This morning, CPR President Rena Steinzor testifies before the House Committee on Small Business's Subcommittee on Investigations, Oversight and Regulations. From the witness list, it would appear that this'll be another in a series of hearings structured by House Republicans to inveigh against the regulations that protect Americans from a variety of hazards in the air we breathe, water we drink, places we work, products we buy, food we eat, and more.
If history is any guide, most of the testimony and discussion will focus not on how best to protect Americans from such problems, but on the costs to small business of doing so. Steinzor is the lone witness permitted to the minority party -- the Democrats, that is -- and as such, could well be the only person who mentions the benefits of regulation. Study after study has demonstrated that the economic benefits of regulation vastly exceed the economic costs. Indeed, before a significant regulation can be finalized, the regulatory agencies must conduct an extensive cost-benefit analysis to be certain that the benefits of the rule exceed the costs. That process is not without flaws: Typically it is slanted to overstate the costs and understate the benefits, and it focuses on economic benefits, ignoring those that cannot be readily expressed in dollar terms. But it's the process this and previous administrations have relied upon. For years, opponents of regulation took the line that we needed to be sure benefits, so measured, outweigh costs. They got what they wanted, but can't take "yes" for an answer, so now they simply rail against costs, and ignore the benefits.
Steinzor will remind them of what those safeguards bring us in terms of lives saved, workdays not lost, health care dollars not spent, ecosystems preserved, and more.Full text
A quick update on the OIRA leadership front: Dominic Mancini has been named the Deputy Administrator of OIRA, and now “leads” the office from this position, an OMB spokesperson says via email (The Hill was up with this news a bit earlier today). Boris Bershteyn’s appointment as Acting Administrator has ended, the spokesperson said. Bershteyn had reached a time limit under the Federal Vacancies Reform Act, which puts restrictions on acting officers performing in Senate-confirmed positions. By the letter of the law, the Administrator of OIRA is a Senate-confirmed position; the Deputy Administrator is not.Full text
Next Wednesday, the Supreme Court will hear oral argument in the case of Horne v. U.S. Department of Agriculture – a complicated and relatively little-noticed case that could have important implications for the direction of “takings” doctrine and, in turn, for how far judges wielding this doctrine may intrude upon the policy-making functions of the elected branches. To understand the case, it is useful to analogize the issues in the case to a set of Russian nested dolls.
The issue representing the innermost doll, which the Court will only get to if it can unpack the outer dolls, is the most intriguing and arguably the most significant in terms of the future of takings doctrine. The question is whether a federal agricultural marketing program results in a “taking” of private property within the meaning of the Takings Clause of the Fifth Amendment by requiring raisin producers to turn over a portion of their crop to a quasi-governmental entity for eventual disposal with little or no financial return to the producers. The program was established pursuant to the federal Marketing Agreement Act, adopted during the Great Depression to stabilize the prices of certain crops by controlling the volume of production going to market.
The Act’s requirement that producers place a portion of their crop in “reserve” only goes into effect once the Department of Agriculture, in response to a petition supported by a majority of producers, issues a formal marketing order, which occurred in the case of raisins in the late 1940’s. In some years, when production is low, no raisins are reserved under the program; in other years, when production is high, raisin producers must place as much as a third of their crop in reserve. The upshot is more stable – and higher – raisin prices for producers and consumers alike.
The Hornes, long-time raisin producers, concluded that the program represented bad agricultural policy and was unfair as applied to them. In the hope of escaping the program’s requirements, they rearranged their business practices in an attempt to avoid the Act’s mandates while continuing to produce raisins, and ceased placing any portion of their raisin crop in reserve. The USDA rejected this gambit and imposed civil penalties on the Hornes for violating the program rules. They responded by filing suit in federal district court in California, arguing, among other things, that the reserve requirement constituted a taking.Full text
Last week Rena Steinzor wrote here that the Acting Administrator of the Office of Information and Regulatory Affairs (OIRA), Boris Bershteyn, was approaching a time limit under the Federal Vacancies Reform Act. That law stipulates that a temporary appointee in a Senate-confirmed position can generally serve for no more than 210 days, unless a nomination is pending, which in this case it is not.
Where Bershteyn was previously listed as the OIRA Administrator, the White House has now removed his name.
