Regulation:

Policy Integrity's Livermore discusses OMB study on costs, benefits of EPA regulations

Has there been a shift in tone on regulation during President Obama's second term? During today's OnPoint, Michael Livermore, executive director at the Institute for Policy Integrity, discusses the politics of regulation as Congress works through the confirmation process for several key regulatory positions. Livermore also gives his take on how Howard Shelanski, the president's nominee to head up the Office of Information and Regulatory Affairs, could affect the future of regulations coming out of this administration.

Transcript

Monica Trauzzi: Hello and welcome to OnPoint. I'm Monica Trauzzi. Joining me today is Michael Livermore, executive director at the Institute for Policy Integrity. Michael, it's great to have you back on the show.

Michael Livermore: Thanks for having me, my pleasure.

Monica Trauzzi: Michael, the discussion on regulation has taken on a new tone during the president's second term. Would you say there's been a shift in the regulatory landscape and the approach to regulations since the start of the year?

Michael Livermore: Things have slowed down certainly, but I don't think the administration has really shifted its emphasis. I think the recent appointments or the recent nominations, anyway, point to continuity within the administration, and unfortunately, a continuity in the conflict with Congress. I think that that is really going to be, it looks like, a defining element of the second term.

Monica Trauzzi: So the holdup that we're seeing on Gina McCarthy's nomination to EPA administrator, what impact is that having on the progress of regulations coming out of that agency?

Michael Livermore: It has to slow things down. I think the combination of the sequester and the kind of budget problems, along with the lack of an administrator, slows things down. I mean, a lot can get done without an administrator, but at the same time, decisions have to be made at the top, and when you don't have someone there to do it, it slows things down.

Monica Trauzzi: So is there a strategy here by Republicans to hold the nomination as long as possible so that these regulations don't move forward?

Michael Livermore: It's hard to say. I think that the strategy though doesn't have to do with, I think, Gina McCarthy herself. They haven't really objected to the nominee as much as I think just objected to EPA in general and the things that EPA does. So whether it's a specific strategy to try to stop and slow down EPA, or just a way of objecting to the agency's path and the agency's business, it's hard to say, but it results in the same thing.

Monica Trauzzi: Center Republicans have made some specific requests of McCarthy and they want her to address some questions on transparency a bit more adequately. Should she just address the questions as they want in order to move the process forward?

Michael Livermore: That might be the alternate resolution. We kind of have to see. Those questions could also be a stand-in for more substantive concerns about the agency, and they might be just waiting for some kind of negotiation to take place. But maybe some of the questions need to get answered too. It's going to be a little bit behind closed doors I think the reality is. There's also a huge number of these questions. It's unusually large requests for information from the agency. It's a little hard to believe it's actually really about getting information and it's more about just objecting to the process.

Monica Trauzzi: President Obama has nominated Howard Shelanski to head up the Office of Information and Regulatory Affairs, which actually has an incredible amount of authority and impact when it comes to the regulations that we see coming out of the administration. So what's your take on that nomination and how he might compare to Cass Sunstein?

Michael Livermore: I think it's a really good choice. Howard has certain characteristics that I think will make him a good fit for the role of OIRA administrator. He's actually worked in agencies before, which is actually different from several of the past OIRA administrators, so that experience I think will be very useful. He also has a legal background and a Ph.D. in economics, which I think again provides him with a good grounding in the different substantive areas that OIRA is going to cover. So I think he really has a range of experiences that are going to hold him in good stead. Now, comparing him to Cass, I think they've got different styles, so that I think is going to be the major difference is stylistic, but in general I think their approach is going to be somewhat similar, kind of pragmatic, analytic approach that's not necessarily going to make everybody happy but I think there'll be some continuity.

Monica Trauzzi: Any sense of how he might handle concerns from the business community?

Michael Livermore: I think he'll be open to them, just as I think genuinely Cass was as well, but they're not going to dominate. Then that can be a problem where OIRA just becomes a mouthpiece for the business community or ignores what agencies are saying. I don't think that's going to happen, but at the same time, they're not going to get shut out. They will have an opportunity to be heard.

Monica Trauzzi: So in the background of all these nominations, the Office of Management and Budget recently released a study that finds the benefits EPA regulations bring to the economy outweigh the cost. And you've done a lot of work on cost benefit analysis, what's your take of what OMB has projected here, and how does it compare to what you talk about in your most recent book?

Michael Livermore: This isn't surprising, right? So when EPA…each regulation they do a cost benefit analysis, and it turns out for the major rules, they have been very controversial, but they have these massive benefits returned for the cost, so the Mercury Rule is a big example, or the fuel efficiency standard. And so when each individual rule is cost benefit justified, when you put them all together, which is what OMB recently did, lo and behold, you find that the whole system works pretty well. And that is consistent with what we've learned over the years with EPA regulations, and in the book that we put out recently, that's looking globally, and the same story can be told. When you look at smart environments on regulations, they turn out to be very cost benefit justified. And these are using tools that are mainstream economic tools that have been in the literature, are peer reviewed for decades.

Monica Trauzzi: So how do you think this report might find its way into the rhetoric in Washington on regulations?

Michael Livermore: We'll see if it does. One hopes it can shift the debate a little bit, but we've had reports like this periodically, and I think that there's just some people who don't trust OMB or they're just kind of ideologically predisposed to not kind of believe it's possible for regulations to have large benefits. And then on the left there are folks that are even opposed to putting economic values on any of these goods. So these are entrenched views. One hopes over time empirical reality can have some influence over them, but it will take some time.

Monica Trauzzi: So this is likely the last interview we're going to be doing under your current position as executive director of Policy Integrity. You're headed to the University of Virginia School of Law, faculty position, congratulations.

Michael Livermore: Thanks very much.

Monica Trauzzi: What can we expect from your work there? Are we going to see similar work as we've seen you do at Policy Integrity?

Michael Livermore: Yeah, I'll definitely be continuing to engage in the regulatory process, I'll be following what happens here in Washington, D.C., and I'll have a little bit more time to focus on big picture academic projects, which is something I'm excited about.

Monica Trauzzi: All right. Congratulations. We'll end it there.

Michael Livermore: Thanks very much.

Monica Trauzzi: Thanks for coming on the show.

Michael Livermore: My pleasure.

Monica Trauzzi: And thanks for watching. We'll see you back here tomorrow.

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