,i #aacth ,,congress #b;d ,session ,h4 ,r4 #chfc ,,in ,,the ,,house ,,of ,,representatives ,january #ad1 #bjad,mr4 ,brady of ,texas introduced the following bill2 which was referred to the ,committee on the ,judiciary ,a ,,bill ,to amend title #e1 ,united ,states ,code1 to establish uniform requirements for thorough economic analysis of regulations by ,federal agencies based on sound principles1 and for other purposes4 #a4 ,short title ,this ,act may be cited as the ,sound ,regulation ,act of #bjad4 #b4 ,findings ,congress finds the following3 7#a7 ,growing ,federal regulation that is highly prescriptive in nature burdens ,american industry and impairs its international competitiveness4 7#b7 ,prescriptive regulation takes away flexibility1 is adversarial in nature1 leads to unintended consequences1 and1 especially as it proliferates1 slows economic growth and job creation4 7#c7 ,despite evidence of increasing regulatory costs1 ,federal agencies hold fast to the presumption that their rules are in the public interest4 7#d7 ,some statutes prohibit consideration of costs and benefits in rulemaking1 although none prohibit agency analysis of costs and benefits for informative purposes4 7#e7 ,for independent regulatory agencies cost-benefit analysis is not institutionalized4 ,executive agencies perform cost-benefit analysis pursuant to ,executive order and under the purview of the ,office of ,information and ,regulatory ,affairs 7,,oira71 which takes direction from the ,president4 ,no peer review is required of analyses by either set of agencies4 7#f7 ,there are no statutory standards for cost-benefit analysis in ,federal rulemaking and there are no consistent1 material consequences when rules are based on faulty or inadequate analysis4 7#g7 ,agencies conduct their own regulatory impact analyses largely by methods of their own choosing and only on a small fraction of the rules they issue4 ,agencies use regulatory cost-benefit analysis mainly in support of favored1 preconceived rules rather than as a decision tool4 ,common deficiencies include-- 7,a7 lack of a coherent theory by which to define a problem1 determine why it occurs1 and guide the agency to the most efficient response2 7,b7 lack of objective evidence that an actionable problem actually exists1 what its dimensions are1 and how they differ from acceptable norms2 7,c7 lack of comprehensive analysis to determine whether a market malfunction exists and orient rulemaking to its causes1 not its symptoms2 7,d7 failure to set clear and realistic objectives whose benefits justify the cost of achieving them2 7,e7 objectives that are set disconnected from costs and may be expansive and vague so that any regulation can be made to appear beneficial2 7,f7 agencies increasingly claiming incidental benefits 7so-called co-benefits7 that are not in furtherance of the stated objective and even private 7as opposed to public7 benefits for their rules2 7,g7 failure to develop regulatory options in light of market analysis and rank them by how efficiently they will improve the market process2 7,h7 inconsistent assumptions and methodologies across agencies2 7,i7 invalid baselines for gauging regulatory effects2 7,j7 omissions of important impacts1 such as on employment and international competitiveness of ,u4,s4 firms2 7,k7 failure to reevaluate regulations after implementation2 and 7,l7 failure to consider the cumulative costs of regulation by the various ,federal1 ,state1 local1 and tribal agencies4 7#h7 ,despite continually changing market conditions1 agencies do not regularly review their existing regulations and regulatory regimes4 ,they also do not review the division of functions among different ,federal agencies or among ,federal1 ,state1 local1 and tribal agencies4 ,regulations lose their purpose1 yet linger and accumulate1 imposing unnecessary costs and slowing economic growth to the detriment of material living standards and1 to some extent1 the very social conditions that are the objects of regulation4 7#i7 ,agencies typically do not conduct regulatory cost studies proactively and report to ,congress unnecessary costs that are not under the agencies' control because of the way laws are written4 ,agency recommendations on how to improve the efficiency of regulation by modifying an existing statute could be helpful to ,congress4 #c4 ,uniform use of cost-benefit analysis ,section #eec of title #e1 ,united ,states ,code1 is amended by adding at the end the following3 7f7 7#a7 ,prior to any rulemaking under this section1 an agency shall comply with the following3 7,a7 ,the agency shall identify1 in the context of a coherent conceptual framework and supported with objective data-- 