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The SBA’s Office of Advocacy Criticism of Its ‘Crain and Crain’ Report: A Dollar Short and A Day Late

Call it buyer’s remorse. The Office of Advocacy of the Small Business Administration (SBA) is publicly—albeit meekly—tiptoeing away from a now-infamous report that it commissioned, in which economists Nicole Crain and Mark Crain purported to find that federal regulations cost the economy $1.75 trillion in 2008. After being roundly criticized by CPR, the Congressional Research Service, and others, SBA’s Office of Advocacy now explains, referring apparently to the $1.75 trillion figure that “the findings of the study have been taken out of context and certain theoretical estimates of costs have been presented publicly as verifiable facts.” While this admission is welcome, it does not go nearly far enough in light of the antiregulatory crusade this misleading, taxpayer-supported report fueled.

Soon after the Crain and Crain report was released in 2010, CPR published a White Paper that demonstrated the unreliability and implausibility of the Crain and Crain report’s methodologies and findings.  A few months later, the nonpartisan Congressional Research Service (CRS) released its own analysis of the Crain and Crain report, and its findings were equally damning. Then the Economic Policy Institute (EPI) separately analyzed the Crain and Crain report, and concluded the Crain and Crain report was based on a “flawed economic model and faulty data.” All of this caused then Administrator of the Office of Information and Regulatory Affairs (OIRA) to describe the study as “deeply flawed” and an “urban legend” in congressional testimony. And in addition to employing indefensible methodologies to support their calculations for costs, the Crain and Crain report’s authors ignored regulatory benefits, a move that ensured that the report’s findings would be ripe for precisely the kind of abuse and misuse by anti-regulatory forces that SBA’s Office of Advocacy is now trying to walk away from.

Sure enough, the fantastical $1.75 trillion dollar estimate has been cited time and time again by industry lobbyists and regulatory criticsin Congress, even after the report itself had been debunked, to support troubling anti-regulatory legislation, such as the REINS Act. After handing this Christmas gift to the anti-regulatory forces, SBA’s Office of Advocacy owes the public something more than burying a begrudging acknowledgment of the report’s weakness on an obscure webpage.

When I wrote Dr. Winslow Sargeant, the head of the SBA Office of Advocacy, asking that his agency completely disavow the Crain and Crain report, he offered a disappointing response that attempted to rehabilitate the Crain and Crain report’s findings and methodology. So, it is encouraging that the SBA Office is now being a little more forthright in its criticisms of the report. Yet, the Crain and Crain report has so polluted the public debate over regulatory policy that this half step by SBA’s Office of Advocacy is plainly inadequate. It is time for the agency to disavow the report completely, remove any vestige of it from its website, and adopt procedures to ensure that it does not pay for and publicize similarly misleading research again.  As a fiduciary of the public’s money, it owes nothing less. 

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Transparency Withdrawn: A New Tactic for Shielding OIRA’s Regulatory Review Activities?

Yesterday, the Environmental Protection Agency (EPA) announced that it was “withdrawing” from White House review its draft final guidance that sought to clarify the scope of the Clean Water Act. The guidance had been languishing at the Office of Information and Regulatory Affairs (OIRA), which oversees the White House regulatory review process, for 575 days, even though Executive Order 12866, the document that governs OIRA review of regulations, caps the length of reviews at 90 days plus a limited, one-time extension of 30 days. This is just the latest episode in what now appears to be a new disturbing trend: The Obama Administration seems to be increasingly relying on a relatively uncommon practice known as a “withdrawal” to unceremoniously dispose of long-overdue OIRA reviews involving important safeguards that are vigorously opposed by industry.

Over the last few months, several other industry-opposed rules have met a similar fate of being withdrawn after sitting at OIRA for well beyond the time limit permitted by Executive Order 12866:

·The National Highway Traffic Safety Administration’s (NHTSA) draft final rule mandating rearview cameras to prevent back-over accidents involving children: “Withdrawn” from regulatory review on June 20, 2013, after collecting dust at the OIRA for 583 days.

