On Wednesday, February 26, 2014, the House will begin consideration of H.R. 2804, the Achieving Less Excess in Regulation and Requiring Transparency Act of 2014 (ALERRT Act). The Rules Committee print includes the text of H.R. 2804 as reported by the Oversight and Government Reform Committee; H.R. 2122 and 1493, as reported by the Judiciary Committee; and H.R. 2542 as reported by the Judiciary and Small Business Committees.
Title I: All Economic Regulations Are Transparent (ALERT) Act
Title I contains the text of H.R. 2804, which was introduced on July 24, 2013 by Rep. George Holding (R-NC) and was referred to the Committees on Judiciary and Oversight and Government Reform. The bill was marked up by the Committee on Oversight and Government Reform and was ordered reported, as amended, on February 11, 2014 by a vote of 19-15. Title I requires federal agencies to submit monthly updates to the Office of Information and Regulatory Affairs (OIRA) on rules the agencies expect to propose or finalize in the following year. Updates must include a summary of the rule, its objective, and its legal basis. For rules that have been noticed, the update must include a schedule for completion, as well as cost and economic impact information. H.R. 2804 requires OIRA to publish two annual assessments of rulemaking. One, published in the Federal Register, must provide information on the regulatory activity in the previous year, including the number of rules issued, deregulatory action taken, and information from the monthly agency updates. The second assessment, published online, must include information on the regulatory review process in the past year, including cost-benefit analyses and the number of OIRA reviews.
“In recent years, regulatory transparency has diminished, giving the public less time to prepare for the opportunity to participate in the regulatory process and less time to prepare for the impact of the regulation itself.” The publication of two key transparency tools—the government-wide semi-annual Unified Agenda of Regulatory and Deregulatory Actions, and annual agency Regulatory Plans—has either been delayed or ignored altogether by the Administration. Additionally, the Administration has sought to narrow the scope of information disclosed in the Unified Agenda.
Title II: Regulatory Accountability Act
Title II contains the text of H.R. 2122, which was introduced on May 23, 2013 by Rep. Bob Goodlatte (R-VA) and was referred to the Judiciary Committee. The bill was marked up on July 24, 2013 and was ordered reported by a vote of 13-9. Title II modifies certain parts of the Administrative Procedure Act (APA) “to reform the process by which federal agencies analyze and formulate new regulations and guidance documents.” In part, Title II codifies key rulemaking principles found in a variety of Executive Orders issued by Presidents for more than thirty years, and makes them judicially enforceable. These include conducting regulatory impact analyses and cost-benefit analyses, and coordinating rulemaking. Title II improves the process for notice-and comment rulemaking by requiring public input at each stage of the process. It also generally requires agencies to issue the least costly alternative rule. Title II brings major guidance within the regulatory review process, thereby subjecting it to more intensive pre-issuance scrutiny. It also reforms the process of issuing interim-final rules—which may currently be promulgated without public input—to prevent abuse of that type of rulemaking. Title II requires “hybrid” rulemaking for high-impact rules (rules imposing $1 billion or more in annual costs), combining hearing-based proceedings previously used in formal rulemaking with informal notice-and-comment procedures to best vet issues raised by these highest-cost rules.
“The annual cost to the economy of federal regulations has . . . been estimated to [exceed] $1 trillion, and . . . is increasing each year. This burden, coupled with uncertainty over what additional federal regulation may be imposed in the near term, have been cited as key factors continuing to hold back economic recovery and the creation of new jobs. The current regulatory burden is largely the fruit of inadequate administrative law. Most important, the APA, known as the ‘constitution’ of agency rulemaking, imposes only a few light-handed constraints on the vast majority of agency rulemaking proceedings. Nowhere in the APA, for example, is an agency required to consider the costs of a proposed regulation and weigh them against potential benefits.” Since its enactment in 1946, the APA has never been updated by Congress to account for modern rulemaking. A patchwork of executive orders has provided additional rulemaking guidance, but has been implemented inconsistently, depending on the Administration in place at the time.
