New Report: Trump's New 'Regulatory Czar' and the Continuing Assault on Our Safeguards

by James Goodwin

April 20, 2017

As the clock ticked closer to the end of the work day a few Fridays back, the Trump administration quietly made an announcement certain to put smiles on the faces of many corporate interest lobbyists in and around the DC Beltway: Neomi Rao, a little known but very conservative law professor at George Mason University's Scalia Law School, would be the nominee for Administrator of the White House Office of Information and Regulatory Affairs (OIRA). The announcement probably went unnoticed by most of the working class families and low-income communities that Trump calls his base, but it may just have a huge impact on their health and well-being. 

As the next "regulatory czar," as the position is popularly known, Professor Rao is set to play a key role in the Trump administration's efforts to roll back the kind of public safeguards that we count on  every day to protect our health, safety, environment, and financial security. In a new report out today, Trump's New 'Regulatory Czar': Poised to Lead the Assault on Our Safeguards, CPR Member Scholars and staff examine the significance of Rao's nomination in greater detail and what it could mean for the Trump administration's broader assault on our system of public protections. 

Professor Rao comes to the job with little management experience and only a modest record of scholarship on administrative law and other topics related to the work that OIRA performs. Her background, though limited, makes clear that she is a committed "small-government" conservative, and her views on regulatory policy in particular reflect this ideology. At the Scalia Law School, which has long been a temple of free market legal thought, Rao runs the Center for the Study of the Administrative State, which she also helped found. The law school helped raise money for the Center in part by leveraging a 2016 donation from the Charles Koch Foundation that is potentially worth up to $10 million

Professor Rao's scholarship on administrative law has primarily been preoccupied with what she evidently regards as the problem of an executive branch that has grown too large. In response, she calls for ever more constraints on the agencies charged with promoting the public interest – including enhanced centralized control from the president – that would inhibit their ability to institute new public safeguards and enforce existing ones. In addition, in her writings on constitutional law, she has staked out controversial views of certain individual rights, such as human dignity, which could negatively influence how OIRA might view rules that are intended to promote those rights. 

The bottom line is that her perspective on regulatory policy appears to closely align with the narrow focus on compliance costs that already pervades OIRA and that serves to undermine the achievement of the visionary policy objectives at the heart of our environmental, public health, consumer protection, and labor laws. 

For more than three decades, OIRA has used its position at the hub of the rulemaking process to weaken, delay, and even block pending regulatory safeguards. The office operates as the "regulatory gatekeeper" thanks to a series of executive orders that require all agencies to submit their larger and more complex draft proposed and final rules to OIRA for an intrusive review. Unless and until OIRA completes that review and grants its approval, the agency may not proceed with sharing the proposed or final rule with the public. Historically, this gatekeeping authority has provided the OIRA Administrator with significant power to dictate the substance of agency rules, as agencies will often accede to any demands for changes made by OIRA personnel as the price of clearing their rules through the review process. 

With Professor Rao at the helm, OIRA is likely to play an active role in implementing the Trump administration's assault on public safeguards. As part of this effort, OIRA will likely continue performing its regulatory gatekeeping function, though its significance will probably be somewhat diminished during the Trump administration. Between the severe resource constraints and Trump's selection of individuals – such as Environmental Protection Agency (EPA) Administrator Scott Pruitt – who are actively hostile to the missions of the agencies they will be running, agencies are unlikely to pursue robust regulatory agendas anyway, leaving OIRA with little regulatory "gate" to "keep." 

Instead, much of OIRA's work will likely focus on another aspect of the Trump administration's deregulatory agenda: rolling back existing safeguards that are opposed by politically powerful corporate interests. One of Trump's first acts in office was to sign Executive Order 13771, a pernicious directive that requires federal executive agencies to eliminate at least two of their existing rules before they can issue any new "significant" rules. On top of that, it demands that the costs associated with any new rules be fully "offset" through cost reductions achieved by eliminating existing regulations. And, of course, the rule makes no pretense of considering the benefits these rules generate. So foregone worker safety, public health, automobile safety, environmental protection – none of it factors into Trump's order. 

Even before Rao's nomination, OIRA, under Acting Administrator Dominic Mancini, has taken a lead role in supervising agency compliance with Executive Order 13771's requirements. Ultimately, OIRA will wield a lot of authority in determining what specific actions agencies must take to comply. 

In addition, Rao could work to reorient OIRA's existing regulatory process to assist in agency compliance with the executive order. Under the Administrative Procedure Act, the elimination of existing regulations requires that agencies undergo the same rulemaking process they must use to institute new rules. As such, agencies must base their deregulatory actions on legally valid policy rationales that are supported by a robust evidentiary record, such that these actions can survive the inevitable legal challenge that public interest groups or others will bring against them. In this way, OIRA's reoriented regulatory review process could provide agencies with a kind of "quality control check" on their deregulatory actions to ensure the legal and policy bases for the actions are as strong as possible. 

Beyond its participation in individual rulemakings, OIRA might seek to institute new cross-cutting anti-protections policies during the Trump administration. These might include new policy guidance on how agencies perform cost-benefit analyses on their rules or new requirements agencies must satisfy before issuing their own guidance documents. 

Because OIRA's work is likely to differ so much during the Trump administration, a new approach will be needed to measure OIRA's influence over the implementation of new public protections. The new report concludes by outlining several new indicators that will likely be necessary for gauging the impact of the diverse and broader range of activities that may come to define OIRA's role in the Trump administration's assault on public safeguards. These indicators include answers to questions about what role, if any, OIRA plays in helping agencies construct statutory or economic-based policy rationales in support of their deregulatory actions to comply with Executive Order 13771 and whether OIRA has issued any new policy guidance documents, or revised existing ones, that seek to inhibit agencies from instituting new or stronger protective safeguards. 

Joining me in co-authoring the report are CPR Member Scholars Thomas McGarity, Amy Sinden, Rena Steinzor, and Robert Verchick. You can find the report here. To read CPR's other work tracking OIRA's role in the regulatory system, visit our Eye on OIRA page.

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Also from James Goodwin

James Goodwin, J.D., M.P.P., is a Senior Policy Analyst with the Center for Progressive Reform. He joined CPR in May of 2008.

Recommended Resources:
Regulatory Policy
Regulatory Tools to Protect People & the Environment

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