Hester Peirce presents at this Regulation University event.

1. Regulatory
Oversight
Essen3als
Part
I:
Finding
Rules
and
Resources
Hester
Peirce
Senior
Research
Fellow
Mercatus
Center

3. Course
Topics
q Why
do
regula3ons
maCer?
q To
what
extent
can
oversight
make
a
difference?
q Where
is
informa3on
about
regula3ons
found?
q What
should
you
be
asking
regulators
before,
during,
and
aKer
the
rulemaking
process?
q How
are
rules
made?

6. The
View
the
Agencies
Want
You
to
Have
of
the
Regulatory
Process
RULES

7. The
View
You
Want
to
Have
of
What
Agencies
Are
Doing
• Agency’s
Plans
• Agency’s
Priori3es
• Agency’s
Process
RULES
• Agency’s
People
• Agency’s
Problems
• Agency’s
Pals

8. Regulatory staff
Source: Susan Dudley & Melinda Warren, The Regulators’ Budget (2012).

9. Federal Register pages
100,000
90,000
80,000
70,000
60,000
50,000
40,000
30,000
20,000
10,000
0
1936
1948
1960
1972
1984
1996
2008

10. Regulatory constraints and pages in the Code of Federal
Regulations
Source: Omar Al-Ubaydli and Patrick A, McLaughlin, “The Industry-Specific Regulatory
Constraint Database,” Working Paper, Mercatus Center, July 2012.

11. What
Is
a
Rule?
• “the
whole
or
a
part
of
an
agency
statement
of
general
or
par3cular
applicability
and
future
effect
designed
to
implement,
interpret,
or
prescribe
law
or
policy
or
describing
the
organiza3on,
procedure,
or
prac3ce
requirements
of
an
agency
.
.
.
“

12.
What
Is
a
Rulemaking
Agency
process
for
formula3ng,
amending,
or
repealing
a
rule

13. Rulemaking
Process
in
Brief
Pre-­‐rule
ANPRM
CCom-­‐
Stage— NPRM
Advanced
ment
the
No3ce
of
No3ce
of
Period
FINAL
agency
is
Proposed
Proposed
and
OMB
RULE
thinking
Rule-­‐
Rule-­‐ Review
about
making
making
Period
what
to
do

14. Gefng
and
Staying
Involved
Mee3ngs
Weigh
in
Con-­‐
with
File
File
with
OMB
gress-­‐
regulators;
comment
Comment
(reviews
ional
leCers;
leCer
in
LeCer
in
draK
Review
ques3ons
response
Response
proposed
Act;
about
to
ANPR
to
NPR
and
final
Law-­‐
priori3es
rules)
suits

15. When
Should
I
Weigh
In?
EARLY
&
OFTEN—
LOOK
WHAT’S
COMING
DOWN
THE
ROAD

16. Administra3ve
Procedure
Act
q Federal
rulemaking
is
governed
by
the
Administra3ve
Procedure
Act
of
1946.
v Agencies
are
bound
by
the
statute,
which
means
they
can’t
regulate
anybody
or
anything
they
want
v Agencies
have
to
follow
established
procedures
for
wri3ng
rules
v Agencies
must
solicit
&
consider
public
comment
v Magic
word
is
PROCEDURE

17. Types
of
Rulemaking
q Formal
Rulemaking
v On-­‐the-­‐record
aKer
hearing
v Not
used
very
oKen
q No3ce
and
Comment
Rulemaking
v No3ce
published
in
Federal
Register
v Opportunity
for
public
to
comment
by
leCer
v Most
common
form
of
rulemaking

18. Unified
Regulatory
Agenda
q Supposed
to
be
published
twice
a
year
q Lets
people
know
which
regulatory
ac3ons
government
agencies
are
working
on
or
considering
q Gives
3meframe
within
which
ac3ons
are
an3cipated
to
be
taken
q Basis
for
asking
ques3ons
q hCp://www.reginfo.gov/public/do/
eAgendaMain

