Tuesday, June 7, 2011
The Administration has taken initial steps to implement Executive Order 13563, “Improving Regulation and Regulatory Review,” released in January. Intended to streamline the federal regulatory process and address complaints from business about the burdens of regulations, there is strong interest in its practical applications. In a nutshell, it requires that regulations be simplified, harmonized, tailored to impose the least burden on society, and performance-based rather than dictating behavior. It also requires that they be based upon a determination that benefits justify costs, and receive increased public participation during promulgation.
President Obama, in the Wall Street Journal editorial wrote, "My hope is that the whole process might inaugurate a broader, less polarized, more fact-based conversation about how we might promote economic growth and job creation while also protecting the health, safety and welfare of the American people."
The “conversation” is being led by Cass Sunstein, Administrator of the White House Office of Information and Regulatory Affairs (OIRA) at the Office of Management and Budget. Before taking up his post he was a Professor at Harvard Law School, after earning a reputation for his insights and writing on economics and cost benefit analysis on the faculty of the University of Chicago School of Law from 1981 to 2008.
Sunstein was a witness at a House Energy and Commerce Committee Subcommittee on Oversight and Investigations hearing on Friday. In his statement, Sunstein described how 30 departments and agencies have reviewed their regulations to determine how they can be streamlined, reduced, improved, or eliminated.
The President's regulatory reform critics point to examples of rules from agencies like the Occupational Safety and Health Administration’s new rule that would allegedly “double-count complaints and capture aches and pains caused from outside the workplace,” according to one article (It is difficult to assess who is telling the truth when Sunstein’s testimony described the final OSHA rule as “removing over 1.9 million annual hours of recordkeeping burdens on employers and save more than $40 million in annual costs”).
A few of the hearing witnesses referred to the proposed “Regulations from the Executive In Need of Scrutiny Act of 2011” (H.R. 10), which would block any major safeguard from moving forward unless Congress approved it within 60 legislative days. This misguided effort would bring in Congress to review regulations that may impose costs on the private sector, and could undermine important public health and safety regulations.
The Natural Resources Defense Council’s David Goldston, in his testimony, pointed out that this is at odds with the accepted and “hard learned” administrative process where detailed technical matters required by Congress are delegated to specialized experts. However, a statement by William L. Kovacs of the U.S. Chamber of Commerce recommended H.B. 10 as a means to achieve regulatory reform.
A main issue in regulatory reform will be how cost benefit analysis (CBA) is carried out. CBA is not new, since it has always been used by agencies to evaluate proposed rules. In fact, President Reagan issued an Executive Order on regulations in 1981 requiring that agencies do CBA by determining that the “ potential benefits to society for the regulation outweigh the potential costs to society” and the selected rules must “maximize the net benefits to society.” Today’s CBA discussions, however, can now be informed by over thirty years of CBE discourse, including Sunstein’s work, on the challenges of quantifying benefits to the public, as with pollution rules that benefit human health, so they can be compared to costs on private companies that would have some cost public’s interest in a strong economy. The political leanings of House leadership are now firmly on the side of maximizing the values used for economic interests. How CBA will be used by agencies in new regulations needs to be closely scrutinized, since it will reveal how tradeoffs are truly being made.
The subcommittee has scheduled a hearing on health issues related to reg reform on Monday, June 13, 2011, at 2:00 p.m. in 2322 Rayburn House Office Building. The hearing is entitled “The Views of the Department of Health and Human Services on Regulatory Reform: An Update,” and promises to reveal the extent to which the Administration and Republican House leaders are at odds on this issue.