Complying with laws is important. It’s also important for the President to take the next step: nominating a new OIRA Administrator, someone with a vision for protecting public health, safety and the environment and who can take the office in a new direction.Full text
It has now been nearly seven months since Cass Sunstein left his job as Administrator of the White House Office of Information and Regulatory Affairs (OIRA). Much has happened in that time, most significantly an election that returned President Obama to the White House, but also a growing recognition that whatever second-term accomplishments the President is able to register on climate change and a number of other issues are likely to be brought about through regulation, not legislation. That's precisely why it's important to fill Sunstein's job with someone who'll help regulatory agencies accomplish their important work.
Unfortunately, the President has yet to nominate a successor. As a result, Sunstein's temporary replacement, Boris Bershteyn, will reach a milestone in just a few days: Under the law, his time as Acting Administrator is up. It would shock no one if the White House did nothing more than strip him of the "Acting Administrator" designation. That's what it did with Jeffrey Zients, who timed out of the role of Acting Administrator of the Office of Management and Budget, and is now described as the person who "leads" OMB. (This morning, Sylvia Mathews Burwell was nominated to be OMB Director, along with Gina McCarthy for EPA Administrator and Ernest Moniz for Energy Secretary).
But that's a lousy way to run OIRA, particularly now, when it is sitting on a bunch of crucial safeguards and is in desperate need of new direction.
From all outward appearances, little at OIRA has changed under Bershteyn’s nearly seven-month leadership, and that’s bad news for the public. As I write, more than 60 proposed or final rules from agencies have been stuck at OIRA for longer than the 120 days permitted under Executive Order 12866, which allows for a 90-day review with a possible 30-day extension. Among the stalled rules:
CPR Member Scholar Robert L. Glicksman will testify at a hearing this morning of the House Judiciary Committee’s Subcommittee on Regulatory Reform, Commercial and Antitrust Law.
The hearing will promote the notion of "The Obama Administration's Regulatory War on Jobs, the Economy, and America's Global Competitiveness" (sounds awfully familiar), and the solution, the majority will say, is a series of anti-regulatory bills (many of which passed the House, but went nowhere in the Senate, in the last Congress).
Professor Glicksman’s testimony argues that the proposed regulatory process legislation amounts to a solution in search of a problem:
The proponents of making it more difficult for agencies to regulate tend to ignore the very real costs that result from a failure to regulate even though significant costs may flow from decisions not to regulate just as they do from decisions to regulate. … The supporters of the proposed regulatory process bills discussed above are right about one thing: The U.S. regulatory system is not promoting the public interest as well as it should be. But their diagnosis of the problem could not be farther from the mark, and their proposed bills would only make the situation worse. To fix the regulatory system, we should instead focus on finding ways to help agencies effectively achieve their statutory missions, such as protecting people and the environment.
Glicksman’s testimony addresses the REINS Act, Regulatory Accountability Act, and other anti-regulatory messaging efforts.Full text
Earlier this week, Karen Mills, the current Administrator of the Small Business Administration (SBA), announced her intention to leave office, opening up another second-term vacancy for President Obama to fill in the coming months. The SBA position is unlikely to attract as much media attention or pundit speculation as the EPA or Energy Interior posts, but it could have a big impact on whether the Obama Administration is able to take on the long to-do list of public health, safety, and environmental challenges that the nation currently faces. The next SBA Administrator can and should begin the critical process of reshaping the controversial SBA Office of Advocacy so that it focuses on helping truly small businesses, without undermining regulatory safeguards.
A recent CPR white paper I co-authored examined how the Office of Advocacy uses federal tax dollars to try to block health, safety, and environmental regulations, often at the behest of large companies. This small and largely unaccountable office, the paper argues, exerts significant influence over the federal rulemaking process, and its work all too often does not benefit truly small business. Rather, the Advocacy office typically echoes the viewpoints of large corporate interests who are already well represented in the rulemaking process, often with the result of watering down or bottling up safeguards needed to protect people and the environment against unreasonable risks.
The white paper concludes by offering several recommendations aimed at creating a more productive role for the Office of Advocacy to play in the federal regulatory system. First, it recommends reorienting the Advocacy office’s mission so that it works toward promoting small business competitiveness—that is, finding ways to help small businesses meet effective regulatory standards without undermining the capacity to compete with larger firms (what we call “win-win” regulatory solutions). Second, mindful that some of the "small" businesses the Advocacy office thinks are its constituents have as many as 1,500 employees, the white paper recommends restricting the Advocacy office’s focus to truly small firms—those with 20 or fewer employees—which lack the resources and expertise to participate meaningfully in individual rulemakings on their own.Full text
Cross-posted from Legal Planet.
