The Little Agency That Could (Block All Good Regulations)

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Dennis Cook/AP Photo

President Ronald Reagan talks with Treasury Secretary Donald Regan, left, while Office of Management and Budget Director David Stockman looks on, January 1985.

This story is 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.

The next Democratic president will, like Bill Clinton and Barack Obama before them, inherit an executive branch that in critical respects was shaped by Ronald Reagan. The administrative procedures and bottlenecks are designed to frustrate effective action. Most important, the next president will immediately face a seemingly uneventful decision whose earth-shattering significance is only apparent to corporate lobbyists. Previous generations of progressive activists have tragically ignored it. That decision is: Who should run the Office of Information and Regulatory Affairs (OIRA)?

What is OIRA, beyond a reductio ad absurdum of Washington, D.C.’s penchant for unwieldy acronyms with improbable pronunciations (“rhymes with Elvira”)?

OIRA, a division of the Office of Management and Budget, was created with a limited statutory mandate to reduce paperwork demands on government partners. Reagan took that and made it the death row of well-meaning legislation, where the judge and jury are corporate lobbyists. Reagan issued an executive order empowering OIRA to intervene in regulatory efforts by government agencies under the guise of so-called “cost-benefit analysis.” Every agency rule now must travel through the OIRA gauntlet before being finalized.

In other words, the modern OIRA was created to frustrate or block many of the actions that the Day One agenda suggests the next president ought to undertake.

OIRA’s newfound powers helped the Reagan team accomplish its ideological goal of reducing regulations that corporations found annoying and costly. Of course, advocates and civil servants saw those initiatives as urgent steps to promote the well-being of workers, the environment, and public safety. But the politically influential business interests that traditionally dominate the process of lobbying disagreed.

Today, OIRA’s cost-benefit framework means corporations can win many regulatory battles by simply generating a lot of paper purporting to show that regulations would be expensive to implement. These “costs” are easy to price out, but many of the benefits of regulation are next to impossible to price, such as the greater “emotional well-being of the extended family members, friends, and other[s]” when children are not run over by cars needlessly. As a result, OIRA has benefitted incumbent corporations over public safety for four decades.

Choosing corporations over public safety was, of course, on-brand for Reagan—but not only did Reagan’s vice president and successor, George H.W. Bush, sustain this “innovation,” it continued under the next two Democratic presidents. Indeed, Clinton and especially Obama expanded on the delegation of authority to OIRA from the president by executive order.

Obama’s presidency in particular underscores the stakes with OIRA—if personnel is policy, and if OIRA is where good policy goes to either wait forever or die, then perhaps no Obama policy decision in his first term was costlier than installing his friend Cass Sunstein at OIRA. As demonstrated by a New York Times deep dive into Obama’s regulatory record, Obama became president with “a skeptical streak when it came to the value of regulation, influenced by his friend Cass R. Sunstein, a Harvard Law professor who had long argued that the government should more rigorously assess the benefits of new regulations.”

Thus, when Obama gave Sunstein the keys to the regulatory castle at OIRA, he ensured that his first term would fail to seize the opportunity to rapidly bring about the “change” he had promised to the country.

The difference between a slothful executive branch that tries to ruffle as few plutocratic feathers as possible and an energetic administration committed to producing results on Day One will come down, in no small part, to who runs OIRA. Do you think I’m exaggerating?

A progressive president will want to secure gains via executive branch power on the environment. With Sunstein at OIRA, energetic public servants at the Environmental Protection Agency (EPA) were deeply frustrated by their inability to overcome George W. Bush’s disastrous eight years and move forward on a range of fronts requiring urgent attention. Looking ahead, as Ben Adler writes in the Prospect’s Fall issue, the next EPA must resuscitate and strengthen the Clean Power Plan, an EPA regulation limiting carbon emissions from power plants under Clean Air Act authority. And they must do so quickly. Senators Sheldon Whitehouse (D-RI), Tom Harkin (D-IA), Ben Cardin (D-MD), and Richard Blumenthal (D-CT) and then-U.S. Representatives Henry A. Waxman (D-CA) and Ed Markey (D-MA) were among those complaining in 2013 about Obama’s OIRA serving as an unnecessary and significant source of delay for a variety of important environmental initiatives of both the EPA and Department of Energy.

