OIRA Wish for 2016: An Orderly Regulatory Process

By Cheryl Bolen

Jan. 29 — Office of Information and Regulatory Affairs (OIRA) Administrator Howard Shelanski has a deceptively simple wish for 2016: to maintain regular order and finalize the administration's top regulatory priorities under standard procedures.

Shelanski knows full well how challenging that will be this year, the last of President Barack Obama's administration. He has already anticipated the onslaught of last-minute rules by agency heads and White House policy officials desperate to bolster their legacies.

These rules, known as “midnight regulations,” are typically submitted to OIRA in the waning days of an administration with hopes for a speedy review, and Shelanski is determined to have none of it.

“My over-arching priority for this year, with a year left in the administration, is to make sure that we maintain an orderly regulatory process that makes sure that the highest priority rules go forward first,” Shelanski told Bloomberg BNA on Jan. 21.

“So that if this administration runs out of time, the rules that don't get done by this administration are those that are relatively lower priorities for the agencies, for the president and for the president's policy councils,” Shelanski said. His agency is part of the Office of Management and Budget.

Early Warning

Federal agencies were warned in a Dec. 17, 2015, memorandum that they would not be permitted to rush significant regulations through in the waning days of the Obama administration (See previous story, 01/25/16).

“There will not be a big package of surprise regulations at the end of this administration, if I have anything to say about it,” Shelanski said.

OIRA must review all significant regulations before they can be finalized, and the memo said it would not rush the process. All priority regulations must be completed and submitted no later than this summer if agencies want their regulations finalized before Obama leaves office.

If the rules are late and the review process runs into hurdles, because of interagency disputes or problems that OIRA discovers with the underlying rule, “we're not going to sweep those under the carpet in the interest of time,” Shelanski said.

Expecting Some Late Entries

Still, Shelanski knows that some agencies will try to send in rules late. “Look, it's human nature,” he explained.

The Cabinet secretaries are all passionate about the missions of their agencies, Shelanski said. And as they see their tenures coming to a close, they all want to achieve their missions, he said.

“And that is a natural thing and frankly, it's commendable—these are the kinds of people we want in office, people who care about getting the job done,” Shelanski said.

OIRA wants the job done, but it is often a “filter” or an enforcer of standards that can slow that process down—to the benefit of the American public and transparency, Shelanski said.

And in the end, OIRA has the full support of the White House for this, he said.

Wrapping Up Agenda

Amit Narang, regulatory policy advocate at Public Citizen, said the administration will be trying to wrap up its regulatory agenda this year.

There are some big-ticket items still left for it to do, including some rulemakings that date from the administration's first term, Narang said. These include Dodd-Frank financial regulations, rules implementing tobacco legislation from 2009, and pipeline safety rules, among others.

“Now, just to be clear, these regulations have been in the pipeline for a long time, and I hope that folks keep that in mind as we start hearing rhetoric about midnight regulations and Obama rushing rulemakings,” he said.

No Model of Efficiency

The regulatory process is no model of efficiency, particularly for the most important rulemakings that benefit the public the most, Narang said.

It is not unusual now to see big-ticket rulemakings take an entire presidential term, Narang said. “The process is not built for speed,” he said. There are a lot of procedural, analytical and legal requirements that agencies have to comply with.

And in an era of reduced or stagnant funding, it is not surprising that agencies take a long time, perhaps longer than many in the public health and safety community would like, Narang said.

But it is not really the agency's fault, Narang said. Congress has layered on many analytical and procedural requirements for agencies and done nothing to streamline or reduce those requirements, he said.

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Regulation, Not Legislation

Sally Katzen, senior adviser at the Podesta Group and former administrator of OIRA in the Clinton administration, said that in the last year of this administration, there probably is not going to be a lot of legislation.

“To the extent [Obama] wants a legacy, and every president does, it's going to have to come from his administration rather than from legislation, from the executive branch rather than from Congress,” she said.

And if past is precedent, there will be a significant effort this year on regulations, Katzen said. “Having said that, I would also say that the warnings of a tsunami [of regulations] are clearly overstated.”

