James Goodwin on CPRBlog {Bio}
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The GAO’s Scathing Report on the SBA Office of Advocacy: 15 Big Revelations

As I noted here last week, the Government Accountability Office (GAO) published a report that delivered a scathing review of the Small Business Administration’s (SBA) Office of Advocacy.  The GAO report’s general objective was to assess whether and to what extent the SBA Office of Advocacy is fulfilling its core mission of serving as a “voice for small businesses within the federal government,” and accordingly looked at two of its most important activities for carrying out that core mission: sponsoring small business-centered economic research and participating in individual rulemakings that have a significant impact on small business interests.

In contrast to most GAO reports—which are conspicuous for avoiding controversy and their dry, moderate tone—this one offered some uncharacteristically strong criticisms of the SBA Office of Advocacy.  For example, after rejecting the SBA Office of Advocacy’s feeble excuses for not taking any steps to verify the quality of information contained in a series of controversial studies on regulatory costs that the agency had sponsored, the GAO report opined, “We acknowledge that these reports may not necessarily be representative of all Advocacy’s research efforts, but not substantiating the quality of the information in even one study could call into question the credibility of Advocacy’s research program.”  (See page 15.)  Elsewhere, the GAO report took the SBA Office of Advocacy to task for its complete failure to document their roundtable discussions, noting that this failure made it “difficult to determine the extent to which small businesses and related entities were represented at these events.”  (See page 18.)

If the GAO seems frustrated, it’s for good reason.  Their review of the SBA Office of Advocacy’s activities produced the following 15 disturbing revelations:

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CPR’s Persistent Watchdogging of Embattled SBA Office of Advocacy Prompts Scathing GAO Report

Earlier today, the Government Accountability Office (GAO) published a scathing report, criticizing the regulatory work and research conducted by the Small Business Administration’s (SBA) Office of Advocacy.  For the past several years, CPR has worked to bring much-needed attention from policymakers, the press, and the public interest community to the SBA Office of Advocacy, which has long leveraged its powerful position in the rulemaking process to oppose stronger safeguards necessary for protecting people and the environment.  Critically, as CPR’s work reveals, the beneficiaries of the SBA Office of Advocacy’s interventions have been large corporations and trade groups, to the detriment of the small businesses they are actually supposed to be helping.

The report, Office of Advocacy Needs to Improve Controls over Research, Regulatory, and Workforce Planning Activities, was conducted in response to a request for a review of “Advocacy’s activities” from the Subcommittee on Financial Services and General Government within the Senate Committee on Appropriations.  The report notes that the subcommittee’s request was made because “[q]uestions have recently been raised about Advocacy's efforts to represent small businesses in regulatory activities and some of its research on small business issues.”

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Regulatory Tsunami? What Regulatory Tsunami?

Sometime last Friday—the Friday before the Memorial Day holiday weekend—the Obama Administration quietly issued the Spring 2014 Regulatory Agenda.  It’s becoming something of a tradition for the Administration to release this semiannual document on classic “take out the trash” news days in this fashion.  The Fall 2013 Regulatory Agenda was similarly released to whatever the opposite of fanfare is on the day before Thanksgiving, while the Spring 2013 Agenda came out the day before Independence Day.

It’s hard to blame Obama’s political folks for resorting to these kinds of tricks to bury the news about the release of the regulatory agenda, since it always elicits the same “the sky is falling” panic from corporate interests and their allies in Congress and conservative think tanks.  They issue their press releases and reports—indignant outrage on full display—about how the regulatory agenda supplies the latest evidence of the Obama Administration’s so-called “regulatory tsunami” or “flood” or “avalanche” or whatever overblown meteorological metaphor happens to strike their fancy on that particular day.

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CPR Member Scholars to Congress: Judicial Review Provisions of CFTC Reauthorization Bill Need Another Look

Yesterday, CPR Member Scholars sent a letter to House Representatives about their concerns with Section 212 of H.R. 4413, the Consumer Protection and End-User Relief Act.  This provision would add a new Section 24 to the Commodity Exchange Act, establishing specific requirements for judicial review of rules adopted by the Commodity Futures Trading Commission (CFTC).  H.R. 4413 is on the short list for a floor vote in House.

As the letter explains, several aspects of Section 212 “raise significant problems.”  One provision would authorize courts reviewing CFTC rules to modify and enforce as modified those rules.  This is a huge departure from how judicial review of rules normally takes place, including judicial review carried out under the Administrative Procedure Act, which essentially authorizes a court to only affirm or set aside a rule in whole or in part. In other words, the Courts interpret laws, they do not write them.  Of this provision, the Scholars write, “Our system of government simply does not contemplate granting a court the regulatory power both to reject an agency’s rule and then force adoption of a different rule preferred by the court itself.”

