Blog Posts in Industry Influence and Interference

International Regulatory Cooperation: Will Harmonization Protect the Public or Prioritize Corporate Profits?

 

A May 1 Executive Order on international regulatory cooperation has raised questions about how regulatory agencies set their priorities. Regulatory cooperation is neither a particularly new idea, nor an inherently bad one – but if not handled carefully, it could undercut the public protections on which Americans depend.

It shouldn't shock anyone to hear that we are living in an increasingly interdependent world. Consider only the FDA: in 2009, it was responsible for overseeing imports from more than 300,000 drug facilities, totaling $2 trillion worth of products from 150 countries. And, between 2002 and 2010, imports of food, drugs, and medical devices all more than doubled. Because of these changes, the agency says that "FDA’s success in protecting the U.S. public depends increasingly on its ability to reach beyond U.S. borders."

International regulatory cooperation sometimes makes sense: for example, the Department of Labor has recently adopted the Globally Harmonized System of Classification and Labeling of Chemicals (GHS). The GHS was the result of an international negotiation involving governments, industry, and labor unions. OSHA estimates it will save American companies $475 million each year (because they can use the same label in different countries) and keep workers safer (because the warning system will be more consistent).

But too often, international regulatory cooperation becomes a race to the bottom, elevating corporate trade concerns over public protections. On May 1, the Administration announced an Executive Order on "Promoting International Regulatory Cooperation." That afternoon, the Administrative Conference of the United States and the U.S. Chamber of Commerce co-hosted a conference on international regulatory cooperation.

Increased emphasis on international regulatory cooperation could be a good thing – if its priority is to improve and maintain regulatory protections across borders. But, too often international cooperation is an excuse to water down protections to the lowest level – a move that typically hurts American workers, consumers, and environment. Our goal should be to have American safeguards represent the “gold standard” worldwide.

Nor should international regulatory harmonization be used as an excuse to limit public participation in the regulatory process. Unfortunately, treaty negotiations controlled by the U.S. Trade Representative typically exclude most public interest groups and consumer organizations, while ensuring maximum corporate involvement and influence. In a disturbing example, "stakeholder presentations" - the only opportunity for public input - were recently eliminated from the meetings surrounding the negotiation of the Trans-Pacific Partnership (TPP), but corporations and industry representatives are still being invited to participate in the TPP talks. In fact, the U.S. Chamber of Commerce – which vigorously supports legislation to undercut public protections – boasts that its recommendations formed the basis for the U.S. negotiating positions.

Alarmingly, previous trade agreements have been interpreted to undermine a nation's ability to regulate within its own borders. For example, the U.S. had prohibited the sale of clove cigarettes on public health grounds. That regulation was recently struck down on grounds that it violated World Trade Organization agreements. Even more egregiously, the North American Free Trade Agreement allows corporations to challenge foreign regulations – and recently, a Canadian trade association raised a challenge to a rule authorized by the Dodd-Frank financial reform law.

As the American economy globalizes, the American regulatory system will have to as well. International regulatory cooperation can be a force for good, if it means that regulators from different nations are working together to enact common-sense standards that are clearer and more consistent and protect citizens no matter where they live. But if corporate special interests are being prioritized over essential public protections, no one should cooperate with that.

(Jessica Randall 05/03/12; 1 comment)

A Dangerous, Misguided Regulatory Attack

 

Today, Sens. Rob Portman (R-OH), Mark Pryor (D-AR), and Susan Collins (R-ME), and Reps. Collin Peterson (D-MN) and Lamar Smith (R-TX) announced their intention to propose a major revision of the Administrative Procedure Act – the basic legal framework that defines how federal rules are made – that would prevent or delay by years important health, safety, and environmental standards. It's hard to imagine a more damaging attack on the federal government's responsibility to protect the public from a wide range of threats.

The most recent draft of the forthcoming bill, currently known as the Regulatory Accountability Act of 2011, is a “solution” in search of a problem. The proposal is based on dangerous and misguided assumptions about the connection between regulations and job creation. For decades, economic studies have shown consistently that regulations do not negatively impact employment. In fact, some standards and environmental protections actually create jobs and generate new industries. Corporations and banks are sitting on more than a trillion dollars instead of investing those resources and creating jobs because demand is weak, not because of regulations.

