Former administrators and staff of the Office of Information and Regulatory Affairs (OIRA), which is part of the Office of Management and Budget, offered advice and recommendations May 20 about how the agency could fare better in the future.

 

An all-day forum sponsored by the Regulatory Studies Center at the George Washington University, held to celebrate the 30th anniversary of OIRA, drew past and present staff of the little-known but powerful unit within the office of the president.

 

Currently the office is in the process of reviewing the preliminary plans of all federal departments and agencies for reconsidering all major rules (99 DER A-18, 5/23/11).

OIRA was created by Congress during the Carter administration, with considerable support from former Sen. Lawton Chiles (D-Fla.), through the Paperwork Reduction Act of 1980.

The agency carries out several important functions, including reviewing federal regulations, reducing paperwork burdens, and overseeing policies relating to privacy, information quality, and statistical programs.

 

It has operated under a series of executive orders signed by various presidents, the most recent being EO 13563 signed in January by President Obama. “And these orders have been remarkably consistent in their policies and procedures,” said Christopher DeMuth, a fellow at the American Enterprise Institute and OIRA administrator from 1981-1984.

 

The core policy of the agency has been the maximum net benefits rule, which means a regulation's benefits should exceed its costs, and the margin of benefits over costs should be the greater among the alternatives being considered, DeMuth said.

 

There have been some variations among administrations, but most have centered around economics, such as using performance standards or cost effectiveness, DeMuth said. But the core procedure is centralized review. Agencies must submit proposed and final rules along with information and analyses to support their rationales, benefits, and costs to OIRA for review before issuing them, he said.

 

OIRA is part of the executive office of the president, but it cannot act unilaterally, DeMuth said. When there are irreconcilable differences between agencies and OIRA, they are settled by the president or his designee, he said.

 

DeMuth said it is hard to identify any other example of such remarkable policy consistency across Republican and Democratic administrations. “That suggests that the OIRA policies and procedures have been addressed to a problem that is apolitical,” he said.

Instead, the problem is the growth of the size, scope, and power of administrative regulation due to the increasing delegation of lawmaking authority from the Congress to the executive, DeMuth charged.

 

DeMuth said the 30-year history of OIRA review has been marked by extreme contentiousness and marginal results. Each administrator faces constant conflict with colleagues who are supposedly on the same team, he said.

 

The contentiousness of the job is evidence for the view that the purpose of OIRA review is not just review and coordination, but constraint, DeMuth said. To date, however, bureaucratic warfare has produced just marginal improvements in regulatory policy, he said.

 

Wendy Lee Gramm, founder of regulatory studies center at the Mercatus Center at the George Mason University and OIRA administrator from 1985-1988, suggested that “incentives matter.”

 

Those who benefit from the regulation, including non-profits, will be represented, but no one speaks for the average consumer or taxpayer, Gramm said. OIRA has tried to do that, but with limited success, she said.

 

“Cost-benefit analysis is supposed to do that, with even more limited success,” Gramm said.

Gramm said she supports public comments, in part to help the average consumer. In addition, she recommended treating regulations like the budget. The budget process is widely understood and accepted, she said.

 

“Well, why shouldn't we evaluate the hidden tax of regulations? Because regulations impose a tax on the public,” Gramm said.

 

The public and businesses are asked to pay for a program that the government is requiring for a public benefit, such as clean air, Gramm said. Under her proposal, each bill would have an authorizing amount that would prevent it from imposing costs on state or local governments, businesses, or the public, of more than X dollars, she said.

 

If the program runs over its authorized amount, the agency would have to come back to Congress for more tax money, Gramm said. “And I think that that's something that could be done. And yeah, it would be controversial,” but so was the budget process when it was first suggested, she said.

 

Under a regulatory budget, benefits would not matter, Gramm said. “People know what the benefits are,” she said. “Let's just look at the costs the way we do with regular, other government programs,” she said.

 

S. Jay Plager, federal appeals court judge and former associate director of OMB and OIRA administrator from 1987-1989, defended agency officials, who do not want to own or control the world.

 

“By and large, the people working in these agencies and writing these regulations are just government servants doing their job,” Plager said. “And their job is to push forward the program of that agency. And they do that with vigor, and they do that with concentration.”

This is the nature of the federal bureaucracy and it is the problem that must be dealt with, Plager said.

