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House Committee on Oversight and Government Reform New Report: Regulatory Process is 'Broken;' GIPSA Rule Cited as Example

Wednesday, September 14, 2011

(American Meat Institute)

There is a “regulatory tsunami’ that goes far beyond the cost of regulations themselves, but also includes breakdowns in the regulatory process itself that is severely impacting large and small businesses alike, according to a House Committee on Oversight and Government Reform report released today, titled “Broken Government: How the Administrative State has Broken President Obama’s Promise of Regulatory Reform.”

According to the report, there are 219 economically significant regulations in the pipeline, which if finalized, will each impose costs of $100 million or more annually on the U.S. economy, and the livestock marketing and procurement rule proposed by USDA’s Grain Inspection, Packers and Stockyards Administration (GIPSA) is among them.  In total, the Obama administration has imposed 75 new major regulations costing more than $380 billion over 10 years.

The report, which was also the focus of a House Committee on Oversight and Government Reform hearing today, highlights five regulations of particular concern, with significant attention given to GIPSA for failing to conduct a proper economic analysis of its proposed livestock procurement rule in violation of E.O. 12866.  Under E.O. 12866, agencies are to conduct a cost-benefit analysis in cases where the rule is determined to be “significant.”

The report notes that in reaction to three private studies and more than 60,000 public comments, GIPSA finally agreed to conduct a more “rigorous” cost-benefit analysis, with USDA’s Chief Economist recently testifying at a Congressional hearing that the rule is being reclassified as “economically significant.”

This designation is extremely important, according to the report, “because it heightens the required analysis; the fact that the rule was improperly classified at its inception likely impacted the scrutiny originally applied to it. Accordingly, those in the agricultural sector have requested GIPSA reopen the rule for public comment after the new economic analysis is complete.” 

When asked at the hearing by House Committee on Oversight and Government Reform Chairman Darrell Issa (R-Calif) whether or not USDA would reopen the comment period in light of the new economic analysis, Cass Sunstein, administrator of the Office of Information and Regulatory Affairs at the Office of Management and Budget, who testified at the hearing, said, “It is fundamentally important for economic analyses to be available for public review." 

In addition, when Chairman Issa expressed concern that parts of the proposed GIPSA rule included issues considered and rejected by Congress in the 2008 Farm Bill, Sunstein acknowledged that unless authorized by the underlying statute, regulating beyond Congressional intent “is a serious problem.”

The report and hearing also highlighted the National Mediation Board minority voting rule, which would reverse a long-standing “majority voting rule” for union elections in the American railroad and airline industries and allow the Board to certify as collective bargaining representative any organization which receives a majority of valid ballots cast in an election.

“The new rule, despite affecting billions of dollars and millions of jobs, was not deemed “significant” by the NMB. It was, however, a departure from the law, a deviation from the Board’s own deliberative practices, and striking evidence of the Board’s favoritism to organized labor,” the report states.

More information about today’s hearing, including prepared testimony, is available on the House Committee on Oversight and Government Reform’s website

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