A recent survey of small business owners by the Small Business Majority reveals that they do not believe regulations are affecting their ability to grow their businesses. Rather, economic uncertainty (i.e., lack of demand for their products) and the rising cost of doing business are what they worry about most. Likewise, in an August survey of business economists, a large majority reported that the current regulatory climate in this country is good for business and the economy.

If the provisions of the proposal (as described in a fact sheet from Portman's office) become law, they will result in a near-moratorium on rules by creating even more obstacles for agencies to overcome in issuing standards that keep us safe from contaminated food, product defects, and polluted air and water. In addition, the proposal would shift the locus of regulatory decisions to the courts and out of agencies' hands by providing multiple new opportunities for deep-pocketed corporate interests to challenge agencies at nearly every step of the process. When such special favors are granted to special interests, everyday Americans are further shut out of the regulatory process, giving them less of an opportunity to participate in this essential function of democratic governance.

For example, the proposed bill could allow cost-benefit analysis to be reviewed by the courts at both the proposed and final stages of the rulemaking process. If this happens, rules would not only languish for years, but courts would be empowered to substitute cost considerations for the health and safety of the American people – the basis of important laws like those that protect workers and our environment. This court-dominated process would be incredibly costly, wasting resources instead of enabling agencies to address problems in a timely and responsive fashion. This shift would favor wealthy business interests, not small businesses. The proposal's judicial review provisions would also shift the responsibility for agency oversight from Congress to the courts and swamp an already overburdened federal court system.

If Sens. Pryor, Portman, et al. want to constructively reform the federal regulatory process, they should work to reduce the barriers that make it difficult for agencies to fulfill the missions they’ve been assigned: to enforce the rules that protect the American people from environmental, chemical, and workplace dangers and establish the foundations for healthy economic growth.

Editor's Note: This post has been updated to clarify the potential scope of judicial review that the Regulatory Accountability Act would write into law.

(Rick Melberth* 09/22/11; 20 comments)

EPA Scientific Integrity Proposal Missing Critical Elements

 

The U.S. Environmental Protection Agency’s (EPA) draft scientific integrity policy is missing critical elements needed to effectively safeguard science at the agency, OMB Watch said in comments filed yesterday. The policy must be improved if the agency is to ensure that the best science informs policy decisions that affect the health and environmental quality of all Americans.

The Obama administration recognizes that sound, uncensored science is critically important to protecting our health, economy, and environment. Consequently, President Obama issued a memo shortly after taking office, establishing protections for scientific integrity and directing agencies to implement them. Unfortunately, implementation of that memo has been sluggish and uneven. However, there have been some bright spots, such as the draft policy at the National Oceanic and Atmospheric Administration (NOAA), which OMB Watch praised.

EPA's efforts have been more mixed. For example, the process to develop a policy at EPA has been mostly open: the agency posted a draft policy and solicited public comment. But the openness has been less than full-fledged, as important appendices and references are missing from the policy posted. EPA should be sure the public has an opportunity to comment on a complete version of the policy before finalizing it.

The content of EPA's draft policy is also flawed. The draft policy moves in the right direction but stops short of what's needed to adequately protect scientific integrity. Fundamentally, an effective scientific integrity policy must do two things: prevent political interference with science and protect the free flow of scientific information. EPA's draft policy is inadequate on both counts. As we say in our comments:

In general, the portions of EPA’s draft policy that have been released to date establish the appropriate principles for scientific integrity, particularly in striving to keep science free from political interference and to foster a culture of scientific openness. However, the translation of these principles into effective policies is lacking, and we recommend that EPA make significant changes to the draft policy to address this gap.

To improve EPA's draft policy, OMB Watch makes these recommendations in our comments:

  1. Make the prohibitions on political interference with science enforceable;
  2. Strengthen protections for the free flow of scientific information;
  3. Protect personnel who blow the whistle on scientific integrity violations;
  4. Improve scientific integrity in peer review and federal advisory committees;
  5. Expand the role and responsibilities of the Scientific Integrity Committee; and
  6. Strengthen scientific integrity in interagency processes.