 

Agencies do not come to decisions out of stupidity, malice, or laziness, but because they have developed a culture over time and get rewarded for pushing a program, Plager said. “How do we help them out, is the question,” he said.

 

One of the significant roles that OIRA can play is to recognize this problem and to provide a central screening mechanism, Plager said. He also disagreed with DeMuth's characterization of OIRA as having a marginal impact.

 

The cost of regulations is an issue that keeps getting lost in the debate, Plager said. A regulatory budget is a “tremendously potent concept” that would try to cost out the imposition of regulations on the public. Still, this would open up the question of cost-benefit analysis and the economics of the regulatory apparatus, he said.

 

Once a regulation is in place, it is almost impossible to undo it, Plager said. But the idea of budgetary Pay-Go is an interesting idea that could come out of the regulatory review process, he said.

 

“Evaluation research is an art that goes on in some academic worlds. We've never brought evaluation research to play in this, and maybe it's something we need to do,” Plager said.

 

Separately, Plager said that the notion of the president intervening or interfering in the regulatory process has always puzzled him. Indeed, the president is the head of the executive branch and of agencies, he said.

 

The problem is with congressional committees, Plager said. The committees think they own the agencies, and the agencies think they are obligated to the committees rather than to the president, he said.

 

“And that has been an ongoing struggle over these many years, and I suspect it's still ongoing,” Plager said.

 

Jim Tozzi, the first deputy administrator of OIRA, said the institution gives a protective shield against the wholesale dismantling of regulatory agencies, which play an integral role in society.

 

“And I think a strong OIRA will maintain them by not letting them go off and do crazy things,” Tozzi said.

 

James Miller III, a senior adviser to the law firm Husch Blackwell and OIRA's first administrator in 1981, offered 25 suggestions for OIRA administrators and senior staff, based on his observations throughout the years.

 

First, be tough, because OIRA stands in the way of a lot of what agencies want to do, Miller said. Take every opportunity to educate and explain to agencies why it is returning their regulatory initiatives. More importantly, tell the public why centralized regulatory review is important to them, he said.

 

Understand that the reason regulatory agencies exist is to issue regulations, Miller said. Understanding their motives will help OIRA administrators spar with them and help them promote regulations that truly make sense, he said.

 

Focus on basic economics and cost-benefit analysis, Miller said. Avoid a we-they attitude with respect to the president and vice-president's staff, “you need them on their side,” he said. Also, do not be afraid of the small scale of OIRA compared to the agencies.

 

Find a vehicle to test Humphrey's Executor, the depression-era Supreme Court ruling that established the so-called independence of the independent agencies, Miller said.

 

“I am fairly confident this Supreme Court would overturn Humphrey's Executor,” Miller said.

Pursue new ways of fulfilling the objective of greater regulatory efficiency, such as advocating a regulatory budget along the lines of the financial budget, Miller said. Stay in touch with predecessors, who can offer good advice and vouch for OIRA to Congress and the press.

 

Publish an annual report on the overall cost of federal regulation, Miller said. Address state regulatory activity, especially how it interfaces with federal regulation. Investigate the relationships between federal regulation and federal tax expenditures, he said.

Comment on regulations proposed by the independent agencies; if nothing else, it will illustrate the need for these agencies to have their regulatory proposals reviewed, Miller said. Rank all agencies by the quality of their regulatory analyses.

 

Keep congressional committees apprised of what OIRA is doing and why, especially if the office is about to do something controversial, Miller said. Constantly be on the lookout for excellent staff to offset attrition.

 

“Don't vote for the union,” Miller stressed. Union representation at OIRA and at OMB will destroy the culture of both, he said.

 

OIRA administrators and staff should not forget their families, Miller said. Also, keep up with developments in the profession. Always do what is right and never even think of retaliation, he said. And always remember, OIRA works for the president.

 

Let White House staff know what OIRA is doing, Miller said. Spend time thinking about long-term goals, rather than what is in the in-box. “And finally, be comforted by the fact that while OIRA may not be perfect, it has endured, despite a number of termination attempts,” he said.

 

Sally Katzen, senior adviser at the Podesta Group and OIRA administrator from 1993-1998, took issue with DeMuth's characterization of OIRA as having the same policies across administrations, Democrat and Republican. “Not so,” she charged.

 

There was substantial speculation in the early days of the Clinton administration, given the deficiencies of President Reagan's EO 12291, that it would scrap the system, Katzen said. But that did not happen; instead, it became EO 12866.

