Congress Revives Gingrich-Era Law To Thwart Obama

Congress Revives Gingrich-Era Law To Thwart Obama
UNITED STATES - MARCH 16: Former Speaker of the House Newt Ginrich, during the 2013 Conservative Political Action Conference at the Gaylord National Resort & Conference Center at National Harbor, Md., on Saturday, March 16, 2013. (Photo By Douglas Graham/CQ Roll Call)
UNITED STATES - MARCH 16: Former Speaker of the House Newt Ginrich, during the 2013 Conservative Political Action Conference at the Gaylord National Resort & Conference Center at National Harbor, Md., on Saturday, March 16, 2013. (Photo By Douglas Graham/CQ Roll Call)

WASHINGTON -- Republicans in Congress aim to revamp an anti-regulatory law from the Newt Gingrich era in an effort to paralyze new financial, environmental and labor rules with a never-ending string of court challenges.

Next week, the House will consider a bill to amend the Unfunded Mandates Reform Act of 1995, which then-Speaker Gingrich (R-Ga.) shepherded through Congress. The 20-year-old law imposed a host of cost-benefit standards on federal regulators, including a requirement that they consider the costs that new rules might impose on state and local governments. But in order to garner Democratic votes and protect against a presidential veto, Gingrich made a significant concession: The regulators' calculations could not be challenged in court.

That would change under a new bill from Reps. Virginia Foxx (R-N.C.) and Loretta Sanchez (D-Calif.), which would open up every aspect of these complex analyses to judicial review -- leading to an inevitable barrage of lawsuits from those affected by the pending rules.

The proposed Unfunded Mandates Information and Transparency Act is part of a multifront attack on the federal regulatory state by Republican lawmakers, and Democrats have overwhelmingly opposed the measures in the House. But Sanchez signed her name to the current bill, and some Senate Democrats are working with Republicans on parts of the plan.

Regulatory cost-benefit analyses are inherently vulnerable to challenge. The long-term benefits of regulations are often difficult to quantify, while the costs can be comparatively immediate and straightforward. The problem is even more acute with regard to public health and safety issues, where the value of human lives must be weighed financially against corporate costs.

Foxx spokesman Sheridan Watson defended the bill as a way of making the Unfunded Mandates Reform Act function properly. "It simply picks up on where ... the existing UMRA statute leaves off, giving it teeth through an enforcement mechanism to ensure adherence to the law and acting as a deterrent for agencies skirting the rulemaking process," he said.

Katherine McFate, president of the Center for Effective Government, disagreed. "It doesn’t improve or streamline the regulatory process, which is already plagued by hurdles and delays," she said. "It would rob the American people of critical upgrades to public health and safety standards."

"Cost-benefit analysis has been and will continue to be a blueprint for big banks to water down, dilute and block Wall Street reforms," warned Amit Narang, regulatory policy advocate for Public Citizen. "The bill ensures that if financial agencies adopt reforms based on cost-benefit analyses that do not reflect Wall Street preferences, big banks will be waiting in the wings with a lawsuit to overturn the rule."

Rep. Sanchez was not immediately available to comment.

Financial reform advocates are particularly concerned about the bill because many regulations under the 2010 Dodd-Frank Wall Street reform law have yet to be written.

Lisa Donner, executive director of Americans for Financial Reform, described the bill as an "effort to cripple regulators’ ability to protect the public interest by loading them down with new paperwork requirements and enabling even more industry lawsuits." She said it "would be a gift to Wall Street and would invite a resurgence of the reckless practices that caused such enormous economic damage just six years ago."

The renewed focus on the cost-benefit analysis is the brainchild of conservative power lawyer Eugene Scalia, the son of the Supreme Court justice. The GOP has been unable to derail either Obamacare or Dodd-Frank in Congress or in the courts on constitutional grounds, so Scalia turned the attack onto the cost-benefit and economic impact analyses that regulators performed in developing rules. He looked for weak spots and aimed his arguments at conservative judges on the U.S. Court of Appeals for the D.C. Circuit.

Already, under existing law, Scalia has managed to overturn some Dodd-Frank rules. But the Unfunded Mandates Reform Act's prohibition on judicial review appears to have stymied other attempts.

The U.S. Chamber of Commerce raised the law's restrictions in its formal criticism of the Volcker Rule, a central tenet of Dodd-Frank. The corporate lobbying group denounced regulators at the Office of the Comptroller of the Currency for concluding that the Volcker Rule would not have a significant economic impact and thus did not require a detailed cost-benefit analysis. Other regulators did perform extensive economic impact analyses in crafting the rule, and eventually so did the OCC.

The Volcker Rule ultimately survived without a serious challenge in court. But given the new bill's potential to boost corporate lawsuits against regulation, it's not surprising that the Chamber of Commerce supports it.

CORRECTION: A previous version of this article misidentified Foxx as a representative of Virginia; she represents North Carolina.

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