Patrick Semansky/AP Photo
The Eisenhower Executive Office Building, June 2019
This article is part of our policy roundtable on “The Future of the Regulatory State.”
This story is also part of the Prospect’s series on how the next president can make progress without new legislation. Read all of our Day One Agenda articles here.
Todd Tucker and Rajesh Nayak’s new report is a welcome contribution to the debate over how a future president should improve the Office of Information and Regulatory Affairs to ensure progressive policies are enacted quickly and effectively. I agree with nearly all of their arguments except for its continued emphasis on quantified cost-benefit analysis as an integral facet of the regulatory process.
Tucker and Nayak propose two excellent changes to OIRA’s structure, which would enable it to fulfill its current responsibilities more effectively. First, they would split OIRA into two branches with complementary responsibilities. Two-thirds of OIRA’s staff, housed in a Regulatory Review Office, would oversee most of OIRA’s current functions: “ensuring conformity of agency initiatives with the elected president’s priorities and peer review of cost-benefit analysis and science.” The remaining third would staff a new Regulatory Planning Office, a “think tank within government to identify areas of under-regulation” that would “convene conversations across agencies and provide guidance.”
A Regulatory Planning Office would be a boon for developing progressive policy. The two policy-making entities within the Executive Office of the President—the National Economic Council and the Domestic Policy Council—focus on the “big ticket” policy priorities necessary for the president’s re-election. Those priorities often require legislative as well as regulatory changes. As I’ve previously written, OIRA, given its current role and workforce of experts versed in regulatory policy and process, is well situated to identify objectives government agencies can achieve through regulation, without Congress.
A Regulatory Planning Office could also encourage and coordinate the implementation of regulatory priorities across agencies. Imagine a future president with an anti-monopoly agenda. Although the Department of Justice and Federal Trade Commission are the two agencies that can officially block mergers, many other agencies less accustomed to policing anti-competitive behavior can also play significant roles. For example, the Department of Agriculture can protect farmers from agricultural conglomerates, the Department of Health and Human Services can prohibit anti-competitive behaviors of the medical providers with which it contracts, and the Department of Defense can use its purchasing power to ensure competition among manufacturing contractors. OIRA’s Regulatory Planning Office could encourage the USDA, HHS, DOD, and other relevant agencies to include pro-competitive policies in their regulations. The Regulatory Planning Office could even function as a clearinghouse for appropriate regulatory language.
OIRA currently maintains only 45 employees—a level inadequate for its current mandate and wholly insufficient for the changes Tucker and Nayak propose. The proposal would more than triple OIRA’s staff levels to 150, with 100 going to the Regulatory Review Office and 50 to the Regulatory Planning Office. At any given agency, many scientists, economists, lawyers, and other experts work together to draft an individual rule, each bringing expertise and a unique perspective to bear on its contents. Yet only a few analysts at most will review the rule once OIRA receives it. Regardless of the competence and commitment of OIRA’s career civil servants, they lack the manpower necessary to ensure review is done as quickly as necessary for an administration dedicated to using its regulatory authority. The executive order authorizing OIRA’s review of regulations permits the office up to 90 days to consider each rule (providing an additional 30 only in the most significant of circumstances), yet regulations frequently languish at OIRA for months or years.
In the Review Office alone, additional staff would make OIRA’s reviews more effective and more efficient; OIRA analysts could devote more time to individual rulemakings. In fact, Tucker and Nayak propose capping OIRA’s time for review at 45 days. Limiting the time for OIRA review would boost any progressive administration. With health and safety regulations, for example, the difference of 45 days is measured in lives saved.
Where I disagree with Tucker and Nayak is their emphasis on quantified cost-benefit analysis (CBA) in the regulatory process, and OIRA’s continued role in policing it. CBA dictates that a regulation should only be promulgated if the rule’s benefits would exceed its costs—an unremarkable and undisputable assertion. Issues arise in its implementation. Often, CBA only looks to costs and benefits that can be quantified, meaning that nonquantifiable benefits such as dignity, equity, and fairness receive minimal consideration.
This month, for example, the Environmental Protection Agency discounted “qualitative benefits and distributional concerns and impacts on minorities” in a regulation because, although “the distribution of potential health effects may indicate more risk to some individuals than to others or more impacts to some groups like tribes than others … in a cost-benefit comparison, the overall amount of the benefits stays the same no matter what the distribution of those benefits is.”
Tucker and Nayak respond that progressives must “get better at quantifying how government action and inaction determines who wins and by how much.” They propose modifications to CBA’s assumptions, and methods for including marginalized communities in policy debates to ensure the costs they bear and benefits they receive are included in the rule’s CBA. But the proposing agency decides which quantified (and unquantified) costs and benefits to consider. There is no guarantee that a future administration won’t undermine OIRA’s role in policing faulty cost-benefit analyses (as has been done with new regulatory budgeting requirements).
If an administration wishes to finalize a rule with costs only impacting the poor and benefits accruing only to the rich, or to decide that some unquantified cost or benefit must be considered to counterweight benefits to a marginalized community, CBA won’t stop it, and neither will career OIRA staff who can be overruled by their political-appointee management. In short, CBA is an inherently political exercise, and tasking civil servants with reviewing or improving CBA won’t make it the panacea Tucker and Nayak envision.
Instead of reviewing agencies’ cost-benefit analyses, OIRA should instead be used to ensure that regulations are upheld in court. The legal standard for promulgating rules is that they cannot be “arbitrary and capricious.” While this standard often does require a rule’s benefits to outweigh its costs, judges also look to nonquantifiable factors. If agencies fail to consider particular effects or erroneously discount considerations of their regulations simply because they are not quantifiable, reviewing courts can overturn the rules. OIRA should use its resources to assist agencies in drafting justifications for their rules that meet this (and any other applicable) legal standard, rather than focusing narrowly on CBA. The additional OIRA staff proposed by Tucker and Nayak would further help ensure progressive regulations go into effect and deliver on their promised benefits.
Although I don’t agree with everything Tucker and Nayak recommend, the next progressive administration should take their proposals seriously. Given OIRA’s immense power in the regulatory arena, a future president must take steps to reform it, to ensure government agencies can implement progressive policy priorities as efficiently and effectively as possible.
