October 03, 2013

Regulatory Review Needs to Comply with Transparency Requirements

On this 20th anniversary of the regulatory review regime of Executive Order 12,866, the appropriate thing to do would be to take stock. Has centralized regulatory review, on balance, improved the quality of federal regulation or interfered with it?   Is this now-extensive regulatory review process worth it, given its costs? Sadly, the opaque quality of the process precludes a definitive answer.  

Readers familiar with regulatory review already know that Executive Order 12,866, issued by President Bill Clinton, significantly reaffirmed systematic, centralized White House review of agency rulemaking activity.  That Order built on the structure established in President Ronald Reagan’s 1981 Executive Order 12,291, both strengthening and modifying it in important ways.  And Reagan’s Executive Order in turn built substantially upon more tentative moves made by Presidents Nixon, Ford, and Carter.  EO 12,866 effectively settled three areas of bipartisan consensus (at least among Presidents) around regulatory review. First, review would be centralized. Executive agencies were not just ordered to refrain from publishing draft rules prior to “clearance” from the OMB Office of Information and Regulatory Affairs, but conflicts between the regulating agency and OMB (or other agencies) were expressly to be resolved by the President or Vice-President.  Second, presidential priorities would expressly guide agency rulemaking, whether or not the agency statutes referenced those concerns. EO 12,866 asked agencies to explain, for example, how each proposed rule was consistent with presidential priorities.   And third, agencies would have to comply with detailed analytical requirements such as cost-benefit analysis, aimed in part at achieving greater policy consistency and in part at some notion of improving the quality of agency rules. Thus, regulatory review joined the President’s other authorities – including appointments, removal, and budgetary control –aimed at increasing the responsiveness of the administrative state. 

Views on whether OIRA review actually improves the quality of agency rules sharply conflict. As other CPR member-scholars have documented, rules can be significantly changed during OIRA review or fail altogether. Professor Lisa Heinzerling, formerly a senior EPA policy official, has argued that OIRA review has blocked important rules without adequate substantive justification. Professor Rena Steinzor, writing with researchers Michael Patoka and James Goodwin,has charged that OIRA review in a number of cases has interfered with long-developed agency scientific expertise and provided well-organized, well-funded interest groups another bite at the administrative advocacy apple.   Meanwhile, former OIRA Administrator Cass Sunstein has written that the office functions mainly as an information-aggregator – compiling interagency perspectives and addressing issues of analytical quality. Stories around particular high-visibility rules, such as EPA’s 2011 effort to strengthen air quality standards for ozone, make clear that centralized review is capable of halting an agency rule even for considerations, such as cost in the case of air quality standards, that Congress did not authorize the agency to consider.   And complying with executive review requirements indisputably takes significant agency resources and sometimes has delayed rules for months or even years.   Besides agency time and resources, the costs of OIRA review thus might include significant lost public benefits from rules that are changed, substantially delayed, or never issued at all.   An important question raised by critics of the process is whether these costs simply dwarf the claimed benefits from more consistent regulation that complies with OIRA’s requirements. 

The difficulty is that OIRA itself appears to be impeding assessment of this question.  Heinzerling and Steinzor have strived to shine a light on some aspects of what OIRA does and what effects centralized review has. But this should not have been necessary. For 20 years, Executive Order 12,866 has clearly required disclosure of changes made to draft rules during OIRA review, as well as all documents exchanged between the agency and OIRA during review. All this public information is to be in “plain, understandable language.”   The goal here – making the review process transparent – is obvious. 

But as I have pointed out elsewhere and CPR analyst James Goodwin has reiterated, public information on the changes made through OIRA review nonetheless is extremely difficult, if not impossible, to locate.   Under President Obama, OIRA has posted exactly one review letter and one return letter, though hundreds of rules have been changed during the course of review.  Documents regarding OIRA review also do not seem to be regularly posted on rulemaking dockets in www.regulations.gov. And just as with the overwhelming majority of revised and returned rules, no documents explain the reason draft rules have been withdrawn. Indeed, Goodwin has identified a possible increase in OIRA’s use of so-called withdrawals to dispose of rules that have been, as a practical matter, shelved through OIRA review.   Withdrawal without explanation continues to interfere with public understanding of what happened to a draft agency rule during OIRA review. It also removes these rules from OIRA’s reports of the time regulatory review takes, limiting the transparency of the review statistics that OIRA does publish.  No reasons have been given for OIRA and the agencies’ lack of compliance with the Executive Order’s disclosure requirements.

On this 20th anniversary of Executive Order 12,866, we should hold OIRA to its own standards. Just as OIRA requires detailed information and analyses to assess agency rules, we need information to evaluate the work centralized regulatory review is actually doing and when it is worthwhile. So far – and despite Executive Order requirements - that is information OIRA has been unwilling to share. When we do learn what takes place in OIRA review, we can then begin to meaningfully assess it.   Let’s hope we’ll have more answers by anniversary number 21. 

Nina Mendelson, CPR Member Scholar; Professor of Law, University of Michigan Law School. Bio.

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