 
containing a cost-benefit analysis of H.R. 3010. Such analysis 
would have included consideration of both the quantitative and 
qualitative benefits and costs of H.R. 3010 for the rulemaking 
process, the federal government, and society. If H.R. 3010's 
proponents were to be logically consistent in their view of the 
efficacy of cost-benefit analysis, they would have supported 
this amendment. Unfortunately, they did not, and the amendment 
was not adopted.
    To highlight the potential cost to society of delaying 
regulation, Representative Jerrold Nadler (D-NY) offered an 
amendment that would have exempted from H.R. 3010 any proposed 
rule made by the Nuclear Regulatory Commission under the Atomic 
Energy Act.\52\ The meltdown of the nuclear reactors at the 
Fukushima Daiichi power plant in Japan earlier this year in the 
aftermath of a devastating earthquake and tsunami highlights 
the dangers of regulatory failure when it comes to ensuring the 
safe operation of nuclear reactors. Representative Nadler was 
particularly concerned about the potential for a similar 
meltdown just north of New York City, at the Indian Point 
Nuclear Power Plant, which is an aged facility and potential 
terrorist target. H.R. 3010 would inhibit or prevent the 
Nuclear Regulatory Commission from being able to protect the 
tens of millions who live in the greater New York metropolitan 
area and millions of other Americans who live near nuclear 
power plants from a catastrophe akin to what happened at 
Fukushima. The amendment failed by a vote of 13 to 16.
---------------------------------------------------------------------------
    \52\42 U.S.C. Sec. Sec. 2011 et seq. (2011).
---------------------------------------------------------------------------

 III. H.R. 3010'S SUPERMANDATES AND OTHER PROVISIONS PRIORITIZE COSTS 
   OVER CRITICAL PUBLIC HEALTH, WORKPLACE SAFETY, AND ENVIRONMENTAL 
                              PROTECTIONS

    H.R 3010 prioritizes minimizing business costs over health, 
safety, and environmental protections in at least two ways. 
First, it imposes a ``supermandate'' on agencies that overrides 
numerous statutes that prohibit or limit the consideration of 
cost in promulgating public health and safety rules. Second, it 
goes well beyond the cost-benefit analysis requirements 
contained in Executive Orders 12,866 and 13,563 by codifying 
expanded analytical requirements that allow for much less 
agency discretion, threatening ``paralysis by analysis.''
A. LH.R. 3010 Makes a Huge Substantive Change to Existing Law by 
        Overturning Statutory Prohibitions or Limitations on 
        Considering Costs in the Rulemaking Process
    H.R. 3010's requirement that agencies consider regulatory 
costs and benefits of proposed and final rules regardless of 
the dictates of other laws, thereby establishing a 
``supermandate,'' imposes a major substantive change to 
existing law. Specifically, section 3(b)(6) of the bill, when 
combined with the bill's required cost and benefit information 
in the notice of proposed rulemaking and the issuance of a 
final rule, would require agencies to consider potential costs 
and benefits associated with proposed and final rules 
``[n]otwithstanding any other provision of law.''\53\ As a 
result, H.R. 3010 overrides provisions in numerous other 
statutes that prohibit or limit agency consideration of costs 
when promulgating rules. These statutes include the Clean Air 
Act,\54\ the Clean Water Act,\55\ the Occupational Safety and 
Health Act,\56\ and the Federal Mine Safety and Health Act.\57\ 
Various environmental groups warn that this is a ``cynical 
attempt'' to overturn these measures and the carefully crafted 
legislative bargains that they represent.\58\ One such 
organization, American Rivers, notes that ``[m]any of our 
nation's fundamental laws protecting our health, like the Clean 
Air Act and the Clean Water Act, would likely not have come 
into effect when their costs, the costs of keeping our air and 
water clean, were greater compared to less protective 
regulations.''\59\ As the ABA's Administrative Law Section 
observes:
---------------------------------------------------------------------------
    \53\H.R. 3010, 112th Cong. Sec. 3(b)(6) (2011) (emphasis supplied).
    \54\Pub. L. No. 91-604, 84 Stat. 1676 (1970), as amended. The cost 
prohibition is codified at 42 U.S.C. Sec. 7142(d)(2) (2011).
    \55\Pub. L. No. 95-217, 86 Stat. 816 (1977), as amended. The 
limitation on cost consideration is codified at 33 U.S.C. Sec. 1311(b) 
(2011).
    \56\Pub. L. No. 91-596, 84 Stat. 1590, 84 Stat. 1590 (1970), as 
amended. The limitation on cost consideration is codified at 29 U.S.C. 
Sec. 655(b)(5) (2011).
    \57\Pub. L. No. 95-164, 91 Stat. 1290 (1977), as amended. The 
limitation on cost consideration is contained in section 101(a)(6)(A) 
of the Act.
    \58\Letter to House Members from American Rivers, Clean Water 
Action, Defenders of Wildlife, Earthjustice, Environment America, 
League of Conservation Voters & the Natural Resources Defense Council 
(Nov. 2, 2011) (on file with the H. Committee on the Judiciary, 
Democratic Staff).
    \59\Letter to House Judiciary Committee Chair Lamar Smith and House 
Judiciary Committee Ranking Member John Conyers, Jr. from Jim Bradley, 
Director of Government Relations, American Rivers (Nov. 2, 2011) (on 
file with the H. Committee on the Judiciary, Democratic Staff).

          In addition to burdening the rulemaking process with 
        analytical requirements that appear to out of 
        proportion to their likely payoffs, the bill's 
        ``rulemaking considerations'' are troubling because of 
        the way in which they would, in some cases, alter the 
        substantive law. The APA would thus become, in several 
        respects, an ``Administrative Substance Act.''\60\
---------------------------------------------------------------------------
    \60\American Bar Ass'n--Section of Administrative Law and 
Regulatory Practice, Comments on H.R. 3010, the Regulatory 
Accountability Act, at 12-13 (Oct. 24, 2011) (on file with the H. 
Committee on the Judiciary, Democratic Staff) (noting that ``[m]uch, 
perhaps most, of the safety and health legislation now on the books 
would seemingly be replaced'').

    In addition, H.R. 3010 imposes other supermandates that 
compromise public health, workplace safety, and environmental 
protections. New APA section 553(d) as proposed by H.R. 3010, 
for instance, requires agencies to ``adopt the least costly 
rule considered during the rule making . . . that meets 
relevant statutory objectives'' and permits agencies to chose a 
more expensive option only if the additional benefits ``justify 
its additional costs.'' As the AFL-CIO observed, this provision 
``would make protecting workers and the public secondary to 
limiting costs and impacts on business and corporations.''\61\
---------------------------------------------------------------------------
    \61\Letter to House Judiciary Committee Chair Lamar Smith and House 
Judiciary Committee Ranking Member John Conyers, Jr. from William 
Samuel, Director, the American Federation of Labor and Congress of 
Industrial Organizations, at 1 (Nov. 1, 2011) (on file with the H. 
Committee on the Judiciary, Democratic Staff).
---------------------------------------------------------------------------
    To rectify the pernicious effects of the bill's 
supermandates, Representative Steve Cohen (D-TN) offered an 
amendment clarifying that these provisions apply only if they 
do not conflict with any other law. Representative Cohen's 
amendment would have ensured that prior Congressional intent as 
expressed in these other measures, such as the Clean Air Act, 
would be preserved and would have prevented unelected agency 
bureaucrats from weighing costs against saving lives. His 
amendment, however, failed by a vote of 14 to 15.
B. LContrary To Its Proponent's Claims, H.R. 3010, Rather Than Merely 
        Codifying the Existing Cost-Benefit Analysis Requirements, 
        Greatly Expands Them, Threatening ``Paralysis by Analysis''
            1. LCost-Benefit Requirements in Executive Orders
    For more than 30 years, beginning with President Ronald 
Reagan, every Administration has required significant rules to 
undergo a comprehensive cost-benefit analysis. President 
Reagan's EO 12291, for example, which outlined certain cost-
benefit analysis requirements for ``major'' rules, i.e., rules 
that would have at least a $100 million annual effect on the 
economy, a major increase in costs or prices for consumers, 
industries, government agencies, or regions, or significant 
adverse effects on competition, employment, investment, 
productivity, innovation, or on the ability of United States-
based enterprises to compete with foreign-based enterprises in 
domestic or export markets.\62\
---------------------------------------------------------------------------
    \62\Exec. Order No. 12,291, 46 Fed. Reg. 13,193 (Feb. 19, 1981).
---------------------------------------------------------------------------
    President Bill Clinton carried forward the cost-benefit 
analysis requirement as reflected in his EO 12866, issued in 
1993.\63\ This EO mandates agencies to prepare cost-benefit 
analyses for ``significant regulatory actions.''\64\ In 
particular, EO 12866 requires agencies to assess all costs and 
benefits of available regulatory alternatives, including, 
significantly, both quantitative and qualitative measures. It 
also provides that agencies should select regulatory approaches 
that maximize net benefits, unless a statute requires another 
approach. Under EO 12866, agencies should, among other 
priorities, adopt regulations only upon a ``reasoned 
determination that the benefits of the intended regulation 
justify its costs,'' and tailor regulations so that they impose 
the least burden on society needed to achieve the regulatory 
objectives.
---------------------------------------------------------------------------
    \63\Exec. Ord. No. 12,866, 58 Fed. Reg. 51,735 (Oct. 4, 1993).
    \64\EO 12866 defines ``significant regulatory action'' as any 
action that is likely to result in a rule that may: (1) have an annual 
effect on the economy of $100 million or more or adversely effect in a 
material way the economy, a sector of the economy, productivity, 
competition, jobs, the environment, public health or safety, or State, 
local, or tribal communities; (2) create a serious inconsistency with 
another agency's actions; (3) materially alter the budgetary impact or 
the rights of recipients of entitlement, grant, user fee, or loan 
programs; or (4) raise novel legal or policy issues arising out of 
legal mandates, the President's priorities, or the principles set forth 
in EO 12866. Id.
---------------------------------------------------------------------------
    In 2007, President George W. Bush issued EO 13422,\65\ 
which substantively amended EO 12866 in various ways. In 
pertinent part, it increased emphasis on cost-benefit analysis 
by agencies, including requiring agencies to include reasonable 
estimates of the aggregate costs and benefits of all 
regulations for each calendar year; and allowed for a greater 
role for political appointees in agency rulemaking.
---------------------------------------------------------------------------
    \65\Exec. Ord. No. 13,422, 72 Fed. Reg. 2,763 (Jan. 23, 2007). 
President Obama revoked EO 13422 on January 30, 2009. Exec. Ord. No. 
13,497, 74 Fed. Reg. 6,113 (Jan. 30, 2009).
---------------------------------------------------------------------------
    On January 18, 2011, President Barack Obama issued EO 
13563,\66\ which supplemented and reaffirmed the principles of 
EO 12866 as issued by President Clinton. In relevant part, EO 
13563 requires agencies to identify, ``as appropriate, means to 
achieve regulatory goals designed to promote innovation,'' and 
to reduce costs and simplify and harmonize rules through inter-
agency coordination.\67\ The order also clarifies that agencies 
must identify and consider regulatory approaches that reduce 
burdens and maintain flexibility and freedom of choice for the 
public.\68\
---------------------------------------------------------------------------
    \66\Exec. Ord. No. 13,563, 76 Fed. Reg. 3,821 (Jan. 18, 2011).
    \67\Id.
    \68\Id.
---------------------------------------------------------------------------
            2. LH.R. 3010 Expands the Scope and Reach of Cost-Benefit 
                    Analysis Requirements Beyond the Executive Orders
    Contrary to the claims of H.R. 3010's proponents, the bill 
would add additional analytical requirements and expand the 
reach of the requirement for cost-benefit analysis. At the 
hearing on H.R. 3010, the Majority witnesses, perhaps 
tellingly, only made general platitudinal arguments about the 
benefits of cost-benefit analysis, without addressing the 
specific analytical factors required by H.R. 3010. The Minority 
witness, Professor Sidney Shapiro, however, explained that 
cost-benefit analysis ``is, at best, inexact and 
manipulable.''\69\
---------------------------------------------------------------------------
    \69\H.R. 3010 Hearing (prepared statement of Prof. Sidney Shapiro, 
Wake Forest School of Law).
---------------------------------------------------------------------------
    Belying the claims of the bill's proponents that H.R. 3010 
merely codifies the requirements of the various Executive 
Orders, sections 3(b)(6), 3(d)(1), 3(f)(3), and 3(f)(4) of the 
bill impose a mandate on all agencies to conduct a cost-benefit 
analysis for virtually all rules, and not just economically 
significant ones. This expanded scope would apply to in excess 
of 3,000 rules annually, including minor ones. For example, if 
the Coast Guard wanted to issue a rule establishing a safety 
zone for a fireworks display (something the Coast Guard does 
frequently), the bill would require the agency to do a cost-
benefit analysis, and to show that the benefits ``justify'' the 
costs.
    The bill's cost-benefit analysis mandate itself will result 
in a tremendous expenditure of taxpayer dollars in the amount 
of resources that it will require agencies to comply. Even one 
of the Majority's witnesses at the legislative hearing on this 
bill acknowledged as much. He said cost-benefit analysis 
``summons the apparatus of cost (and benefit) estimation--which 
is itself costly.''\70\ More than 50 administrative law 
academics also highlighted their concern about the additional 
costs that the bill's burdensome requirements will impose on 
agencies, which is particularly problematic in this time of 
severe budgetary pressures.\71\
---------------------------------------------------------------------------
    \70\H.R. 3010 Hearing (prepared statement of Christopher DeMuth, 
American Enterprise Institute).
    \71\Letter from 52 administrative law academics to House Judiciary 
Committee Chair Lamar Smith and House Judiciary Committee Ranking 
Member John Conyers, Jr., at 1 (Oct. 24, 2011).
---------------------------------------------------------------------------
    In addition to expanding cost-benefit analysis requirements 
to include all rules and not just economically significant ones 
per the existing Executive Orders, H.R. 3010 also adds numerous 
analytical requirements to the already substantial analytical 
requirements of the rulemaking process, threatening ``paralysis 
by analysis.'' Moreover, H.R. 3010 expands the cost-benefit 
analysis requirement to include ``major guidance'' documents, 
i.e., documents that are not ``rules'' under current law. The 
bill also would require agencies to identify the costs and 
benefits of alternatives to rules that are ultimately proposed.
    Additionally, as noted, H.R. 3010 would force agencies to 
adopt the least costly rule absent a compelling need to protect 
public health and safety. Under EO 12866, in contrast, agencies 
must simply determine that the benefits of a proposed rule--
including non-quantifiable benefits--justify their costs and 
that benefits are maximized. As U.S. PIRG observes:

