President Barack Obama took two steps toward reforming the way federal agencies develop public protections. On Jan. 30, the president issued a memorandum to the heads of executive departments and agencies asking for recommendations to help develop a new regulatory executive order. The same day, he issued an executive order overturning two Bush-era executive orders that changed the way regulations were developed.
The memo on regulatory review was published in the Feb. 3 Federal Register. It appears to initiate a process that would lead to a new executive order outlining the path agencies need to follow to develop rules and the review of those rules by the White House. The regulatory executive order currently in force, Executive Order 12866, was issued by President Clinton in 1993 and amended twice by President Bush.
Obama's memo differs from other presidential administrations considerably in its tone toward the value of public protections. He writes, "I strongly believe that regulations are critical to protecting public health, safety, our shared resources, and our economic opportunities and security." He also acknowledges the "expertise and authority" of the federal agencies, a philosophy that is in stark contrast from the Bush administration, where agency expertise and authority were often overridden by White House interests. By publicly requesting recommendations from the agencies, Obama is providing a seat at the table for agencies as the administration begins formulating a new order.
The memo directs the Office of Management and Budget's (OMB) director to work with agencies to produce the recommendations within 100 days. Specifically, the recommendations should address the following issues:
Most of these issues have been debated by regulatory scholars, public interest organizations, and business interests for years. Obama's transition team received many proposals on how to improve the regulatory process from think tanks, legal experts, scientific organizations, and public interest organizations. OMB Watch also initiated a project led by 17 regulatory and policy experts that made recommendations to the new administration and Congress.
Observers will pay particular attention to any recommendations on cost-benefit analysis in light of Obama's presumed controversial choice for OIRA administrator. Obama is expected to nominate University of Chicago law professor Cass Sunstein to the post. Sunstein is an ardent advocate of cost-benefit analysis and has written that agencies need guidance from OIRA in order to do the analyses correctly and make them useful as regulatory tools. He also argues that cost-benefit analysis should be a major, but not necessarily a determinative, consideration in justifying agency rulemakings.
The Obama administration has not yet described a process by which the public can offer input on the formulation of a new executive order. The Obama memo provides no requirement for public consultation, nor does it require the agency recommendations to be made public. However, on his first full day in office, Obama announced in a memo on transparency and openness that transparency, participation, and collaboration would be guiding principles in his administration.
The executive order Obama issued, Executive Order 13497, was published in the Federal Register on Feb. 4. It revoked a controversial order Bush issued in January 2007 that gave OIRA more control over agency regulatory practices by amending E.O. 12866. Critics of the Bush changes, including OMB Watch, argued that additional delay in issuing regulations would result from two changes: 1) making regulatory policy officers within agencies presidential appointees and giving them power to initiate or kill regulations, thus usurping what had traditionally been a power of the agency heads; and 2) requiring agencies to submit significant guidance documents (nonbinding information documents of all types that clarify how to implement rules) to OIRA for review before releasing the documents. There was no time limit by which OIRA had to act on the guidance documents.
In addition, Bush provided OIRA with another rationale for limiting which rules would be approved. By requiring agencies to identify a "specific market failure," Bush's amendments shifted the criterion for issuing rules from identifying a problem like public health or environmental protection. OIRA could return a rule or kill it if an agency did not convince OIRA of a market failure justifying the agency's actions.
The Obama order also revoked a 2002 Bush order that amended E.O. 12866 by removing the vice president from a formal role in resolving disputes regarding regulations under review. The changes shifted those responsibilities to others in the White House, usually the president's chief of staff. By revoking these two Bush executive orders, Obama has returned to the Clinton-era framework for rulemaking and review, pending the outcome of the process he has begun with the memo asking for agency recommendations.
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