· The EPA’s draft proposed Chemicals of Concern list—an absurdly modest regulatory “action” that would have merely identified a handful of potentially harmful chemicals as worthy of additional agency scrutiny: “Withdrawn” from OIRA review on September 6, 2013, after an astonishing delay of 1214 days.

·The EPA’s draft proposal to limit the chemical industry’s specious “confidential business information” claims to shield crucial health and safety data on their new chemicals from public disclosure: “Withdrawn” from OIRA review on September 6, 2013 after 620 days.

Before delving into why this apparent uptick in withdrawals is cause for concern, some background may be in order.   A “withdrawal” occurs when an agency voluntarily chooses to “withdraw” a draft proposed or final rule from the regulatory review process before OIRA, as the regulatory gatekeeper, has either formally approved the draft—clearing it for publication in the Federal Register—or denied it, through a “return letter,” sending the draft back to the agency for more work. At least, that’s the theory of how withdrawals work. In some cases, the circumstances suggest that OIRA or other White House officials have pressured the agency into withdrawing a rule.

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House Republicans to hold hearing on climate change, can I get a witness?

Everything’s upside down. Last week a Democratic president urged a military strike in the Middle East while Republicans dithered about quagmires. Tomorrow, a subpanel of the House Energy and Commerce Committee will launch its first climate change hearing in years and hardly any Obama administration official is willing to show up.  Representative Ed Whitfield (R-Ky), who chairs the Committee’s Energy and Power subpanel, says the committee requested presentations from 13 federal agencies. But as of this post only EPA Administrator Gina McCarthy and Energy Secretary Ernest Moniz have promised to testify.

Normally, of course, you can’t stop us progressives from talking about climate change. We talk smack about Canadian tar sands, press universities to rethink their carbon investments, and name hurricanes after Marco Rubio. (The last was really funny, but perhaps not fair.) The President’s all in too. Last August, when he denounced, “the limitless dumping of carbon pollution from our power plants,” I couldn’t get enough.

So, what leaves Whitfield singing, “Can I Get A Witness?”  

The thing to know is that tomorrow’s major hearing on climate change is not really a major hearing. It is not even one of those Potemkin major hearings where the participants sit like plyboard cut-outs and pretend to be interested in the topic.

No, this is an ambush. And even the Democrats have figured it out.

So, please, do not expect the panel’s vice chairman, Representative Steve Scalise (R-La) to express concern that because of warming and subsidence, Louisiana is experiencing the fastest rate of sea-level rise on the planet. And, no, Representative Cory Gardner (R-Co) is not going to waste time explaining that his state’s water conservation board worries that Colorado may soon lack water to support its cities, farms, and fish runs. Nor will Representative John Barrow (D-Ga) complain that the Peach State lacks any plan to prepare for such climate shockers as heat waves, vector-borne illness, and increased smog?

You see, the real concern of those in charge of this hearing is not that the climate is changing, but that the government might try to do something about it.

Thus Chairman Whitfield’s invitation letter requests that witnesses come prepared to discuss all upcoming “regulations or guidelines” that would make it harder to pump greenhouse gases into the air, and explain how any “agency funds” have been used to reduce or prepare for climate impacts. As Whitfield explained later to press: "It’s important that we be aware of what unilateral action through regulation and executive orders the administration is looking at.”

One of those “unilateral actions” that Whitfield, no doubt, has in mind is EPA’s upcoming proposal to limit greenhouse gas emissions from new fossil fuel power plants. Let’s ignore for the moment how a rule embraced by an elected president, impelled by a Supreme Court decision (Massachusetts v. EPA), and authorized by an act of Congress (the Clean Air Act) can be characterized as “unilateral.” I need to save something for my law students’ final exam.

The coal industry is extremely worried about this because coal is exactly the fossil fuel that President Obama had in mind when he complained about all that “limitless dumping” from “power plants.” And some Beltway experts are predicting that EPA’s new rules may require new coal-fired power plants to adopt expensive technologies like “carbon capture and storage” (CCS) in order to qualify for permits.