Mission: Mostly Accomplished

Actually, much of what Obama set out to achieve through regulation has been accomplished, Katzen said. The president's signature issue is health care, and the Department of Health and Human Services already has issued important implementing regulations, she said.

With respect to climate change—another priority—the air office at the Environmental Protection Agency has finished much of its work as well, Katzen said.

On the other hand, the Department of Labor is pressing hard on a number of regulations that it hopes to finish this year, Katzen said.

Another potential source of new regulation will be the Department of Transportation, she said. DOT regulators are working on, among other things, drones and driverless cars, which could be the stuff of a lasting legacy, Katzen said. And even if those don't go out the door as final rules this year, a lot of progress will be made on them that Obama's successor may find compelling, she said.

Time Is Running Out

But time is running out, Katzen said, to do a lot of new things, let alone finish everything in the pipeline.

To cement priorities or strengthen accomplishments, a regulation should be completed by this spring—otherwise it runs the risk of falling under the Congressional Review Act, she said. That law gives Congress 60 days to vote to nullify a new rule and could be used to invalidate last-minute regulations should Republicans win control of the White House and Congress in November.

Still, agencies know that not all late-filed regulations will be set aside, even if a Republican succeeds Obama, Katzen said. In 2009, Democrats had control of the White House, the Senate and the House and yet they did not set aside any regulations from the administration of former President George W. Bush, Katzen said.

Rather, Congress was focused on the economic meltdown that was occurring in 2009 and trying to confirm Obama's executive appointees, she said.

Election Year Challenge

A second major challenge Shelanski faces this year is the political rhetoric coming from Republican presidential candidates and business-backed advocacy groups.

The U.S. Chamber of Commerce has said this administration is on a “regulatory tear” and has put fighting regulations at the top of its list of priorities for 2016 (See previous story, 01/15/16).

“That kind of rhetoric is just to be expected,” Shelanski said. “It helps sometimes to come down to facts.”

The vast majority of rules that the federal government issues each year are minor, ministerial rules like Medicare payment schedules and hunting quotas under the Migratory Bird Treaty Act, he said.

The rules that underlie a lot of the rhetoric end up boiling down to a small handful, Shelanski said. And it is far better to talk about specific rules and their costs and benefits than make blanket statements about a regulatory “tsunami,” he said.

“The reality is that this administration has done a lot of rulemaking, because there have simply been vast areas of urgent public need that Congress has not acted on,” Shelanski said.

Congressional Inaction Seen

So working within the law and the limits of the regulatory authority that executive branch agencies have, the president has tried to address a lot of public policy problems through regulation, Shelanski said.

The job of OIRA has been to ensure that those rules are as efficient as possible and consistent with the president's overriding objective of growing the economy and growing jobs, Shelanski said.

There's a bit of a “disconnect” between the rhetoric of job-killing, economy-stagnating regulations and a report showing 292,000 new jobs created in December 2015 and an unemployment rate holding at 5 percent, Shelanski said.

“We have an economy that's crawled out of a terrible recession to steady growth, to job creation and to incredibly low levels of unemployment,” Shelanski said. “That does not fit factually with the story that you hear from a lot of these groups,” he said.

Neglecting Benefits

No one denies that in specific circumstances, specific rules are going to hurt specific businesses and it's easy to go out and find a business here or there that is harmed by a rule, Shelanski said.

To the extent possible, it is OIRA's obligation to try to prevent those harms, Shelanski said. “There are costs to regulation and this president is seriously attuned to those costs and wants to avoid them,” he said.

Rules are not designed for the sake of hurting anybody or imposing costs, but to achieve benefits, Shelanski said.

“And at least through the first six years of this administration, we have over $200 billion in net benefits identified from our regulatory programs,” he said.

Chamber Raises Objections

Bill Kovacs, senior vice president of Environment, Technology and Regulatory Affairs at the Chamber, said the organization recognizes the need for smart regulations to ensure workplace safety and protect public health.

“The problem is that the government is not being honest about the benefits they are calculating,” Kovacs said in an e-mail to Bloomberg BNA.

