Experts Vie to Influence Obama on Regulatory Reform

Regulatory experts across the country are angling to change the way federal regulations are written and approved. Since President Barack Obama issued a memo Jan. 30 instructing his administration to rethink the executive order that governs the federal regulatory process, the White House Office of Management and Budget (OMB) has been accepting public comments on ideas for reform and meeting with stakeholders.

On Feb. 26, OMB announced [1] the beginning of an 18-day comment period; OMB will accept comments until March 16. The public can submit comments by emailing them to oira_submission@omb.eop.gov [2] or faxing them to (202) 395-7245. OMB is posting all comments online at www.reginfo.gov/public/jsp/EO/fedRegReview/fedRegReview.jsp [3]. Obama has requested administration officials forward their recommendations to him by mid-May.

Obama's aim is to realign a rulemaking process many observers believe is outmoded. Modern risks like global climate change and the safety of the food supply are not being adequately managed, leaving many to question both the speed and seriousness with which the government can address emerging problems.

Obama is likely to substantially revise or completely replace Executive Order 12866 [4], Regulatory Planning and Review. President Bill Clinton signed E.O. 12866 in September 1993. President George W. Bush made modifications to the E.O. but largely upheld the Clinton framework.

E.O. 12866 requires federal agencies to seek White House approval before publishing regulations. Agencies must submit to the White House Office of Information and Regulatory Affairs (OIRA), a unit within OMB, draft versions of proposed and final regulations. OIRA can require the agency to make changes to the rule before allowing it to move forward. OIRA also funnels the concerns or comments of other agencies inside the federal government.

E.O. 12866 also requires agencies to "assess all costs and benefits" of the regulatory options under consideration.

The process defined by E.O. 12866 has sometimes spawned controversy. For example, during the Bush administration, OIRA stalled for more than 18 months a regulation intended to protect the North Atlantic right whale, a critically endangered species. While under OIRA's control, officials from Vice President Dick Cheney's office and the Council of Economic Advisors questioned the scientific basis for the rule. When the Department of Commerce unveiled [5] the final rule, it was weaker than the proposed version released years earlier.

Critics of the process are now weighing in with ideas for reform. OMB Watch called [6] for an end to rule-by-rule review – a process that has dominated federal rulemaking under E.O. 12866 and its predecessor order. "White House offices do not, and should not, duplicate the expertise of the agencies and, therefore, should not be involved in the review of each significant regulatory proposal," OMB Watch said.

Instead, OIRA should show more deference to agencies. OIRA could continue to facilitate comments from other agencies, but its direct relationship with rulemaking agencies should help, not hinder, according to OMB Watch. OIRA should shift its responsibilities by helping agencies set priorities and identify areas where regulation could address an unmet need. OIRA should also hold agencies accountable for delays in finalizing rules, OMB Watch said.

Other commenters, including the Center for Progressive Reform (CPR), also called for an end to rule-by-rule review.

However, Jim Tozzi of the Center for Regulatory Effectiveness urged a continuation of rule-by-rule review: "OMB review of discretionary regulations should be viewed as indispensable to the President's Constitutional duty to 'take Care that the Laws be faithfully executed,' since rulemaking is in many instances the primary way in which most statutes are implemented."

Comments submitted by law professors Jacob Gersen and Anne Joseph O'Connell focused on the length of the rulemaking process. Using government-provided data, they found the average time between a rule's proposal date and finalization date to be 503.4 days for significant regulations. The calculation does not encompass the time it takes for an agency to study and develop its proposed rule.

Gersen and O'Connell recommend OIRA more frequently "encourage agencies to start and finish rulemakings more quickly."

Some commenters targeted cost-benefit analysis. CPR urged the Obama administration to forego the usual form of cost-benefit analysis, which has traditionally emphasized the conversion of all costs and all benefits to dollars and cents, for comparison's sake. CPR says the focus on so-called monetization leads to the "inability of cost-benefit analysis to measure the benefits produced by regulatory action."

Others called for changes to the way cost-benefit analysis is done. Reece Rushing from the Center for American Progress recommended cost and benefit assessments more accurately identify the parties that are expected to feel a rule's impact, rather than aggregating impacts into a single cost estimate and a single benefit assessment. Matthew Adler from the University of Pennsylvania also discussed the distribution of costs and benefits and proposed innovative ways for measuring a rule's effect on income inequality or poverty.

Many commenters mentioned the need to improve transparency in the rulemaking process, especially during OIRA's review of rules, if it is to continue. Columbia University law professor Peter Strauss commented, "The legitimacy and acceptability of [OIRA's] role requires a high degree of transparency in its exercise – not just lists of meetings, attendees and submissions, but copies of documents." He added, "If agencies should change their course as a result of coordination activities, they should indicate how and why they were persuaded to do so."

OMB is also taking meetings with outside interests to hear recommendations in person. OMB has held at least three of these meetings, according to the webpage listing comments and meetings. OMB held one meeting with representatives from public interest groups, another with industry lobbyists, and a third with officials representing state and local governments.

(All comments and meeting participant lists are available at www.reginfo.gov/public/jsp/EO/fedRegReview/publicComments.jsp [7].)

Outside of the OMB-led process for revising the executive order, the Obama administration is taking other steps to reform rulemaking. On March 9, Obama signed a presidential memorandum [8] directing the White House Office of Science and Technology Policy (OSTP) to lead an effort to develop recommendations "designed to guarantee scientific integrity throughout the executive branch."

"The public must be able to trust the science and scientific process informing public policy decisions," Obama said in his scientific integrity memo. In an apparent affront to the Bush administration, he added, "Political officials should not suppress or alter scientific or technological findings and conclusions." Scientific integrity and transparency advocates repeatedly criticized the Bush administration for suppressing science around controversial issues, such as climate change and reproductive health.

Obama provided certain key principles that OSTP must follow in developing recommendations, including the importance of hiring agency scientists on the basis of expertise, not political ideology. Obama highlighted the need for transparency, saying, “Each agency should make available to the public the scientific or technical findings or conclusions considered or relied on in policy decisions,” except where prohibited by law. He added that each agency should also have procedures to “ensure the integrity of the scientific process” and ensure that decision making is not corrupted.