Public Scrutiny for an Unnoticed Regulatory Powerhouse
The Office of Information and Regulatory Affairs has an unenviable reputation. The media can’t seem to resist calling it "obscure," and often refer to its director as the "regulatory czar." Among progressives, it’s regarded as an unduly sympathetic ally of industry lobbyists trying to water down or kill protective regulations.
In fact, all those things are more or less true. It’s "obscure" because most people have no idea what it does; its director is fairly described as a "czar" (within the meaning of the term in Washington, not in pre-revolutionary Russia!) because he wields extraordinary power over the regulatory structure; and it is clearly the place where industry lobbyists pitch their tent, hoping to delay, dilute, distort, or defang protective regulations.
OIRA is one other thing, as well. It is also the office that forces regulatory agencies to subject proposed regulations to systemically flawed cost-benefit analysis – a method of regulatory impact analysis that overstates the costs of protective regulations to industry (largely by relying on inflated industry estimates) and understates the benefits of such regulations (often by simply ignoring those that do not carry a price tag).
White House Office Working Against the President's Stated Objectives
Why is OIRA's imposition of cost-benefit analysis on all things regulatory not a sound policy? One EPA cost-benefit analysis calculated the worth of IQ points that children lose to in utero mercury poisoning by “guesstimating” the impact on the children’s future earnings. (The analysis also treated the diminished likelihood that the children would attend college as a cost savings – weighing in on the side of not bothering to regulate mercury!) Absent from the analysis because they don’t lend themselves to conversion into dollars and cents were some obvious points: that money alone doesn’t make up for brain damage, and that no parent would “sell” their child’s IQ points. Such cost-benefit analysis outrages are all too common. Significantly, most of the statutes under which agencies regulate call for some other form of regulatory impact analysis; cost-benefit is only rarely required by law. It is imposed by executive order not by statute, and could be just as easily “un-imposed” by a President inclined to remove what was intended to be, and has plainly become, a tool for scuttling protective regulations.
An "obscure" government agency that wields outsized power is in dire need of scrutiny. That’s exactly the rationale for CPR’s Eye on OIRA project, launched in 2010 to monitor and report on the activities of the Office of Information and Regulatory Affairs. The project does not exist solely to scold OIRA. When the office is supportive of protective regulations and regulatory agencies, when it plays a constructive role in the regulatory process, CPR Member Scholars praise the agency. When OIRA strays, however, overstepping its mandate or serving as a conduit for industry complaints, the Member Scholars say so.
In April 2013, President Obama nominated Howard Shelanski to replace Cass Sunstein as the head of OIRA. Noting that OIRA was months, and in some cases, years overdue in its review of rules -- in violation of Executive Order 12866, CPR's Rena Steinzor wrote in a blog post:
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....
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.
On June 27, the Senate confirmed Shelanski to the position. CPR's Sidney Shapiro issued the following reaction:
Now that he's been approved, Administrator Shelanski must begin the critical task of reinvigorating our calcified regulatory system. From clearing the backlog of overdue regulations stuck at OIRA in violation of the required deadline for finishing review to working with other Administration officials to identify ways to help implement President Obama's climate plan, thenew Regulatory Czar has a full plate.
Addressing the backlog of overdue regulations was among Shelanski's first tasks, and he found a "solution" that drew criticism from many of the President's supporters. As CPR Policy Analyst James Goodwin described in a September 18, 2013, post on CPRBlog, OIRA's bottleneck began to break up when the Environmental Protection Agency and the National Highway Traffic Safety Administration withdrew proposals that OIRA was more than a year behind on reviewing.
On September 6, 2013, less than three months after Shelanski's confirmation, EPA withdrew its proposed "Chemicals of Concern" list, a proposal that would have identified a number of potentially harmful chemicals worthy of scrutiny.
That same day, EPA withdrew a proposal to limit confidential business information claims that shield crucial health and safety data on new chemicals from the public.
Then on September 17, 2013, EPA withdrew draft final guidance intended to clarify the scope of the Clean Water Act.
That followed the withdrawal on June 6, 2013, while Shelanski's nomination was still being considered by the Senate, of NHTSA's final rule mandating rewarview cameras on vehicles to prevent back-over accidents.