19. Before
a
Rule
Is
Born
An
agency
might
begin
a
rulemaking
for
several
reasons:
v It
discovers
a
problem
that
needs
to
be
fixed
v It
receives
a
statutory
direc3ve
from
Congress
v It
receives
a
pe33on
for
rulemaking—something
a
member
of
the
public
(or
of
Congress)
could
do
v Members
of
Congress
can
weigh
in
through
leCers,
hearings,
phone
calls,
etc.
before
a
rulemaking
process
starts

20. Exploring
Op3ons
With
the
Public
q Advanced
No3ce
of
Proposed
Rulemaking/
Concept
Release:
Doesn’t
set
out
a
par3cular
proposal,
but
lays
out
some
different
op3ons
and
issues
that
the
agency
is
considering.
q Roundtables:
Agency
brings
in
people
with
different
perspec3ves
to
discuss
whether
and
how
to
tackle
a
par3cular
issue.
q Pre-­‐proposal
comment
solicita3ons:
Agency
asks
for
comments
before
issuing
proposal.

21. This
commenter
is
asking
for
rulemaking
on
an
issue
that
has
been
controversial
in
the
securi3es
field,
the
line
between
brokers
and
investment
advisers.

22. The
SEC
held
a
roundtable
on
decimaliza3on
on
February
5,
2013.
A
prior
no3ce
explained
the
reason
for
the
roundtable:
.
.
.
the
SEC
staff
recommended
that
the
Commission
solicit
the
views
of
investors,
companies,
market
professionals,
academics,
and
other
interested
par3es
on
decimaliza3on
generally,
its
effects
on
IPOs
and
on
trading
and
liquidity
for
small
and
mid-­‐cap
companies,
and
what,
if
any,
changes
should
be
considered.
The
roundtable
will
provide
a
forum
to
discuss
these
issues
and
explore
specific
recommenda3ons
on
structuring
pilot
programs
to
gather
addi3onal
data
and
analysis
on
these
issues.
.
.
.

23. Public
Comments
on
SEC
Regulatory
Ini7a7ves
Under
the
Dodd-­‐Frank
Act
The
Dodd-­‐Frank
Wall
Street
Reform
and
Consumer
Protec3on
Act
includes
provisions
that
require
the
SEC
to
undertake
various
ini3a3ves,
including
rulemaking
and
studies
touching
on
many
areas
of
financial
regula3on.
Members
of
the
public
interested
in
making
their
views
known
on
these
maCers,
even
before
official
comment
periods
may
be
opened,
are
invited
to
submit
those
views
via
the
email
addresses
below.
BUT
agencies
may
argue
they
are
not
legally
obligated
to
consider
pre-­‐comment
period
comments,
so
resubmit
during
official
comment
period.

24. Proposing
a
Rule
q Agency
prepares
a
proposed
rule,
which
is
published
as
a
No3ce
of
Proposed
Rulemaking
in
the
Federal
Register
q The
public
typically
has
30-­‐120
days
to
comment
on
the
rule.
President
Obama
has
directed
agencies
to
provide
60
days,
when
feasible.
q Agency
reviews
the
comments

25. Agencies
publish
ANPRs,
NPRs,
and
Final
Rules
in
the
Federal
Register
This
final
CFPB
rule
consists
of
37
pages
of
rule
text
and
176
pages
of
preamble.

26. Commen3ng
on
a
Rule
q Members
of
the
public
comment
to
help
to
guide
the
agency
in
an
appropriate
direc3on
q Reviewing
incoming
comment
leCers
is
a
useful
way
to
iden3fy
the
big
issues
on
which
you
need
to
follow
up
q OKen,
even
comments
that
come
in
aKer
a
comment
period
closes
will
be
considered
q Every
communica3on
the
agency
has
with
outsiders
should
be
memorialized
in
the
comment
file

27. Members
of
Congress
A
54
page
can
and
do
weigh
in
comment
during
the
comment
leCer
from
Senators
period.
Merkley
and
Levin
The
purpose
of
this
leDer
is
to
offer
our
views
regarding
the
proposed
rule
to
implement
the
prohibi7ons
and
restric7ons
on
proprietary
trading
and
certain
interests
in,
and
rela7onships
with,
hedge
funds
and
private
equity
funds.
.
.
.