EPA's draft suggests that the agency understands the central role of scientific integrity in achieving its critical work to protect Americans' health and natural resources. But EPA needs more than just principles in order to have a policy that effectively upholds scientific integrity. Luckily, EPA has a great model to draw from: the draft NOAA policy. We're hopeful that EPA will make the revisions necessary to ensure that EPA science continues to be top-caliber research that Americans can trust.

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(Gavin Baker 09/07/11; 12 comments)

How to Strengthen Transparency in the U.S. Open Government Plan

 

Yesterday, OMB Watch submitted its recommendations for the Obama administration's national plan for the Open Government Partnership (OGP). The administration will unveil its plan, with new concrete commitments to increase transparency, at the international OGP meeting on Sept. 20.

Seven other countries will also announce their national open government plans at that summit, organized around the United Nations General Assembly meeting. For the U.S. as well as the other participants, OGP has been an impetus to action for transparency. The national plan to be released in September is an important opportunity for the administration to expand on its progress in strengthening open government in order to empower Americans and build a better democracy.

In blog posts on Aug. 8 and Aug. 22, the administration asked for feedback on six topics to inform the development of its national plan. Reforms in these areas, including improving federal websites and promoting corporate accountability, would constitute a positive agenda for the U.S. Open Government Plan.

Our comments offer recommendations on each of the six topics. Among the ideas offered, OMB Watch encouraged the administration to:

  1. Transform Regulations.gov into a one-stop shop for citizens to learn about rulemaking
  2. Establish federal website standards that encourage proactive disclosure, identification of public priorities, and visualization tools
  3. Improve Data.gov with common data formats, identifiers, and user-friendly interfaces
  4. Strengthen records management with smarter IT investments and email policy
  5. Make regulatory compliance information more user-friendly
  6. Promote corporate accountability with better disclosure

In addition to these comments, OMB Watch has consulted with the administration on other topics that would make excellent contributions to the U.S. Open Government Plan. Meaningful reforms to the six consultation topics would be a significant step forward, but we hope that the administration will consider additional initiatives as well. For instance, the White House could establish an award, similar to the SAVE Award, to recognize the best contributions to open government by federal employees. Such an award could be an important way to foster a culture of openness within government and would be a helpful complement to the policy reforms the administration is considering.

We invite readers to join the discussion by sending their thoughts on the six topics by email to opengov@ostp.gov.

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(Gavin Baker 09/01/11; 17 comments)

Business Economists: Current Regulatory Environment Good for Business and Economy

 

The August 2011 Economic Policy Survey from the National Association for Business Economics (NABE) found that a large majority of business economists have a positive perspective on the regulatory environment in the United States, contradicting the overheated, anti-regulatory rhetoric coming from Big Business lobbying shops.

According to the survey:

Regulatory activity has gained a lot of attention, with many groups suggesting that American businesses are overregulated by the current administration. With that said, 80 percent of survey respondents felt that the current regulatory environment was "good" for American businesses and the overall economy.

Moreover, according to these experts, many of whom work hands-on in the business world, the watchword "uncertainty," when used by many businesses, refers to anxieties over the weak economy, not so-called "regulatory uncertainty." Nearly 75 percent of survey respondents said that "once the economy starts to improve, such anxieties will go away." NABE also noted, "The majority of survey respondents indicated that while uncertainty might be a concern, it is not a major one."

The NABE survey is the latest piece of evidence that the sky is not falling when it comes to regulations or the regulatory environment. In fact, recent studies from the independent Economic Policy Institute clearly show that regulations do not have a significant impact on job loss overall, that some rules can help create jobs in certain sectors, and that specific regulatory protections, including a series of environmental and public health standards from the U.S. Environmental Protection Agency (EPA), can have significant economic and quality-of-life benefits. Other studies and reports, including pieces from the Office of Management and Budget (OMB), the Congressional Research Service (CRS), and the Clean Air Council, illustrate that industry messaging on regulations is misleading and that the benefits of key public protections far outweigh their costs to business.

The bottom-line take-away from all of this evidence, coupled with common sense? The American people simply do not have to – and should not be asked to – choose between job creation and protecting their families and communities from environmental, workplace, and consumer product hazards.