Fancy this, for years the coal industry has been telling us about all its clean coal technology.  They said over, and over again that clean coal technology allowed power plants to capture greenhouse gases and pump them underground. We were assured such advancements “aren’t just predictions,” but reality.

Remember the image of the orange extension cord plugged into that polished lump of coal--the one paraded during NASCAR rallies and in between segments of Sunday morning political talk shows?

Remember those television ads with a rainbow coalition of goggled lab and plant workers imploring you to “Believe!”? (Shout it with me: “BELIEVE!”)

And now they say they don’t have it? Let’s have a hearing on that!


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Robert Verchick Reacts to Congressional Letter on OIRA Delays

Late Tuesday afternoon, Senators Sheldon Whitehouse (D-RI), Tom Harkin (D-IA), Ben Cardin (D-MD), and Richard Blumenthal (D-CT) and U.S. Representatives Henry A. Waxman (D-CA) and Ed Markey (D-MA) sent a letter to White House Office of Management and Budget Director Sylvia Burwell urging her to take "prompt action" to implement rules and regulations held up at the Office of Information and Regulatory Affairs (OIRA). The letter notes that under Executive Order 12866, OIRA reviews of agency draft rules must be completed within 90 days, and that 14 of the 20 EPA rules currently undergoing OIRA review have been languishing for more than 90 days, 13 of them for more than a year. 

In a statement this morning, CPR's Robert Verchick, a former EPA official, applauded the Members of Congress for taking on the issue. He said:

Congressional deadlock is often cited as the primary reason for government inaction, but as these key Members of Congress note in their letter, the President's own White House staff is delaying rules that could improve the quality of life for millions of Americans with the stroke of a pen.

EPA's proposed "Chemicals of Concern List rule" has been languishing at OIRA for more than three years, that for a proposal which would provide for nothing more than the simple disclosure of such potentially harmful chemicals, as phthalates, PBDEs, and BPA. Consumers and taxpayers deserve to know which cancer-causing and endocrine-disrupting chemicals are in the products they buy and use. But the President's OIRA is sitting on the rule. Action on this and the other rules bottled up at OIRA is long overdue. The Senators' and Representatives' letter reflects an appropriate sense of urgency.

Verchick was the Deputy Associate Administrator for Policy at the EPA during the first Obama Administration.

CPR Member Scholars have published extensively on the problems at OIRA. Read more on our Eye on OIRA page.

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What the White House Taketh Away, It Can Also Giveth: An Agenda for 'Regulatory Czar' Howard Shelanski's First 30 Days

As the scandal du jour over the pure lug-headedness of some IRS staffers reminds us, any screw-up, anywhere in the government, will make its way to the White House press briefing room in about a nanosecond of Internet real time. Suspicion is deeply bred into the press corps, and appropriately so. For that reason, the 2,000 or so people who directly serve on the President's White House staff, but who remain faceless to the rest of us, insist on maintaining control over anything that could embarrass him, including dozens of health, worker safety, and environmental rules that might engender so much as a whiff of controversy or attract a smidgen of opposition from powerful special interests.

In this vein, we look forward to the confirmation hearings of one of the few White House politicos actually subject to the Senate's advice and consent—Howard Shelanski, President Obama’s nominee for the powerful position of “regulatory czar,” a.k.a. Administrator of the Office of Information and Regulatory Affairs (OIRA), located within the White House Office of Management and Budget (OMB). Dr. Shelanski, a lawyer (Berkeley ’92) and Ph.D. economist (Berkeley ’93), was most recently the chief number-cruncher at the Federal Trade Commission (FTC), giving rise to speculation that he will spearhead an effort to bring independent agencies like the Securities and Exchange Commission (SEC) under Executive Order 12,866, which is read to require elaborate cost-benefit analyses before the issuance of any rule or guidance that upsets powerful industries. 

Given the high dudgeon of investment bankers these days—the New York Times recently reported their determination to sabotage new derivatives (!!) rules under consideration at the Commodities Futures Trading Commission—bringing the independent agencies to heel is undoubtedly a priority for the waves of lobbyists who swarm the White House staff each morning. But we hope Shelanski will be called to account for a more appropriate agenda.

