IIAR

The November 2014 elections resulted in a significant shift in control of Congress. Republicans gained control of the Senate and widened their majority in the House of Representatives. As a result, efforts to reform the regulatory process are seeing renewed interest this year. Bills that have been approved by the House in the past, but didn’t see action in the Senate are now moving in both chambers, setting up opportunities for Congress to send multiple pieces of regulatory reform legislation to the President. This article will examine some of the regulatory reform bills getting the attention of this Congress.

REGULATORY ACCOUNTABILITY ACT

Central to the regulations that impact the ammonia refrigeration industry is the foundational process by which regulations are developed. The federal regulatory process, rooted in the Administrative Procedure Act, has not been updated for over 60 years. In recent years, federal agencies have been very active in promulgating numerous significant regulations using the outdated processes afforded by the APA. Many of these regulations have resulted in high compliance costs and uncertainty leading to negative impacts to businesses. The Regulatory Accountability Act would modernize the APA process by which federal agencies promulgate regulations and improve accountability and the integrity of the rulemaking process.

Some of the major provisions in the legislation are:

Mandating agencies to assess the costs and benefits of proposed rules and to consider alternatives. Giving these requirements the force of law ensures that they cannot be rolled back without congressional action and provides the basis for judicial review of agency compliance.

Subject “independent” agencies, which are outside the direct control of the President, to the same rulemaking requirements as other federal agencies. Independent agencies are responsible for a large and growing share of regulations but are not subject to many of the procedural requirements placed on other agencies.

Require major rules, those with $100 million in impact or more annually), have an advance notice of proposed rulemaking be released to solicit public comment before they are proposed. This provision is meant to prevent agencies from making tentative policy decisions before the public has an opportunity to comment.

For rules with $1 billion in impact or more annually, agencies would be required to hold an oral evidentiary hearing involving all affected parties with a full opportunity for cross-examination of witnesses from all sides. The hearing will provide more complete information on which regulators can make decisions.

Status: The Regulatory Accountability Act passed the House in January 2015 by a vote of 250 – 175. The House passed bill has been referred to the Senate Committee on Homeland Security and Government Affairs. President Obama has threatened to veto the legislation.

SUNSHINE FOR REGULATORY DECREES AND SETTLEMENTS ACT

Another procedural issue complicating the regulatory process is the practice of “sue and settle.” In these situations, organizations sue federal agencies and seek to compel them to take specific actions, such as issuing new regulations. In many cases, agencies will negotiate with organizations to develop consent decrees or settlement agreements that result in agencies developing regulations or compelling specific timelines for action. These negotiations take place in a non-public way leading to a lack of transparency in federal policy making. The Sunshine for Regulatory Decrees and Settlements Act would reform the “sue and settle” process by improving transparency and making agencies more accountable for their actions. Provisions of the bill include:

Providing for greater transparency by requiring agencies to publicly post and report to Congress information on sue-and-settle complaints, consent decrees, and settlement agreements;

Requiring that consent decrees and settlement agreements be filed only after interested parties have had the opportunity to intervene in the litigation and join settlement negotiations, and only after any proposed decree or settlement has been published for at least 60 days to provide for notice and comment; and Requiring courts considering approval of consent decrees and settlement agreements to account for public comments and compliance with regulatory process statutes and executive orders.

Status: In the House, the Sunshine for Regulatory Decrees and Settlements Act was approved by the House Judiciary Committee on March 24th. It is now awaiting consideration by the full House. In the Senate, the bill has been referred to the Senate Judiciary Committee but has yet to receive a vote.

Toxic Substances Control Act (TSCA) Modernization

In addition to fundamental regulatory procedures, Congress is also considering reforms specific to particular issues and industries. For example, the Toxic Substances Control Act, passed in 1976, is the primary law that the Environmental Protection Agency uses to regulate the safety of chemical products.

TSCA gives EPA the authority to review and regulate chemicals in commerce. TSCA was designed to ensure that products are safe for intended use. While the law originally perceived as creating a strong system of regulations, over time, confidence in EPA’s regulation of chemicals has eroded. As a result, individual states have established their own laws and regulations related to chemical products. In some cases, these laws have been based more on the concerns of activists than on science.

This has led to a patchwork of laws and regulations that can be confusing and sometimes contradictory as companies deal with multiple state policies. To help improve this situation and provide more consistency and predictability, federal legislation has been drafted and is currently under consideration in Congress.

The TSCA Modernization Act of 2015, introduced in the House, and the Frank R. Lautenberg Chemical Safety for the 21st Century Act, introduced in the Senate, would both provide important updates to the Toxic Substances Control Act. These bills would:

Create a new system for EPA to evaluate and manage risks associated with chemicals already on the market. Either EPA or a manufacturer (who is willing to pay the cost) may designate a chemical for risk evaluation. The risk evaluation must stand up to rigorous scientific standards set out in the legislation. If unreasonable risk is determined, EPA must immediately draft a rule to manage the risk.

Set deadlines for EPA to take action. Risk evaluations must be completed within 3 years. Risk management rules must follow completion of risk evaluations by 90 days.

Ensure user fees paid to EPA for specific purposes are used just for those purposes. User fees will be deposited in a separate fund in the Treasury, and the fees charged and collected will match the cost of carrying out the specific purposes.

Provide limited preemption of state law. Once EPA makes a final decision on a chemical, either a new rule or a determination that it poses no unreasonable risk, EPA action would apply in all states. Prior state laws that do not conflict with TSCA, and private rights of action under tort or contract law, are preserved.

Maintain protection of confidential business information. Certain state, local, and tribal government officials and health care professionals will have access. Confidentiality claims must be reclaimed after ten years. Exemption from CBI protection for health and safety studies does not include disclosure of confidential chemical formulas.

Status: Both the House and Senate bills enjoy bipartisan support. The Senate’s bill was approved by the Environment and Public Works Committee on April 28th. The House legislation was approved on May 14th. The next step in the process will be consideration by the full House and Senate.

Legislative efforts such as those profiled above, should they be enacted, could provide improved transparency and additional certainty to the regulated community. Many hurdles still remain, including veto threats, but with Republicans now controlling both the House and Senate, regulatory reform will continue to be high on the agenda. n