          The new bill would in effect slow down the regulatory 
        process by adding unending cost-benefit analyses, 
        followed by court challenges. New analyses mandated by 
        the legislation would require estimates of future 
        direct and indirect costs that are impossible to 
        forecast with any reliability. These new hurdles and 
        the increased influence given to big business and 
        corporate special interests would cause significant 
        problems for federal agencies such as the CDC and the 
        FDA and would undermine their ability to fulfill their 
        missions.\72\
---------------------------------------------------------------------------
    \72\Letter to House Judiciary Committee Chair Lamar Smith and House 
Judiciary Committee Ranking Member John Conyers, Jr. from Nasima 
Hossain, U.S. PIRG Public Health Advocate, at 2 (Nov. 2, 2011) (on file 
with the H. Committee on the Judiciary, Democratic Staff)

    We are concerned not only with the bill's cost-benefit 
analysis provisions, but with its specific mandates as to the 
factors that must be considered as part of that analysis. While 
former OIRA Administrator Sally Katzen testified before the 
CCAL Subcommittee that both Democratic and Republican 
administrations have agreed on the basic principle that 
agencies should engage in cost-benefit analysis of proposed and 
final rules, she strongly opposed codification because each 
administration has chosen to place different emphases and 
nuances into its cost-benefit analysis requirements. Codifying 
a single, stringent standard would prohibit such 
flexibility.\73\
---------------------------------------------------------------------------
    \73\Cost-Benefit Hearing (statement of Sally Katzen).
---------------------------------------------------------------------------

 IV. H.R. 3010 USURPS CONGRESSIONAL INTENT BY SUBSTANTIALLY EXPANDING 
 OIRA'S--AND, THEREFORE, THE PRESIDENT'S--CONTROL OVER RULEMAKING AND 
              UNDERCUTS CURRENT TRANSPARENCY REQUIREMENTS

    H.R. 3010 expands OIRA's control over all agency rulemaking 
and undercuts the transparency requirements that currently 
exist in EO 12866. In the hands of the wrong administration, 
this extraordinary and unaccountable power over rulemaking 
threatens agencies' ability to do the job that Congress tasked 
them with doing, which is to protect the American people from a 
broad array of harms.
A. LH.R. 3010 Would Empower OIRA To Exert a Choke Hold Over Rulemaking
    Within the Executive Office of the President, OMB is 
charged with the responsibility to oversee and coordinate 
Executive Branch agencies. OMB works with agencies ``to help 
improve administrative management, to develop better 
performance measures and coordinating mechanisms, and to reduce 
any unnecessary burdens on the public.''\74\ Since the 1930's, 
OMB has been involved in ``questions of management and 
organization of the executive branch'' and the level of its 
involvement has fluctuated over time.\75\
---------------------------------------------------------------------------
    \74\Executive Office of the President of the United States, Office 
of Management and Budget Mission, available at http://
www.whitehouse.gov/omb/organization_mission/. OMB's ``predominant 
mission,'' however, is ``is to assist the President in overseeing the 
preparation of the federal budget and to supervise its administration 
in Executive Branch agencies.'' Id.
    \75\Committee Print: Office of Management and Budget: Evolving 
Roles and Future Issues Congressional Research Service Report, S. Comm. 
on Governmental Affairs, 99th Cong. 185 (1986).
---------------------------------------------------------------------------
    With regard to the regulatory processes of Executive Branch 
agencies, OIRA, established by Congress in the Paperwork 
Reduction Act of 1980 as an arm of OMB, reviews significant 
proposed and final rules from federal agencies before they are 
published in the Federal Register.\76\ As a result of OIRA's 
review, draft rules may be revised before publication, 
withdrawn before a review is completed, or returned to the 
agencies ``because, in OIRA's analysis, certain aspects of the 
rule need to be reconsidered.''\77\
---------------------------------------------------------------------------
    \76\Paperwork Reduction Act of 1980 Sec. 3503, 44 U.S.C. ch. 35 
(2011).
    \77\Interim Report on the Administrative Law, Process and Procedure 
Project for the 21st Century, Subcomm. on Commercial and Administrative 
Law of the H. Comm. on the Judiciary, 109th Cong. 39 (2006) available 
at http://judiciary.house.gov/Media/PDFS/Printers/109th/31505.pdf 
[hereinafter ``Interim Report''].
---------------------------------------------------------------------------
    Excessive concentration of power in OIRA can be troubling. 
For instance, under the Bush Administration, OIRA's role as a 
``gatekeeper for new rulemakings'' was substantially 
strengthened.\78\ The OIRA Administrator during the Bush 
Administration explained that one of his office's functions was 
``to protect people from poorly designed rules,'' and that OIRA 
review was a way to ``combat the tunnel vision that plagues the 
thinking of single-mission regulators.''\79\ This ``return to 
the gatekeeper perspective of OIRA's role [had] implications 
for an array of OIRA's functions.''\80\ During the Bush 
Administration, ``OIRA's increasingly aggressive role in 
controlling agency action'' may have been ``the biggest 
administrative law story of the new century.''\81\ 
Manifestations of OIRA's heightened role in the rulemaking 
process, as identified by the Government Accountability Office 
(``GAO'')\82\ and CRS,\83\ included the following:
---------------------------------------------------------------------------
    \78\Curtis W. Copeland, ``Changes to the OMB Regulatory Review 
Process by Executive Order 13422,'' CRS Report for Congress, RL 33862, 
at 56 (2007) (quoting Office of Management and Budget, Stimulating 
Smarter Regulation: 2002 Report to Congress on the Costs and Benefits 
of Federal Regulations and Unfunded Mandates on State, Local, and 
Tribal Entities, Dec. 2002).
    \79\John Graham, Administrator, OIRA, Remarks to the Board of 
Trustees, The Keystone Center, at Washington, DC (June 18, 2002), 
available at http://www.whitehouse.gov/omb/inforeg/
keystone_speech061802.html.
    \80\Interim Report at 56.
    \81\Lisa Heinzerling, ``Statutory Interpretation in the Era of 
OIRA,'' 33 Ford. Urb. L. Rev. 1097, 1117 (2006).
    \82\U.S. General Accounting Office, Rulemaking: OMB's Role in 
Reviews of Agencies' Draft Rules and the Transparency of Those Reviews, 
GAO-03-929, Sept. 22, 2003.
    \83\The Rulemaking Process and the Unitary Executive Theory: 
Hearing Before the Subcomm. on Commercial and Administrative Law of the 
H. Comm. on the Judiciary, 110th Cong. (2008) (prepared statement of 
Curtis W. Copeland, Specialist in American National Government, 
Congressional Research Service) (footnotes omitted). Additional 
instances of this heightened role include the following:

   Gthe increased use of ``informal'' OIRA reviews in which 
agencies share preliminary drafts of rules and analyses before final 
decisionmaking at the agencies--a period when OIRA says it can have its 
greatest impact on the rules, but when OIRA says that some of the 
---------------------------------------------------------------------------
transparency requirements in Executive Order 12866 do not apply;

   Gextensions of OIRA review for certain rules for months or 
years beyond the 90-day time limit delineated in the executive order;

   Gusing a general statutory requirement that OIRA provide 
Congress with ``recommendations for reform'' to request the public to 
identify rules that it believes should be eliminated or reformed;

   Ga leadership role for OIRA in the development of electronic 
rulemaking, which has led to the development of a centralized 
rulemaking docket, but which some observers believe can lead to 
increased presidential influence over the agencies;

   Gthe development of an OMB bulletin on peer review that, in 
its original form, some believed could have led to a centralized system 
within OMB that could be vulnerable to political manipulation or 
control;

   Gthe development of a proposed bulletin standardizing agency 
risk assessment procedures that the National Academy of Sciences 
concluded was ``fundamentally flawed,'' and that OIRA later withdrew; 
and

   Gthe development of a ``good guidance practices'' bulletin 
that standardizes certain agency guidance practices.
Id.

