House Republicans have taken what some call much-needed action recently, by pushing through two bills that could weaken high profile environmental and financial regulations by potentially flooding the federal courts with scores of lawsuits.
The first bill to pass helps to bring new life to the Unfunded Mandates Reform Act of 1995, brought to fruition back then by former House Speaker Newt Gingrich. The legislation, two decades old, imposes several cost-benefits standards on federal regulators and includes requirements that scrutinize the costs that might be imposed on state and local governments because as a result. The new GOP bill adds some nuances to the law that allow the in depth regulatory calculations to be fought against in federal court. This opens up every step of the analysis project to potential litigation and may make it very difficult for certain agencies to create and implement new regulations and rules.
The bill was funded by financial cuts of $32 million to the Consumer Financial Protection Bureau; an agency that President Obama created as part of the 2010 Wall Street Reform bill that was meant to put heat on predatory lending practices, mortgage abuse and abusive credit card companies.
Marcus Stanley, the policy director at Americans for Financial Reform had this to say about the recent turn of events, “Both of these bills are part of an attack on the entire regulatory state. They’re designed to make it impossible for agencies to function.”
There was not a single Republican to vote against the bill. Nine Democrats with conservative leanings, including: Reps. Brad Ashford (D-Neb.), Jim Costa (D-Calif), Henry Cuellar (D-Texas), John Delaney (D-Md.), Gwen Graham (D-Fla.), Collin Peterson (D-Minn.), Loretta Sanchez (D-Calif.), Kurt Schrader (D-Ore.) and Kyrsten Sinema (D-Ariz.) all voted in favor of this bill.
Implementing regulatory cost-benefit analysis can always be particularly vulnerable to challenges from those that oppose these types of initiatives. The longer term benefits of regulatory actions are often difficult to justify, while the associated costs are usually easy to understand. Calculations can become even more difficult to understand with safety and public issues, where actual human lives have to be taken into consideration alongside corporate expenditures.
Regulators were already required to conduct economic impact analyses along with other number crunching with regards to the costs and benefits before Gingrich started to work on adding additional layers of bureaucracy throughout the nineties. The issue became somewhat under the radar between the time that Gingrich left Congress and when Obama got inaugurated. It was only when a prominent conservative lawyer, Eugene Scalia, began to contest some financial regulations that these types of issues became more prominent.
Scalia was able to overturn new rules that Congress dictated to regulators, which required new cost-benefit legislation to become a top priority for Republicans. After passing the update to Gingrich’s bill, the GOP pushed through some additional litigation which added more cost-benefit calculations to regulatory efforts. That particular bill managed to get 19 yes votes from Democrats.
Democratic support for these bills is probably due to the bills having an emphasis on small businesses. With the legislation in place, regulators are required to perform analysis related to the “indirect” effect that new rules might have on smaller companies, which includes any type of effect on revenue. The terms are as of yet undefined, which will leave them open to plenty of challenges from the opposition. Financial regulators have purposed tighter rules on big banks, which could have a negative trickle down effect on smaller companies as a result.