The White House Office of Management & Budget (OMB) appears to be facing a significantly changed role reviewing EPA and other agencies’ regulations under the Obama administration that at a minimum appears likely to remove what critics say is the office’s deregulatory bias.

But one former OMB official cautions that the Obama administration should continue to ensure the office plays a central role reviewing regulatory policy as a way to keeps “political entrepreneurs” from trying to exert influence at the various agencies with no oversight. “With OMB, you have a center of accountability that you don’t have at any other place,” the source says.

The source adds that there are a lot of “checks and balances” on the powers of OMB offices, especially the Office of Information and Regulatory Affairs (OIRA), including the ability of agency heads to appeal OMB decisions and the fact that the agencies have to disclose OMB actions. “It’s not absolute power at all,” the source says.

Even before his election victory, Obama vowed to quickly rescind a Bush administration order, E.O. 13422, that requires EPA and other agencies to have a White-House appointed “regulatory policy officer” who Obama charged “can prevent career professionals from initiating rulemaking processes.”

The order has been a lightning rod for Democrats and environmentalists, who charged it allowed OMB to block rulemaking and other policy processes even before they were formally initiated.

Obama also promised to quickly issue his own executive order “establishing clear guidelines for the review and release of federal and federally-sponsored research, guaranteeing that results are released in a timely manner and are not distorted by ideological biases,” according to campaign documents on science policy. Obama also vowed to strengthen protection for “whistle blowers” who report abuses of these processes.

Obama also signaled during the campaign that he is a strong believer in “well-designed” environmental regulations. In an Oct. 30 interview on MSNBC, Obama said that while he is a “strong” believer in the free market, he is also a strong believer that air and water are “common goods . . . that require us to have some regulation.”

Since Obama’s election, several key groups have issued reports backing Obama’s call to rescind E.O. 13422 and recommending scores of additional ways to overhaul OMB’s role, especially OIRA’s role.

OMB Watch, a public interest group, released Nov. 12 Advancing the Public Interest Through Regulatory Reform, which backed the administration’s plans to rescind E.O. 13422, while also calling on the incoming administration to revise E.O. 12866, an executive order issued by the Clinton administration that serves as the basis of current executive review, saying it is “outdated and should no longer continue to be used.” Relevant documents are available on InsideEPA.com.

The OMB Watch report echoes what many environmental and public interest groups hope will be the tone for regulatory policy in the the administration. “No one is happy with the way the current executive order works,” says a source with Georgetown Law School who was familiar with the OMB Watch report. The source says, despite the diverse range of individuals contributing to the report, the group largely agreed that “too much power” is in OIRA “not simply to dictate results [at the agencies], but to tell an agency how to go about doing its work.”

This is particularly important for the incoming administration, the source argues. “You need to unshackle the agencies,” the source continues. “You’re going to need your agencies to churn out some work,” which is hard if OIRA is acting as a “choke hold.”

A source with the Institute for Public Integrity at the New York University School of Law says the new administration “should structure OIRA oversight to get rid of the anti-regulatory bias.” The Cost-Benefit Compass: Navigating the Perfect Storm of Economic, Environmental and Energy Challenges, a policy brief released by the institute last month, suggests that OIRA’s role be expanded to implement “a mechanism to review agency inaction” and take “a greater harmonization and coordination role” between the agencies.

With the increased responsibility, the center also suggested an increase in funding to avoid delays in the regulatory process and more transparency at OIRA for “certain actions that are quasi-regulatory in nature.” The institute argue that, while “imperfect,” the interaction between OIRA and the agencies “has likely contributed to more rational regulation.”

According to the policy brief, “Over the years, the back and forth between agencies and OIRA has helped build a more sophisticated apparatus within agencies to analyze the implications of their decisions.” For example, the brief argues that this interaction has lead cost-conscious administrations to pursue environmental programs supported by cost-benefit analysis, while administrations focused on environmental concerns have been able to pursue more cost-effective programs because of the input from OMB.

The group is recommending the Obama administration issue a new executive order in the first 100 days that reauthorizes regulatory review with cost-benefit analysis, but that changes the emphasis, according to the source. In the past, the emphasis was on the use of regulatory review as a “check on agency action and needed to tame overzealous agencies,” the source says. But the new emphasis should be on prodding agencies to action and putting an equal focus on the ancillary benefits of cost-benefit analysis. -- Aaron Lovell

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