VapeMentors, the Fat Cat Vapor Shop, and Cosmic Fog Vapors All Walk Into an Obscure White House Office...

by James Goodwin

December 16, 2015

This week appears to mark the end of an extraordinary period in the history of the White House Office of Information and Regulatory Affairs (OIRA), the shadowy bureau charged with reviewing and revising pending agency rules, which too often ensures they are not overly inconvenient for affected industries.  For the last month and a half, a Mos Eisley-esque mélange of characters has streamed through the front doors to lobby OIRA’s gang of economists and political operatives over a pending rule that would establish the Food and Drug Administration’s (FDA) authority to regulate non-traditional tobacco products including e-cigarettes and flavored cigars the same way it does with more traditional tobacco products, such as cigarettes and smokeless tobacco.  OIRA’s review of the rule, which comes at the end of a rulemaking process that has already stretched more than five years, provides these groups with one last chance to influence the substance of the rule before the FDA is able to formally publish the final version and begin implementing its provisions.

Once completed, the FDA’s “deeming” rule, as it has become known, would represent a huge step forward for public health by subjecting harmful and increasingly popular tobacco products to important restrictions aimed at preventing children from using the products and at encouraging current users to quit.  E-cigarettes and other similar electronic smoking devices are a particular threat, because they are often marketed with exotic vaping fluid flavors (such as blueberry and milk chocolate) and bright colors that are especially appealing to children and teenagers.  Because they provide users with a big dose of nicotine, they are just as addictive as traditional cigarettes.  Contrary to the claims of some supporters of e-cigarettes, these products also expose users to other harmful chemicals, including carcinogens like formaldehyde and diethylene glycol, a chemical commonly found in antifreeze.  More recently, researchers have found examples of e-cigarettes that contained diacetyl, a chemical used to make artificial butter flavoring that has long been known to cause a dangerous lung disease, popularly known as “popcorn lung,” in workers that manufacture microwavable popcorn.

In all, OIRA has hosted a total of 33 lobbying meetings with outside groups during the current review period, making the FDA’s deeming rule one of the most heavily lobbied in OIRA history.  Consistent with CPR’s previous research on OIRA lobbying, the vast majority of these meetings (25 of 33, or 76 percent) were organized at the behest of industry groups or industry-supported organizations seeking to delay the rule’s implementation or weaken the public health protections it would provide.   The meetings have included some of the usual suspects among the tobacco industry, most notably Altria and R.J. Reynolds.  They also include some smaller industry opponents of the rule, including such colorfully named businesses as Fat Cat Vapor Shop and The Vapor Bar, Inc.

This lobbying onslaught comes on the heels of a call to action issued in October by a major trade publication representing convenience stores and gas stations where many of these non-traditional tobacco products are sold.  The trade publication notes that the OIRA review process can produce significant changes in rules to make them more favorable to affected industries.  It even quotes a former OIRA official who worked on the earlier review of the draft proposed deeming rule about how that review had resulted in a proposal that was “fundamentally different” from what the FDA had initially sent over.  To ensure that this review yields “similar results this time around,” the publication encourages “retailers and manufacturers” to “request a meeting to present their case to OIRA.”

To underscore the importance of these meetings, the publication also includes this quote from the former OIRA official: “‘It’s as important, if not more important, to be engaged during the period of White House review than it is to give comments.’”  In other words, the former OIRA official is asserting that the OIRA review process has supplanted the Administrative Procedure Act’s (APA) notice-and-comment process as the most important avenue for public engagement in the rulemaking process.

It’s worth highlighting this assertion, because it is a truly extraordinary admission from a former public official and because it offers a disturbing insight into how OIRA personnel view their jobs.   It suggests that these individuals have little compunction about substituting their own judgements for those of agencies in regulatory decision-making despite their lack of expertise and despite their complete lack of legal authority.  (Recall that OIRA review is conducted pursuant to executive order, which is a non-binding legal instrument.)  It also suggests that political calculations and economic bean-counting play a larger role in regulatory decision-making than do considerations of relevant law and science.  For many rules, politics trumps policy, and OIRA plays a starring role in the process.

From a policy perspective, the diminution in importance of notice and comment vis-à-vis OIRA review also represents a disturbing development for how the rulemaking process is carried out.  Unlike the APA process, OIRA review lacks even the most basic procedural safeguards for protecting the integrity of the process and ensuring that all interested parties are afforded a meaningful chance to participate.   There is no guarantee of transparency.  Decision-making does not have to be made on the record or based on the evidence that is considered.  Instead, the real policymaking takes place behind closed doors based on arbitrary political considerations that lack any legally authorized foundation.  The will of publicly accountable representatives is thwarted, and the policy outcomes that emerge are not guided by an abiding concern for the public interest.

Given the damage that OIRA has already done to the deeming rule, it is hardly any surprise that all of these groups have been lining up to make their case to further weaken the rule’s provisions during the current review period.  When OIRA completed its review of the draft proposal last April, it had altered the rule’s cost-benefit analysis to make it look like the rule would deliver relatively few benefits to society, which in turn would make it easier for the tobacco industry to challenge the rule in the courts once it was finalized.  In particular, OIRA used an inflated estimate of what is known as the “lost pleasure discount.”  According to the FDA’s analysis, the rule would deliver significant public health and economic benefits by encouraging current smokers to quit and by preventing future smokers from starting.  But, thanks to the lost pleasure discount, only a small percentage of those benefits could be counted (in this case, only 30 percent), because the rest would be offset by the feeling of pleasure that smokers would forgo by no longer smoking.

As a matter of economics, the application of something like the lost pleasure discount to addictive products makes no sense.  And as a matter of simple ethics, it is morally reprehensible to engage in form of decision-making that legitimizes the addiction-fueled sense of satisfaction that smokers experience by balancing it against the health benefits of quitting smoking.  But OIRA was only too happy to endorse and ratify the application of the lost pleasure discount in the context of the FDA’s deeming rule.

This whole episode provides an object lesson in the dangers that OIRA review poses for sensible public interest-oriented regulatory decision-making.  Hopefully, this time around, the FDA will stand its ground and insist upon a final rule that delivers strongest public health protections possible under that law.

Tagged as: Deeming OIRA
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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.

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