7i7 the nature and significance of the market failure1 regulatory failure1 or other problem that necessitates regulatory action2 7ii7 the reasons why national economic and income growth1 advancing technology1 and other market developments will not obviate the need for the rulemaking2 7iii7 the reasons why regulation at the ,state1 local1 or tribal level could not address the problem better than at the ,federal level2 7iv7 the reasons why reducing rather than increasing the extent or stringency of existing ,federal regulation would not address the problem better2 and 7v7 the particular authority by which the agency may take action4 7,b7 ,before the agency increases the extent or stringency of regulation based on its determinations pursuant to subparagraph 7,a71 it shall-- 7i7 set an achievable objective for its regulatory action and identify the metrics by which the agency will measure progress toward the objective2 7ii7 issue a notice of inquiry seeking public comment on the identification of a new objective under clause 7i72 and 7iii7 give notice to the committees of ,congress with jurisdiction over the subject matter of the rule4 7,c7 ,the agency1 if the agency is not seeking to repeal a rule1 shall develop at least #c distinct regulatory options1 in addition to not regulating1 that the agency estimates will provide the greatest benefits for the least cost in meeting the regulatory objective set under subparagraph 7,b7 and1 in developing such regulatory options1 shall apply the following principles3 7i7 ,the agency shall assume that individuals are rational and not qualify that assumption unless the agency-- 7,i7 has conclusive evidence of a detrimental systematic behavioral bias2 and 7,,ii7 can devise behavioral regulatory options that do not preclude any choices of market participants4 7ii7 ,the agency shall1 to the extent practicable1 attempt to engage private incentives to solve a problem and not supplant private incentives any more than necessary4 7iii7 ,the agency shall consider the adverse effects that mandates and prohibitions may have on innovation1 economic growth1 and employment4 7iv7 ,an agency's risk assessment shall be confined to its jurisdiction1 subject to specific regulatory authority4 ,agency assessments of the risks of adverse health and environmental effects shall follow standardized parameters1 assumptions1 and methodologies4 ,an agency also shall provide analyses of increases in risks1 whatever their nature1 produced by the regulatory options under consideration4 7v7 ,the agency shall avoid incongruities and duplication in regulation at the ,federal1 ,state1 local1 and tribal levels4 7vi7 ,the agency shall compare and contrast the regulatory options developed and explain how each would meet the regulatory objective set pursuant to subparagraph 7,b74 7,d7 ,the agency shall estimate the costs and benefits of each regulatory option developed1 notwithstanding any provision of law that prohibits the agency from using costs in rulemaking1 at least to the extent that the agency is able to-- 7i7 exclude options whose costs exceed their benefits2 7ii7 rank the options by cost from lowest to highest2 7iii7 estimate the monetary cost of any adverse effects on private property rights1 identify the categories of persons who experience a net loss from a regulatory option1 and explain why the negative effects cannot be lessened or avoided2 7iv7 establish whether the cost of an option exceeds #ej1jjj1jjj for any #ab-month period1 except that the dollar amount shall be adjusted annually for inflation based on the ,,gdp deflator1 and the ,president may order that a lower dollar amount be used for a particular period2 and 7v7 identify the key uncertainties and assumptions that drive the results and provide an analysis of how the ranking of the options and the threshold determination under clause 7iv7 may change if key assumptions are changed4 7,e7 ,the estimates pursuant to subparagraph 7,d7 shall-- 7i7 follow the methodology established pursuant to paragraph 7#b77;,a72 7ii7 to the maximum extent practicable1 comply with any guidelines issued by the ,administrator of the ,office of ,information and ,regulatory ,affairs pertaining to cost-benefit analysis2 and 7iii7 include1 at a minimum-- 7,i7 agency administrative costs2 7,,ii7 ,united ,states private sector compliance costs2 7,,iii7 ,federal1 ,state1 local1 and tribal compliance costs2 7,,iv7 ,federal1 ,state1 local1 and tribal revenue impacts2 7,v7 impacts from the regulatory options developed on ,united ,states industries in the role of suppliers and consumers to each industry substantially affected1 especially in terms of employment1 costs1 volume and