May 23, 2013

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).

Of course, to workers who got cancer from inhaling formaldehyde on the job, the snail’s pace achieved by the President’s regulatory hit squad is not good news. Several of the most important health and safety proposals are stuck at OIRA, and have been deep-sixed there for as long as three years, including a proposal to list such household-name toxics as bisphenol A (BPA) and flame retardants as “chemicals of concern.” That's one reason why the "how many rules" measure isn't necessarily instructive. After all, even by the stilted cost-benefit analyses OIRA imposes on the agencies, the benefits to society and the economy of these rules vastly exceed the costs. Such inconvenient realities notwithstanding, opponents of environmental, health and safety safeguards have invested heavily in the argument that the Obama Administration is flooding us with rules, and Curtis Copeland's numbers flat-out disprove it.

To be clear, by holding these proposals so long, OIRA is in flagrant violation of the Executive Order that gives it authority to review regulations in the first place. One might expect such a leisurely pace from the last president's White House. But President Obama promised better.

In truth, even these compilations of rules are likely just a fraction of the true backlog: OIRA has a widely known but impossible to document practice of instructing agency staff to leave their more ambitious—and effective—proposals on their own credenzas, so that they never get to OIRA in the first place. Known colloquially as “mother may I” conversations, these exchanges take place in phone calls and off-the-record meetings that leave no trace of White House interference. Such preemptive control over proposed regulation is necessary, thinks the White House staff,  to avoid any political fallout from the controversies that regulations in those areas would inevitably engender.

So far, the regulatory delays cannot be causally linked to actual deaths in real time, although that outcome is only a matter of time. For example, the Food and Drug Administration (FDA) is still wringing its hands about whether to regulate compounding pharmacies, an industry that has killed 53 Americans since last fall. For the moment, and ill-advisedly, FDA Commissioner Peg Hamburg has put the onus on Congress to do something about the scandal, even though she has ample authority—if not ample resources—to take effective regulatory action on her own. But the compounding pharmacists object to federal controls and the House of Representatives is in terminal gridlock, so it’s a safe bet that the next time someone injects meningitis into a patient’s spine with the medicine that’s supposed to make her better, Hamburg and not John Boehner will be pictured on the nightly news and Republicans will once again excoriate the White House for its murderous negligence. Sadly, we’re getting to the point when it will be harder and harder to defend the President, who seems to be well on his way toward breaking, and therefore owning, regulatory government.

So when the senators finally get their opportunity to question Shelanski, we urge that their first questions focus on how he plans to dislodge this large wad of crippled protections that the staff at OIRA have so thoroughly wedged into the regulatory pipeline, and on whether, like his predecessor, Cass Sunstein, Shelanski will deliver business-as-usual deference to the industries that profit from polluting our environment and cutting safety corners with such predictably disastrous results for workers and consumers.


Rena Steinzor, Professor of Law, University of Maryland Carey School of Law. Bio.

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