Rep. Rob Goodlatte, Chairman of the House Judiciary Committee, has introduced a bill, titled the Regulatory Accountability Act of 2017, that would have a dramatic impact on rulemaking by many federal agencies, particularly the ones that regulate energy companies. If enacted, the bill would require agencies to supply more justification for proposed regulations, provide parties with a right to an evidentiary hearing on several aspects of proposed regulations, expand the scope of judicial review, and eliminate Chevron deference to an agency’s interpretation of governing statutes and Auer deference to an agency’s interpretation of its own regulations. The overall impact, no doubt intended, would be to impede the promulgation of new regulations by federal agencies.
The bill is a package of several individual bills that the House of Representatives passed in the last session. Those bills languished in the Senate in the face of Executive Branch opposition and a threatened Presidential veto. Although several features of the bill—most notably the abolishment of Chevron and Auer deference—will face intense opposition in the Senate, significant portions of the omnibus bill should have a good chance of being enacted given the incoming administration’s stated commitment to regulatory reform.
The bill has six parts. The bill would require federal agencies to identify the achievable objective for the proposed regulation and the metrics by which the agency will measure fulfillment of that objective. Agencies also would be obligated to choose the lowest-cost rulemaking alternative to meet their stated objective. The bill further would compel agencies to publish information online about regulations being developed and the costs of such regulations and provide the public with plain-language summaries of proposed regulations. In a nod to small businesses, the bill would amend the Regulatory Flexibility Act by directing agencies to analyze and minimize both the direct and indirect affects of the propose regulation on small entities.
Although the proposal to abolish Chevron and Auer deference has attracted the most press coverage, perhaps the most significant parts of the omnibus bill are the provisions that would provide parties with the right to an evidentiary hearing on two sets of issues. First, parties may petition for a hearing on whether the proposed regulation complies with the Information Quality Act. The IQA, originally enacted in 2000, is designed to ensure the quality, objectivity, utility, and integrity of information disseminated to the public. In a rulemaking context, the IQA is intended to ensure the accuracy and reliability of facts, data, or research on which agencies rely in proposing a regulation.
In recent years, the data and methodology used by agencies to justify far-reaching regulations has generated intense controversy. Notable examples are EPA assumptions on carbon dioxide and methane emissions and their effect on the climate. Environmental impact statements by the EPA and the FERC and assessments by the Fish and Wildlife Service of the effects of hydroelectric dams and wind turbines on endangered species and migratory birds also have received criticism. Under present law, parties can request a correction to data or research alleged to be flawed, but there typically is no judicial review of the agency’s response to such requests for correction. Courts generally have held either that (1) the IQA does not create any legal right to the correctness of information on which the agency relies or (2) plaintiffs lack standing to challenge any deficiencies in the agency information. As a result, the IQA is honored more in the breach.
The Regulatory Accountability Act seeks to change that. Under the bill, parties can file petitions with the agency proposing a regulation or rule arguing that the data, research, facts or other information supporting the regulation or rule are erroneous. If the agency agrees that a party has a made a prima facie case that evidence or other information on which the agency is relying does not comply with the IQA, then the agency would be required to hold an evidentiary hearing on its compliance. An agency’s determination that the party had not made out a prima facie case of non-compliance would be subject to judicial review once the regulation is finalized. The bill also provides for judicial review of an agency’s compliance with the IQA even if no party files a petition seeking a hearing before the agency.
The omnibus bill would also mandate an evidentiary hearing for “high-impact rules,” defined as having an annual economic impact of over $1 billion or reducing employment or wages in a region by more than 1%, unless all parties agree to waive the hearing (an unlikely prospect). The hearing would address whether: the agency’s factual predicate for the regulation is supported by the evidence, the agency has selected the lowest-cost alternative, and the agency has complied with the IQA. Parties could also seek to have other relevant issues addressed at the hearing. Parties could also request an evidentiary hearing for “major rules,” defined as having an annual economic impact over $100 million, but whether to hold such a hearing would be left to the discretion of the agency.
The omnibus bill also would delay the effective date of “high-impact rules.” Such regulations would not take effect until all judicial challenges to the regulations are resolved. Given the time courts typically take to resolve lawsuits contesting agency rulemaking, this provision would almost guarantee that a “high-impact rule” could not be implemented until several years after it is first proposed.