(Rick Melberth* 08/25/11; 63 comments)

New Critique of Crain and Crain Study Rejects Claim about Costs of Public Safeguards

 

An estimate of the cost of public protections often cited by regulatory opponents has been rejected by researchers from the Economic Policy Institute (EPI). The critique, Flaws Call for Rejecting Crain and Crain Model, concludes that because the $1.75 trillion cost estimate is heavily based on flawed methodology and flawed data, it "should not be used either as a valid measure of the costs of regulation or as a guide for policy."

The exceptionally high estimate comes from a study by Nicole Crain and Mark Crain contending that the annual cost of federal regulations in the U.S. increased to more than $1.75 trillion in 2008. The Crain and Crain study, released in September 2010, was developed for the Small Business Administration’s (SBA) Office of Advocacy and reviewed and edited by SBA officials. While regulatory critics in Congress and industry parade the figure as evidence linking regulations to the damaged economy, researchers and experts have scrutinized the Crain and Crain study.

John Irons and Andrew Green, authors of the EPI paper, found fundamental errors in the regression analysis used by Crain and Crain to determine 70 percent of the costs included in the final estimate. They also discovered a pattern of missing information in the initial data set used to assess the relationship between regulation and GDP in other countries. Irons and Green used more complete data to recalculate part of Crain and Crain’s analysis but ultimately concluded that even enhanced data could not make up for flaws in the study’s methodology.

Adding to numerous criticisms of the study, the EPI critique involves a specific examination of the economic model used in the study, from which Irons and Green identify both conceptual and empirical problems with Crain and Crain’s analysis. In addition to deficiencies in the data and underlying methodology, researchers have identified broad conceptual flaws that undermine the suitability of the study as a regulatory deterrent. For example, evaluations by the Center for Progressive Reform (CPR) and the Congressional Research Service (CRS) point out that the benefits of regulations were not considered in the study.

Crain and Crain’s regulatory cost estimates also differ from estimates submitted in annual reports to Congress by the Office of Management and Budget (OMB). Cass Sunstein, administrator of OMB’s Office of Information and Regulatory Affairs (OIRA), said in a June hearing that the Crain and Crain study is "deeply flawed and should not be relied on." Austan Goolsbee, the chairman of the Council of Economic Advisers, called the $1.75 trillion figure "utterly erroneous."

Following the release of EPI’s critique, the Coalition for Sensible Safeguards issued a statement calling on members of Congress and others to stop relying on the $1.75 trillion cost estimate.

(Katie Greenhaw 07/19/11; 6 comments)

EPA Withdraws TRI Clarification Rule That Would Protect Public Health

 

Last Friday, the U.S. Environmental Protection Agency (EPA) withdrew from consideration a final rule that clarified exemptions to its Toxics Release Inventory (TRI) reporting requirement. The articles exemption clarification was being reviewed by the Office of Information and Regulatory Affairs (OIRA), the last step before it could be finalized and published in the Federal Register. The OIRA review process is not made available to the public, so it is impossible to tell what caused EPA to pull the rule.

TRI is an important part of the Emergency Planning and Community Right-to-Know Act that requires manufacturers whose production processes release toxic chemicals into the environment above a certain threshold to report it to EPA. However, chemical releases that occur during storage of materials not made at the facility, or through the natural deterioration of materials, are exempt from the TRI reporting requirement. EPA created this “articles exemption” to reduce the reporting burden on facilities.

In 2007, representatives of the wood treatment industry contacted EPA for guidance on the articles exemption. EPA found that wood treatment facilities incorrectly believed off-gassing wood that had been treated with toxic chemicals was exempt from TRI reporting requirements under the articles exemption provision. As a result, wood treatment plants were exposing surrounding communities to toxic chemicals such as ammonia, arsenic, and benzene without reporting it. EPA, acknowledging that its existing guidance on exempt articles was misleading, began the rulemaking process to clarify that off-gassing did not qualify for the exemption.

The withdrawal of this rule is cause for concern for two reasons. First, EPA pulled the rule in its final stages, after it had been through the rigors of the rulemaking process during which stakeholders, the public, and OIRA had the opportunity to weigh in on the proposal. In addition, EPA held a meeting with industry in July 2010, before the final rule was completed, giving the agency ample opportunity to respond to industry complaints. EPA then finished the final rule and submitted it to OIRA in November 2010. The withdrawal indicates that EPA must have received new information or felt additional political pressure since drafting the final rule, though none of this has been disclosed to the public.