quality of output1 and prices2 7,,vi7 nationwide impacts on overall economic output1 productivity1 consumer and producer prices2 7,,vii7 international competitiveness of ,united ,states companies2 and 7,,viii7 distortions in incentives and markets1 including an estimate of the resulting loss to the ,united ,states economy4 7,f7 ,the agency shall publish for public comment all analyses1 documentation1 and data under subparagraphs 7,a7 through 7,d7 for a public comment period of at least #cj days 7subject to applicable limitations under law1 including laws protecting privacy1 trade secrets1 and intellectual property7 and correct deficiencies or omissions that the agency becomes aware of before choosing a rule to propose4 7#b7 7,a7 ,beginning not later than the date that is #ahj days after the effective date of this section-- 7i7 each agency shall1 by rule1 establish and maintain the specific cost-benefit analysis methodology appropriate to the functions and responsibilities of that agency and establish an appropriate period for review of new rules to assess the cost effectiveness of each such new rule at achieving the objective identified under paragraph 7#a77;,b77i7 the new rule was intended to address2 7ii7 the methodology so established shall-- 7,i7 include the standardized parameters1 assumptions1 and methodologies for agency assessments of risk under paragraph 7#a77;,c77iv72 7,,ii7 comply1 to the maximum extent practicable1 with technical standards for methodologies and assumptions issued by the ,administrator for the ,office of ,information and ,regulatory ,affairs2 7,,iii7 include the scope of benefits and costs consistent with the framework used and the metrics identified in the establishment of the regulatory objective under paragraph 7#a72 7,,iv7 not include consideration of incidental benefits but only those benefits that were considered in the establishment of the regulatory objective2 7,v7 limit consideration of costs and benefits to costs and benefits that accrue to the population of the ,united ,states2 7,,vi7 constrain the agency from presuming that continued augmentation or tightening of mandates and additional prohibitions cause benefits and costs to change linearly but determine at what point benefits will rise less than1 and costs will rise more than1 proportionally2 7,,vii7 include comparison of incremental benefits to incremental costs from any action the agency considers taking and refrain from actions whose incremental benefits do not exceed their incremental costs2 and 7,,viii7 include analysis of effects on private incentives and possible unintended consequences2 and 7iii7 the agency shall adhere to the methodology so established in all rulemakings4 7,b7 ,if the agency does not select the least-cost regulatory option as its proposed rule1 the agency shall justify its selection1 explaining-- 7i7 how that selection furthers other goals or requirements relevant to regulating matters within the agency's jurisdiction and why these should override cost savings2 and 7ii7 why each of the other regulatory options not chosen would not sufficiently further such other goals or requirements4 7,c7 ,if the agency makes a determination under paragraph 7#a77;,d7 that the monetized cost of a rule exceeds the applicable monetary limit under clause 7iv7 of such paragraph for any #ab-month period1 the agency head shall-- 7i7 first issue an advanced notice of proposed rulemaking2 7ii7 provide notice to the appropriate ,congressional committees and keep such committees informed of the status of the rulemaking2 and 7iii7 ensure that-- 7,i7 the agency shall notify the ,administrator of the ,small ,business ,administration1 the ,director of the ,office of ,management and ,budget1 and affected parties1 and provide each such person with information on the potential effects of the proposed rule on affected parties and the type of affected parties that might be affected2 7,,ii7 not later than #ae days after the date of receipt of the materials described in subclause 7,i71 the ,director1 in consultation with the ,administrator1 shall identify representatives of affected parties1 #be percent of which shall represent small business concerns 7as such term is defined in section #c7;a7 of the ,small ,business ,act71 when possible1 and all the major stakeholders shall have the opportunity to obtain advice and recommendations about the potential effects of the proposed rule2 7,,iii7 the agency shall convene a review panel consisting wholly of full-time ,federal officers1 employees1 and contractors in the agency responsible for the proposed rule1 the ,director1 the ,administrator1 and the representatives of affected parties identified