One can only imagine the consequences if a Sunstein-style OIRA head delays or weakens 2021 Democratic appointees’ attempts to address the time-sensitive climate crisis with the urgency the science demands.

And this ought to go without saying, but progressives have to hope that a new president’s EPA is not hamstrung by Sunstein-like figures on enhancing protections for ozone in the air. EPA scientists had sought an ozone standard that scientists believed “would have prevented up to 12,000 premature deaths, 5,300 nonfatal heart attacks, 2,200 cases of chronic bronchitis, 420,000 lost work days, and 2,100,000 missed school days every year.” The EPA’s efforts were defeated by Sunstein.

But OIRA is not only about the environment. The Trump administration has extended the reach of OIRA to tax code interpretations previously safe from its meddling. As Victor Fleischer argues in this magazine, Treasury should be able to close the carried interest loophole as well as the “Gingrich-Edwards” loophole, but for OIRA. One hopes that a Democratic president either ends this “innovation”—which might threaten, or at least delay, reform—or else appoints someone loath to utilize it.

Labor issues are also squarely within OIRA’s current domain, and labor issues are an area where Sunstein was a particularly implacable and obstructive foe of progress. For instance: “In 2011, the Occupational Safety and Health Administration sent to OIRA a draft regulation to protect workers from silica dust, common in many industries and a known cause of cancer and deadly silicosis.” That regulation, the first update since 1971, was not finalized until 2016—reflecting the dilatory actions of Sunstein and his successor, Howard Shelanski, who was nearly as deferential to corporate lobbying.

Sunstein’s opposition to labor rights has led him to weigh in on only one Trump nomination—he supports the stridently anti-worker Eugene Scalia to run … the Department of Labor. Sunstein has, since leaving the Obama administration, embraced chunks of Jeb Bush’s anti-regulatory policy ideas and expressed cautious praise for Trump’s anti-regulatory agenda. Sunstein also stood up for the little guy by writing a piece titled “Mark Zuckerberg Is Also Part of the Solution,” complaining that Zuckerberg’s “proposals for regulating Facebook and other social media deserve a fairer hearing than they are getting.” Sunstein is a Facebook consultant.

So it ought to be no surprise that workers and the environment were not the only tangible victims of Obama’s OIRA. A rare deep dive into OIRA by Reuters in 2015 explored the tragic decision by Obama’s OIRA to slow down implementation of a 2008 law signed by President George W. Bush (!) mandating cars have “rearview cameras as standard equipment” by 2011. The goal of the law was to minimize unwitting fatalities due to cars backing out and hitting children, the elderly, and the handicapped. OIRA decided under Sunstein in 2011 that the National Highway Traffic Safety Administration (NHTSA)’s regulations implementing Congress’s will were too expensive, and thus there was a significant delay.

As Reuters put it, but for OIRA, “Melissa Helcher might not have killed Clark Biddle in a Columbus, Ohio, parking lot on a cold February day this year.”

Will the next Democratic president hamper their first term with someone like Cass Sunstein running OIRA? Almost certainly not … if progressives make this personnel selection the priority it ought to be. An OIRA administrator could direct agencies to strengthen and improve rules, not just take the guts out of them. And most important, the next president can modify the Reagan-era executive order that mandates a cost-benefit analysis for all rules, forcing OIRA administrators to take a more holistic approach to accounting for issues of public health and safety. In fact, an aggressive president could potentially strip OIRA of much of its authority, although the way the anti-regulatory Congressional Review Act of 1996 incorporated a role for OIRA arguably makes it more complicated to end OIRA’s regulatory review role entirely. Still, new directives could return OIRA to a shell of its former self.

Whatever the new OIRA regime, who runs the office determines in no small part whether brilliant ideas across the breadth of the executive branch will, in fact, happen. Activists and organizations interested in the ideas discussed across this series must put pressure on presidential candidates to at least identify the type of person they would install at the head of this tiny but powerful agency—and to disavow the record of failed administrators like Cass Sunstein.