Second, OIRA delayed its review of the exemption clarification, which is often a red flag indicating potential industry or political interference in the rulemaking process. By law, OIRA has 90 days to review a rule and return it to the agency for revisions or for publication in the Federal Register. It may file one 30-day extension if it needs more time to reach a decision on the rule. The exemption clarification was at OIRA for 214 days – more than twice the standard time for review.

EPA has ignored press requests for information regarding the withdrawal of the rule, including whether the agency plans to resubmit a revised version of the exemption clarification or to cancel the clarification entirely. While not required by law, EPA should release the OIRA markup of the final rule and let the public know why it pulled a straightforward clarification that would have improved protections to public health and safety.

(Cassandra Lovejoy* 06/24/11; 9 comments)

OIRA Administrator Sunstein Calls Crain & Crain Report "Deeply Flawed"

 

In his oral testimony in a hearing before the Senate Committee on Homeland Security and Governmental Affairs on June 23, Cass Sunstein called out a "deeply flawed" report that many have been using to criticize the costs of the regulatory system.

The report in question was commissioned by the Small Business Administration's Office of Advocacy from economists Nicole and Mark Crain. It pins the annual cost of regulations at $1.75 trillion, a figure which many on Capitol Hill have repeated as they argue that federal agencies should halt or delay the rules that protect our health, workplaces, and environment.

Unfortunately, that number is simply not accurate. The study has been widely discredited by the Congressional Research Service, the Economic Policy Institute, and the Center for Progressive Reform. Even the Crains themselves have said that the number was "not meant to be a decision-making tool for lawmakers or federal regulatory agencies."

With Sunstein's opening remarks, the Obama administration became the latest voice to join the chorus decrying the report. He said the report is "deeply flawed and should not be relied on" and referred to the $1.75 trillion figure as "an urban legend." In defending the Obama administration's regulatory record, Sunsten noted that the benefits of final rules (including things like lives saved and illnesses prevented) far outweigh the costs of regulation. He pointed out that this has been the case under both Republican and Democratic administrations.

Austan Goolsbee, the Chairman of the Council of Economic Advisers, provided a bit more detail in a post on the White House blog. He wrote:

“Some people are throwing around scary numbers about the costs regulations are imposing on the US economy. One group is even claiming that the regulations currently on the books cost the U.S. economy $1.75 trillion in 2008. The Council of Economic Advisers has looked at those claims and the $1.75 trillion figure is utterly erroneous. In fact, their own data (which come from the World Bank) show that countries with smarter regulations have higher standards of living, and the United States has one of the best regulatory systems in the world. And beyond that, their number completely ignores the benefits of regulation.”

The Chamber of Commerce and their allies in Congress certainly can have their opinions about regulations – but it's high time they stopped trying to make up their own facts.  We can all hope that Sunstein's comments will make a difference in changing the debate.

(Jessica Randall 06/23/11; 9 comments)

Real Stories about the Benefits of Regulation Emerge Ahead of Senate Hearing

 

For months, the country has been bombarded with increasingly negative and misleading messages about federal regulation, and Congress has responded by launching attacks against public protections that safeguard our air, our water, our food, our workplaces, and our economy. What's been missing from these anti-regulatory broadsides are examples of the benefits of regulation, but such stories emerged earlier today during a Coalition for Sensible Safeguards press call.

The call, held one day before the Senate Homeland Security and Governmental Affairs Committee is scheduled to discuss a variety of legislative proposals targeting regulation, featured four speakers from diverse backgrounds: Robert Weissman, the president of Public Citizen (a co-chair of the coalition); Mike Krajovic, the president and CEO of the Fay-Penn Economic Development Council in Pennsylvania and a member of the American Sustainable Business Council's steering committee; Margo Moskowitz, a native of Virginia (she now lives in Georgia) who suffered a severe case of E. coli infection from cookie dough; and Cathy Stoddart, a registered nurse at a Level 1 trauma center in Pittsburgh, PA.