         Lthe development of a detailed economic 
        analysis circular and what agency officials described 
        as a perceptible ``stepping up the bar'' in the amount 
        of support required from agencies for their rules, with 
        OIRA reportedly more often looking for regulatory 
        benefits to be quantified and a cost-benefit analysis 
        for every regulatory option that the agency considered, 
        not just the option selected;

         Lthe issuance of 21 letters returning rules to 
        the agencies between July 2001 and March 2002--three 
        times the number of return letters issued during the 
        last 6 years of the Clinton Administration;\84\
---------------------------------------------------------------------------
    \84\OIRA, however, returned only two rules in 2003, one rule in 
2004, one rule in 2005, no rules in 2006, and one rule in 2007. OIRA 
officials indicated that the pace of return letters declined after 2002 
because agencies had gotten the message about the seriousness of OIRA 
reviews.

         Lthe issuance of 13 ``prompt letters'' between 
        September 2001 and December 2003 suggesting that 
        agencies develop regulations in a particular area or 
        encouraging ongoing efforts. However, OIRA issued two 
        prompt letters in 2004, none in 2005, one in 2006, and 
---------------------------------------------------------------------------
        none in 2007[.]

According to CRS, these and other Bush Administration 
initiatives ``represent[ed] the strongest assertion of 
presidential power in the area of rulemaking in at least 20 
years.''\85\ A detailed analysis prepared by the Democratic 
staff of the House Judiciary Committee concerning the Bush 
Administration's control of the rulemaking process concluded 
that such control was ``to the detriment of the public interest 
and has served to circumvent legislative intent.''\86\ Not 
surprisingly, President Obama, in one of his first acts in 
office, revoked EO 13422, which contained these expanded OIRA 
authority provisions, on January 30, 2009.\87\
---------------------------------------------------------------------------
    \85\The Rulemaking Process and the Unitary Executive Theory: 
Hearing Before the Subcomm. on Commercial and Administrative Law of the 
H. Comm. on the Judiciary, 110th Cong. (2008) (prepared statement of 
Curtis W. Copeland, Specialist in American National Government, 
Congressional Research Service).
    \86\H. Comm. on the Judiciary Majority Staff, Reining in the 
Imperial Presidency--Lessons and Recommendations Relating to the 
Presidency of George W. Bush, 111th Cong., at 186 (Mar. 2009).
    \87\Exec. Ord. No. 13,497, 74 Fed. Reg. 6,113 (Jan. 30, 2009).
---------------------------------------------------------------------------
    Notwithstanding the serious concerns presented regarding 
greater presidential control over rulemaking, section 3 of H.R. 
3010 would require all agencies--including independent 
regulatory agencies--to consult with OIRA before they could 
publish a proposed or final rule. This requirement represents 
an unprecedented delegation of power to OIRA and the President 
as it will effectively allow OIRA to control all rulemaking 
activity. Moreover, this provision would undermine the 
independence of independent regulatory agencies that Congress 
created to be independent of the President.\88\ This 
requirement is particularly curious in light of the fact that 
many of the proponents of H.R. 3010 are also, somewhat 
hypocritically, proponents of H.R. 10, the Regulations from the 
Executive in Need of Scrutiny Act, or ``REINS Act.''\89\ That 
bill requires, among other things, that Congress approve all 
major rules before they can go into effect. Therefore, in H.R. 
10, proponents of this legislation are seeking to regain 
control from the Executive Branch over the rulemaking process, 
while in H.R. 3010, they seek to give the Executive Branch even 
more power over the rulemaking process.
---------------------------------------------------------------------------
    \88\Certain agencies are considered ``independent'' because the 
President has limited authority to remove their leaders (usually, heads 
of such agencies can only be removed for cause, rather than at the 
President's pleasure). Stephen G. Breyer, et al., Administrative Law 
and Regulatory Policy, at 100 (4th ed. 1999).
    \89\H.R. 10, 112th Cong. (2011).
---------------------------------------------------------------------------
    Rather than learning from prior mistakes, the proponents of 
H.R. 3010, in effect, seek to revitalize and codify the Bush 
Administration's view that OIRA should act as a rulemaking 
``gatekeeper'' by mandating OIRA review authority in some of 
the same ways specified in the Bush Administration's overruled 
EO 13422. As a result, H.R. 3010 ensures greater presidential 
control over rulemaking, which, in the wrong administration's 
hands, could undermine important health, safety, consumer 
protection, financial and other regulations.
    In recognition of the problematic consequences of the 
bill's delegation of virtually unlimited control over the 
rulemaking process to OIRA, Representative Nadler offered an 
amendment deleting the requirement in the bill that agencies 
(including independent regulatory agencies) consult with OIRA 
before they may publish an Notice of Proposed Rule Making or 
issue final rules. His amendment, however, failed by a vote of 
13 to 20.
B. LH.R. 3010 Undercuts Current Transparency Requirements
    Another problematic aspect of H.R. 3010 is section 3, which 
gives the President and OIRA the discretion as to what 
information must be made available to the public in connection 
with certain rulemaking processes. As a result, the bill would 
reduce--not strengthen--current requirements for OIRA 
transparency. For example, EO 12866 currently requires OIRA to 
``make available to the public all documents exchanged between 
OIRA and the agency during the review by OIRA'' The bill, 
however, would allow the President and the OIRA Administrator 
to decide--at their discretion--what information that OIRA 
provides to the agency will be disclosed to the public. Also, 
section 3(l) of the bill would allow the President or the OIRA 
Administrator to prevent the inclusion of documents and 
information communicated by OIRA from the rulemaking record.

V. H.R. 3010 FURTHER TILTS THE REGULATORY PROCESS IN FAVOR OF BUSINESS 
           INTERESTS AND OTHERS WHO WANT TO STOP REGULATIONS

A. LH.R. 3010 Reinstates a Long-Discredited, Cumbersome, and Time-
        Consuming Formal Rulemaking Process That Can Be Used To Thwart 
        Needed Public Health and Safety Rules from Being Promulgated
            1. LThere Is No Need for Formal Rulemaking
    While regulations provide a substantial net benefit for 
society, agencies must nonetheless comply with constitutional 
due process requirements when issuing them. The Constitution 
provides that the government may not deprive anyone of life, 
liberty, or property without ``due process of law.''\90\ This 
requirement of fair procedure applies to the federal regulatory 
rulemaking and adjudicatory processes, the impact of which can 
be extensive. As Justice Robert Jackson observed in 1952, ``The 
rise of administrative bodies probably has been the most 
significant legal trend of the last century and perhaps more 
values today are affected by their decisions than by those of 
all the courts, review of administrative decisions apart.''\91\
---------------------------------------------------------------------------
    \90\U.S. Const. amend. XIV, Sec. 1.
    \91\Federal Trade Commission v. Ruberoid Co., 343 U.S. 470, 487 
(1952) (Jackson, J., dissenting).
---------------------------------------------------------------------------
    Though rarely used, agencies must sometimes follow the 
APA's formal rulemaking procedures ``when rules are required by 
statute to be made on the record after opportunity for an 
agency hearing.''\92\ The Supreme Court, in an opinion authored 
by then-Justice William Rehnquist, interpreted this language to 
mean that unless Congress specifically states in a statute 
governing the substance of the rulemaking that agency 
``hearings'' regarding proposed rules are to be ``on the 
record,'' an agency is not required to use formal rulemaking 
procedures.\93\
---------------------------------------------------------------------------
    \92\5 U.S.C. Sec. 553(c) (2011).
    \93\United States v. Florida East Coast Railway Co., 410 U.S. 224, 
237-238 (1973).
---------------------------------------------------------------------------
    The formal rulemaking procedures, outlined in sections 556 
and 557 of the APA, require the agency seeking to promulgate 
the rule to carry the burden of proof in a trial-like 
process.\94\ Any interested party has the opportunity to 
present evidence and conduct cross-examination with an 
administrative law judge or other agency official 
presiding.\95\ The presiding officer can administer oaths, 
issue subpoenas, exclude irrelevant evidence, and make other 
rulings concerning the conduct of the proceeding.\96\ The rule 
must be supported by substantial evidence.\97\ In contrast to 
an informal rulemaking, a court can review a rule subject to 
formal rulemaking to determine whether the ``evidence'' 
supporting the rule was ``substantial.''\98\
---------------------------------------------------------------------------
    \94\5 U.S.C. Sec. 556(d) (2011).
    \95\5 U.S.C. Sec. 556(c), (d) (2011).
    \96\5 U.S.C. Sec. 556(d) (2011).
    \97\Id.
    \98\See 5 U.S.C. Sec. 706(2) (2011) (outlining various bases for 
judicial review).
---------------------------------------------------------------------------
    Up until the 1970's, the trial-type procedures involved in 
formal rulemaking were thought to be the best (though not the 
only) means of ensuring that agency rulemaking satisfied due 
process concerns and ensured fairness and accuracy in the 
rulemaking process. Over time, however, informal procedures 
(partly described in footnote 41 above) came to be seen as 
being sufficient to satisfy due process, while formal 
rulemaking procedures came to be seen as unnecessarily 
cumbersome and time-consuming and offering little advantage 
over informal rulemaking procedures.\99\ For instance, in the 
1960's, of 16 formal rulemakings under the Food, Drug and 
Cosmetic Act, not one was completed in less than 2 years and 
the average time elapsed between first proposal and final order 
was 4 years.\100\ Moreover, in two of the 16 cases, the formal 
rulemaking proceedings took more than a decade, including one 
proceeding to determine whether the Food and Drug 
Administration (FDA) should require that peanut butter contain 
at least 90% peanuts (as the FDA proposed) as opposed to 87% 
peanuts (as proposed by industry).\101\ In the peanut butter 
case, a government witness was examined and cross-examined for 
an entire day about a survey of cookbook and patented peanut 
butter formulas, missing recipes, and his personal preferences 
regarding peanut butter.\102\
---------------------------------------------------------------------------
    \99\Stephen G. Breyer et al., Administrative Law and Regulatory 
Policy, at 582 (4th ed. 1999).
    \100\Id.
    \101\Id.
    \102\Id.
---------------------------------------------------------------------------
    Not surprisingly, the ABA's Administrative Law Section has 
observed that formal rulemaking has been ``long-discredited'' 
and that it has ``passed almost completely into disuse, because 
experience has shown that it leads to substantial delays and 
unproductive confrontation and because courtroom methods are 
not generally suited to resolution of legislative-type 
issues.''\103\ The Section's views reflect a ``virtual 
consensus in the administrative law community that the APA 
formal rulemaking procedure is obsolete.''\104\ Indeed, the 
Administrative Conference of the United States recommended in 
1993 that the APA's formal rulemaking procedure be 
repealed.\105\ Studies conducted of formal rulemaking 
procedures ``showed clearly'' that such procedures ``slowed 
proceedings considerably and undermined agencies' ability to 
fulfill their mandates'' that, in turn, imposed ``heavy social 
costs.''\106\
---------------------------------------------------------------------------
    \103\American Bar Ass'n--Section of Administrative Law and 
Regulatory Practice, Comments on H.R. 3010, the Regulatory 
Accountability Act, at 2 (Oct. 24, 2011) (on file with the H. Committee 
on the Judiciary, Democratic Staff).
    \104\Id. at 20.
    \105\Administrative Conference of the United States Recommendation 
93-4, 59 Fed. Reg. 4670, 4670 (1993).
    \106\American Bar Ass'n--Section of Administrative Law and 
Regulatory Practice, Comments on H.R. 3010, the Regulatory 
Accountability Act, at 22 (Oct. 24, 2011) (on file with the H. 
Committee on the Judiciary, Democratic Staff).
---------------------------------------------------------------------------
    Notwithstanding the obvious shortcomings with formal 
rulemaking, H.R. 3010 fully embraces this procedure for ``high-
impact'' rules, defined in the bill as those with a $1 billion 
cost to the economy. Proponents of formal rulemaking assert 
that it allows an opportunity for parties to cross-examine the 
agency, which is the best way to vet the agency's factual 
assertions and assure the public that only the best science 
underlies agency action.\107\
---------------------------------------------------------------------------
    \107\APA 65 Hearing (statement of Jeffrey A. Rosen); Formal 
Rulemaking Hearing (statements of Noel J. Francisco and Edward W. 
Warren).
---------------------------------------------------------------------------
    Such an assertion, however, is itself unsupported by 
evidence. H.R. 3010's proponents offer no study or other data 
indicating that cross-examination and other facets of the 
formal rulemaking process are the most effective tools for 
making scientific and policy judgments. Indeed, Professor 
Matthew Stephenson of Harvard Law School challenged this 
assertion in testimony before the CCAL Subcommittee.\108\ 
Additionally, Professor Stephenson noted that informal notice-
and-comment rulemaking is already heavily proceduralized, 
making formal rulemaking procedures unnecessary.
---------------------------------------------------------------------------
    \108\Formal Rulemaking Hearing (statement of Matthew C. 
Stephenson).
---------------------------------------------------------------------------
            2. LFormal Rulemaking Will Bring Agency Rulemaking To a 
                    Halt
    While formal rulemaking procedures will not improve the 
quality of agency rules, the costs and delays associated with 
formal rulemaking would effectively grind agency rulemaking to 
a halt.\109\ As demonstrated by the peanut butter case 
described above, a formal rulemaking can take up to a decade to 
complete without any positive effect on the quality of the 
final decisions. Additionally, by impeding agency rulemaking 
through more formal procedural requirements, H.R. 3010 could: 
(1) impede desirable rule changes; (2) lead agencies to use 
other, less desirable forms of agency regulation such as ad hoc 
adjudication; (3) be forced to write cruder, blunter rules or 
use more vague statutory language, leaving the interpretation 
to courts; and (4) impede its own oversight of rulemaking by 
making it harder for agencies to change course in response to 
the views of the political branches, giving agencies a way to 
``run out the clock'' on a President or a congressional 
majority, and shifting power within agencies away from 
political appointees to career staff.\110\ At the legislative 
hearing on this bill, Minority witness Professor Sidney Shapiro 
observed, ``Almost no serious administrative law expert regards 
formal rulemaking as reasonable, and it has been all but 
relegated to the dustbin of history.''\111\ More than 50 other 
administrative law academics concur.\112\
---------------------------------------------------------------------------
    \109\Id.
    \110\Id.
    \111\Hearing on H.R. 3010 (prepared statement of Prof. Sidney 
Shapiro, Wake Forest School of Law).
    \112\Letter from 52 administrative law academics to House Judiciary 
Committee Chair Lamar Smith and House Judiciary Committee Ranking 
Member John Conyers, Jr., at 2 (Oct. 24, 2011) (noting that formal 
rulemaking ``runs directly contrary to the consensus of the 
administrative law community that the APA formal rulemaking procedure 
is unworkable and obsolete'') (on file with H. Committee on the 
Judiciary, Democratic Staff).
---------------------------------------------------------------------------
    By delaying the rulemaking process, H.R. 3010 presents 
serious public health and workplace safety concerns. As noted 
by the AFL-CIO:

        These formal rulemaking procedures will make it more 
        difficult for workers and members of the public to 
        participate, and give greater access and influence to 
        business groups that have the resources to hire lawyers 
        and lobbyists to participte in this complex process. 
        For agencies that already provide for public hearings, 
        such as OSHA and MSHA, the bill would substitute formal 
        rulemaking for the development of all new rules, 
        overriding the effective public participation processes 
        conducted by these agencies.\113\
---------------------------------------------------------------------------
    \113\Letter to House Judiciary Committee Chair Lamar Smith and 
House Judiciary Committee Ranking Member John Conyers, Jr. from William 
Samuel, Director, the American Federation of Labor and Congress of 
Industrial Organizations, at 2 (Nov. 1, 2011) (on file with H. 
Committee on the Judiciary, Democratic Staff).
---------------------------------------------------------------------------
            3. LFormal Rulemaking Will Give an Unfair Advantage to 
                    Well-Funded Special Interests to Influence 
                    Rulemaking
    We are also particularly concerned that H.R. 3010's formal 
rulemaking requirements will favor those special interests that 
have the resources to fund the kind of protracted litigation 
this process entails. Under the current law, ``corporate and 
business lobbying of agencies far exceeds that by groups 
representing the public,'' as Professor Shapiro testified at 
the legislative hearing on the bill.\114\ H.R. 3010, however, 
will facilitate greater influence of business interests on 
rulemaking and agencies.
---------------------------------------------------------------------------
    \114\H.R. 3010 Hearing (prepared statement of Prof. Sidney Shapiro, 
Wake Forest School of Law).
---------------------------------------------------------------------------
    In particular, we share the fears of the Union of Concerned 
Scientists, which notes, for example, that the legislation 
jeopardizes ``the respect and deference to the role of science 
in rulemaking'' that exists under current law.\115\ Rather than 
facilitating ``thoughtful consideration based on facts,'' the 
bill would open ``the floodgates to challenges that are not 
fact-based and that seek only to delay the rulemaking process, 
and to make it easier for special interests to contest rules in 
the courts.''\116\ Aptly describing the bill as a ``corporate 
lobbyist dream,'' the Vice-Chair of the American Sustainable 
Business Council and President of the South Carolina Small 
Business Chamber of Commerce explains:
---------------------------------------------------------------------------
    \115\Letter to to House Judiciary Committee Chair Lamar Smith and 
House Judiciary Committee Ranking Member John Conyers, Jr. from 
Francesca T. Grifo, Senior Scientist and Director--Scientific Integrity 
Program, Union of Concerned Scientists (Nov. 3, 2011) (on file with the 
H. Committee on the Judiciary, Democratic Staff).
    \116\Id.

          It appears to be written by corporate attorneys for 
        corporate attorneys.
          Every aspect of the RAA is geared toward encouraging 
        special interests to legally challenge every regulation 
        of an agency. Even frivolous lawsuits are protected 
        under the bill because the RAA defines as ``substantial 
        evidence'' for a lawsuit to be anything the special 
        interest thinks is reasonable.\117\
---------------------------------------------------------------------------
    \117\Frank Knapp, Vice-Chair, American Sustainable Business 
Council, & President, South Carolina Small Business Chamber of 
Commerce, Regulatory Reform Good for Multinationals, Yet Bad for You, 
The Hill Blog, Nov. 1, 2011 (original emphasis), available at http://
thehill.com/blogs/congress-blog/judicial/191015-regulatory-reform-good-
for-multinationals-yet-bad-for-you

    Given all these shortcomings with formal rulemaking, 
Representative Melvin Watt (D-NC) offered an amendment to 
strike this provision from the bill at the Committee markup. 
The amendment, however, failed by a vote of 13 to 16.
B. LH.R. 3010's Expanded and Less Deferential Judicial Review Risks 
        Undermining Agency Rulemaking and Reducing Political 
        Accountability for Policy Decisions Without Enhancing Due 
        Process
            1. LCurrent Law Provides Adequate Opportunity for Judicial 
                    Review
    The APA provides for judicial review of final agency action 
when there is no other adequate judicial remedy available.\118\ 
The APA requires a reviewing court to compel agency action when 
it is unlawfully withheld or unreasonably delayed and to set 
aside as unlawful agency action, findings, and conclusions when 
they are found to be:
---------------------------------------------------------------------------
    \118\5 U.S.C. Sec. Sec. 702, 704 (2011).

        (A) arbitrary, capricious, an abuse of discretion, or 
---------------------------------------------------------------------------
        otherwise not in accordance with law;

        (B) contrary to constitutional right, power, privilege, 
        or immunity;

        (C) in excess if statutory jurisdiction, authority, or 
        limitations, or short of statutory right;

        (D) without observance of procedure required by law;

        (E) unsupported by substantial evidence in [a formal 
        rulemaking] or otherwise reviewed on the record of an 
        agency hearing provided by statute; or

        (F) unwarranted by the facts to the extent that the 
        facts are subject to trial de novo by the reviewing 
        court.\119\
---------------------------------------------------------------------------
    \119\5 U.S.C. Sec. 706(2) (2011).

