Bill to toughen review of independent agencies makes former regulator wary

Michael Fitzpatrick, a former associate administrator of OIRA under President Obama, called the legislation “exciting,” namely because, he says, it is probably the only regulatory reform Congress is likely to pass this session.

On Thursday, Fitzpatrick spoke at an American Bar Association conference about regulatory issues, and was joined on the panel by Portman’s chief counsel Brian Callanan, former SEC official Bruce Kraus and Eugene Scalia, partner at Gibson, Dunn & Crutcher and the son of Supreme Court Justice Antonin Scalia.

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The younger Scalia is well known for winning a trio of federal court cases, including one featuring the Business Roundtable, that eventually forced the SEC to use more stringent cost-benefit analysis in its crafting of rules.
 
While Kraus is “guardedly optimistic” about forcing the cost-benefit analysis, he said more conversations about the complex rulemakings could only serve to improve the end result.

Following Scalia’s suits against the agency, Kraus said the SEC “started to get its act together” by being thorough before drafting regulations. But he expressed concern about the fine print in Portman's bill concerning judicial review.

It could be “a real open invitation to sue over every little assumption, every piece of reasoning, every piece of data” during the rule-making process, Kraus said. Because independent agencies have a panel of bipartisan leaders, votes could reveal conflicting opinions on either the cost or benefit side.

Judges could say, “’Ah-ha! The commission is contradicting itself,’” Kraus said. “And that’s enough to kill a rule.”

Furthermore, even though independent agencies would not be bound by OIRA’s opinions about their rules, ignoring the White House could also become a “lightening rod” for lawsuits.

“[Cost-benefit analysis] is more fun to write about than it is to write,” Kraus said.


Cost-benefit analysis has come under scrutiny from public advocacy groups, who claim that relying too heavily on the mathematical equations can delay or kill otherwise necessary regulations.

Fitzpatrick, the former OIRA staffer, said he saw plenty of rules come into the office “flatly illegal” or contradictory to the administration’s mission.

“All important pieces of work should get a review,” he said. “It’s not about killing rules, it’s about making them better.”

“You don’t work at OIRA if you want to be liked,” Fitzpatrick joked. “OIRA knows it’s there to be a pain in the rear.”

Fitzpatrick and Kraus explained that their views are not necessarily those of the agencies that previously employed them.

A Senate aide familiar with the Portman bill, called the Independent Agency Regulatory Analysis Act, said it would be reintroduced sometime this year – though there is no specific timeline for when it will appear.

In light of some of the concerns raised on Thursday, the Senate aide, who is not authorized to be quoted, said the office is “working on some minor changes to reflect some of the feedback we've received.”

Last year, Sens. Mark Warner (D-Va.) and Susan Collins (R-Maine) signed on in support, but it’s unclear whether they will be part of this effort once it’s reintroduced.