pursuant to subclause 7,,ii72 7,,iv7 the agency shall conduct a detailed analysis of the costs and benefits of the regulatory option it is advancing1 and1 in doing so-- 7aa7 the agency shall consider the cumulative and interactive costs of regulatory requirements of ,federal1 ,state1 local1 tribal1 and 7where applicable7 international regulations2 and 7bb7 the agency shall identify the key uncertainties and assumptions that drive the results and provide an analysis of how the ranking of the regulatory options changes if the key assumptions are changed2 7,v7 the panel shall review agency material prepared in connection with this subsection1 including any draft proposed rule1 and review the advice and recommendations of each affected party representative identified2 7,,vi7 not later than #fj days after the date the agency convenes a review panel pursuant to subclause 7,,iii71 the review panel shall report on the comments of the affected party representatives and its findings as to issues related to the provisions of this subsection1 and such report shall be made public as part of the rulemaking record2 7,,vii7 where appropriate1 the agency shall modify the proposed rule or the cost-benefit analysis under subclause 7,,iv7 based on the report under subclause 7,,vi72 7,,viii7 subject to applicable limitations under law1 including laws protecting privacy1 trade secrets1 and intellectual property1 the agency shall publish for comment all analyses1 documentation1 and data under this paragraph for a public comment period of at least #cj days and correct deficiencies or omissions that the agency becomes aware of before adopting a proposed rule2 and 7,,ix7 affected parties1 including ,state1 local1 or tribal governments1 and other stakeholders may participate in the rulemaking by means such as-- 7aa7 the publication of advanced and general notices of proposed rulemaking in publications likely to be obtained by affected parties2 7bb7 the direct notification of interested affected parties2 7cc7 the conduct of open conferences or public hearings including soliciting and receiving comments over computer networks2 and 7dd7 reducing the cost or complexity of procedural rules to ease participation in the rulemaking4 7,d7 ,every #d years the agency shall conduct a review of all rules of the agency in effect and determine based on objective data whether its rules are working as intended1 furthering their objectives1 imposing unanticipated costs1 and generating a net benefit or not1 and shall amend such rules if appropriate4 ,the agency shall report to ,congress the findings of each such review4 7,e7 ,any person may petition an agency to amend an existing rule made prior to the establishment of methodology under this paragraph1 and1 if the agency denies such a petition1 that denial shall be subject to review under chapter #g of this title4 7,f7 ,notwithstanding any other provision of law1 including any provision of law that explicitly prohibits the use of cost-benefit analysis in rulemaking1 an agency shall conduct cost-benefit analyses and report to ,congress the findings with specific recommendations for how to lower regulatory costs by amending the statutes prohibiting the use thereof4 7#c7 ,for purposes of this subsection-- 7,a7 the term regulatory options means any action an agency may take to address an objective identified under paragraph 7#a77;,b77i71 including the option not to act2 7,b7 the term private incentives means financial gains or losses that motivate actions by private individuals and businesses1 and does not include any law or regulation that prescribes private actions or outcomes2 and 7,c7 the term incidental benefit means a claimed benefit outside the specific regulatory objective or objectives identified under paragraph 7#a77;,b77i7 a rule is intended to address as identified in paragraph 7#a77;,a74 7#d7 ,all determinations made under this subsection shall be subject to review under chapter #g4 4 #d4 ,congressional review ,section #hja7;a77#b7 of title #e1 ,united ,states ,code1 is amended by adding at the end the following3 7,c7 ,the ,comptroller ,general shall examine the cost-benefit analysis for compliance with the requirements of section #eec7;f71 including the agency methodology established under section #eec7;f77#b77;,a74 7,d7 ,the ,comptroller ,general shall examine any risk analysis under section #eec7;f77#a77;,c77iv7 pertaining to the cost-benefit analysis for compliance with the requirements of section #eec7;f74 7,e7 ,the ,comptroller ,general also shall examine the agencies' quadrennial regulatory reviews for consistency with the requirements of section #eec7;f7 and report to ,congress on the results4 4