The two exceptions to this presumption of judicial review under 
the APA are when ``statutes preclude judicial review'' and when 
``agency action is committed to agency discretion by 
law.''\120\ A court, however, always has the authority to 
review the constitutionality of agency action, including those 
actions that are otherwise unreviewable.\121\
---------------------------------------------------------------------------
    \120\5 U.S.C. Sec. 701 (2011).
    \121\See Webster v. Doe, 486 U.S. 592 (1988); Oestereich v. 
Selective Service System, 393 U.S. 233 (1968).
---------------------------------------------------------------------------
    In Chevron U.S.A., Inc. v. Natural Resources Defense 
Council, the Supreme Court held that a reviewing court can 
invalidate an agency rule or formal adjudication only when it 
violates a constitutional provision or when the agency's rule 
exceeds its statutory authority to issue the rule as clearly 
expressed by Congress.\122\ Where the statute is ambiguous, 
courts must defer to an agency's permissible interpretation of 
the statute.\123\ The court cannot strike down a rule based on 
substantive policy grounds, out of deference to an agency's 
substantive expertise in the matter being regulated.\124\ 
Subsequent to the Chevron decision, the Supreme Court has 
limited the Chevron doctrine to legislative rules\125\ (i.e., 
those having the effect of law), and the extent of judicial 
deference can be unclear in a given case.
---------------------------------------------------------------------------
    \122\Chevron U.S.A., Inc. v. Natural Resources Defense Council, 
Inc., 467 U.S. 837 (1984).
    \123\Id.
    \124\Id.
    \125\United States v. Mead Corp., 533 U.S. 218 (2001).
---------------------------------------------------------------------------
    Courts will also invalidate a rule that is arbitrary or 
capricious. Normally, this type of scrutiny applies to informal 
rulemaking.\126\ Although originally an extremely deferential 
standard, the Supreme Court, in a series of decisions since the 
1970's, has left unclear precisely what level of deference is 
required, suggesting that the ``arbitrary or capricious'' 
standard may not be as deferential towards agency action as it 
is in other contexts.\127\ The Court has suggested that, even 
under the arbitrary or capricious standard, a reviewing court 
must conduct a ``searching and careful'' review of agency 
action.\128\ Heightened review under the arbitrary or 
capricious standard has been referred to as the ``hard look'' 
doctrine, under which a court examines ``carefully the 
administrative record and the agency's explanation, to 
determine whether the agency applied the correct analytical 
methodology, applied the right criteria, considered the 
relevant factors, chose from among the available range of 
regulatory options, relied upon appropriate policies, and 
pointed to adequate support in the record for material 
empirical conclusions.''\129\
---------------------------------------------------------------------------
    \126\Interim Report at 112.
    \127\Motor Vehicle Mfr. Ass'n v. State Farm Mut. Auto. Ins. Co., 
463 U.S. 29 (1983); Citizens to Preserve Overton Park, Inc. v. Volpe, 
401 U.S. 402 (1971).
    \128\Citizens to Preserve Overton Park, Inc. v. Volpe, 401 U.S. 402 
(1971); Interim Report at 113.
    \129\Interim Report at 113 (quoting Thomas O. McGarity, Some 
Thoughts on Deossifying the Rulemaking Process, 41 Duke L.J. 1385, 1410 
(1992)).
---------------------------------------------------------------------------
    The existence of the ``hard look'' review of informal 
rulemaking already provides arguably deferential, but still 
meaningful judicial review of agency rulemaking. H.R. 3010, 
however, threatens to upset that balance.\130\
---------------------------------------------------------------------------
    \130\According to some critics, ``hard look'' review itself may be 
insufficiently deferential to agency decisions. Id. at 115. Whatever 
the merits of such criticism, H.R. 3010's judicial review provisions 
would tip the balance much further away from judicial deference than 
current law.
---------------------------------------------------------------------------
            2. LJudicial Review under H.R. 3010 Will Allow Courts to 
                    Substitute Their Judgment for That of Agency 
                    Experts and Give More Opportunities for Special 
                    Interests to Challenge Rules
    H.R. 3010 would subject to judicial review agency 
compliance with numerous APA requirements, including their 
application of H.R. 3010's cost-benefit analysis requirements. 
By greatly expanding opportunities for judicial review, H.R. 
3010 would present many more instances when a court could 
overrule agency action as a result (e.g., a court could find 
that an agency failed to properly identify the costs and 
benefits of alternatives to a proposed rule).
    Even assuming that courts had the resources to review these 
types of agency decisions, expanded and less deferential 
judicial review would be troublesome because it would make 
rulemaking more costly and time-consuming for agencies by 
forcing them to adopt more detailed factual records and 
explanations, effectively imposing more procedural requirements 
on agency rulemaking. Also, agencies may be dissuaded from 
pursuing regulations in the first place. Additionally, 
criticism of the existing ``hard look'' arbitrary or capricious 
review standard for informal rulemaking may apply to a much 
greater degree to H.R. 3010's more formal move to expand the 
scope of judicial review.
    In particular, H.R. 3010 would require that a court give 
less deference to agency decisions under many circumstances, 
and such a less deferential judicial review standard runs the 
risk that judges effectively will be making policy by allowing 
personal policy preferences to intrude in their review of an 
agency rule, whether consciously or not. Public Citizen, a 
nonprofit consumer advocacy organization representing consumer 
interests, observes:

        [B]y needless expanding the scope of judicial review, 
        the legislation marks an unprecedented and dangerous 
        move away from traditional judicial deference to a 
        system where courts are encouraged to overturn highly 
        technical, resource-intensive agency decisions and 
        substitute their own policy preferences instead. This 
        new and inappropriate role for the courts is a recipe 
        for more activist judges, increased litigation, endless 
        delays, and more rather than less uncertainty for 
        regulated parties and the public.\131\
---------------------------------------------------------------------------
    \131\Letter to to House Judiciary Committee Chair Lamar Smith and 
House Judiciary Committee Ranking Member John Conyers, Jr. from David 
Arkush, Director, & Amit Narang, Regulatory Policy Advocate, Public 
Citizen's Congress Watch, at 2 (on file with the H. Committee on the 
Judiciary, Democratic Staff).

    Much of H.R. 3010's judicial review standard appears to be 
old wine in new bottles. A similar legislative initiative was 
promoted during the 1980's by anti-regulatory interests in 
Congress. The view then, as now, among proponents of enhanced 
judicial review was that the existing standard of judicial 
review favored agency decisions too much whenever injured 
members of the public sought to reverse those decisions on 
appeal.\132\ The enhanced judicial review standard proposed in 
the legislation would have required courts to independently 
decide all relevant questions of law, review agency 
determinations of jurisdiction and authority to determine 
whether they were based on statutory language or other evidence 
of legislative intent, not accord any presumption in favor of 
agency determinations of questions of law other than its 
jurisdiction and authority, and apply what was in effect a 
``substantial evidence'' test for informal rulemaking.\133\
---------------------------------------------------------------------------
    \132\Morton Rosenberg, The Future of Public Participation in 
Informal Agency Rulemaking Under Pending Regulatory Reform Proposals, 
Congressional Research Service Report for Congress, Dec. 7, 1982, at 
44.
    \133\Id. at 45.
---------------------------------------------------------------------------
    CRS concluded that the effect of this enhanced judicial 
review proposal would be ``to abolish the judicially developed 
doctrine of deference, which was developed by the courts as an 
aid to reviewing agency decisions and which recognizes agency 
expertise and involvement in the legislative process.''\134\ 
CRS also noted that enhanced judicial review threatened to skew 
the agency factfinding process in favor of those with the 
resources to shape the agency record by making it more lengthy 
and costly.\135\ Also, parties opposed to a rule could further 
add costs and delay to the rulemaking process by increasing 
appeals of agency determinations.\136\ Finally, enhanced 
judicial review increases the risk of judicial activism, 
whereby judges would make policy from the bench by substituting 
their policy views for those of the agency.\137\ In short, the 
same criticisms that applied to expanded judicial review a 
generation ago apply to H.R. 3010's judicial review provision.
---------------------------------------------------------------------------
    \134\Id.
    \135\Id. at 46-47.
    \136\Id. at 47-48.
    \137\Id. at 48-51.

    In response to the multiple problems presented by H.R. 
3010's judicial review provisions, Representative Cohen offered 
an amendment deleting section 7 of the bill, which expands the 
scope of judicial review to include compliance with the 
Information Quality Act and prohibits courts from deferring to 
agencies' determinations under certain circumstances. The 
amendment, however, failed by a vote of 14 to 18.
C. LH.R. 3010's Provisions of Opportunities to Challenge Agency 
        Compliance With the Information Quality Act Is a Thinly 
        Disguised Way to Regulate the Regulators and Give More 
        Opportunities for Business Interests To Undermine Rulemaking
    New APA section 553(d)(4), as proposed by H.R. 3010, would 
permit any ``member of the public''--that is, literally anyone, 
including an entity that has no legitimate interest in the rule 
at issue--to petition for a trial-type hearing for the purpose 
of determining whether a proposed rule complies with of the 
Information Quality Act (``IQA'').\138\ In support of such 
petition, section 553(d)(4) only requires the proponent to 
present a ``prima facie case that evidence or other information 
upon which the agency bases the proposed rule fails to comply'' 
with the IQA. Moreover, the bill makes agency compliance with 
the IQA subject to judicial review, including the decision 
whether to hold an agency hearing.
---------------------------------------------------------------------------
    \138\Pub. L. No. 106-554, Sec. 515 (2000).
---------------------------------------------------------------------------
    The IQA, also known as the Data Quality Act, was a 
Republican initiative included in a 2000 appropriations bill 
that required OMB to issue data quality guidelines to federal 
agencies beginning in 2001.\139\ No hearings or legislative 
process preceded the enactment of this measure. Under these 
guidelines, all agencies subject to the Paperwork Reduction 
Act--a law that requires OMB to develop and oversee the 
implementation of policies, principles, standards, and 
guidelines applicable to the dissemination of public 
information by federal agencies--are required to establish and 
follow data quality guidelines that: (1) ensure and maximize 
the quality, objectivity, utility and integrity of information, 
including statistical information prior to dissemination; and 
(2) allow affected individuals and/or organizations to seek and 
obtain correction of information maintained and disseminated by 
the agency that does not comply with OMB or agency guidelines. 
In addition, an agency must report to OMB regarding the number 
and nature of complaints received by the agency regarding 
agency compliance with OMB guidelines.\140\ More 
controversially, the IQA also requires federal agencies to have 
a process by which outside parties can ``seek and obtain 
correction of information maintained and disseminated by the 
agency that does not comply with'' the IQA's requirements for 
information quality.\141\
---------------------------------------------------------------------------
    \139\Id.
    \140\Id.
    \141\Id.
---------------------------------------------------------------------------
    Proponents of the IQA include the U.S. Chamber of Commerce 
and the Center for Regulatory Effectiveness, an industry-backed 
regulatory ``watch dog'' group. Critics of the law state, 
however, that it is a mechanism for ``regulating the 
regulators.'' These include CPR, OMB Watch, and Public 
Citizen.\142\
---------------------------------------------------------------------------
    \142\Project on Scientific Knowledge and Public Policy, Information 
Quality Act, available at DefendingScience.org.
---------------------------------------------------------------------------
    The expanded opportunities to challenge agency compliance 
with the IQA is troubling. In addition to offering yet another 
way to slow down rulemaking both by challenging agencies' data 
and by challenging their compliance with the IQA, the IQA 
itself is problematic because it provides an opportunity for 
industry to challenge agencies' scientific findings to the 
extent that those findings are contrary to the economic 
interests of industry.
    In sum, H.R. 3010 would permit anyone to request an IQA 
hearing, even if that person suffers no injury, i.e., lacks any 
legal standing. In addition, the bill fails to clarify what 
constitutes a ``prima facie'' case of agency non-compliance 
with the IQA, which will force agencies to err on the side of 
caution and hold IQA hearings, especially in light of the 
bill's provision making a decision not to hold a hearing 
subject to judicial review. Finally, judicial review would add 
an entirely new level of litigation to the rulemaking process.
D. LH.R. 3010 Encourages a Regulatory Race to the Bottom
    Section 2 of the bill defines a major rule, in pertinent 
part, as a rule that has ``significant adverse effects on . . . 
the ability of United States-based enterprises to compete with 
foreign-based enterprises in domestic and export 
markets.''\143\ The practical effect of this definition is that 
it will require agencies and the courts to consider the 
business and regulatory environments of other nations.
---------------------------------------------------------------------------
    \143\H.R. 3010, 112th Cong. Sec. 2 (2011).
---------------------------------------------------------------------------
    For example, a proposed rule that imposes heightened clean 
air requirements on American steel manufacturers would 
necessarily require consideration of whether this regulation--
which could potentially result in higher compliance costs--
could make American steel products less competitive in a 
country, such as China, that has a much less stringent 
regulatory regime. While the economic analysis under this 
requirement may be simple, its dangerous ramifications for 
public health cannot be underestimated. Chinese officials have 
only recently begun to acknowledge the health hazard risks 
presented by extensive air pollution that affects its cities, 
including its capital.\144\ The end result of H.R. 3010 is that 
the public health of Americans and the safety of the 
environment will be compromised so that American manufacturers 
can better compete with their foreign counterparts. This is a 
shortsighted regulatory ``race to the bottom'' that prioritizes 
profits over saving lives.
---------------------------------------------------------------------------
    \144\See, e.g., Andrew Jacobs, With Anger Over Dirty Air Rising, 
Beijing Tries Tours on Monitoring Center, N.Y. Times, Nov. 9, 2011 
(``Environmental officials who have resisted releasing sensitive data 
about air pollution here in the capital announced that they would take 
action to address increasing complaints that the government's 
monitoring system fails to report on the most dangerous airborne 
particles emitted by the growing ranks of cars and trucks.''), 
available at http://www.nytimes.com/2011/11/10/world/asia/with-anger-
over-dirty-air-rising-beijing-tries-tours-on-monitoring-
center.html?ref=world.
---------------------------------------------------------------------------

                       DESCRIPTION AND BACKGROUND

    The following section-by-section explanation of H.R. 3010, 
as amended, highlights the most problematic provisions in the 
bill.
    Sec. 2. Definitions. Section 2 of the bill amends section 
551 of title 5 of the U.S. Code, which defines various terms 
applicable to the Administrative Procedure Act (``APA'') to add 
new definitions. Rather than providing clear and concise 
definitions for these new terms, H.R. 3010 defines these terms 
in vague and subjective respects. For the definition of ``major 
rule,'' section 2 sets forth four alternative definitions, each 
of which is potentially vague and subject to interpretation:

        (1) an annual cost on the economy of $100 million or 
        more, adjusted annually for inflation;

        (2) a major increase in costs or prices for consumers, 
        individual industries, federal, state, local or tribal 
        government agencies, or geographic regions;

        (3) significant adverse effects on competition, 
        employment, investment, productivity, innovation, or on 
        the ability of U.S.-based enterprises to compete with 
        foreign-based enterprises in domestic and export 
        markets; or

        (4) significant impacts on multiple sectors of the 
        economy.