Notwithstanding the loud and endless gnashing of teeth by conservative groups, the truth is that the total number of significant, substantive rules issued in 2012 (848) was substantially lower than the number issued in the last year of the George W. Bush Administration (1,063), and 2013 looks to be shaping up as the lowest (at the current rate, a projected total of 579) since 1997.   Some illuminating tables and a list of delayed rules prepared by regulatory analyst Curtis Copeland, a respected retiree from the Congressional Research Service who spoke at a recent CPR event, bear this out.  In fact, counting all the little stuff, including routine approvals by the federal government of programs implemented by the states, at the rate it is going, the Obama Administration will produce this year considerably fewer than half the “rules” (1,360) that the George W. Bush Administration did in its last year in office (3,085).

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EPA on the Right Track for Addressing Endocrine-Disrupting Chemicals, but Should be Wary of Potential Detours

A year ago this month, CPR published a white paper that laid out a two-phased action plan for federal agencies to take some critical steps toward protecting the public from Bisphenol-A (BPA). The report provided both short-term and long-term action items for the EPA, FDA, and OSHA that could establish stronger safeguards, risk assessment practices, and warning mechanisms for families and consumers concerning BPA and other endocrine-disrupting chemicals.  We said an underlying requirement for both short-term and long-term action items is for federal agencies to acknowledge the unique low-dose effects and non-monotonic dose response curves (NMDRC) of endocrine-disrupting chemicals and adapt existing scientific protocols to reflect these unique risks.

Shortly before the conclusion of 2012, EPA announced a promising new effort in turning these action items into a reality.  The agency is forming a working group dedicated to investigating and analyzing low-dose effects and NMDRCs for endocrine disrupting chemicals, and intends to release a “state of the science” paper, which will undergo peer review and “help inform how the safety of chemicals are assessed.”  The working group will focus on three critical questions in conducting its work:

  • Do NMDRCs capture adverse effects that are not captured using our current chemical testing strategies (i.e. false negatives), and are there adverse effects that we are missing?
  • Do NMDRCs exist for chemicals, and if so under what conditions do they occur?
  • Do NMDRCs provide key information that would alter EPA’s current weight of evidence conclusions and risk assessment determinations, either qualitatively or quantitatively?
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TSCA Reform and the Presidential Election

When Barack Obama took office, reform of U.S. chemical regulation appeared to be an area of some bipartisan agreement, especially when compared to climate change, where it was clear a contentious fight would loom on Capitol Hill.  Prominent Members of Congress had called for reform of the outdated Toxic Substances Control Act (TSCA) of 1976, EPA Administrator Lisa Jackson soon laid out the Administration’s key principles for TSCA reform, and the largest chemical industry trade association acknowledged that TSCA needed to be “modernized” and “updated.”

Four years later, though, progress on TSCA reform has been frustratingly slow.  The 2010 Republican victory in the House dashed hopes for quick action on the Hill, and the chemical industry is once again defending the status quo.

The stakes are enormous.  Under TSCA, more than 90% of all chemicals in use have never been tested for their health and environmental effects.  TSCA requires the EPA to demonstrate that chemicals pose “unreasonable risk” prior to restricting their manufacture or use, and it erects elaborate procedural hurdles before EPA can make that finding.  Since TSCA was enacted, EPA has attempted to restrict only six chemicals under those provisions of the Act, and the last attempt was in 1989. 

We are “flying blind” by allowing massive public exposure to untested chemicals.  As a result of flaws in TSCA, we also lack solid comparative information about the toxicity of chemicals. For example, while many companies have stopped using Bisphenol-A (BPA) in baby products and food containers, we have little information about substitutes for BPA, and companies are not required to disclose what substitutes they are using.  From hydraulic fracturing fluids to flame retardants in furniture to construction materials in our homes, we simply do not know the health and environmental effects of tens of thousands of chemicals to which we are exposed.

