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Unless the Office of Information and Regulatory Affairs is reformed, the next president’s regulatory aims will tread water at best and be dead in the water at worst.
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.
Inside the Office of Management and Budget is a small office called the Office of Information and Regulatory Affairs (OIRA). As explained by Jeff Hauser in the Prospect, OIRA effectively gets to decide whether the government can issue life-saving and welfare-promoting rules on health, safety, the environment, the economy, and so much more. Everything in the Day One Agenda can be derailed by this agency. Without reforming OIRA, a new president’s regulatory aims will tread water at best and be dead in the water at worst.
The combination of the 1993 Executive Order 12866 (which requires detailed analysis of any “economically significant” rule) and a loophole in the Congressional Review Act of 1996 (CRA) allows OIRA to review every regulation the government issues, and change or stop those it doesn’t like. This gives OIRA’s 50-person staff arguably more control over the president’s policy agenda than the thousands of other decision-makers, scientists, policy experts, and economists in executive agencies. Under both Democratic and Republican presidents, OIRA kills rules, slows the rulemaking process to a crawl, and weakens those rules that do see the light of day.
Here’s an example: After examining the science, the Food and Drug Administration decided to regulate e-cigarettes and ban the sale of flavored e-cigarettes, due to “emerging data regarding the attractiveness of flavored tobacco products to youth and young adults.” This was consistent with presidential directives to agencies to regulate when “made necessary by compelling public need.” The FDA sent its rule to OIRA for review, and when it was finally released in 2016, the ban on flavored e-cigarettes was gone. President Obama’s OIRA overruled the FDA’s scientists, epidemiologists, economists, and a presidentially nominated and Senate-confirmed commissioner. In the words of one former official, the rationale was “Is it reasonable to effectively shut down all of these vape shops and businesses when the benefits and harms were still inconclusive?”
We know what happened next. Between 2016 and the end of 2019, an untold number of teenagers became (predictably) hooked on flavored e-cigarettes, and the Trump administration announced it will bring enforcement actions against makers of these products.
OIRA’s role in a progressive presidency will be ineffective and unnecessary at best and actively harmful at worst. But it doesn’t have to be this way. With a fundamental rethinking, a future president can flip OIRA on its head, turning an office that slows, weakens, and kills regulations into one that spurs agencies to regulate more quickly and effectively.
Rethinking OIRA
OIRA’s staff should not spend time reviewing agencies’ economic analyses, slowing down rulemaking, and overriding the decisions of policy experts. They should have the president’s political goals in mind, rather than the abstract concept of economic efficiency. In fact, with its thorough knowledge of the regulatory process, OIRA should become the president’s advocate in the regulatory space, helping and encouraging agencies to regulate, rather than standing in their way. Several changes would accelerate agency action and allow presidents to better fulfill their promises.
Simply preventing OIRA from delaying rulemakings would dramatically expedite the rulemaking process. Despite Executive Order 12866 allowing OIRA only 90 days to assess a rule, OIRA frequently goes past that deadline. It once delayed an OSHA rule proposal by two and a half years, the duration of which likely prevented OSHA from saving more than 1,600 lives.
Reducing delays also protects regulations from being overturned. The CRA allows Congress and a succeeding president to overturn regulations issued in the last 60 legislative days of a president’s term. Prolonged OIRA review can push an otherwise safe rule into this window, allowing it to be easily overturned, as President Trump and the Republican Congress did 14 times in 2017. Twelve of those rules were delayed by OIRA review. In addition, a rule can die if a president decides not to defend a predecessor’s regulation in court; the “fiduciary rule” issued by President Obama’s Department of Labor was killed when the Trump administration declined to defend its legality. Litigation over the fiduciary rule might have concluded under President Obama had the rule not sat with OIRA.
In addition to removing delays, OIRA should receive three new objectives to further accelerate agency action and allow presidents to better fulfill their promises.
First, OIRA should train political appointees on the policymaking tools available so they can regulate as quickly as possible. Administrative law, like any area of law, is complex, and no one should expect political appointees with expertise in other substantive legal areas to have thorough knowledge of the avenues available for policymaking. For example, agencies could make rules through adjudication rather than the time-consuming notice-and-comment process, but agencies rarely utilize that option. To address these blind spots, OIRA should provide brief trainings or issue short written materials for new political appointees on the advantages and disadvantages of the policymaking options.