Title III: Regulatory Flexibility Improvements Act
Title III contains the text of H.R. 2542, which was introduced on June 27, 2013 by Rep. Spencer Bachus (R-AL) and was referred to the Small Business and Judiciary Committees. The bill was marked up by both committees and was ordered reported, as amended, on December 11, 2013. Title III amends the Regulatory Flexibility Act (RFA) and the Small Business Regulatory Enforcement Fairness Act (SBREFA) to ensure agencies adequately analyze proposed rules for their potential impacts on small businesses. It eliminates loopholes that agencies have used to avoid complying with the law. Specifically, Title III “defines and expands which economic effects are to be examined by agencies, imposes greater detail in performing the analyses, clarifies language concerning applicability of the RFA to the Internal Revenue Service (IRS), subjects all agencies, including the IRS, to the procedures in § 609 on the [Small Business Regulatory Enforcement Fairness Act (SBREFA)] panel process, eliminates barriers to judicial review of RFA compliance for agencies that have a statutory exhaustion requirement after a final rule is published before the rule can be challenged in court, mandates that the Chief Counsel promulgate RFA compliance regulations applicable to all federal agencies, and transfers the limited function on determining size standards of small businesses for purposes other than the Small Business Act and the Small Business Investment Act of 1958 to the Chief Counsel for Advocacy.”
“The RFA was enacted in 1980 to ensure that federal agencies take into account the disparate impact that regulations have on small businesses . . . . Agencies regularly flouted the requirements of the RFA forcing Congress to take action in 1996 with the enactment of the [SBREFA] . . . which made some significant changes to the RFA with the expectation that it would improve agency compliance. Studies by the [GAO], reports from the Chief Counsel for Advocacy, and [Congressional hearings] demonstrate that agencies are still reluctant to comply with the analytical requirements of the RFA.”
Title IV: Sunshine for Regulatory Decrees and Settlements Act
Title IV contains the text of H.R. 1493, which was introduced on April 11, 2013 by Rep. Doug Collins (R-CO) and was referred to the Judiciary Committee. The bill was marked up on July 24, 2013 and ordered reported by a vote of 17-12. Title IV addresses “sue-and-settle litigation” by reforming procedures for consent decrees and settlement agreements entered into by federal agencies that require them to take regulatory action. Specifically, the bill requires (1) heightened transparency to the public and regulated entities of “notices of intent to sue, complaints, consent decrees and settlement agreements, and attorneys’ fee agreements in lawsuits attempting to force regulatory action”; (2) increased opportunities for “regulated entities, State, local and Tribal co-regulators, and the public . . . to participate in the shaping or judicial evaluation of sue-and-settle consent decrees and settlement agreements, whether through notice-and-comment procedures or rights to participate in litigation as intervenors or amici curiae”; (3) “more complete records and tools [for courts] to review proposed sue-and-settle consent decrees and settlement agreements”; and (4) codification of key restrictions from the Department of Justice’s 1986 “Meese Memo” to “constrain the authority of [DOJ] and defendant agencies to agree to sue-and-settle consent decrees and settlements that present separation-of-powers concerns.”
In “sue-and-settle” litigation, activists manipulate consent decrees and settlement agreements entered into by the federal government to require new regulations; reorder regulatory priorities; bind future administrations; and limit the rights of regulated entities. Generally, pro-regulation parties sue federal agencies for, e.g., failing to meet mandatory statutory deadlines for new regulations. The parties often negotiate a consent decree or settlement agreement in secret before a complaint is filed, and then propose the decree or agreement to the court when the case is filed. The decrees and agreements often require the agency to issue new regulations on an expedited timeline that prevents public and stakeholder input. They also legally bind future administrations and co-regulators such as state, local, and tribal authorities, which must assist in promulgating or carrying out the regulations.
Policies developed by Attorney General Meese during the Reagan and George H.W. Bush administrations, set forth in the “Meese Memo,” limited the DOJ from entering into consent decrees or settlement agreements that presented separation-of-powers concerns. These policies were relaxed under the Clinton administration and sue-and-settle cases have since boomed under President Obama. A recent study by the Chamber of Commerce found that “the sue-and-settle process is increasingly being used as a technique to shape agencies’ regulatory agendas, without input from the public or the regulated community.”
 Id. at 4.
 Id. at 5.
 Id. at 1.
 According to congressional testimony “current judicial review doctrines encourage agencies to use the rulemaking process to issue broad, ambiguous regulations, and then interpret [them] through mere guidance documents, which do not have to be promulgated through any established processes. 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.” Id. at 8.