The speakers illustrated the benefits of regulation and provided examples of what happens when sensible, effective safeguards are not in place. Moskowitz, for instance, told a powerful story about her foodborne illness experience several years ago, the effects of which she is still living with today. Stoddart noted that before the Occupational Safety and Health Administration (OSHA) cracked down on needle safety issues, nurses and other health care professionals were frequently falling victim to needlesticks; one of her colleagues eventually died after becoming infected with hepatitis from a needlestick. Stoddart said that since needle safety rules have been in place, incidents of hepatitis and other infections from needlesticks have fallen dramatically, preventing untold illnesses and deaths among health care workers.

Krajovic said that small business owners want to do the right thing, especially considering that much of their success is based upon the quality of life in the communities in which they live and work. During the call, he said that many small businesses are "naturally doing what's naturally right" and are playing by the rules on a daily basis. He also stressed that Big Business and its allies, including the U.S. Chamber of Commerce, do not speak for the small business community and have what he called a "myopic" view of public protections. Without regulations, he said, communities suffer from the irresponsible actions of these big corporations, such as shipping jobs overseas.

These stories and others like them show that public protections are critically important. Hopefully, lawmakers in the Senate and beyond will start listening and will come to understand that legislation that delays critical rules and prevents agencies from effectively protecting the public is counterproductive and poses a threat to the health, safety, and quality of life of the American people.

(Rick Melberth* 06/22/11; 5 comments)

Snowe Anti-Reg Amendment Fails, but with a Majority

 

A legislative amendment intended to delay new public protections and roll back existing regulations failed in the Senate today. The amendment, championed by Sen. Olympia Snowe (R-ME), is the same legislation that derailed a small business aid bill last month.

Snowe’s amendment is a sop to corporate lobbyists. It would complicate the rulemaking process in ways that waste agency time and taxpayer resources while giving special interests additional opportunities to game the system and undermine decisions based on science and agency expertise. Specifically, the amendment would:

  • Allow special interests to challenge agency rules in court before they are even finalized, potentially trapping agencies in a never-ending cycle of litigation.
  • Require agencies to conduct lookback reviews for potentially all their rules under deadline. If the agency doesn’t meet the deadline or if the review is deemed inadequate, agency inspectors general could cut agency budgets by one percent for each rule.
  • Increase the number of agencies required to form small business review panels that give business representatives a sneak peek at rules under development, before they go public. (Currently, only EPA, OSHA, and the new consumer protection bureau must form the panels.)
  • Expand agency cost-benefit analyses to include “indirect” impacts, with a definition of indirect that’s vague enough to send agencies on an endless quest for new implications before they can act.
  • Expand these requirements to agency guidance documents, not just rules, even though guidance documents are non-compulsory and often help businesses comply with rules or keep their products and practices safe and effective. 

Snowe attempted to attach her amendment to a bill that would reauthorize the Economic Development Administration. Although the amendment failed in a 53-46 cloture vote, seven short of the 60 needed to end debate, it is unlikely to be gone for good. This is the second time Snowe has tried to attach the amendment to an unrelated bill, and, during the second go-round, she gave it a new, snappy name: Freedom from Restrictive Excessive Executive Demands and Onerous Mandates (FREEDOM) Act of 2011.

(“Freedom” is an interesting choice of title given that the bill’s supporters would pay for it by eliminating a program that helps veterans start and maintain small businesses – a cruel blow to the entrepreneurial spirit of those who fought to keep our nation free. The bill would transfer funds from the Small Business Administration’s Veterans Assistance and Services Program to the SBA’s Office of Advocacy, an agency that funnels business concerns into agency rulemakings.)

The Coalition for Sensible Safeguards, of which OMB Watch is a member, wrote to Senators today urging them to vote “no” on the amendment and applauds the 46 Senators who did.

But the 53 who voted “aye” should be ashamed. The Snowe amendment would impact every major regulatory agency, slowing health and safety standards in the pipeline and allowing special interests to target rules on the books. The amendment would negatively impact food and product safety, clean air and water, the health and safety of miners and other workers, fair access to healthcare, and tougher oversight of Wall Street. Rules that aid students, farmers, veterans, the disabled, and even small businesses – which the amendment purports to benefit – would be swept in as well.

Snowe’s amendment is backed by big business lobbyists from the U.S. Chamber of Commerce, National Association of Home Builders, National Retail Federation, and others.

(Matthew Madia 06/09/11; 7 comments)