All four rules were more than a year overdue, with the Chemicals of Concern list three years late, all because of OIRA. As Goodwin wrote, "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."
CPR's Report on OIRA Meetings and Outcomes
Over the years, OIRA’s pattern became familiar: an agency sends over a protective rule for review; industry meets with OIRA to complain about the rule (often several times); and then, behind closed doors, OIRA presses the agency to dilute or delay the rule, leaving people and the environment inadequately protected against unreasonable risks. The EPA’s rules for controlling coal ash waste and ozone pollution, the FDA’s rule to reduce salmonella contamination in eggs, and NHTSA’s rule on fuel efficiency labels for tires—all are telling examples of OIRA’s influence over the regulatory system.
The report reviews 10 years’ worth of data on OIRA’s meetings with outside groups and status reports for completed rule reviews—the only information on OIRA’s activities that are publicly available. It finds that industry has taken advantage of OIRA’s “all-you-can-meet” policy to dominate the OIRA meetings process: Industry representatives meet with OIRA five times more frequently than do public interest group representatives.
It also finds that industry’s meetings achieve the desired result: Rules that were the subject of meetings were 29 percent more likely to be changed during the review than those that were not the subject of meetings. Almost invariably, OIRA’s influece operates as a one-way ratchet, weakening safeguards that protect the public and the environment in order to protect regulated industry’s bottom line. Lastly, it finds that the EPA is disproportionately burdened by this process. Even though the EPA’s rules comprised only 11 percent of all those reviewed by OIRA, 41 percent of all meetings at OIRA related to EPA rules. Other agencies’ rules are changed a lot during OIRA review—about 65 percent of the time—but EPA rules are changed even more frequently than that—a whopping 84 percent of the time. Read more about the report, read the full report or read just the executive summary. Explore the searchable database, which compiles all the data on OIRA meetings and rule reviews used in the report.
12866 at 20 Blog Carnival. Executive Order 12866 turned 20 in October 2013, and nine CPR Member Scholars marked the occasion of the order upon which rests OIRA's true power with a blog carnival. Here's a summary of who said what with links to each of the individual posts.
Delays at OIRA: In June 2013, 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. 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. CPR Member Scholar Robert Verchick, a former EPA official, applauded the letter in a statement.
Scoring Political Points with the Regulatory Look-Back: In May 2011, OIRA Administrator Cass Sunstein penned an op-ed in the Wall Street Journal and delivered a speech at the American Enterprise Institute touting the preliminary results of the Administration's regulatory look-back, announced by the President in January. As the look-back was originally framed, agencies would examine current regulations to seek out -- and eventually revise -- rules that were redundant, had been overtaken by technology, were no longer necessary, or needed to be expanded. In his May announcement, Sunstein focused his discussion exclusively on regulations to be eliminated or weakened. CPR's Amy Sinden responded with a blog post taking the Administration to task for its anti-regulatory rhetoric, for failing to follow through on its promise to seek out areas where regulation needed to be expanded, and for ginning up the look-back as a largely political exercise that would divert agencies from their urgent work.
Launching the Obama Regulatory 'Look-Back': The GOP majority in the House of Representatives is working to advance legislation designed to gum up the regulatory system -- calling it the REINS Act. (Read Member Scholar Sidney Shapiro's editorial memorandum on the subject.) In January 2011, President Obama responded to the GOP's anti-regulatory initiative by launching one of his own. In an op-ed in the Wall Street Journal, the President announced that he would direct agencies to "look back" at existing regulations with the goal of identifying those "that conflict, that are not worth the cost, or that are just plain dumb." As CPR President Rena Steinzor pointed out, in the process of launching the initiative, the President adopted the frame for the conversation that the GOP has put forward: that regulations are a drag on the economy. In fact, as Steinzor argued in a number of media placements, there's no evidence of that. Moreover, she observed, the initiative will distract agencies from the much more important work of addressing pressing regulatory needs -- like climate change, unsafe workplaces, unsafe automobiles and more. Read Steinzor's blog on the subject.