Another provision of Section 212 would allow any parties involved in a judicial challenge to a CFTC rulemaking to apply to the court “for leave to adduce additional evidence,” provided that the party can show “that the additional evidence is material and that there was reasonable ground for failure to adduce it before the Commission.”  This change would be unprecedented and generally applies, if ever, to court challenges to agency orders. This change would open the door to special interests inserting themselves even further along in the regulatory process, slowing down implementation of needed rules even further. Given that those interested parties would be free to submit to CFTC any and all evidence they wish on a particular CFTC rule, there should be no “reasonable ground” for those parties to fail to submit such information during the rule-making process, rather than later during litigation.

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Better Late Than Never: OIRA’s Meeting Logs Just Got a Lot More Transparent

This week the Office of Information and Regulatory Affairs (OIRA)—the obscure White House Office charged with reviewing and approving agencies’ regulations—took an important and much-appreciated step in the direction of greater transparency by updating and improving its electronic database of lobbying meetings records that the agency holds with outside groups concerning the rules undergoing review.  As detailed in a 2011 CPR report, corporate interests have long used OIRA as a court of last resort for seeking relief from regulatory requirements they find inconvenient; these lobbying meetings provide them with a powerful and secretive forum in which to push for substantive changes to critical agency safeguards that would ensure the public continues to bear the cost of their polluting activities.  With the improved database, the public, policymakers, and the media will be better able to track the efforts of corporate interests to exploit the OIRA review process to weaken or block regulatory protections.

Before the upgrade, OIRA docketed all its meetings in a barebones and often careless fashion on a separate section of its website.  As the 2011 CPR report explained, the meetings dockets suffered several serious flaws.  The meetings were not linked to the rule undergoing review that was the subject of the meeting, nor was there any standardized format for documenting what rule was the subject of the meeting.  Often, interested members of the public would have to consult a number of different sources to verify what rule was at issue in a given meeting.  To make matters worse, key meetings log data—including the attendees of the meeting and their affiliations—were often rife with typos and inaccurate or incomplete information.  These log data were also supposed to provide links to all documents presented at the meeting, but in some cases the links do not work.  Even when accurate, the meetings data were of limited utility because they were not presented in a searchable database.  If, for example, a member of the public wanted to see how many meetings took place with regard to a particular rule, he or she would have to assemble these data manually.  CPR sought to overcome this problem by creating its own searchable meeting database, which available here.

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CPR Member Scholars Send Letter to Senate Criticizing “Attempted Misuse” of the Congressional Review Act

Yesterday, 13 Member Scholars of the Center for Progressive Reform (CPR) sent a letter to the U.S. Senate expressing their concern about S.J. Res. 30, a Congressional Review Act (CRA) “resolution of disapproval” introduced by Senate Minority Leader Mitch McConnell (R-KY) that seeks to block the Environmental Protection Agency’s (EPA) proposed Clean Air Act New Source Performance Standard (NSPS) to limit greenhouse gas emissions from future fossil-fueled power plants.  Drawing on their many years experience in administrative law, the Member Scholars make the case that McConnell’s proposal is at odds with the CRA, because it seeks disapproval not of a final regulation, but of a regulation that has merely been proposed.  “By attempting to subject a proposed rule—as opposed to a final rule—to this process,” they write, “S.J. Res. 30 is contrary to the statutory language and could raise questions as to the legitimacy of any resolution of disapproval.”

Some history is in order.  Senator McConnell introduced S.J. Res. 30 in January, and in a slap in the face to, well, everyone, he fired off a letter to the Government Accountability Office (GAO) raising the very issue that the CPR Member Scholars are now flagging:  He asks them to “review” Congress’s ability to use the CRA to force an up-or-down vote to stop the EPA’s proposed NSPS. As explained below, what McConnell hopes to use the CRA for is to prevent any kind of rule that resembles the proposal to go forward.  The GAO has not yet responded to Senator McConnell’s inquiry, but he seems determined to move ahead with the resolution anyway.  Incidentally, the GAO FAQs page on the CRA seems to suggest that the GAO presumes that the CRA does not apply to proposed rules.  One question asks: “Should agencies submit proposed rules to GAO? [i.e., to initiate the CRA process].”  The answer provided states: “No. Agencies should only submit major, nonmajor, and interim final rules to GAO.

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The “Best” Regulatory System Money Can Buy: Lessons from North Carolina’s “Regulatory Reform” Movement

For years, Duke Energy has enjoyed virtual free rein to contaminate North Carolina’s surface and ground waters with arsenic, lead, selenium, and all of the other toxic ingredients in its coal ash waste in clear violation of the Clean Water Act and other federal environmental laws.  And it seems that both North Carolina’s regulators and state legislators are determined to keep it that way.

Last year, the state’s environmental agency actively thwarted citizens’ efforts to sue Duke for violating the Clean Water Act by intervening in the lawsuit at the last minute and then settling with the company for just over $99,000—chump change for a company worth more than $50 billion—and no obligations to clean up their coal ash waste sites or prevent future pollution.  As detailed previously on CPRBlog, the head of the state’s environmental department—appointed by Gov. Pat McCrory, a former executive at Duke who had worked for the company for nearly three decades—promised that he would work as a “partner” to regulated industries in the state.  Federal prosecutors are now looking into whether North Carolina’s environmental regulators engaged in any criminal activity in their efforts to shield Duke.

