Last week, the U.S. House of Representatives passed a bill that would block government agencies from adopting any significant regulations until the unemployment rate drops to 6 percent or below. The Red Tape Reduction and Small Business Job Creation Act (H.R. 4078) passed by a vote of 245 to 172, attracting support from about thirteen Democrats as well as almost every Republican member.
Until the unemployment rate drops, the proposed law would allow a federal agency to undertake a significant regulatory action only if the President determines that doing so would be necessary for addressing an imminent threat to public health or safety, enforcing of criminal laws, protecting national security, or implementing an international trade agreement, or if doing so would simply repeal an existing regulation. The President would also be allowed to request that Congress approve other actions that do not meet these exceptions.
For purposes of the bill’s regulatory moratorium, a “regulatory action” includes any step to adopt a new regulation – not only the publication of a final rule but also even an announcement of an agency’s possible interest in starting a rulemaking proceeding. And a “significant” regulatory action is defined by the bill as one that is expected to impose costs on regulated firms in excess of $50 million annually.
The bill also includes a variety of other regulatory reform provisions, some that had been contained in other bills introduced in the House earlier this session. For example, the bill would impose a similar moratorium on significant regulatory actions during the period of time between a presidential election in November and the January day when a new President is inaugurated. It would also, among other things, require the Securities and Exchange Commission and the Commodity Futures Trading Commission to conduct cost-benefit analyses on their proposed regulations.
The bill has now been referred to the Senate, where no immediate action is expected. If ever enacted, the Red Tape Reduction and Small Business Job Creation would amend the current “informal” rulemaking process that authorizes agencies to impose new regulatory requirements after publishing a proposed rule in the Federal Register and allowing members of the public time to send in comments. At present, executive branch agencies are required to conduct benefit-cost analyses of new rules that would have an annual economic impact of $100 million or more.