What We'll Look For in the Obama Administration's Forthcoming Executive Order on Regulatory Process

by Ben Somberg

November 23, 2009

The Obama Administration is expected to issue revisions to Executive Order 12,866, which specifies how the White House Office of Management and Budget (OMB) supervises federal regulatory agencies as they develop regulations to protect health, safety, the environment, and more (see the full comments on the matter submitted by CPR's board members in March).

CPR President Rena Steinzor and Board Member Rob Glicksman have issued a backgrounder on the coming Executive Order -- explaining the context and setting out six specific criteria on which to judge the Order. They are:

  1. Does the new EO continue to require agencies to justify proposed rules by quantifying “benefits” in dollar terms only – thus inviting agencies to ignore benefits that defy such monetization?
  2. Does the new EO continue to apply a “discount rate” to benefits of regulatory protections that won’t be realized for several years to come? And if it does apply a discount rate, is it set at the current rate of 7 percent, a number so high that future benefits from, for example, efforts to slow climate change essentially drop out of the equation after a couple of decades?
  3. Does the new EO explicitly disavow the “senior death discount” or other versions of lowering the value of a year of life if people are sick or handicapped?
  4. Does the new EO embrace – and to what extent – Sunstein’s attachment to “behavioral economics”? In particular, does it substitute warnings to citizens about potential harms for actual regulatory protection from harms? And does it rely on “willingness to pay” studies that peg the “benefits” of regulation to suspect data on how much people say, in the abstract, they are willing to pay to avoid certain harms.
  5. Does the new EO preserve OIRA’s power to “return” proposed regulations it does not like to agencies for time-consuming additional evaluation rather than simply advise agency heads that it disagrees with their judgments?
  6. Does the new EO impose transparency on OIRA’s activities, most significantly by ending OIRA’s practice of forcing regulatory agencies to meet with it behind closed doors and using those meetings to kill ideas for proposed regulations even before they are made public?

 We'll have more, of course, when the Order is issued.

E.O. 12,866 would be marginally improved if the Obama Administration responds to these six issues, and we would thank CPR for advocating for the improvements. But the Executive Order would continue harboring a far greater problem when it comes to environmental regulations. In particular, it would continue imposing on the executive agencies the burden of proving that environmental regulations pass a cost-benefit test, even where the environmental laws do not require them to bear that burden. This burden disables the Administration from taking steps to protect the environment whenever there is uncertainty and whenever the protective benefits can't be proved to outweigh the economic costs. Conditioning environmental protection on proven gains in net-benefit serves to preference the current market structure and dooms us to continual growth in all increments of environmental damage that we can't prove we can control cost-effectively. But once the cumulative human footprint surpasses the Earth's finite capacity to sustain ecological damage and begins destroying the ecological integrity of the Earth, the cumulative cost to human welfare far outstrips the sum of the individual costs of each increment of damage. Scientific reports are making it all too clear that the overall human footprint has now grown too large to be sustainable in the long run. Under these circumstances, there is no basis in logic for using a cost-benefit test to screen regulations controlling each incremental impact. We need instead to undertake a serious effort to contain our cumulative environmental impacts to a sustainable scale. Comments fleshing out this point were filed with OMB on behalf of 24 organizations and individuals (see public comment no. 111 on OMB site at: www.reginfo.gov/public/jsp/EO/fedRegReview/publicComments.jsp). We at the Science & Environmental Health Network and the co-signers of our comments hope to see the new Executive Order seriously examine when CBA should be used in environmental decisions and when it should not.
— Joseph Guth
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