Coal Ash Comments. Rena Steinzor's November 19, 2010 comments to EPA on its proposed coal ash regulation have sharp criticism for OIRA's extended review of EPA's 2009 proposal to regulate coal ash. Along the way, OIRA violated the executive order establishing its authority to review regulations by missing its deadlines, then imposed on EPA an alternative, watered-down, regulation, and then saddled EPA's original proposal with a cost-benefit analysis that would make it all but impossible for EPA to describe plainly hazardous coal ash as a hazard. Read Rena Steinzor's 2010 comments on EPA's proposal and OIRA's role in the process. Read the news release. Read a CPRBlog post.
Did OIRA Help Cause the Recent Salmonella Outbreak? One of the stories that emerged in the wake of the massive egg recall in August was that the Food & Drug Administration had recently issued a new rule meant to prevent salmonella contamination in eggs, but the rule was issued just a few months after the salmonella outbreak began. In these kinds of “near miss” situations, it is natural to ask questions like: Could the FDA have issued the rule a few months earlier? And, if so, why didn’t it? As it turns out, OIRA may have interfered with the rule in November of 2008, possibly delaying the rule’s completion by half a year or even longer. A September 1, 2010, CPRBlog post examines the facts surrounding this instance of potential OIRA interference with catastrophic consequences.
OIRA and Cock Roaches? Read Rena Steinzor's August 30, 2010 testimony before an EPA panel conducting regional hearings on regulating coal ash, in which she explains why the supposedly "irrational" refusal of human test subjects to drink a glass of water from which a cock roach had just been removed is at the heart of OIRA's extraordinary rationale for tilting a cost-benefit analysis against regulating coal ash.
OIRA and Transparency: Despite the Obama Administration's commitment to transparency in government, OIRA is operating in opaque mode, according to a June 22, 2010 CPRBlog post from Rena Steinzor.
OMB Report to Congress. OMB submits annual reports to Congress on the benefits and costs of federal regulation. And like clockwork, CPR Member Scholars analyze the submission and respond. Read the2010 response from Sidney Shapiro, Amy Sinden, Rena Steinzor, and James Goodwin. Their four main points: OMB's habit of providing Congress with aggregate costs and benefits of regulation is "fundamentally counterproductive" and OMB should abandon it; the report makes clear that OIRA intends to continue "micromanaging agency decisionmaking," even though the agencies are the ones with mandates from Congress; while the report's call for transparency is laudable, the recommendations "are incomplete"; and the Interagency Task Force approach used to develop a proposed value for the social costs of carbon, an approach OMB holds up in its reort as a model of transparency, was anything but transparent -- the task force's members were never revealed and it took no public comments, while using flawed economic models, data and assumptions. Here's OMB's report. Read more about OMB's annual reports to Congress.
Coal Ash. After a months-long struggle between EPA and OIRA, on May 3, 2010, EPA released not one but three proposals for dealing with the problem of hazardous coal ash waste. EPA sent a proposed rule to OIRA in mid-October 2009, starting a 120-day clock for OIRA's consideration of the proposal. What followed was a massive lobbying blitz by the industry, that included more than 40 meetings with OIRA staff -- all to talk about a rule whose substance was the province of EPA, not OIRA. In February, the clock expired, but no rule emerged, and neither, for that matter, did an explanation as to why the time had run out without action. CPR's review of the paper trail between between EPA and OIRA, subsequently released by EPA, shows exactly how EPA's proposal came to be watered down. Read all about it, here and here. Read all CPRBlog entries on coal ash.
OIRA’s First Review Letter of the Obama Administration. On March 19, 2010, Administrator Cass Sunstein issued OIRA’s first Review Letter of the Obama Administration, offering guidance to the Administrator of the National Highway Traffic Safety Administration (NHTSA) on how to implement the agency’s new “Tire Fuel Efficiency Consumer Information Program.” Under this program, NHTSA must develop a system of fuel efficiency ratings for tires, which consumers can consider when deciding which replacement tires to buy for their cars. OIRA’s Review Letter directs the agency to employ behavioral economics principles, such as “clarity” and “transparency and meaning,” when designing the labels for communicating the ratings to customers. For background on the different type of OIRA letters, see here.