More than any other agency, EPA has been writing rules with “astronomical” costs, and large supposed benefits, Kovacs said. But EPA is denying the public basic information about the real benefits of these regulations, he said.

Almost all of the benefits from these EPA rules come from purely incidental reductions of fine particulate matter (PM2.5) emissions, Kovacs said. He said 97.2 percent of benefits from rules finalized between 2000 and 2013 come from reduced PM2.5.

However, PM2.5 levels in the U.S. are significantly below EPA and World Heath Organization standards, and EPA cannot demonstrate that further reductions will deliver real health benefits, Kovacs said.

“The public deserves to know whether costly regulations that could mean real harm for local economies have real benefits,” Kovacs said. “This is why we are pushing for more transparency in the rulemaking process,” he said.

By the Numbers

Daniel Perez, policy analyst at the George Washington University Regulatory Studies Center, said the 2015 fall unified regulatory agenda listed 76 economically significant rules in the final stage (See previous story, 11/20/15).

So at a bare minimum, assuming there is no midnight spike, the administration has said there are 76 economically significant rules—or rules with an economic impact of $100 million or more annually—that are going out this year, Pérez said.

By comparison, the Clinton administration's 1999 agenda listed 30 such rules, and the Bush administration's 2007 agenda listed 49 such rules, Pérez said.

No Final Tally

Historically, what's listed in the agenda, at least looking at Bush and former President Bill Clinton, doesn't fully account for the finally tally, Perez said.

Where the Clinton administration listed 30 rules, that was only 41 percent of the total number that actually ended up being published, Pérez said. The Bush administration estimated a little better, with its 49 listed rules ending up as 65 percent of the total for the year, he said.

So, it is reasonable to assume the Obama administration's list of 76 rules will be only a percentage of the final rules published this year, Pérez said.

Quicker Pace

Compared to the previous two administrations, the Obama administration has issued more economically significant regulations: averaging 4.6 per month compared to 3.8 per month, Perez said.

Obama's biggest year for economically significant rules was 2010, with 74 regulations. That spike had to do with rules implementing the Affordable Care Act, he said. Forty-five regulations were issued in 2009 and 53 in 2011, Perez said.

And, even though the ACA was enacted in 2010, it still requires more regulations, Pérez said. “So you'll see ACA rules this year that need to be rolled out to keep cementing the act,” he said.

Agency's Focus

The benefits that OIRA brings to the American public are twofold: quality control and consistency in the regulatory process, Shelanski said.

OIRA's job is to ensure that agencies have rules that are well-grounded in science and evidence, tailored to achieve their objectives and transparent to the American public about what they are based on, what they will achieve and what they will cost, Shelanski said.

That oversight is aimed at driving agencies to do higher-quality analysis, research and engagement with the public in the development of their rules, he said.

“Does it sometimes mean that you can't do as many rules as you would like? Yes it does,” Shelanski said. But, he said, the American public is better off because costs are reduced and benefits are maximized through that process.

Record Is Better

The review process also improves the record, so stakeholders who do wish to seek accountability in the courts have a well-developed record on which to do it, Shelanski said. And, he said, it helps agencies when they go to defend a rule a court, knowing that they have had to show a rigorous basis and record of evidence for their rule to OIRA.

Because of statutes that Congress has enacted over the decades, there are areas of overlapping jurisdiction and missions that can criss-cross, Shelanski said.

So, one agency's rules can have an effect on another agency's mission, Shelanski said. To ensure that rules do not lead to interagency tensions, or to contradictions and duplications with existing rules, an office is needed to coordinate interagency review of rules before they come out, he said.

Shelanski's parting thoughts on the year were this: The regulatory plan and agenda are public, people can see what OIRA is doing, and OIRA doesn't want surprises.

“And if there's one thing I want to make sure is that we continue that ethic of sound analysis and no surprises and transparency right through to the very last day,” he said.

To contact the reporter on this story: Cheryl Bolen in Washington at cbolen@bna.com

To contact the editor responsible for this story: Heather Rothman at hrothman@bna.com