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Federal Regulations Advisor Insight and Commentary on U.S. Government Regulatory Affairs

Opinion: Regulatory Analysis, Public Comments, and Policy Decisions

Posted in Executive - OMB Review, Judicial Review & Remedies, Regulatory Flexibility & Small Business, Regulatory Process

A crop of comments have sprung up recently on whether regulatory analyses in rulemaking – economic, scientific, and otherwise –support a specific point of view.  At the same time, questions about whether public comments inherently bias a policy decision in a specific direction have arisen.  At bottom, information is the currency of the regulatory process – sticking one’s regulatory head in the sand, ostrich-like, is not an acceptable response.  If good analysis and public scrutiny informs a regulatory decision, then it is a better decision.  If that decision is not politically palatable, then policy makers need to go back to their drawing boards.

Richard Pierce recently wrote in the University of Pennsylvania’s Regblog that “In theory, the notice-and-comment process provides a judicially enforced means through which all individuals and groups that have an interest in the outcome of a major regulatory decision making process, including beneficiaries, have an effective means of influencing its outcome.  Recent empirical research exposes this widespread belief as completely fictional.”  Pierce opines that empirical proof now shows that public comments drive the decision-maker to a more industry-friendly result.

Industry commenters often have more information and their comments are substantively better than the “vituperative” comments of “public interest” organizations.  (This is not to say that public interest organizations inherently do not provide good commenters – to the contrary, some are exquisite, but the majority are not).  The real question is not whether the result favors industry, but whether the agency had done its homework prior to proposing a rule.  All too often, the agency does not, and the disinfecting sunlight of the public comment period is all that informs the agency’s ultimate judgment in a final rule.

At the same time, Nancy Nord laments in Politico the CPSC’s retreat from cost-benefit analyses in its rules.  Such a retreat is not uncommon in a rush to judgment – analysis takes time and effort, and agencies do not want to spend the time or energy conducting analyses that might prove their preferred rule to be not only less than optimal, but counterproductive.  President Obama has struck the contrary chord – requesting that independent agencies undertake the cost-benefit analysis that is required of Executive Branch agencies.

Most worrisome are those regulations in which an agency can effectively bypass public scrutiny and reduce their analytical requirements at the same time.  Some exceptions to notice and comment rulemaking waive Regulatory Flexibility Act analytical requirements – whether embedded in authorizing statutes or permitted by discretionary exceptions in the Administrative Procedure Act (APA).  The Dodd-Frank Wall Street Reform and Consumer Protection Act and the Patient Protection and Affordable Care Act notably eliminated the public comment process and much needed analysis, relying on the agencies’ internal ability to research the problem and formulate rational decisions.

Without thorough analyses, and testing of the analyses in public, judicial review is the only bulwark that stands in the way of imposing irrational, abusive regulations on the public – no matter the good intentions of the agency.  This debate is not “new” and will not go away, but it pits the result-oriented against the quality-oriented.  Fortunately, I think the courts are siding with the quality-oriented.  Whatever the result, an “unjustified” rule should be challenged and should not survive judicial review.