Julie Havlak reports for Carolina Journal that the U.S. House has passed Rep. Virginia Foxx’s bill to fix loopholes in the Unfunded Mandates Reform Act of 1995. It goes to the Senate, where its fate is less certain.
Current law only requires agencies to report the expected cost of regulations if they issue a notice of proposed rulemaking. Republicans say this offers agencies a loophole to pass more regulations with less oversight by simply not posting a notice.
H.R. 50 would require scrutiny for all major rules, as well expanding the law to cover all independent agencies.
Bill sponsor U.S. Rep. Virginia Foxx, R-5th District, argued agencies should be reined in before continuing to burden local governments and businesses with expensive regulations.
As explained by the Manhattan Institute’s Economics21 project:
Unfunded mandates are generally defined as statutes in federal law or provisions in regulations carrying enforceable duties on lower levels of government or the private sector without appropriating the funds or granting the aid needed.
The existing framework for keeping these unpaid-for regulations in check is the Unfunded Mandates Reform Act (UMRA). Unfunded mandates surged through the two decades leading up to the passage of UMRA in 1995. UMRA requires the Congressional Budget Office and issuing agencies to estimate the direct costs of mandates when they surpass $100 million, whether in bills for the former or in regulations for the latter.
UMRA was hailed at the time as a major step towards a more cooperative form of federalism. However, the same coalition of state and local officials, private sector advocates and constitutional scholars that pushed for UMRA today point to agencies’ use of cracks in the system to keep imposing regulations without due funding or justification. The Government Accountability Office has identified a total of 14 such loopholes.
Rep. Foxx’s bill would strengthen that weak framework in a number of important ways.
As CJ points out, one of the problems Foxx’s bill would fix is to eliminate a clever out agencies were using to avoid reporting duties and close scrutiny of their rules. The law requires this scrutiny and reporting of agency rules when they originate under a notice of proposed rulemaking. The agencies realized the workaround: skip the formal proposal, skip the scrutiny.
The Hill reports on another feature:
The bill — introduced by Rep. Virginia Foxx (R-N.C.) and known as the Unfunded Mandates Information and Transparency Act — would require agencies to propose regulatory alternatives when the cost of the rules exceed $100 million. Agency heads would be given the option to explain why a less expensive alternative wasn’t used when publishing the final rule.
Foxx has said that federal rules and regulations number in the thousands each year and that the related costs make it harder for businesses to hire employees. She’s said that regulators should be required to measure the cost of rules before implementation.
That feature sounds familiar. Republicans in the General Assembly made a similar reform as part of the Regulatory Reform Act of 2011 (RRA 11).
I urged expanding upon that aspect as part of my list of additional regulatory reforms at the end of my “Reining In Regulation” report:
Another reform in RRA 11 was to mandate that when an agency proposes a rule with substantial economic impact [currently defined in state law as “an aggregate financial impact on all persons affected of at least one million dollars ($1,000,000) in a 12-month period”], it must consider at least two alternatives and explain why the alternatives were rejected.
To expand on this reform, when the agency considers alternatives to its proposed rule, the agency should also be required to consider making no change along with the alternatives to consider and quantify. (Alternatives for a pre-existing rule under periodic review would correspondingly include no longer having the specific rule.) Agencies should be then required to choose the least burdensome alternative.