 

Among the changes was that OIRA would only review significant regulations and that the process was made more transparent, Katzen said. More importantly, benefits would be given as much prominence and weight as costs, she said.

 

The elevation of the benefits side was a big part of moving from a deregulation, regulatory relief, costs are important mandate to a charter of “neutral” principles that could support either regulation or deregulation, Katzen said.

 

Looking ahead, Katzen offered two important recommendations. The first is to extend OIRA review to independent agencies. Katzen said she knows why the president did not extend the executive order to the independent regulatory commissions, but that it should change.

“In hindsight I think that was wrong. And I have been championing this issue for the last several years,” Katzen said.

 

A second recommendation is for OIRA to get off the transaction-based orientation that it is on, Katzen said. Not stop reviewing regulations, but look at more than one at a time. There has been recent discussion about the “train wreck” that OIRA faces with half a dozen Environmental Protection Agency notices and rules about to go final, she said.

 

Rather than considering them individually, there needs to be a more holistic look or framework for addressing these problems, Katzen said. The basis for this is already in the current executive order, she said.

 

Finally, return letters are not necessarily productive, Katzen said. Instead, the fundamental issue is a culture question. “And what you want to do is to convince the agency and to teach the agency to use this kind of analysis for its own benefit, not because it's being forced to do it,” she said.

 

“I don't think a public comment excoriating an agency or embarrassing an agency is going to bring about that kind of culture change. I just don't think it's the best approach,” Katzen said.

 

Susan Dudley, director of the Regulatory Studies Center at the George Washington University and OIRA administrator from 2007-2009, said OIRA's role is to counter agencies' natural tendency to want more: budget resources, authority, or information collections.

OIRA examines policies from the perspective of the broader public interest, rather than agencies' parochial interests of single-mission agencies, Dudley said. The agency has the expertise, policy analysts and economists, to make them a neutral arbiter, she said.

But it is also responsible for ensuring that regulatory policies are consistent with the policies of the elected president, Dudley said. So OIRA's effectiveness is not only a function of its expertise and the quality of its analyses, but its working relationships with the executive office of the president.

 

Dudley said that regulation is bipartisan in character. Indeed, the analysis and principles in regulation are nonpartisan, including when regulation is appropriate, how regulation is designed, and how to evaluate whether regulation is effective, she said.

 

Regulatory activity, budgets, and staffing are increasing, Dudley said, according to a recent study by the center (92 DER A-11, 5/12/11).

 

Historically, the pressure to regulate is never more evident than during the last two years of an administration, Dudley said. But in May 2008, White House Chief of Staff Joshua Bolton issued a memo to agencies admonishing them not to issue last-minute regulations and to have everything finished by November of that year, before the election results were known, she said.

 

“So what I think we can learn from that, is that midnight regulations I think are inevitable. But I also think that the Bolton memo had an effect—if nothing else, it spread out the review of those regulations over a longer period,” Dudley said.

 

This provided more thorough review and opportunity for public comment, Dudley said.

It has become a standard practice for incoming administrations on Inauguration Day for the incoming chief of staff to issue a memo halting all the regulations of the previous administration, she said.

 

“I would love to see a standard practice of outgoing chiefs of staff issuing a memo similar to the Bolton memo to try to smooth that transition,” Dudley said.

 

Among her remaining recommendations, the internet is a “game changer,” and its role is just beginning to be understood, Dudley said.

 

Also, international cooperation is more important now than before, Dudley said. Regulations should not be a barrier to trade, she said.

 

Cost-benefit analysis should not be the first or the last word in understanding regulation, Dudley said. “We need to go back to first principles and understand first, what's the compelling need for the regulation,” she said.

 

Finally, OIRA is necessary but not sufficient, Dudley said. As regulation becomes a more attractive vehicle for achieving policy goals in the face of budget constraints, OIRA is too small and other checks and balances are needed to ensure accountability, she said.

The president needs OIRA, but it would be ideal to have an institution that is both outside of elected officials' control but also accountable, Dudley said. “I think we need outside checks,” she said, such as academic institutions or possibly a new congressional office that reviews regulations.

 

Codifying the executive order that controls OIRA could have benefits, chief among them subjecting regulatory analysis to judicial review, Dudley said. Not that courts are any better judge of regulation, but any analysis that is subject to judicial review typically is done better, she said.

 

“And second, because I think it could cover independent agencies, and I would like to see that too,” Dudley said.