28. Final
Rule
q AKer
considering
the
comments,
an
agency
draKs
a
final
rule
and
publishes
a
No3ce
of
Final
Rulemaking
in
the
Federal
Register
q No3ce
includes
implementa3on
dates
q Agency
can
alterna3vely
issue
a
revised
no3ce
of
proposed
rulemaking
q OMB
has
a
role
to
play,
but
we’ll
save
that
for
next
3me

29. The
Code
of
Federal
Regula3ons:
Where
Rules
Go
Once
They
Are
Final

30. Excep3ons
to
Standard
Rulemaking
q The
APA
some3mes
allows
agencies
not
to
comply
with
the
standard
rulemaking
procedures
v Certain
types
of
rules,
e.g.,
rules
that
deal
with
agency
management
v Certain
circumstances—good
cause
not
to
comply
with
the
procedures

31. Excep3onal
Rules
q Direct
Final
Rule
v Supposed
to
be
used
for
non-­‐controversial
rules
v Rule
is
published
in
Federal
Register
and
takes
effect
unless
a
nega3ve
comment
comes
in
q Interim
Final
Rule
v Rule
takes
effect
when
it
is
published
in
the
Federal
Register
v The
public
has
an
aKer-­‐the-­‐fact
opportunity
to
comment

32. .
.
.
The
SEC
implemented
the
registra3on
provision
on
an
interim
basis
in
order
for
municipal
advisors
to
meet
the
new
law's
October
1
registra3on
deadline.
The
SEC
expects
to
propose
a
permanent
rule
later
this
year.
.
.
.

33. Congressional
Review
Act
q Final
rules
don’t
become
effec3ve
un3l
they
are
filed
with
Congress
and
GAO
q Major
rules
must
be
delayed
by
60
days
q Resolu3on
of
disapproval
v Any
member
of
Congress
can
introduce
v If
both
Senate
and
House
adopt,
rule
is
eliminated
v President
can
veto→2/3
vote
in
Senate
and
House
required

34. Backdoor
Rulemaking
q A
lot
of
de
facto
rulemaking
happens
in
non-­‐
rule
rules
q Examples
are
frequently
asked
ques3ons,
forms,
leCers,
other
subregulatory
documents,
and
enforcement
ac3ons
that
further
clarify
and
refine
the
rules
issued
q Keep
an
eye
on
these
to
ensure
that
regulators
are
not
skir3ng
the
APA

35. Where
to
Look?
• Agency
Websites
hCp://www.hhs.gov/regula3ons/index.html
• Regula3ons.gov
hCp://www.regula3ons.gov/#!home;tab=search
• Federal
Register
hCps://
www.federalregister.gov/ar3cles/search
• OpenRegs.com
hCp://openregs.com/
• OMB’s
OIRA
Website
hCp://www.reginfo.gov/public/
• GAO’s
CRA
website

36. This
7
page
leCer
from
the
CFTC
includes
some
things
that
look
a
lot
like
rules.
.
.
.
Staff
believes
that
for
cleared
swap
repor3ng
to
SDRs,
DCOs
should
include
a
link
between
the
original
swap
(and
any
applicable
USI
from
the
original
swap)
to
the
resul3ng
or
new
swap
between
the
DCO
and
each
original
counterparty
(and
any
applicable
USIs
from
the
new
swaps).
.
.
.

37.
There’s
More
.
.
.
Regula3on
University
Regulatory
Oversight
Essen3als
Part
II
March
12,
2013