Regulatory Accountability Act Would Let Corporations Rig the Rules and Block Lifesaving Protections

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By David Rosen, Public Citizen

The Regulatory Accountability Act (RAA) of 2017 (S. 951), soon to be considered in the U.S. Senate, is one of the greatest threats to our regulatory system in decades. The bill would rig the rulemaking process in favor of corporate deregulation and defeat continued enforcement of our nation’s public interest laws.

The RAA would set the stage for any number of large-scale deregulatory disasters – public health and safety tragedies such as the recent food contamination outbreaks, environmental catastrophes such as the 2010 BP oil spill into the Gulf of Mexico and market failures such as the 2008 Wall Street collapse – that could devastate entire communities and disrupt the lives of tens of millions of Americans.

While the RAA has many damaging provisions, four of its major features would permanently disable our system of public protections. First, the RAA would flip current law on its head, forcing regulators to put costs to industry ahead of protecting the public. Second, it would add 53 new analytic and procedural hurdles to the rulemaking process without providing any funding for compliance, adding delays to a system that already takes too much time to protect the public.

Third, it would require use of a discredited, lobbyist-dominated, chaotic process called an “adversarial hearing” for the most protective rules. And fourth, it would create dozens of new opportunities for corporate lobbyists, politicians and judges to inject themselves into the rulemaking process and overrule agency expertise.

If any one of these provisions were to become law, it would render our system of public protections ineffectual. But together, the RAA would fulfill White House chief strategist Steve Bannon’s sinister vision of “deconstructing the administrative state.”

There is no possibility of amending or fixing this legislation in a way that would leave our nation’s rulemaking process capable of protecting the public from corporate wrongdoing and systemic risks. With impacts affecting women’s health, consumer protection, food safety, financial reform, labor, our environment, disability rights, human rights, sustainable agriculture, rural development and more, the consequences of this legislation are difficult to overstate.

The RAA could be brought to the Senate floor for a vote within a matter of weeks. It already has passed in the U.S. House of Representatives and would receive President Donald Trump’s enthusiastic support. The time to speak out against this dangerous legislation is now.

Please tell members of the Senate to oppose the Regulatory Accountability Act because it would rig the rules for big corporations and block lifesaving public protections.

Putting Corporate Profits First

Our nation is facing a virtual epidemic of corporate crime and wrongdoing. Just saying the company names – United Airlines, Volkswagen, Wells Fargo, BP, Takata and Samsung – makes the point. But instead of toughening our laws and regulations, the RAA would unleash corporate predators and polluters to exploit workers, consumers and families. In effect, it would let big corporations police themselves, removing the tools regulators need to hold them accountable.

The RAA would force agencies to adopt the most “cost-effective” regulations for corporations, rather than those that maximize net benefits to the public. This would make cost-benefit analysis – already a deeply flawed tool that inflates hypothetical costs to industry and undercounts potential benefits to the public – even worse by forcing regulators to put costs to industry ahead of protecting workers, consumers, families and our environment. As we learned in the Wall Street crash, the most “cost-effective” regulations for big banks ended up being the most costly for millions of homeowners, workers, businesses and our economy.

Nowhere in the RAA is the term “cost-effective” clearly defined. As a result, the precise meaning of this term could be litigated for decades, even as it overrides virtually every public interest law implemented and enforced through regulation, including the Clean Air Act, the Clean Water Act, the Occupational Safety and Health Act and the Consumer Product Safety Improvement Act. These laws prioritize public health, safety and economic security over the cost concerns of regulated industries – and that is what makes them effective.

Although the RAA contains a boilerplate savings clause, ostensibly to exempt existing laws from the new requirements, the intentionally vague language of that clause does not specify whether bedrock public health and safety laws such as the ones listed above would be exempt from the RAA. Instead, determinations of whether the RAA supersedes these statutes are left to the courts. The likely result: years of expensive and wasteful litigation.

Letting Corporate Lobbyists Rig the Rules

The RAA would offer opponents of regulatory safeguards dozens more opportunities to attack and kill public protections in court. All 53 of the RAA’s new procedural and analytical requirements (PDF) would be subject to judicial review – more pretexts for corporate interests to take agencies to court. The RAA would allow judges to overturn rules by second-guessing cost-benefit analysis, scientific justifications and agency expertise generally, and it arbitrarily would require higher standards of evidence for rules that provide the greatest benefits to Americans. In effect, the RAA would undermine the judicial deference traditionally afforded to agencies and give courts freer rein to interfere in highly technical decisions.

Adversarial hearings, which the RAA would require for the most protective rules, would transform the rulemaking process into a high-cost “pay-to-play” game that would cut the public out of the loop and put corporate lobbyists and lawyers in charge. Corporations have the resources to take advantage of these hearings to block or weaken regulations; members of the public do not.

