Obama Asks for Recommendations on Regulatory Process, OIRA

by Matthew Madia, 2/3/2009

President Barack Obama is asking federal agencies to reform the process for writing new regulations. In a Jan. 30 memo, published in today's Federal Register, Obama instructs Director of the White House Office of Management and Budget Peter Orszag, in consultation with agency officials, to formulate a set of recommendations for transforming the government's rule-writing process. Obama wants the recommendations within 100 days.

Setting new regulatory standards that protect the public — and doing so without delay — is a critical function for Executive Branch agencies. Over the past few years, plenty of rulemakings have been fraught with controversy:

  • The White House challenged the scientific basis for a regulation to protect the critically endangered North Atlantic right whale, delaying the rule by more than a year in the process;
  • The White House repeatedly heard the complaints of industry lobbyists over a regulation tightening the air quality standard for smog — a standard which ultimately disappointed clean air advocates;
  • The Department of Labor — relying on a well-paid outside contractor instead of its own experts — rushed to draft a regulation that would have changed the way agency scientists assess the health risks of occupational exposure to toxic chemicals.

Obama is asking for recommendations on a new executive order on regulatory review. Presumably, Obama will revoke or substantially revise the current order, Executive Order 12866. Among other things, E.O. 12866 gives OMB's Office of Information and Regulatory Affairs (OIRA) the power to review and edit proposed and final regulations on behalf of the president. It also gives cost-benefit analysis a prominent role in regulatory decision making.

Obama is clear about what he wants addressed through reform: 

Among other things, the recommendations should offer suggestions for the relationship between OIRA and the agencies; provide guidance on disclosure and transparency; encourage public participation in agency regulatory processes; offer suggestions on the role of cost-benefit analysis; address the role of distributional considerations, fairness, and concern for the interests of future generations; identify methods of ensuring that regulatory review does not produce undue delay; clarify the role of the behavioral sciences in formulating regulatory policy; and identify the best tools for achieving public goals through the regulatory process.

All of those instructions are good, but the examples of controversial rulemakings listed above prove the importance of the first item: OIRA's relationship with agencies. OIRA wields extraordinary power in its role as regulatory gatekeeper. When that role has been more sinister than salutary, public protections are weakened, delayed, or thrown out entirely.

Part of the problem is inherent to the structure of the OIRA review process. Agencies send draft regulations to OIRA for approval. In most cases, those drafts have already been subject to substantial forethought, scrutiny, and vetting within the agency. If OIRA disagrees with the substance of the agency's work, making changes could be a daunting task. It would be like if a contractor was asked to redo all the wiring in a brand new house after the walls were painted, the carpet was down, and the owners had moved in.

Orszag and the agency officials he consults with should sketch out a clearer and more deferential role for OIRA. The White House should not be in the business of meddling with agency science or slow-walking regulatory standards meant to improve society. OIRA should be charged with conveying the president's priorities before an agency begins a rulemaking, not after, and then it should trust that agencies will find the best ways to accomplish their goals and obligations. It should not be engaged in a line-by-line review of every standard federal agencies wish to set.

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