WHITE HOUSE:

Obama overhaul of regulatory reviews now seen as unlikely

There's "no chance" that President Obama will rework the executive policies carried over from his predecessor that tell agencies how to write regulations and outline a White House oversight role, academics and activists say.

Obama had raised expectations for major changes in his first weeks in office, when he requested recommendations for new executive orders, or E.O., on issues such as scientific integrity, public disclosure and regulatory review, touting them as part of a plan to make his administration "the most open and transparent in history." He also scrapped several George W. Bush-era revisions to Executive Order 12866, which President Clinton had issued to allow the Office of Information and Regulatory Affairs (OIRA) to review and edit regulations before they are proposed (Greenwire, Feb. 4, 2009).

Open-government groups have criticized the transparency of OIRA's regulatory reviews, saying the public should be able to see the differences between the draft regulations that come into the office and versions that go out. The office has also become a battleground for environmentalists and industry groups concerned about the use of cost-benefit analysis in regulatory review.

The White House Office of Management and Budget took public comment on regulatory policy last year, and while the issues raised were expected to be addressed by a presidential order, many were laid out in a recent memo issued by OIRA chief Cass Sunstein. The memo, released last month, could "signal the death of more official efforts to overhaul the regulatory process," activist group OMB Watch said in a recent blog post.

"It's been over a year since the E.O. recommendations were due, and it's been over a year since we've heard a peep from the administration," said Matt Madia, regulatory policy analyst at OMB Watch, in an interview. "Some of these principles in these memos are very much consistent with OIRA Administrator Sunstein's philosophy toward regulation.

"The disclosure and simplification issues being addressed not in an E.O. or a presidential memo, but in a memo from him, signals to me that the E.O. is not coming or at least is not coming anytime soon."

Though the cost-benefit analysis debate continues to divide free-market supporters and environmentalists, regulatory experts on both sides agree: The Obama administration is unlikely to replace the Clinton-era directive that governs OIRA's role.

There is "no chance" that Obama will issue a new executive order on regulatory review, said Richard Williams, a cost-benefit analysis supporter and managing director of the regulatory studies program at George Mason University's Mercatus Center. That view was seconded by Amy Sinden, an environmental law professor at Temple University and a member of the Center for Progressive Reform.

A White House spokesman deferred questions to OMB, which declined to comment on the details of the review process.

"It's up to the president to decide whether or not to issue another E.O. on this, but the issue remains in a deliberative stage," OMB spokeswoman Meg Reilly said.

While the administration has remained tight-lipped on its review of regulatory policy, recent public statements by White House officials indicate Obama may be content to preserve the Clinton-era executive order.

Michael Fitzpatrick, associate administrator of OIRA, suggested during a February panel discussion that putting a new executive order on paper is less important than "resetting" the office's relationships with agencies. Because any administration is able to tweak the regulatory system to suit its regulatory goals, the fact that E.O. 12866 has survived three administrations is an "achievement," he said.

If the Obama administration is finding itself able to achieve its goals under the current executive order, it might prefer to avoid issuing a new directive that could prompt a political fight and force the White House to commit scarce resources, said Michael Livermore, executive director of the Institute for Policy Integrity.

Livermore, who has argued that cost-benefit analysis can be reconciled with environmental regulation, said he supports a revised executive order that would apply the administration's transparency initiative to regulatory policy. Though it is hard to "look behind the curtain" of the White House, he said he understands that the administration might want to maintain the balance struck by the Clinton-era policy.

"Why would you want to make a bunch of changes if you're going to end up upsetting that continuity?" he said, channeling that view.

Costs and benefits

Industry groups and free-market advocates have sought to extend OIRA's use of cost-benefit analysis, saying it helps the office's regulations get the "biggest bang for the buck."

While Sunstein's support for cost-benefit analysis has drawn some fire within the administration, "it won't make a difference whether or not he gets a new executive order" because his views do not diverge far from the Clinton-era order, the Mercatus Center's Williams said.

Meanwhile, environmental advocacy groups have called for a reduction in OIRA's power, saying the office's use of cost-benefit analysis has weakened regulatory protections by low-balling societal benefits and overestimating compliance costs for industry. The appointment of Sunstein, a longtime proponent of cost-benefit analysis, told environmentalists that OIRA would likely remain "a place where industry groups can come and get an ear for all the reasons they think environmental and public health regulations should be weakened," said the Center for Progressive Reform's Sinden.

Rena Steinzor, the center's executive director and an environmental law professor at the University of Maryland, has been among the most vocal critics of OIRA's influence over regulations. In a blog post yesterday, Steinzor criticized the calculations in OIRA's analysis of U.S. EPA's recently proposed rules for the management of coal ash.

After meeting with dozens of business groups and environmental groups, the office estimated that $233.5 billion in lost economic benefits would be caused by the stigma of classifying coal ash as hazardous waste. A mathematical error in the analysis reduced the monetized benefits of avoiding spills by $881 million, Steinzor wrote yesterday.

"These are but a handful of the errors that tend to get obscured as surreal quantities of Monopoly money are shuffled about in the cost-benefit analysis. A billion dollars is bound to get lost here or there, due to sloppy calculations," she wrote. "The cost-benefit analysis completely overrides the imminent environmental objective. It does, however, cast the problem in stark relief: this is simply a case of industry profit pitted against communities and lives."

While environmental groups have described OIRA as an industry ally, the tables have turned under the Obama administration, Williams said.

In 2007, he said. OIRA reviewed all rules deemed economically significant -- those with an economic impact of $100 million or greater. Last year, OIRA did not analyze about 20 percent of those rules.

"In some senses, OIRA has had its legs cut out from under it," Williams said. "While this administration has been in power, they haven't returned a single rule to the agencies. It tells me that while some of the things that Cass Sunstein is doing are interesting, the fundamental job of OIRA, which is to make sure that the analysis has been done correctly and the rules are good, has been undermined."

'Look before you leap'

During the recent panel discussion, which was organized by OMB Watch, OIRA's Fitzpatrick defended cost-benefit analysis and said that subjecting the regulatory review process to public scrutiny would have a "whole host of complications."

Letting the public see behind the scenes of OIRA analysis "could create an inability to have full and frank conversations about what's going on," he said. "In my view, there's a real value to this 'take a second breath,' 'look before you leap' idea of central review. To open up the whole process transparently could actually take out the value of it."

Those types of contentious questions were not addressed by the 12-page memo released by OIRA last month.

In the memo, Sunstein directs agencies to consider policy objectives when deciding how to present information to the public. Using miles-per-gallon stickers on cars as a prominent example, the memo directs agencies to decide whether full disclosure of data is necessary or if a summary will do a better job.

The memo draws from Sunstein's work in behavioral economics, saying that in order to help consumers make informed choices, agencies must acknowledge that "people have limited time, attention, and resources for seeking out new information," it says. "It is important to ensure that relevant information is salient and easy to find and to understand."

Typically, that type of direction to agencies would be fleshed out after the release of an executive order -- not before it, Madia said. That is bad news for activists who hoped the Obama administration would rework OIRA's role in the regulatory review process.

"We're now a year and a half into the administration, so maybe White House officials have found that they're happier than they thought they would be," Madia said. "Once any administration gets in power, it's difficult to expect them to abdicate any responsibilities or powers they have."

Click here to read the OIRA memo.