OIRA@2050

With EPA’s rules slated to be a key focus of the election-year debate, advocates on all sides are increasingly calling to reform the Office of Information and Regulatory Affairs (OIRA), the White House office that reviews the agency’s regulations.

OIRA, a part of the Office of Management and Budget (OMB), has already taken center stage in the debate over regulatory costs, with House Republicans and industry groups charging the office is too lax in its reviews of EPA and other agencies’ rules, while environmentalists and public health advocates complain it unnecessarily weakens rules and overrides agency decisionmaking.

GOP lawmakers are pushing legislation to strengthen the office’s regulatory review authority – such as requiring more extensive cost-benefit analysis.

The White House has threatened to veto some of the legislation and OIRA Administrator Cass Sunstein has argued instead for the administration to address the economic impacts of rules via a retrospective review process that President Obama required in Executive Order (E.O.) 13563.

Under the terms of the order, agencies are required to identify rules that could be “modified, streamlined, expanded, or repealed” in order to reduce regulatory burdens. EPA and other agencies have already identified a host of rules that they are reviewing to determine whether they need to be scaled back to address economic cost concerns.

Sunstein has also touted the adequacy of current cost-benefit and other regulatory reviews the office has conducted.

Business groups applauded the retrospective review, though many have called for it to go further and some have called for it to be codified.

While the administration has resisted calls to codify it, Sunstein has nevertheless used it to fend off GOP calls to revise the rulemaking process. While administration officials share “common ground” with lawmakers in terms of wanting to reduce regulatory costs and burdens, the administration does not see the need for legislative fixes being proposed, Sunstein told a Senate hearing last June.

Still, other are seeking administrative reforms. For example, former OIRA Administrator James Tozzi is suggesting limiting the role of the administrator while strengthening the role of agency desk officers, encouraging them to work with agencies to improve rules, rather than simply rejecting them, and calling for OIRA to increase coordination with the budget side of OMB.

But environmental advocates are urging the office to scale back its centralized review functions and in some cases, to drop its reviews of EPA and other agencies’ guidance documents and other policy measures that do not meet the office’s current rule-review threshold.

While few expect to see the office reformed before the election, one regulatory expert says the office still has an important role to play in the election’s immediate aftermath, given the potential issuance of a large number of “midnight rules” in the event the president loses the election.

“In 2012, OIRA’s job is to prevent the White House from being embarrassed by itself,” the source says, adding that the administration will want to avoid a regulatory issue that makes political waves like the Solyndra loan did for the budget side of OMB.

The source says the White House can tell agencies not to submit controversial rules or delay approval of rules and tell the agencies not to publish them. On top of this, the source says, OIRA can provide the White House with important information about the costs of key rules, which can inform the decisionmaking process.

Reform Options

Once Washington moves beyond the election, policymakers may begin considering options for reforming OIRA, such as Tozzi’s proposal.

In a special issue of the Administrative Law Review released in late 2011, the former OIRA chief suggested strengthening the role of OIRA desk officers. At one time, desk officers would have been responsible for the review of all transactions at an agency like EPA, but that role has diminished over the years as the OIRA administrator has taken a greater role in the decisionmaking process.

“The role of the desk officer has changed considerably from acting as an overseer of agency operations to a more passive role with greater emphasis on writing white papers for action by the administrator,” Tozzi writes. “ Having the majority of the decisions flow through the administrator reduces the clout of the organization. In addition, it appears that recently there has been an emphasis on recruiting book smart desk officers; there is also a need for desk officers who are street smart.”

He says desk officers and other OIRA officials should return to their roles as “social entrepreneurs,” where they could “develop a concept, market it and make it grow,” similar to for-profit companies, rather than simply rejecting an agency rule. “OIRA needs to have a reemergence of social entrepreneurs,” Tozzi says. “Within OIRA this means that when an agency sends over a poorly designed regulation, OMB staff would go beyond objecting to the rule by devising a solution to the agency problems through the appropriate use of sugar and vinegar.”

Further, Tozzi says OIRA staff levels need to be increased – noting within a year after it was established, OIRA had the most personnel of any office in OMB. He also proposes that OIRA strengthen its connection to the budget side of OMB as a way to build clout for the office, in particular by “assigning primary jurisdiction for the review of select rules to budget examiners in order to foster a continued working relationship with the budget side and the ease work load in OIRA.”

OIRA should also encourage retrospective review above and beyond the administration’s ongoing efforts by encouraging and reviewing petitions filed under the Data Quality Act (DQA). While Tozzi applauds the review under E.O. 13563 as a “promising start,” he says “it still allows the agencies, not the White House or the affected parties, to make the final decisions regarding retrospective review.” Tozzi says greater use of the DQA, a tool that allows stakeholders to challenge science and other information used in rulemaking and which Tozzi crafted, would “change this imbalance.”

Finally, he recommends greater support for “mechanisms that allow the private sector to assume a portion of its enforcement role,” including the DQA, because the power of OIRA will fluctuate among presidential administrations.

Limit OIRA

But many proponents of stricter environmental, health and safety rules argue that OIRA has become an obstacle for what they say are much-needed rules and are making the opposite case, seeking to scale back its regulatory review role.

The Center for Progressive Reform (CPR) in November released a white paper looking at the way industry influences OIRA in an attempt to block, slow down or rein in rulemakings by EPA and other agencies. The report, Behind Closed Doors at the White House: How Politics Trumps Protection of Public Health, Worker Safety & the Environment, found that some 84 percent of Obama EPA rules were changed by OIRA during the inter-agency review process, while also finding that industry groups had greater influence at the office than environmentalists.

CPR’s report included a number of recommendations for reforming OIRA, including calling for the office to focus its regulatory review on “economically significant” rules, which cost more than $100 million annually, and cease reviewing other rules, guidance documents and proposals that do not meet the threshold.

The group says if OIRA does review non-economically significant rules, it should provide a written explanation of why the rule conforms with executive orders governing regulatory review and make the explanation public.

Rena Steinzor, president of CPR and a professor at the University of Maryland Carey School of Law, says while OIRA “will stay in business” in future administrations, she “hopes it pays more attention to regulatory dysfunction and start thinking about how it can help agencies get on top of this problem” – particularly in the face of more major environmental and public health disasters like the Deepwater Horizon oil spill.

Steinzor also says, as agency resources are cut, an office positioned like OIRA could look to solve problems that cut across the agencies, like dealing with imported goods that contain toxics or other hazards, which she says is “an example of something only the White House can do.” OIRA could also work across agencies to formulate cross-cutting approaches to enforcement, something it could pursue with the Justice Department.

Steinzor says stronger enforcement is one way to respond to calls from Republicans and others for a “super-mandate” that would override health-based environmental laws and require agencies to pursue the least-costly alternative for regulation. Part of this is the need to “recover the avoided cost of compliance” for companies that are in violation of EPA rules and are able to gain market advantage by undercutting their competition, Steinzor says.

Steinzor further says the budget office at OMB could encourage agencies like EPA to use its authority to charge fees to industry in an effort to fund regulatory activities. In this context, President Obama could “be a leader and say it’s time for industry to pay the cost of overseeing” its activities. — Aaron Lovell