    This definition is plagued with uncertainty and wrong-
headed policy objectives. To begin with, each alternative 
definition is qualified by the phrase ``likely to impose,'' 
which is inherently vague. Second, it fails to clarify what ``a 
major increase in costs or prices'' would mean in this context. 
Similarly, the definition does not specify what would 
constitute ``significant adverse effects.'' Third, the 
definition, as revised by the Manager's Amendment, applies to 
regulations that have ``significant impacts on multiple sectors 
of the economy.'' The introduced version of the bill referred 
to ``significant costs.'' Whereas the term ``costs'' is 
susceptible of definition, ``impacts'' would capture a much 
broader category of rules, a subset of which would include 
costs. Costs, for example, is defined in Black's Law 
Dictionary, while ``impacts'' is not. Unlike the Regulatory 
Flexibility Act which uses the term ``significant economic 
impact,'' the Manager's Amendment use of the word ``impact'' 
would appear to be much broader.
    Perhaps most importantly, the definition clearly signals 
that our Nation's regulatory regime must now be compared to 
those of other nations. The definition requires analysis of the 
effect of a regulation on the ``ability of United States-based 
enterprises to compete with foreign-based enterprises in 
domestic and export markets,'' which may be subject to little 
or no regulation. This provision will clearly facilitate the 
race to the bottom of deregulation and has the real potential 
to undo a broad range of public health, workplace safety and 
environmental protection regulations.
    While most of the other definitions in section 2 do not 
appear to be problematic, the provision's definition of ``major 
guidance'' is equally as vague and reflective of bad policy as 
its definition of ``major rule'' because it uses similar 
criteria.
    Sec. 3. Rulemaking. Section 3 substantively amends APA 
section 553, which sets forth the requirements for informal 
notice-and-comment rulemaking under the APA, to vastly 
complicate and extend these requirements in ways that are 
unclear. To begin with, while new subsection (b) of section 553 
requires an agency to make all preliminary and final factual 
determinations based on evidence, it is not clear what type of 
evidentiary standard would apply.
    Second, the agency must, in addition to other applicable 
considerations, consider the following:

        (1) The legal authority under which the rule may be 
        proposed, such as whether it is required by statute and 
        if so, whether it is due by a specific date; and 
        whether the agency has discretion to commence a 
        rulemaking (new section 553(b)(1)).

        (2) Other statutory considerations applicable to 
        whether the agency can or should propose a rule or 
        undertake other agency action (new section 553(b)(2)). 
        It is unclear what ``other agency action'' would 
        encompass.

        (3) The specific nature and significance of the problem 
        the agency may address with a rule, including the 
        degree and nature of risks the problem poses and the 
        priority of addressing those risks compared to other 
        matters or activities within the agency's jurisdiction, 
        and whether the problem warrants new agency action and 
        any countervailing risks posed by such new action (new 
        section 553(b)(3)). Again, this is very vague.

        (4) Whether existing rules have created or contributed 
        to the problem the agency may address with a rule and 
        whether such rules ``could'' be amended or rescinded to 
        address the problem in whole or in part (new section 
        553(b)(4)). The provision's use of the word ``could'' 
        encompasses a potentially extraordinary realm of 
        possibilities.

        (5) Any reasonable alternatives in lieu of a new rule 
        or other response identified by the agency or 
        ``interested persons,'' including not only responses 
        that mandate particular conduct or manners of 
        compliance, but also the alternative of no federal 
        response; amending/rescinding existing rules; potential 
        regional, state, local or tribal regulatory action or 
        other responses that could be taken in lieu of agency 
        action; and potential responses that specify 
        performance objectives rather than conduct or manners 
        of compliance, establish economic incentives to 
        encourage desired behavior, provide information upon 
        which choices can be made by the public, or incorporate 
        other innovative alternatives rather than agency 
        actions that specify conduct or manners of compliance 
        (new section 553(b)(5)). Essentially, this directs the 
        agency to consider alternatives to promulgating a new 
        rule. Note that ``interested persons'' can include 
        literally anyone.

    Third, new section 553(b)(6) overrides all existing law to 
require the agency to consider: (1) the ``potential'' costs and 
benefits associated with ``potential'' alternatives set forth 
above, including direct, indirect, and cumulative costs and 
benefits and estimated impacts on jobs, economic growth, 
innovation, and economic competitiveness (new section 
553(b)(6)(A)); (2) means to increase the cost-effectiveness of 
any federal response (new section 553(b)(6)(B)); and (3) 
incentives for innovation, consistency, predictability, lower 
costs of enforcement and compliance--for governmental and 
regulated entities, and the public--and flexibility (new 
section 553(b)(6)(C)).
    As a result of this supermandate, H.R. 3010 overrides 
provisions in numerous other statutes that prohibit agencies 
from considering costs when promulgating rules. These statutes 
include the Clean Air Act,\145\ the Clean Water Act,\146\ the 
Occupational Safety and Health Act,\147\ and the Federal Mine 
Safety and Health Act.\148\ Various environmental groups warn 
that this provision is a ``cynical attempt'' to overturn these 
measures.\149\
---------------------------------------------------------------------------
    \145\Pub. L. No. 91-604, 84 Stat. 1676 (1970), as amended.
    \146\Pub. L. No. 95-217, 86 Stat. 816 (1977), as amended
    \147\Pub. L. No. 91-596, 84 Stat. 1590, 84 Stat. 1590 (1970), as 
amended.
    \148\Pub. L. 95-164, 91 Stat. 1290 (1977), as amended.
    \149\Letter to House Members from American Rivers, Clean Water 
Action, Defenders of Wildlife, Earthjustice, Environment America, 
League of Conservation Voters & the Natural Resources Defense Council 
(Nov. 2, 2011) (on file with the H. Committee on the Judiciary, 
Democratic Staff).
---------------------------------------------------------------------------
    Fourth, new section 553(c)(1) requires advance notice of 
proposed rulemaking (ANPRM) for certain types of rules. Whereas 
the bill, as introduced, only required an ANPRM for major and 
high-impact rules, the Manager's Amendment extends this 
requirement to rules presenting a ``novel legal or policy 
issue.'' The effect of this revision is that this provision 
captures a potentially very broad and very indefinite category 
of rules, even if these rules do not have any major effect or 
economic impact. It is likely intended to capture regulations 
issued under the Dodd-Frank Wall Street Reform and Consumer 
Protection Act\150\ and the Patient Protection and Affordable 
Care Act,\151\ both of which potentially raise novel legal and 
policy issues arising out of these measures. As a result, this 
change will cause greater delay and uncertainty in the 
rulemaking process.
---------------------------------------------------------------------------
    \150\Pub. L. No. 111-203 (2010).
    \151\Pub. L. No. 111-148 (2010).
---------------------------------------------------------------------------
    Not later than 90 days before a notice of proposed 
rulemaking (NPRM) is published in the Federal Register (the 
current starting point for notice-and-comment rulemaking), an 
agency must published an ANPRM in the Federal Register. This 
notice must include all of the following:

        (1) A written statement identifying, at a minimum, the 
        nature and significance of the problem the agency may 
        address with a rule, including data and other evidence 
        and information on which the agency expects to rely for 
        the proposed rule (new section 553(c)(1)(A)(i)).

        (2) The legal authority under which a rule may be 
        proposed, such as whether it is required by statute and 
        if so, whether it is due by a specific date; and 
        whether the agency has discretion to commence a rule 
        making (new section 553(c)(1)(A)(ii).

        (3) Preliminary information available to the agency 
        concerning the other considerations specified in new 
        section 553(b) (new section 553(c)(1)(A)(iii).

