Independent financial agencies have issued a large number of rules in recent years. Just to implement the Dodd‐Frank financial reform act, they proposed 56 regulations in the year starting August 1, 2012—yet at the time they were issued, none of the rules were publicly identified as being “major.” Responsibility for designating a rule as major lies not with the independent regulatory agencies, however, but with the OMB. According to Section 804 of the Congressional Review Act, a rule is “major” if the administrator of the OMB’s Office of Information and Regulatory Affairs (OIRA) finds that its economic effects exceed specified thresholds. The government’s silence about whether a rule being issued is major violates the intent—if not the letter—of the Congressional Review Act.
In fiscal year 2013, only one of the rules issued by the independent financial agencies provided any discussion of a major rule determination. That discussion, in the Swap Dealer and Major Swap Participant Recordkeeping, Reporting, and Duties Rule issued by the Commodity Futures Trading Commission, was a part of a dissent by CFTC Commissioner Scott O’Malia.
The practice of issuing major rules without identifying them publicly is not new. Only one of the 15 final major rules issued by the independent financial agencies in fiscal year 2011 contained any statement referring to a determination that the rule was major. The sole exception was an incidental revelation as part of a discussion of the rule’s effective date. Further, there is no evidence that the OMB or OIRA played any role in the determination that the rules were major. Of more concern, there is no evidence that the OMB or OIRA played any role in determining that other rules issued by independent agencies were not major.
The OMB’s approach is inconsistent with the fundamental principle that regulatory agencies need to distinguish publicly between big and small regulatory decisions to highlight rules that merit more intensive review by stakeholders and Congress. Last year, the CFTC and OIRA signed a memorandum of understanding providing for OIRA technical assistance in assessing benefits and costs of CFTC rules implementing the Dodd‐Frank Act. Such interagency consultation ought to be extended to all regulations issued by the independent agencies. More generally, the OMB should require a quantitative, data‐driven determination of whether important regulations are major rules. Such designations should be made public in Federal Register notices and included in all press releases about new rules, both proposed and final. Burying the designations in an annual report to Congress or relying on the Government Accountability Office to post the designation on a webpage weeks after promulgation of a final rule does not constitute sufficient transparency.
Regulatory practices that obscure which rules are major can be remedied by better use of authorities that Congress has granted to OIRA. Section 804 of the Congressional Review Act can and should serve as the basis for a consultation between the independent agencies and OIRA on the determination of whether a rule is major. Regular reporting of the results of such consultations and the routine identification of all major rules—both proposed and final—are necessary for the OMB to meet the standards of transparency in governance laid out by President Obama in 2009.
