Amending Executive Order 12866: Good Governance or Regulatory Usurpation? Part 2

Opening Statement By Chairman Brad Miller

Good morning, I want to welcome everyone to part II of our hearing on role of the Office of Information and Regulatory Affairs in overseeing the development of regulations.

The most powerful regulatory office in Washington is the rarely noticed Office of Information and Regulatory Affairs (OIRA). OIRA was created in the 1980 Paperwork Reduction Act with a mandate to reduce the paperwork requirements on the American public. Within a few years of its creation, the Reagan White House had given expansive powers to that office to review all regulatory proposals by Federal agencies. Predictably, an office supposedly created to reduce paperwork put standards and procedures in place that required agencies to generate mountains of paper.

Congress and the White House struggled over the proper role of OIRA all through the 1980s. Various Congressional Committees believed that OIRA prevented agencies from complying with statutory requirements to clean up the environment, protect the public and make workplaces safer.

The Clinton Administration’s Executive Order 12866 resolved some of the aspects of that fight. This Subcommittee took testimony from a former director of OIRA, Sally Katzen, in February. Ms. Katzen was the principle author of E.O. 12866. She testified that the Clinton Administration Order assured that agencies carried more influence over the substance of a regulation than did OIRA. OIRA could ask hard questions, ask for more data or more clarity, but in the end statutory authority and expertise reside in the agencies and OIRA must respect that.

Executive Order 13422 is a new chapter in OIRA’s role. Under this order, not just major regulations, but guidance is subject to review by OIRA. And the order creates a new requirement—“market failure”—for any agency to promulgate any regulation. “Market failure” does not appear in any statute as a consideration in rule-making; in fact, Congress flatly rejected the argument that the market will solve the problem when Congress enacted the legislation granting rule-making authority.

The Order also requires agencies to compose annual summaries of the cumulative costs of proposed regulations, another requirement for rule-making that does not appear in statute. And the Order creates within each agency a “Regulatory Policy Officer” who can smother regulatory efforts in the crib before an agency can even begin considering a regulatory action. The cumulative effect of all these changes is to seize for the President and OIRA power over regulatory efforts consistent neither with statute nor with the Constitution.

Professor Strauss has it just right when he warns us that there are many potential hazards on this path.

I want to hear what process was followed in developing this new Executive Order, what deficiencies in E.O. 12866 is this designed to redress, and how OIRA intends to apply these new requirements.

I want to hear the advantages, and pitfalls, of using cost benefit analysis, market failure and even a regulatory budget as a tool for regulatory policy.

The power give to Regulatory Policy Officers is especially troubling. RPOs are Presidential appointees with political ties. OIRA speaks for the President and OIRA has set out an economic standard as a guide to regulatory proposals, a standard unsupported by statute. RPOs will apply that standard while also serving in agencies that have statutory obligations that are entirely different from the values and preferences of OIRA?

Unlike the Clinton Administration order, Executive Order 13422 requires no disclosure requirements to actions by RPOs? Will we ever know, in that pre-rule period, what has happened, who has spoken with whom and how language may be changed in a proposal, or what proposed rules were stopped in their tracks buy an agency’s RPO? What sort of discussions may occur between OIRA and the RPO regarding OIRA’s expectations and how would the Congress, much less the public, ever learn that those exchanges had occurred.

Deciding issues that affect the lives of millions of Americans in secret is incompatible with our democratic traditions.

Witnesses

Panel 1

1 - Mr. Steve Aitken
General Counsel Office of Information and Regulatory Affairs Office of Management and Budget Office of Information and Regulatory Affairs Office of Management a
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Panel 2

1 - Mr. Peter Strauss
Professor, School of Law Columbia University Columbia University
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2 - Mr. Gary Bass
Director OMB Watch OMB Watch
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3 - Dr. Robert Hahn
Executive Director AEI-Brookings Joint Center for Regulatory Studies AEI-Brookings Joint Center for Regulatory Studies
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4 - Dr. Richard Parker
Professor, School of Law University of Connecticut University of Connecticut
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