With its thorough knowledge of the regulatory process, OIRA should become the president’s advocate in the regulatory space, helping and encouraging agencies to regulate, rather than standing in their way.
Second, OIRA should help ensure agencies’ rulemakings will be upheld in court, regardless of the content. When finalizing rules, agencies must issue preambles identifying their necessity. Under what is known as “hard-look review,” judges review these preambles to ensure that the agencies’ contemporaneous rationales were sufficiently reasoned. However, this standard provides courts enough flexibility to overturn nearly every rule if they so choose. As a result, agencies have been incited to spend hundreds of pages per significant rule explaining why they chose one nuanced policy position over another, slightly different position.
OIRA staff should review the rules’ preambles to ensure they meet legal sufficiency for hard-look review, although the staff should not be able to stop an agency from finalizing a regulation if they disagree with the agency’s content or analysis. Additionally, when agencies are sued for failing to adequately consider the effects of a rule, OIRA staff should file amicus (or “friend of the court”) briefs defending the agencies’ analytical processes. Rules only fulfill a president’s promises to the public if they go into effect, and controversial rules only go into effect if they survive judicial review.
Finally, much like the Domestic Policy and National Economic Councils, OIRA should identify, develop, and push agencies to enact regulatory priorities. Residing in the Executive Office of the President, OIRA is well situated to be attuned to the administration’s priorities, have frequent interactions with Oval Office staff, and guide the White House’s thinking on regulatory matters in ways that will promote the president’s policy objectives and campaign promises. OIRA can work with agencies’ political and policymaking staff to prioritize administration objectives, developing implementation strategies and even hard deadlines. No central apparatus exists to coordinate these priorities today; this change would make OIRA a spur to effective regulatory change rather than a wet blanket.
Overcoming Objections
Those invested in the morass of OIRA review will no doubt challenge this redirection by arguing that OIRA’s role is merely to ensure good governance, and that the reforms above would allow the administrative state to run wild. However, these changes would do nothing of the sort.
Proponents argue that OIRA forces agencies to “show their work,” and make policy based on outcomes and not political considerations. As an initial matter, no one seriously doubts that agencies take politics into consideration; elections have consequences, after all. In addition, under hard-look review, courts will overturn agencies’ actions unless they’ve considered the effects of a regulation (quantifiable or not) and made decisions based on expected results, not politics. Therefore, OIRA is not the sole gatekeeper, and doesn’t need to ratchet down the administrative state.
Further, OIRA’s mandated cost-benefit analyses are frequently lacking. For example, with “transfer rules” that direct money from one entity to another, agencies frequently do not consider secondary benefits to recipients. In its analysis for a new rule imposing work requirements on some SNAP beneficiaries, the USDA failed to consider the negative health impacts on beneficiaries of losing their food benefits. It did consider the burdens of new paperwork on states, however.
OIRA advocates also argue that the process makes “agencies accountable to the president,” since the White House can stop agencies from implementing policies against the president’s wishes. Yet White House staff can already pick up the phone to ask agencies about their rules, and the president can simply tell any agency head to stop specific rulemakings. No officials removable by the president will continue with a rule after the president has instructed them to stop. OIRA’s time would be better spent keeping track of the deluge of activities coming out of the agencies.
Finally, defenders may maintain that statutes mandate OIRA’s current activities. However, nothing in this proposal would restrict OIRA’s ability to manage information collection under the Paperwork Reduction Act and the Information Quality Act. Although the proposal would change OIRA’s regulatory mission, the office would still easily be able to fulfill its other mandates, under the CRA and the Regulatory Flexibility Act (RFA).
Even if agencies are no longer required to draft quantified cost-benefit analyses, OIRA’s analyses for hard-look review would certainly provide sufficient information to determine whether an agency’s regulation is a “major rule,” as it must do under the CRA. As for the RFA, all it requires of OIRA is to have staff sit on review panels for most proposed rules, take comments from small businesses, and relay that information to the agency proposing the rule.
The Day One Agenda requires progressives to rethink much of government: which services to provide, regulations to issue, and laws to strictly enforce. But it also means rethinking how the machinery of government operates. OIRA, developed over the course of decades, can simply put a halt to progressive values and maintain the status quo. Under leadership with values and imagination, the little agency that blocks regulation can become the little agency that demands effective regulatory reform.