 Id. at 2.
 Id. at 4.
 Committee Report 113-288, Part 2 at 9-10. “Section 609 of the RFA requires three federal agencies, the Occupational Safety and Health Administration (OSHA), the Environmental Protection Agency (EPA) and the Consumer Financial Protection Bureau (CFPB or Bureau), to consider, prior to publication of a proposed rule in which an IRFA will be prepared, the concerns of small entities. [Section 609(b)] establishes the procedures for obtaining the input of small entities. [They] require the formation of a panel of federal employees, including a representative from the Office of Advocacy (the organizer of the panel), who then obtain input on the potential economic impacts from selected small entity representatives. After receiving the input, the panel submits a report to the agency and requires the agency to respond to [the report] in the proposed rule. The agency is at liberty to modify the proposal according to the recommendations of the panel report but is not required to do so.” Id. at 59.
 Id. at 9.
 Committee Report 113-230.
 Id. at 7.
 Id. at 16-17.
 Id. at 2-3.
 Examples included agreements that “committed the agency to expend funds that Congress had not appropriated and that had not been budgeted for the action in question”; “divested the agency of discretion committed to it by Congress or the Constitution”; and “interfered with the agency’s authority to revise, amend, or promulgate regulations through the procedures set forth in the Administrative Procedure Act or other statutes . . . .” Id. at 5-6.
 Id. at 4. An examination of sue-and-settle cases under the Clean Air Act and the Clean Water Act revealed that sue-and-settle agreements entered into by the administration “have led to the issuance of at least 100 regulations.” Id. Just six of the agreements would impose more than $100 billion in estimated annual costs. Id. Beyond the enormous costs of such agreements, they institute major policy changes while limiting public and stakeholder input.
According to CBO estimates, implementing the bills contained in the Rules Print of H.R. 2804 would have the following impacts:
1) Rep. Cartwright (D-PA) Amendment #4 – Amendment strikes the 6 month moratorium on finalizing rules.
2) Rep. Murphy (D-FL) Amendment #8 – Amendment cuts titles II and IV from the bill.
3) Reps. Rothfus (R-PA) and Barr (R-KY) Amendment #10 – Amendment adds terms to define a negative-impact on jobs and wages rule, helps agencies identify a negative-impact on jobs and wages rule, and requires agency heads approving a negative-impact on jobs and wages rule to submit a statement that they approved the rule knowing of its negative-impact on jobs and wages.
4) Rep. Brady (R-TX) Amendment #2 – Amendment requires federal agencies to identify in any Notice of Proposed Rulemaking (NPR) the achievable objective of the proposed rule and the metrics to be used. Also requires federal agencies in issuing final rules to certify that the rule meets the objectives the agency identified in the NPR.
5) Rep. Rigell (R-VA) Amendment #9 – Amendment expands the requirements of initial regulatory flexibility analyses to include an analysis of any impairment of the ability of small entities to have access to credit.
6) Rep. Tipton (R-CO) Amendment #3 – Amendment makes a technical correction that ensures the current requirement, under the Regulatory Flexibility Act, that each agency annually publish a list of regulations to be reviewed pursuant to its periodic review plan, remains so.
7) Rep. Connolly (D-VA) Amendment #17 – Amendment exempts any rule pertaining to air quality or water quality.
8) Rep. Jackson Lee (D-TX) Amendment #6 – Amendment exempts rules made by the Secretary of Homeland Security, or any consent decree or settlement made as a result of the rule.
9) Rep. Johnson (D-GA) Amendment #14 – Amendment excludes from the bill any rule, consent decree, or settlement agreement that the Director of the Office of Management and Budget determines would result in net job creation or whose benefits exceeds its costs.
10) Reps. Miller (D-CA) and Courtney (D-CT) Amendment #11 – Amendment exempts regulations proposed by the Occupational Safety and Health Administration to prevent combustible dust explosions and fires.
11) Reps. Miller (D-CA) and Courtney (D-CT) Amendment #13 – Amendment exempts any regulations or modifications thereto, which have been recommended in writing by the Inspector General of a federal agency, including but not limited to those which would improve protections for taxpayers, students, public and workplace safety and health, or would otherwise increase the effectiveness or efficiency of agency activities.
For questions or further information contact the GOP Conference at 5-5107.