Cost-benefit analysis has become a ubiquitous part of regulation, enforced by the Office of Management and Budget. A weak cost-benefit analysis means that the regulation gets kicked back to the agency. Yet there is no statute that provides for this; it’s entirely a matter of Presidential dictate. And reliance on cost-benefit analysis often flies in the face of specific directions from Congress about how to write regulations. There are a few exceptions, such as regulations involving pesticides, bans on toxic substances, and thermal water pollution, where Congress called for EPA to balance costs and benefits equally. But almost all environmental laws direct agencies to use some standard other than cost-benefit analysis. The statutes generally place a greater weight on environmental quality and public health than on cost.
For example, it’s fairly obvious that Congress did not contemplate much of a role for cost-benefit analysis when it passed the Clean Air Act. Some key provisions of the Act are based completely on health risks and do not allow consideration of costs. When costs are a factor, Congress carefully specified factors to be taken into account and provided different standards for different situations. All of the fine distinctions in the table below would be erased if all regulations are simply based on the same cost-benefit standard.Full text
Congress created the Office of Advocacy (Office) of the Small Business Administration (SBA) to represent the interests of small business before regulatory agencies. It recognized that, unlike larger firms, many, if not most, small businesses can’t afford to lobby regulators and file rulemaking comments because of the expense involved. The Office was supposed to fill this gap by ensuring that agencies account for the unique concerns of small businesses when developing new regulations. Instead, as new reports from the Center for Progressive Reform and the Center for Effective Government document, the Office of Advocacy is using its resources and influence to weaken the regulatory process, usually at the behest of big business.
The Office of Advocacy has steadily expanded its role in the rulemaking process, creating numerous opportunities to oppose regulation, slow the regulatory process, and dilute the protection of people and the environment against unreasonable risks. Its activities are frequently undertaken in conjunction with corporate lobbies and trade associations that represent the interests of their large business members. Often, it is difficult to find even a sliver of sunlight between the positions taken by the Office and those taken by such prominent regulatory opponents as the big-business-focused U.S. Chamber of Commerce. It turns out that's not by accident: The Center for Effective Government’s report exposes emails between the Office and big business interests demonstrating that the Office takes its lead from big business lobbyists.
The Office of Advocacy bolsters its anti-regulatory efforts by sponsoring research projects with the obvious aim of weakening the U.S. regulatory system. Non-governmental researchers carry out these projects under contracts awarded by the Office with little in the way of oversight or peer review. At least in some cases, these "research" papers are thinly veiled political documents. The most egregious example is the 2010 study by economists Nicole Crain and Mark Crain, which purported to find that the annual cost of federal regulations in 2008 was about $1.75 trillion. As CPR and others demonstrated, the Office ignored serious methodological problems with the report, which rendered it implausible, apparently because the results fit with the Office’s anti-regulatory narrative.Full text
CPR Member Scholar David Driesen of Syracuse University has an op-ed in the January 28 Syracuse Post-Standard making the case that the President should reinvigorate his regulatory agenda, in part by diminishing the Office of Information and Regulatory Affairs' power to stifle regulations. He puts the argument in the context of the pressing need for action on climate change, writing:
Obama should put an end to obstructionist OIRA review in light of the urgency of climate disruption and the failures this review has led to. Specifically, he should issue an executive order requiring prompt regulation of major sources of greenhouse gases under the Clean Air Act, including a schedule for prompt rulemaking. This order should direct OIRA to work to speed and strengthen environmental, health and safety standards. He should also abolish OIRA's authority to review minor standards, since such reviews waste scarce government resources excessively analyzing cheap measures to protect people from important threats.
Finally, he should order OIRA to stop demanding cost-benefit analysis of proposed environmental, health and safety protections. We cannot reliably compare the value of human life or a preserved ecosystem to the costs of regulation. Key uncertainties often make quantification of the number of deaths and illnesses or the magnitude of ecological destruction addressed through environmental standards impossible....
We barely made it through the first round of the 'fiscal cliff battle,' but we will still face an ongoing climate crisis unless Obama abandons business-as-usual in favor of doing everything we feasibly can do to reduce the coming damage. He can do a lot with the stroke of a pen, perhaps even enough to persuade some House Republicans to come to the table to help shape future environmental policy.
Read the full article, here.Full text