'Curiouser and Curiouser!' Cried Alice ... A Tale of Regulatory Policy in the Obama Administration

by Sidney Shapiro

July 30, 2009

Like Alice's adventure, the development of regulatory oversight in the Obama administration is becoming "curiouser and curiouser." President Obama selected Cass Sunstein to be the head of the Office of Information and Regulatory Affairs (OIRA), a curious choice since Sunstein, although one of the country’s most distinguished academics, is in favor of extending the use of cost-benefit analysis, a position so popular with the business community that the Wall Street Journal endorsed his nomination. Sunstein's confirmation hearing was uneventful, probably because he avoided answering any difficult questions, but Sunstein's nomination is now being held by Senator John Cornyn, who objects to Sunstein's previous statements on animal rights -- an issue that the head of OIRA is highly unlikely to encounter.

In the meantime, the development of a new Executive Order on regulatory impact analysis has had its own curious journey. The new administration invited public comment on shaping the executive order, an unprecedented and welcome development. The administration also sought the input of agencies, although it has not made their comments public. That's defensible -- Presidents defend such secrecy as necessary to ensure that subordinates will be candid in giving advice -- but the administration missed an opportunity to fulfill its pledge to be more transparent since it is unlikely that agencies would have been affected had the comments been disclosed.

To fulfill its transparency commitment, the administration also should have put out a draft Executive Order for public comment. In Republican administrations, OIRA review has been used to scuttle regulation, while OMB in the Clinton administration adopted a more benign attitude towards executive oversight. The ideal outcome would be to replace the current cost-benefit centered review process with a more pragmatic approach, a result CPR board members called for in March. But given Sunstein’s appointment, this outcome would be unexpected (but welcome). If a cost-benefit approach is to be retained, the devil will be in the details, all the more reason to invite public comment on a draft executive order.

It may not be too late to rectify this failure. The Hill has an "OMB official" saying: "The director has submitted a set of recommendations to the president, in compliance with the president’s memorandum and within the 100-day timeframe. As decisions based on those recommendations are approved, they will be made public." While decisions are pending, the administration could and should seek pubic input.

Once the Executive Order is out, the journey to presidential oversight of rulemaking is not finished. There is also the matter of how transparent the oversight process at OMB will be. After President Reagan put OMB in charge of the first executive order requiring cost-benefit centered regulatory impact analysis, the White House conducted its oversight in secret, opening the door for behind-the-scenes corporate lobbying to weaken regulations. President Clinton created better transparency when he revised the Executive Order on rulemaking oversight, and John Graham, who headed OIRA in the last administration, did likewise. But Graham’s OMB avoided these requirements by undertaking oversight before submission of a rule to OMB, the point at which the transparency requirements kicked in. It remains to be seen whether OMB will address this gigantic loophole, as CPR scholars have recommended, but a failure to address it would be the final curious development given the administration’s commitment to transparency.

Update: See also OMB Watch on this, "While Sunstein Nomination Is Delayed, Regulatory Reform Waits."

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Sidney A. Shapiro holds the Fletcher Chair in Administrative Law at the Wake Forest University School of Law and is the Associate Dean for Research and Development. He is a member of the board of directors of the Center for Progressive Reform.

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