That’s a problem, since the RAA would make these hearings the exclusive record of decision-making for agencies when developing new protections, rendering the public comment process largely irrelevant to rulemaking. Because of their exclusionary nature and because they led to enormous delay and dysfunction, adversarial hearings were abandoned decades ago. Most regulatory experts agree (PDF) that it makes little sense to bring them back.

Adding More Delays

It currently takes agencies an entire presidential term on average to produce and finalize the regulations that provide the greatest benefits to Americans, and regulators have missed rulemaking deadlines half the time over the past 20 years. The RAA’s 53 new requirements, adversarial hearings and judicial review provisions would take a rulemaking process that already faces unacceptable delays and make those delays far worse.

The bill even creates a new category of non-binding guidance documents – so-called “major” guidance – that would be subject to cost-benefit analysis and review at the U.S. Office of Information and Regulatory Affairs, the White House’s regulatory clearinghouse. It is important to remember that guidance documents usually are requested by regulated industries that are trying to comply with the law and want speedy clarification from regulators.

As a result of the RAA’s new cost-benefit requirements, agencies would find it more difficult to issue guidance in areas where the benefits are difficult or impossible to quantify in monetary terms, such as the benefits of preventing discrimination, sexual assault on college campuses or opioid addiction. In addition, regulators would face significant new delays in issuing guidance to resolve regulatory uncertainty.

Misleading Claims

Some of the bill’s proponents claim that the RAA is about streamlining the rulemaking process, but they have yet explain how inserting dysfunctional adversarial hearings, dozens of new time-consuming hurdles and more judicial review into the rulemaking process would speed things up. The truth is that the RAA is designed to create paralysis by analysis.

Some proponents also claim that RAA would help small businesses, but that’s not what this legislation is about. The term “small business” does not appear anywhere in the bill – no surprise, since the bill was written by corporate lobbyists to be a windfall for big business. Supporters of this legislation often have resorted to fake facts, bogus studies and alarmist claims to make their case – all of which have been discredited, debunked and in some cases disavowed.

The facts are that federal regulations yield about $800 billion in quantifiable net benefits (PDF) to the public each year, up to 12 times the costs. Regulatory protections ensure that we have clean air and water, healthy food, safe products, fair workplaces, honest wages and other basic standards of living. We do not have to choose between jobs and commonsense safeguards that protect our pocketbooks, homes and workplaces. Furthermore, new standards create jobs by encouraging innovation and protecting those who work hard and play by the rules.

The Devastating Impacts

Make no mistake: The costs of deregulation – or of a system rigged by the RAA not to regulate – are enormous.

The Wall Street financial crisis of 2008 was caused by weakening and repealing regulations that had kept America’s banking system sound for decades. Weak drilling safety standards resulted in the 2010 BP oil spill into the Gulf of Mexico that killed 11 workers, cost more than $50 billion and disrupted small businesses, working families and ecosystems all along the Gulf Coast. In 2014, lax enforcement led to an estimated 10,000 gallons of toxic chemical waste leaking from a private storage facility into a major West Virginia river.

Even now, more than 18 million Americans – including the residents of Flint, Michigan – are using water systems with lead levels that violate current standards. The RAA would leave millions of Americans vulnerable to job losses, wage cuts, environmental disasters and public health crises – letting corporate predators and polluters threaten entire communities and get away with it.

The victims of inadequate regulation and enforcement have heart-wrenching stories. U.S. veteran Paul A. Schwarz, Jr. died from eating a piece of cantaloupe in a fruit cup due to a lack of food-safety protections. The absence of automobile backup cameras resulted in the accidental death of a young boy. And a young girl was strangled to death by a window blind cord deemed “child safe” by the company that made it.

Every one of these tragedies could have been prevented by commonsense safeguards that the RAA would block if it were law. Regulation and regulators are how we defend ourselves against these dangers.

Against Public Wishes

Voters in both parties understand this. That’s why polling consistently shows that Democrats, Republicans and Independents by overwhelming margins want more protective rules and tougher enforcement – whether the question is framed in general terms or addresses specific regulations. But instead of defending the people who elected them, conservative politicians in Washington are using deregulation and regulatory repeal to reward their corporate donors.

Big corporations spent more than $1 billion during the last election cycle to get their way in Congress. To pay them back, Republicans in Congress used the Congressional Review Act to repeal 14 public protections – striking down broadband privacy safeguards, worker health and safety rules, and clean water protections – and angering the public.

The public backlash is continuing to grow as more and more Americans realize what’s been lost and who is responsible. After the destruction wrought by the Congressional Review Act and Trump’s extreme “one-in, two-out” executive order on regulations, we cannot let the RAA permanently shut down the enforcement of our nation’s bedrock public interest laws.

Please urge the Senate to abandon the RAA. While senators should oppose the RAA, it would be even better if it never came to the floor for a vote.

Originally posted here.

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