In addition, the notice must solicit data, views and arguments 
from interested persons concerning the information and issues 
addressed in the ANPR and provide for a period of not less than 
60 days for such persons to submit such feedback to the agency 
(new section 553(c)(1)(B)-(C)).
    Fifth, new section 553(d) mandates that an agency must 
consult with OIRA before it determines to propose a rule. This 
provision essentially codifies OIRA's role as a gatekeeper of 
agency rulemaking, a role that this Committee severely 
criticized in the last Congress.\152\ In particular, concern 
was expressed that the prior Administration's ``greatly 
enhanced control over the rulemaking process has been to the 
detriment of the public interest and has served to circumvent 
legislative intent.''\153\ By mandating prior consultation with 
OIRA, this requirement could allow OIRA to have a potential 
choke hold on agency rulemaking and thereby be used to thwart 
Congressional intent.
---------------------------------------------------------------------------
    \152\See, e.g., H. Comm. on the Judiciary Majority Staff, Reining 
in the Imperial Presidency: Lessons and Recommendations Relating to the 
Presidency of George W. Bush, Final Report to Chairman John Conyers 
Jr., at 186-87 (Mar. 2009).
    \153\Id. at 186.
---------------------------------------------------------------------------
    New section 553(d) then itemizes an extensive list of 
information that must be included with a NPRM in addition to 
that already required under current law. These additional 
requirements include a reasoned preliminary determination of 
the need for the rule and whether the rule is required by 
statute. In addition, the NPRM must include a reasoned 
preliminary determination that the benefits of the rule meet 
the relevant statutory objectives and justify the costs of the 
rule, including all costs described in section 553(b)(6); 
whether those alternatives meet relevant statutory objectives; 
and why the agency did not propose any of those alternatives. 
This provision clearly prioritizes costs over benefits. Whereas 
an agency must merely determine that a rule's benefits meet the 
relevant statutory objectives, new section 553(d) mandates that 
the agency ``justify the costs'' of a proposed rule, which is 
potentially a much higher standard.
    Further, the NPRM must include a discussion of: (a) the 
alternatives to the proposed rule, and other alternative 
responses, considered by the agency under new section 553(b); 
(b) the costs and benefits of those alternatives (including all 
costs to be considered under section 553(b)(6); (c) whether 
those alternatives meet relevant statutory objectives; and (d) 
why the agency did not propose any of those alternatives. Where 
there are numerous alternatives to a proposed rule, this 
requirement will require an agency to conduct multiple 
hypothetical cost-benefit analyses, which will only delay 
action on the proposed rule and cause agencies to incur 
extensive compliance costs.
    Finally, the NPRM must contain a statement of whether 
existing rules have created or contributed to the problem that 
the agency seeks to address with the rule, and, if so, whether 
or not the agency proposes to amend or rescind any of these 
rules.
    Sixth, all information considered by the agency and ``steps 
to obtain information by the agency'' in connection with its 
determination to propose the rule must be placed in the docket 
for the proposed rule and made available to the public and ``at 
the discretion of the President or the Administrator of the 
Office of Information and Regulatory Affairs, information 
provided by that Office in consultations with the agency.'' By 
allowing the President and OIRA to control the dissemination of 
information to the public, this provision largely undermines 
the transparency of the rulemaking process.
    Seventh, even when an agency decides against issuing a 
rule, it must still issue a notice of determination of other 
agency course of action that includes a description of the 
alternative response that the agency determined to adopt. The 
agency may only make such determination after consultation with 
OIRA. If in its determination of other agency course the agency 
determines to amend or rescind an existing rule, the agency is 
not required to undertake additional proceedings under new 
section 553(c) before it publishes a NPRM to amend or rescind 
the existing rule.
    Eighth, all information considered by the agency and 
``steps to obtain information by the agency'' in connection 
with its determination of other agency course must be placed in 
the docket for the proposed rule and made available to the 
public and ``at the discretion of the President or the 
Administrator of the Office of Information and Regulatory 
Affairs, information provided by that Office in consultations 
with the agency.'' Again, this provision largely undermines the 
transparency of the rulemaking process.
    Ninth, after the NPRM has been sent, the agency must 
provide interested persons an opportunity to participate in the 
rulemaking through submissions of written data, views, or 
arguments with or without opportunity for oral presentation. An 
opportunity for oral presentation must be provided if a hearing 
is required under section 553(d)(4)(B) or 553(e). With regard 
to situations not covered by section 553(e), if rules are 
required to be made on the record after opportunity for agency 
hearing, formal rulemaking requirements of sections 556 and 557 
apply.
    Tenth, the agency must provide not less than 60 days for 
interested persons to submit written data, views or argument, 
or not less than 120 days for a proposed major or high-impact 
rule (new section 553(d)(3)).
    Eleventh, within 30 days of publication of a NPRM, a member 
of the public may petition for a hearing in accordance with 
section 556 to determine any evidence or other information upon 
which the agency bases the proposed rule fails to comply with 
the Information Quality Act (IQA)\154\ (new section 
553(d)(4)(A). This means that anyone, even someone who would 
not qualify as an interested person, could demand this relief 
(new section 553(d)(4)(A)).
---------------------------------------------------------------------------
    \154\Pub. L. No. 106-554, 114 Stat. 2763, 2763A-153 (2000).
---------------------------------------------------------------------------
    Upon its review of the petition, the agency may determine, 
without further process, to exclude from the rulemaking the 
evidence or information that is the subject of the petition 
and, if appropriate, withdraw the proposed rule. The agency 
must promptly publish any such determination (new section 
553(d)(4)(B)(i)).
    If the petition is not resolved per the above, then the 
agency must grant any such petition that presents a prima facie 
case that evidence or other information upon which the agency 
bases the proposed rule fails to comply with the IQA and hold 
the requested hearing not later than 30 days after receipt of 
the petition, provide a reasonable opportunity for cross-
examination at the hearing, and decide the issues presented by 
the petition no later than 60 days after receipt of the 
petition. The agency may deny a petition that does not present 
a prima facie case (new section 553(d)(4)(B)(ii)).
    Twelfth, judicial review of agency action pursuant to new 
section 553(d)(4)(B)(ii) is available when there is judicial 
review of the agency's final action. It is unclear what this 
means. No judicial review is permitted for an agency's 
determination to withdraw a proposed rule under new section 
553(d)(4)(B)(ii) (new section 553(d)(3)(C)). The failure to 
petition for a hearing under new section 553(d)(4) does not 
preclude judicial review of any claim based on the IQA under 
section 7.
    Thirteenth, the agency is required to hold a hearing in 
accordance with sections 556 and 557, following a NPRM, receipt 
of comments on the proposed rule, and any hearing held under 
section 553(d)(4), unless such hearing is waived by all 
participants in the rulemaking other than the agency (new 
section 553(e)). This requirement will also considerably 
increase delay and expense in the rulemaking process. The 
agency must provide a reasonable opportunity for cross-
examination at the hearing. The hearing is limited to the 
following issues of fact, except that participants at the 
hearing other than the agency may waive determination of any 
such issue: (1) whether the agency's asserted factual predicate 
for the rule is supported by the evidence; (2) whether there is 
an alternative to the proposed rule that would achieve the 
relevant statutory objectives at a lower cost (including all 
costs considered under section 553(b)(6)); (3) if there is more 
than one alternative, which would achieve the relevant 
statutory objectives at the lowest cost; (4) whether, if the 
agency proposes to adopt a rule that is more costly than the 
least costly alternative, the additional benefits of the more 
costly rule exceed the additional costs of the more costly 
rule; (5) whether the evidence and other information upon which 
the agency bases the proposed rule meets the requirements of 
the IQA, and (6) upon petition by an interested person who has 
participated in the rulemaking other issues relevant to the 
rulemaking, unless the agency determines that consideration of 
the rule would not advance consideration of the rule or would, 
in light of the need for agency action, unreasonably delay 
completion of the rulemaking. The agency must grant or deny 
this petition within 30 days of receipt (new section 553(e)).
    Fourteenth, not later than 45 days before any hearing held 
under new section 553(e) or sections 556 and 557, the agency 
must publish in the Federal Register a notice specifying the 
proposed rule to be considered at such hearing, the issues to 
be considered at the hearing, time/place, except that such 
notice may be issued not later than 15 days before a hearing 
under section 553(d)(4)(B) (new section 553(d)(4)).
    Fifteenth, an agency may only adopt a rule following 
consultation with OIRA to facilitate compliance with applicable 
rulemaking requirements (new section 553(f)(1)).
    Sixteenth, an agency may adopt a rule only on the basis of 
best reasonably obtainable scientific, technical, economic, and 
other evidence and information concerning the need for, 
consequences of, and alternatives to the rule (new section 
553(f)(2)).
    Seventeenth, except as provided in new section 
553(f)(3)(B), the agency must adopt the rule considered during 
the rulemaking, including all costs pursuant to section 
553(b)(6) (new section 553(f)(3)(A)). The agency may adopt a 
more costly rule only if its additional benefits justify its 
additional costs and only if the agency explains its reason for 
doing so based on interests of public health, safety or welfare 
that are clearly within the scope of the statutory provision 
authorizing the rule (new section 553(f)(3)(B)).
    Eighteenth, when the agency adopts a final rule, it must 
publish a NFRM that includes: (1) a concise, general statement 
of the rule's basis and purpose (new section 553(f)(4)(A)); (2) 
the agency's reasoned final determination of need for a rule, 
including whether it is required by statute as well as a 
summary of any final risk assessment or regulatory impact 
analysis performed by the agency (new section 553(f)(4)(B)); 
(3) the agency's reasoned final determination that the rule's 
benefits meet the relevant statutory objectives and justify the 
rule's costs (new section 553(f)(4)(C)); (4) the agency's 
reasoned final determination not to adopt any of the 
alternatives to the rule (new section 553(f)(4)(D)); (5) the 
agency's reasoned final determination that existing rules have 
not created or contributed to the problem that the agency seeks 
to address with the rule or that existing rules have created or 
contributed to the problem, and if so, why amendment or 
rescission of such existing rules is not alone sufficient to 
respond to the problem and whether and how the agency intends 
to amend or rescind the existing rule separate from adoption of 
the rule (new section 553(f)(4)(E)); (6) the agency's reasoned 
final determination that the evidence and other information 
upon which the agency bases the rule complies with IQA (new 
section 553(f)(4)(F)); and (7) for any major or high-impact 
rule, the agency's plan for review of the rule no less than 
every 10 years to determine whether, based on evidence, there 
remains a need for the rule, whether the rule is in fact 
achieving statutory objectives, whether the rule's benefits 
continue to justify its costs, and whether the rule can be 
modified or rescinded to reduce costs while continuing to 
achieve statutory objectives (new section 553(f)(4)(G)). As 
required elsewhere, all information considered by the agency 
must be placed in the docket for the rule.
    Unless notice or hearing is otherwise required by statute, 
certain specified requirements of new section 553 do not apply 
to interpretive rules, general statements of policy, or rules 
of agency organization, procedure or practice (new section 
553(g)(1)). When the agency for good cause, based on evidence, 
finds (and incorporates the finding and a brief statement of 
reasons therefore in the rules issued) that compliance with 
subsection (c), (d) or (e) or requirements to render final 
determinations under subjection (f) before the issuance of an 
interim rule is impracticable or contrary to the public 
interest (including national security), such provisions/
requirements do no apply to the agency's adoption of an interim 
rule new section 553(g)(2)(A)). If an agency, in compliance 
with subsection (A), adopts an interim rule, it must commence 
proceedings that comply fully with subsections (c) through (f) 
immediately upon publication of the interim rule and must 
complete compliance within 270 days from publication of the 
interim rule or 18 months for a major or high-impact rule and 
take final action to adopt a final rule or rescind the interim 
rule. If the agency fails to take timely final action, the 
interim rule will cease to have the effect of law (new section 
553(g)(2)(B)). New section 553(g)(3), as added by the Manager's 
Amendment, includes a ``good cause'' exception to the notice 
and public procedure requirements if the agency finds such 
requirements to be ``unnecessary.'' As examples, the Amendment 
mentions rules ``undertaken only to correct a de minimis 
technical or clerical error in a previously issued rule or for 
other noncontroversial purposes.'' This amendment recognizes to 
some degree why the bill's additional procedural requirements 
may be unnecessary. A shortcoming of this change, however, is 
that it does not go far enough. For example, the additional 
requirements may still pertain to a new rule that makes only a 
de minimis technical change.
    Other than in cases involving national security, the 
agency's publication of an interim rule not in compliance with 
subsection (c) through (e) or requirements to render final 
determinations under subsection (f), an interested party may 
seek immediate judiciary review under chapter 7 of the agency's 
determination to adopt such interim rule. This requirement 
provides yet another opportunity for well-funded opponents of 
regulation to slow or derail a rulemaking.
    The record on review must include all documents and 
information considered by the agency and any additional 
information presented by a party that the court determines 
necessary to consider to assure justice (new section 
553(g)(2)(C)). This provision could allow parties to overwhelm 
courts with submissions that would force them to sort through 
and determine whether they would assure justice (``justice'' 
being a vague term in this context).
    Nineteenth, when a hearing is required under subsection (e) 
or is otherwise required by statute or at the agency's 
discretion before the adoption of a rule, the agency must 
comply with the formal rulemaking requirements of sections 556 
and 557 in addition to subsection (f) in adopting the rule and 
in providing notice of the rule's adoption (new section 
553(h)). As explained in greater detail elsewhere in this 
dissent, formal rulemaking is a thoroughly discredited process 
that is hardly used anymore.
    Twentieth, the required publication or service of a 
substantive final or interim rule must be made within 30 days 
before the rule's effective date, unless: (1) a substantive 
rule grants or recognizes an exemption or relieves a 
restriction; (2) interpretive rules and statements of policy; 
or (3) as otherwise provided by the agency for good cause found 
and published with the rule (new section 553(i)).
    Twenty-first, each agency must give an interested person 
the right to petition for the issuance, amendment, or repeal of 
a rule (new section 553(j)). This appears to be extremely broad 
and again presents another opportunity for opponents of 
regulations to slow the rulemaking process down further.
    Twenty-second, new section 553(k) contains various 
provisions intended to strengthen OIRA's control over 
rulemaking. These include the provision requiring OIRA to 
establish guidelines for the assessment, including quantitative 
and qualitative, of the costs and benefits of potential, 
proposed, and final rules, other economic issues, or issues 
related to risk that are relevant to rulemaking under section 
553 and other sections of this title (new section 
553(k)(1)(A)). It is unclear, however, what ``other economic 
issues'' would include. OIRA must regularly update these 
guidelines to ensure that agencies use the best available 
techniques to quantify and evaluate anticipated present and 
future benefits, costs, other economic issues, and risks as 
accurately as possible (new section 553(k)(2)(B)). In addition, 
OIRA must issue guidelines to promote coordination, 
simplification, and harmonization of agency rules (new section 
553(k)(2)). Moreover, OIRA, must ensure consistency in 
rulemaking by issuing guidelines and ensure that rulemakings 
conducted under procedures specified in provisions of law (new 
section 553(k)(3)(A)). H.R. 3010 also empowers OIRA to issue 
guidelines for the conduct of hearings under subsections 
553(d)(4) and (e), including provisions that assure a 
reasonable opportunity for cross-examination. In turn, each 
agency must adopt regulations for conducting hearings 
consistent with these guidelines (new section 553(k)(3)(B)). 
With respect to the IQA, OIRA must issue guidelines with 
respect to how that Act applies in rulemaking proceedings under 
sections 553, 556, and 557. Such guidelines and OIRA's specific 
determinations regarding agency compliance with such 
guidelilnes are entitled to judicial deference (new section 
553(k)(4)).
    Twenty-three, the agency must include in the rulemaking 
record all documents and information considered by the agency 
during the proceeding, including at the discretion of the 
President or the OIRA documents and information communicated by 
OIRA during consultation with the agency (new section 553(l)). 
This is yet another example where the bill will undermine 
transparency of the rulemaking process.
    New section 553(m) recognizes an exception for certain 
provisions with respect to monetary policy rulemakings by the 
Federal Reserve or Federal Open Market Committee. Most 
regulations issued pursuant to Dodd-Frank Wall Street Reform 
and Consumer Protection Act, however, will still be subject to 
H.R. 3010's cumbersome rulemaking requirements.
    Sec. 4. Agency Guidance; Procedures to Issue Major 
Guidance; Presidential Authority To Issue Guidelines for 
Issuance of Guidance. Section 4 imposes an extensive series of 
new obligations on an agency before it can issue major guidance 
and guidance pertaining to a ``novel legal or policy issue 
arising out of statutory mandates.'' By applying these 
requirements to ``novel legal or policy'' issues, section 4 
would capture a very broad and very indefinite category of 
guidance, even if they do not have any major effect or economic 
impact. Its requirements would apply to guidance issued 
pursuant to the Dodd-Frank Wall Street Reform and Consumer 
Protection Act as well as the Patient Protection and Affordable 
Care Act, both of which potentially raise novel legal and 
policy issues arising out of these statutes. As a result, this 
change could cause greater uncertainty in the agency's use of 
guidance process.
    Among the new requirements that an agency must satisfy 
before it may issue major guidance are the following:

        (1) Before an agency may issue any major guidance, it 
        must make a reasonable determination that such guidance 
        is understandable and complies with relevant statutory 
        objectives and regulatory provisions (new section 
        553a(a)(1)(A)).

        (2) The agency must identify the costs and benefits 
        (including all costs considered during the rulemaking 
        under section 553(b)) of conduct conforming to such 
        guidance and assure that such benefits justify such 
        costs (new section 553a(a)(1)(B)).

        (3) The agency must describe alternatives to such 
        guidance and their costs and benefits (including all 
        costs to be considered during the rulemaking under 
        section 553(b)) and explain why the agency rejected 
        those alternatives (new section 553a(a)(1)(C)). This 
        would force an agency to potentially do countless cost-
        benefit analyses.

        (4) The agency must confer with OIRA to assure that the 
        guidance is reasonable, understandable, consistent with 
        relevant statutory and regulatory provisions, and 
        requirements or practices of other agencies, does not 
        produce costs that are unjustified by the guidance's 
        benefits, and otherwise appropriate (new section 
        553a(a)(2)). This provision is yet another instance 
        where the bill strengthens OIRA's control over agency 
        rulemaking.

        (5) The agency guidance must state in a plain, 
        prominent and permanent manner that it is not legally 
        binding (new section 553a(b)(2)).

        (6) The guidance must be made available by the issuing 
        agency to interested persons and the public at the time 
        it is issued (new section 553a(b)(3)).

    Section 4 also includes a general proviso to agencies that 
they minimize the potential for litigation arising from 
uncertainty, which itself may create uncertainty by having a 
chilling effect on the agencies' willingness to issue guidance. 
It also specifies that OIRA has authority to issue guidelines 
for use by agencies in the issuance of major guidance and other 
guidance that must assure each agency avoids issuing guidance 
documents that are inconsistent or incompatible with or 
duplicative of its other regulations and those of other 
agencies, and drafts its guidance documents to be simple and 
easy to understand to minimize the potential for uncertainty 
and litigation.
    Sec. 5. Hearings; Presiding Employees; Powers and Duties; 
Burden of Proof; Evidence; Record as Basis of Decision. Section 
5 adds a comprehensive regime of new requirements for hearings. 
For example, new section 556(e)(2) specifies that the record 
for decision must include any information that is part of the 
record of proceedings under section 553. When an agency 
conducts formal rulemaking procedures under sections 556 and 
557 directly after concluding proceedings on an ANPR under 
section 553(c), the matters to be considered and determinations 
to be made must include, among other factors, the matters and 
determinations described in subsections (b) and (f).
    Upon receipt of a petition for a hearing under this 
section, an agency pursuant to new subsection 556(g) must grant 
the petition in the case of any major rule, unless the agency 
reasonably determines that a hearing would not advance 
consideration of the rule or would, in light of the need for 
agency action, unreasonably delay completion of the rulemaking. 
The agency must publish its decision to grant or deny the 
petition when it renders the decision, including an explanation 
of the grounds for such decision. The information contained in 
the petition must be included in the administrative record. 
Subsection (g), however, does not apply to monetary policy 
rulemakings proposed or implemented by the Federal Reserve or 
Federal Open Market Committee.
    Sec. 6. Actions Reviewable. Section 6 amends section 704 of 
the APA, which specifies what agency actions are reviewable by 
a court. Whereas section 6 substantially broadens the types of 
actions reviewable, the Manager's Amendment adds even more 
types of agency actions that would be subject to review: (1) 
denial by an agency of a correction request; (2) denial of an 
administrative appeal under section (b)(2)(B) of the IQA; and 
(3) the failure of an agency to grant or deny such request or 
appeal within 90 days. This will provide more opportunities for 
federal judges to second guess agency actions even though 
federal judges are generalists and agencies are experts. Also, 
the 90-day time frame may be unworkable under certain 
circumstances.
    Except for cases involving national security, new section 
704 permits an interested party to seek immediate judicial 
review of an agency's determination to adopt an interim rule on 
an interim basis upon the agency's publication of such rule 
without compliance with section 553(c), (d), or (e) or 
requirements to render final determinations under section 
553(f). While this provision at least recognizes an exception 
for national security matters, one can easily conceive of other 
matters that should also warrant exception from new section 
704, e.g., imminent public health or safety rules.
    Sec. 7. Scope of Review. Section 7 amends section 706 of 
the APA, which sets forth the scope of judicial review. Current 
section 706(a)(2)(A) provides that a court, in appropriate 
circumstances, must ``hold unlawful and set aside action, 
findings, and conclusions found to be arbitrary, capricious, an 
abuse of discretion, or otherwise not in accordance with law.'' 
Section 7 broadens the matters subject to judicial review to 
include any agency action, findings or conclusions that 
allegedly violated the IQA. In addition, section 7 prohibits a 
court from deferring to an agency's interpretation of its rule 
under various specified circumstances. Further, section 7 
requires a court to review agency denials of petitions under 
section 553(e)(6) (pertaining to petitions by interested 
persons raising other issues) or any other petition for a 
hearing under sections 556 and 557 for abuse of agency 
discretion.
    Sec. 8. Added Definition. Section 8 amends the definitions 
pertinent to judicial review of agency actions to add a 
definition of ``substantial evidence,'' which it defines as 
such relevant evidence as a reasonable mind might accept as 
adequate to support a conclusion in light of the record 
considered as a whole, taking into account whatever in the 
record fairly detracts from the weight of the evidence relied 
on by the agency to support its decision. This amendment to 
current law may actually be one of the very few provisions in 
H.R. 3010 that are beneficial.

                               CONCLUSION

    H.R. 3010 troubles us for numerous reasons. First, it is 
based on the false and unsupported claims that regulations 
stifle economic growth and job creation and impose undue costs. 
Such claims also do not account for the overwhelming evidence 
that regulation results in net benefits to society, including 
spurring economic activity. Second, H.R. 3010's numerous 
changes to the APA would have the cumulative effect of halting 
agency rulemaking in its tracks, undermining agencies' ability 
to protect the American people from a wide range of harms and 
circumventing Congress's intent in delegating rulemaking 
authority to agencies through various statutes. Third, H.R. 
3010 privileges industry cost considerations over public 
health, workplace safety, environmental protection, and other 
values by overriding substantive law and imposing an unworkable 
cost-benefit analysis regime on agencies. Fourth, H.R. 3010 
dangerously concentrates unaccountable power over rulemaking in 
OIRA's hands. Fifth, H.R. 3010 tilts the rulemaking playing 
field in favor of business interests by resurrecting the long-
discredited and time-consuming formal rulemaking process, 
providing for expanded and less deferential judicial review, 
increasing opportunities to challenge agency compliance with 
the IQA, and encouraging the United States to engage in a 
regulatory ``race to the bottom'' with China and other 
developing countries.
    For these reasons, we respectfully dissent and urge strong 
opposition to H.R. 3010.

                                   John Conyers, Jr.
                                   Jerrold Nadler.
                                   Robert C. ``Bobby'' Scott.
                                   Melvin L. Watt.
                                   Zoe Lofgren.
                                   Sheila Jackson Lee.
                                   Maxine Waters.
                                   Steve Cohen.
                                   Henry C. ``Hank'' Johnson, Jr.
                                   Ted Deutch.