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CPR Submits Comments on FDA's Proposed Generics Labeling Rule

If you’re harmed by an improperly labeled prescription drug you’ve taken, should your ability to hold the manufacturer accountable in court depend on whether that drug was “name brand” or “generic”? Strangely, it does matter, thanks to the 2011 U.S. Supreme Court decision in Pilva v. Mensing. There, the Court held that because of a quirk in the Food and Drug Administration’s (FDA) regulations, generic drug manufacturers were shielded against plaintiffs’ state tort law failure-to-warn claims that alleged that a generic drug’s labeling failed to provide adequate warning of particular health risks.  The Court reasoned that since the FDA’s regulations didn’t readily allow generic drug manufacturers to update their labels quickly to warn consumers against any newly discovered risks, it would be impossible for those same generic drug manufacturers to fulfill a separate state tort law duty to provide such warnings through adequate labeling.  The impossibility of complying with both legal duties simultaneously compelled the Court to find that the FDA’s regulations preempted the plaintiffs’ state tort law claims.

In the wake of that decision, the FDA has proposed to amend its regulations to eliminate this disparity.  Specifically, the proposal seeks to extend to generic drug manufacturers the ability to use the “changes being effected” supplement process (often called “CBE changes”) to make changes to their product labels.  It’s a little complicated, but the basic gist is that CBE changes enable drug manufacturers to update product labels relatively quickly whenever they become aware of certain kinds of information regarding the potential risks of their drugs.  The goal of the CBE changes process is to empower drug manufacturers to provide consumers and their doctors with relevant risk information as quickly as possible, so that they can make the best-informed decisions possible about whether and how to take a particular drug.   The public comment period for the proposal ends this Thursday, and CPR Member Scholars Tom McGarity and Sid Shapiro and I have submitted comments that aim to highlight for the FDA an important, but easily overlooked benefit of this rulemaking—namely, the invaluable role that a vibrant state civil justice system can play in complementing and reinforcing the FDA’s regulatory programs so that they are better able to protect the public against unreasonably dangerous drugs. 

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The Regulatory Accountability Act: Or How to Defeat the Public Interest in Just 65 Easy Steps

Cue the majestic fanfare, for this week marks House Republicans’ so-called “Stop Government Abuse Week”—you know they mean business, because they have a clever Twitter hashtag and everything.   So how does one celebrate such an auspicious occasion?  Apparently, by wasting precious House floor time with a series of votes on several extreme anti-regulatory bills that, if enacted, would make it all but impossible for agencies to carry out their congressionally mandated missions of safeguarding the public against corporate abuses.  The jewel in this potentially catastrophic crown is the Regulatory Accountability Act, which has been repackaged as Title II of the overstuffed “Regnibus” bill, officially known as the All Economic Regulations are Transparent (ALERT) Act (H.R. 2804).

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Has OIRA really improved the timeliness of its reviews? Nope, it just has a new scheme for delaying safeguards and defeating transparency

It’s time to put to bed an unfortunate myth that’s been floating around the last few weeks.  The myth goes something like this:  The Office of Information and Regulatory Affairs (OIRA)—the opaque bureau within the White House charged with approving agencies’ draft regulations before they can be released to the public—has succeeded in improving the timeliness of its reviews during the last few months.  OIRA has long been a roadblock to the successful implementation of critical safeguards, so if true, this claim would be welcome news.  But, when OIRA’s recent record is viewed with a more critical eye, this claim simply does not hold up.

While it’s true that OIRA has recently cleared its docket of several high profile draft rules that have been stuck there for several months or even years, in many cases OIRA has done so by relying on what almost amounts to an accounting trick—one that seems calculated to skirt any meaningful transparency requirements.

A few months ago, CPR noticed a disturbing trend in which OIRA was increasingly using an obscure and relatively uncommon process known as a “withdrawal” to end some long-overdue reviews of high profile draft rules.  Among the first rules to be disposed of through this scheme included the Environmental Protection Agency’s (EPA) draft proposed Chemicals of Concern list (withdrawn from OIRA review on September 6, 2013, after 1,214 days) and the National Highway Traffic Safety Administration’s (NHTSA) draft final rule for rearview cameras in automobiles (withdrawn from OIRA on June 20, 2013, after 583 days).

So, what is a withdrawal and why does it matter?  A withdrawal occurs when the rulemaking agency (for example, the EPA or NHTSA) voluntarily withdraws a draft rule from OIRA review before it has been completed.  The withdrawal process is distinct from a “return,” which occurs when OIRA ends the review by sending the draft rule back to the rulemaking agency for more work instead of approving it.  From a transparency perspective, there is a crucial difference between withdrawals and returns.  When OIRA uses a return to end a review, Executive Order 12866 (a legal document that governs OIRA review) requires that it issue a public “return letter” that explains the problems with the draft rule and why OIRA was otherwise unable to approve it.  In contrast, with a withdrawal, the rulemaking agency is under no obligation to offer a public explanation for why it decided to withdraw the draft rule from OIRA review.

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