CPR Member Scholars Propose Two Key Reforms for the Office of the Regulatory 'Czar'
For more than a quarter of a century, a comparatively small White House office within the Office of Management and Budget has wielded outsized power over the federal regulatory process. It's the Office of Information and Regulatory Affairs (OIRA), and not by accident, its director has come to be known as the "regulatory czar."
Time and again since OIRA began its work in the early days of the Reagan Administration, Congress has passed laws assigning statutory authority and responsibility to specific regulatory agencies – the Environmental Protection Agency, Occupational Safety and Health Administration, National Highway Traffic Safety Administration, Consumer Product Safety Commission, Food and Drug Administration, and others – only to have OIRA stand in the way of those agencies doing their jobs protecting Americans.
In recent years, it has become increasingly clear that the nation’s regulatory structure is failing. The evidence is everywhere: poisoned peanut butter, lead-laden toys, SUVs that invite rollover, Vioxx and other medicines with dangerous but insufficiently researched side effects, environmental standards that permit dangerous toxins in the air and water, and more. These failings are partly the product of insufficient resources at the agencies, and partly the result of deliberate efforts by industry and their allies to gum up the regulatory process, so as to prevent protective regulations from going into effect.
OIRA has been one such ally. Congress invariably establishes specific standards by which the experts at the regulatory agencies are to judge whether and how much to regulate. For example, a "technology-based" or "feasibility" standard requires the agency to decide the extent to which reducing a particular hazard is technologically and economically feasible and then writing rules to accomplish that. But with the full blessing of Presidents Reagan, Bush I, Clinton and Bush II, OIRA has enforced a different standard, requiring agencies to weigh costs to industry against the monetized benefits to the public and the environment. Not only is this cost-benefit method of regulatory analysis inconsistent with statutory standards, it has been roundly debunked by CPR Member Scholars and others as subject to gross manipulation and inherently inaccurate in its “balancing” of costs and benefits. (Read more, here.)
In January 2009, President Obama called for the Office of Management and Budget to draft an Executive Order revising the process of regulatory review. On March 16, 2009, CPR Member Scholars John Applegate, Robert Glicksman, Thomas McGarity, Sidney Shapiro, Amy Sinden, Rena Steinzor, and Robert Verchick (collectively the CPR board) filed formal comments offering two key suggestions. They wrote:
First, the Office of Information of Regulatory Affairs (OIRA) must abandon its role of conducting centralized regulatory review. During the Bush Administration, OIRA’s mission was defined exclusively as controlling excessive regulation by agencies through review of individual rules and the threat that any one may be held up as its economists question an agency’s cost-benefit analysis. OIRA’s role should be fundamentally reoriented. It should work with agencies to improve their ability to fulfill their regulatory missions, helping agencies to calculate and document their true budgetary needs, develop better and more proactive regulatory agendas, resolve interagency disputes, and ensure they have the necessary legal authority to truly protect individuals and the environment.
Second, the new Executive Order must replace cost-benefit analysis as a determinative factor in regulatory decision-making for two reasons: (1) it is inconsistent with the law in most cases and (2) it has failed as a tool of regulatory analysis.
Noting that only 2 of the 31 statutory provisions undergirding the regulatory system mandate the use of cost-benefit analysis (see chart), the scholars recommend that OIRA instead use “pragmatic regulatory impact analysis” (PRIA). They write that PRIA
starts from the premise that the agency should employ the particular standard-setting method that Congress specified in the relevant statute….The key characteristics of a pragmatic regulatory impact analysis are its emphasis on all the factors specified by the statutes, and its reliance on informed judgments by a full range of scientific, technical, legal, and managerial experts at agencies with respect to those central issues. These characteristics make for a decision-making process that is more transparent, inclusive, and effective.
PRIA is the subject of a forthcoming CPR white paper. Read more:
Preliminary Comments. Read Rena Steinzor's February 20, 2009 letter to OMB chief Peter Orszag submitting preliminary comments for OMB consideration as it prepares recommendations for President Obama on ways to reform the regulatory process, and calling for a formal comments period for OMB's proposal.
Only 2 of 31… Just 2 of the 31 statutory provisions undergirding the nation’s health, safety and environmental regulatory structure call for cost-benefit analysis. One is the Consumer Product Safety Act. Can you guess the other? Use CPR’s chart to impress your friends.
The Czar. Read about Cass Sunstein, the President’s pick for “regulatory czar,” and CPR Member Scholars’ concerns about his support for cost-benefit analysis.
Congressional Testimony. On April 30, 2009, CPR President Rena Steinzor testified before the House Science and Technology Committee’s Subcommittee on Investigations and Oversight on clean science and regulatory issues. Read the testimony. Read the news release.