The Office of Management and Budget (OMB) invited public comments on the design of its new Executive Order on regulatory review, and CPR has now submitted our recommendations.
We urged the Obama Administration to make fundamental changes in how OMB and prospective “regulatory czar” Cass Sunstein operate. We're hopeful that the new Administration will convert OMB from a regulatory Siberia into the guarantor of dramatically improved government protection of public health, safety, and the environment.
If we have learned anything from the financial meltdown paralyzing the world’s economy, it is that large industries should never be placed in the position of making money, controlling their own greed, and adopting ethics to protect the public interest all at the same time. Because the government cop was off the beat on too many fronts, strange new “derivatives,” toxic mortgage loans, hedge funds, and Ponzi schemes brought multi-billion multinationals to the brink of collapse. But it's not just the financial regulators who have been missing. The agencies responsible for ensuring pure food, safe drugs, hazard-free workplaces, and clean air and water were brought to their knees by systematic underfunding, the withering oversight of people like Vice President Cheney, lack of political will, and a brain drain of qualified civil servants. Too often the OMB was responsible for pushing them to the edge of the ledge and shouting “jump.”
Our comments recommend that the OMB's Office of Information of Regulatory Affairs (OIRA) abandon its role of conducting centralized regulatory review. Instead, OIRA’s role should be fundamentally re-oriented. It should work with federal regulatory agencies to improve their ability to fulfill their missions, helping agencies to calculate and document their true budgetary needs, develop better and more proactive regulatory agendas, resolve interagency disputes, and ensure they have the necessary legal authority to truly protect individuals and the environment.
Second, we recommend that the OIRA stop using the “cost-benefit analysis” (CBA) method originated in the Reagan years and sharpened to a lethal weapon under George W. Bush. CBA has an established history of being used as a tool to stymie health, safety and environmental regulation. Instead of using CBA, the Administration should return to more faithful compliance with Congress's directions to the regulatory agencies — laws that mostly forbade CBA or at least did not require its use.
Congress has adopted 31 different statutory provisions in the past few decades giving broad instructions to federal health, safety, and environmental agencies. We checked, and only two of the 31 provisions specifically call for using cost-benefit analysis in formulating regulations. Another six allow CBA to be used as a method, but don't require it. The remaining 23 laws specifically prohibit CBA. In these cases, Congress directed agencies to use one of several, well-established alternatives to cost-benefits analysis, including the formulation of technology-based or effects-based standards, phased bans, or the balancing of multiple factors.
We believe the agencies should generally use "pragmatic regulatory impact analysis" (PRIA) in formulating regulations, not just because it is the most effective solution, but because it better complies with the meaning of Congress's directives. The hallmark of a PRIA is that it actively seeks out and considers a full range of views on the factors specified by the applicable statute. So, for example, if an environmental statute calls for “technology-based standards” (whereby the agency in question must identify the best equipment available to remedy a problem), the EPA would explore the pollution control alternatives that are available throughout the industry, determine the reductions in pollution that those technologies provide, and analyze whether it would be feasible for plants to obtain and install the best of the technologies that are available. The agency would also consider the aspect of public health or the condition of the environmental media or other threatened resource that is threatened by the pollution it is seeking to control, and determine how those conditions would be improved by the installation of the technologies that are available.
Under an “effects-based standard” (whereby the agency must determine what level of a pollutant in the ambient environment is acceptable from a public health perspective), the agency would consider everything that scientists and other technical experts can tell them about the release of pollutants, their “fate and transport” through ambient air, the exposure levels experienced by the population as a whole and, especially, by vulnerable populations (e.g., the elderly or young children), and the health effects likely to result from those exposures. The agency would weigh the inevitable uncertainties that plague such estimates. It would explore the best methods available for reducing pollution to levels that will eliminate harmful exposures. It would then consider any other methods that might be available to accomplish these results.
In the coming months, CPR will present in greater detail the mechanics of how PRIA would work, and demonstrate its advantages over cost-benefit analysis. We'll also be hosting a unique symposium in May to bring together the leading supporters and critics of OIRA’s current role in the regulatory system and of the use of cost-benefit analysis for reviewing individual regulations.
I'm confident these projects will provide a useful complement to the Obama Administration’s efforts to prepare a new Executive Order to replace Executive Order 12,866.
The OMB should be applauded for opening up this process to initial public comment. But I also strongly urge OMB to provide for at least a 90-day comment period regarding its draft of the new Executive Order on regulatory review once this draft has been prepared. OMB noted in its notice in the Federal Register calling for comments on the design of the new Order that it was taking this unusual step because of the “unusually high level of public interest” in the provisions of this Order. With dozens of comments submitted in response to OMB’s invitation, it appears that OMB has been vindicated in taking this unusual step. I believe this large outpouring of interest also justifies taking the additional step of providing for a 90-day post-draft comment period as well.
The Center for Progressive Reform's comments to OMB were written by Steinzor and CPR Member Scholars John S. Applegate, Robert L. Glicksman, Tom O. McGarity, Sidney A. Shapiro, Amy Sinden, and Robert R.M. Verchick, as well CPR policy analyst James Goodwin.