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White House Now Not Sure it is Interested at All in Public's Ideas for Strengthening Existing Rules

The White House’s message on its program for retrospectively reviewing existing regulations just shifted a little further away from recognizing the need for protective regulations for health, safety, and the environment. First the White House said it was interested in "expanding" certain existing regulations, if appropriate. Then it said it was interested in hearing ideas from the public on expanding regulations, but officially considers those ideas to be a lower priority than ideas that would weaken regulations. Now today, a new website launched by the White House pushes the notion of any balance in regulatory review further off the table.

Let me step back. Executive Order 13,563, issued by President Obama in January of 2011, announced the regulatory look-back program we’ve discussed a lot here:

To facilitate the periodic review of existing significant regulations, agencies shall consider how best to promote retrospective analysis of rules that may be outmoded, ineffective, insufficient, or excessively burdensome, and to modify, streamline, expand, or repeal them in accordance with what has been learned.

A key word there was expand. If agencies were to divert some of their current staff from working on needed new public protections to re-evaluate existing ones (the White House has never sought, let alone received, any new funding for the look-back programs at the agencies), at least it might, in theory, be a somewhat balanced exercise that could identify needed expansions to existing rules. Cass Sunstein, the Administrator of OIRA, has himself publicly noted the importance of the word “expand.” The process, we hoped, might not be simply weakening existing rules.

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FDA Takes Baby Step Toward Protecting the Public from BPA

Yesterday, the U.S. Food and Drug Administration (FDA) announced that it would amend an existing food additive regulation to prohibit the use of Bisphenol A (BPA) in “infant feeding bottles (baby bottles) and spill-proof cups, including their closures and lids, designed to help train babies and toddlers to drink from cups (sippy cups).”  BPA, a chemical commonly added to polycarbonate resins (a fancy word for plastics), continues to raise concerns over its low-dose, endocrine-disrupting health effects.  Despite these health and safety concerns, the FDA’s decision to ban BPA in these limited items responds to a petition from the American Chemistry Council (ACC), which cites abandonment as the reason for the regulation amendment—not safety.

The good news about FDA’s BPA ban: FDA finally took an affirmative step toward protecting some of the public from BPA.  The bad news: the step is a meager one that establishes little more protection than state legislatures and grass-roots campaigns have already achieved through state bans and market pressures.  FDA, in other words, permanently banned BPA from products that already have removed it.

As I explained in a previous blog posting concerning CPR Member Scholar Noah Sach’s and my comments on the ACC’s petition and in CPR’s previous white paper on BPA regulatory options, FDA can take much larger and more meaningful steps to protect the public.  These steps begin with recognizing the safety and health risks associated with BPA and include implementing broader bans without regard to age and use limitations and mandating BPA labeling requirements.

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Safe Drinking Water Act Provides EPA Key Opportunity to Regulate BPA

Member Scholar Noah Sachs and Policy Analyst Aimee Simpson have sent a letter to the EPA nominating the chemical Bisphenol A (BPA) to be included on the “Fourth Contaminant Candidate List” for possible regulation. They write:

Pursuant to the Safe Drinking Water Act Amendments of 1996 (SDWA), the U.S. Environmental Protection Agency (EPA) must compile a list of unregulated contaminants that are known or anticipated to occur in public water systems and may require regulation under the SDWA.  EPA then must make a decision about whether or not to regulate a least five of the contaminants on the list.  EPA recently issued a notice and request for nomination of chemical and microbial contaminants for possible inclusion in the fourth drinking water Contaminant Candidate List (CCL 4).  Under existing guidelines, EPA selects contaminants for a CCL based on a scoring system that addresses two primary factors:  health effects and occurrence in water supplies.  BPA received a low score on this scale during deliberations on the CCL3 and was not included on that list.  We believe that new information published since the CCL3 deliberations will change BPA’s score.  It deserves your close attention, and BPA should be added to the CCL 4.

Sachs and Simpson explain that the scientific research on BPA has advanced significantly, particularly with regard to low-dose impacts. They write: “these low-dose health effects are not properly accounted for in current risk assessments of BPA and CCL evaluations.” The full letter is here.

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