Eye on OIRA: President Defied by President's Men; Sunstein and Orszag Violate Obama's Own Directive

The system of checks and balances devised by the Framers of the Constitution 220 years ago was all about the sharing of power. In practice, it makes for a messy flow chart, and lends itself to lots of inside-the-Beltway conversation about who’s in, who’s out, who’s winning and who’s losing. But as messy as the how-a-bill-really-becomes-a-law flow chart is, the structure within the White House itself usually features one constant: When the President says jump, staffers ask how high.

Every now and again, however, things get turned on their head, and the forces of bureaucracy manage to thwart Presidential will. That dynamic appears to be at work right now in the White House Office of Management and Budget, where Obama appointees Peter Orszag and Cass Sunstein, the director of OMB and Administrator of the Office of Information and Regulatory Affairs, respectively, seem to be operating in defiance of an Executive Order by President Obama. On March 17, 2010, several of my fellow CPR Board Members and I wrote to White House counsel Robert Bauer asking him to investigate Orszag and Sunstein’s clear violation of decisions made by this President with respect to regulatory review.

The most troubling practice is OIRA’s assertion of authority to review guidance documents from regulatory agencies, which include speeches, advice letters, electronic mail exchanges and other efforts to advise regulated parties about how to comply with regulations. OIRA typically reviews major regulations, and has an Executive Order authorizing it to do so, but guidance documents are another matter. This huge extension of OIRA’s field of operation was first established in the waning days of the George W. Bush Administration with the issuance of Executive Order 13,422. The Bush EO’s extension of this authority was criticized by progressives as an example of brazen overreaching that could paralyze the federal government’s efforts to regulate everything from financial services to pollution.

In an effort to turn a new page on regulatory review, a hot-button issue under Bush, President Obama revoked EO 13,422 just ten days after taking office. His decision to reverse the Bush policy was praised as a return to more judicious and proactive regulatory policies. Rep. Brad Miller (D-NC), who chairs the House Science Committee’s subcommittee for investigations and oversight, said “While the President’s order on Guantanamo Bay may get more of the national spotlight, his decision to rollback this Bush Executive Order is just as important to restoring open government and Constitutional separation of powers.”

But on March 4, 2009, OMB Director Orszag issued a brief memorandum “clarifying” that President Obama did not intend to revoke OIRA’s authority to review guidance documents. Other than being presented on White House stationary, he offered no acknowledgment that his memo was approved by the President, nor did he explain how an admittedly senior, but single political appointee could countermand an executive order that affects so many members of the Cabinet.

The power grab by OMB has the demonstrable effect of delaying routine efforts by the Obama Administration’s dynamic new leaders at health and safety agencies, most particularly EPA administrator Lisa Jackson, recently described by Rolling Stone as an “eco-warrior.” For example, OIRA is now reviewing EPA’s finalization of its air quality policy on wildland and prescribed fires, as well as guidance to other agencies on implementation of a water quality criterion for methylmercury.

EPA has even felt obligated to send over to OIRA its “chemical action plans” explaining how it may regulate notorious chemicals under the Toxic Substances Control Act at some unspecified point in the future. The plans are clearly outside the ambit of EO 12,866, the only directive left standing that contains a presidential delegation of authority to OIRA to stick its nose in agency business. EO 12,866 generally limits OIRA review to proposed and final “rules” (requirements applied across an entire industry) that will impose costs of $100 million or more. In at least one case, EPA’s chemical action plan for bisphenol-a (BPA), the endocrine disrupter included in a wide range of plastic products used to serve food, including baby bottles, was delayed for weeks while OMB chewed it over. And because some offices within EPA do not post documents written “before” and “after” OIRA review, we may never know what changes Sunstein and his staff demanded.

Given the huge number of guidance documents issued by all the agencies and departments under OIRA jurisdiction annually, and the small size of OIRA staff—35 to 40 economists and other specialists devoted to regulatory review—OIRA cannot possibly be conducting such oversight on the basis of neutral criteria, such as the economic import of the guidance. Rather, to avoid drowning in paperwork, OIRA must be cherry-picking guidance it suspects will be particularly controversial. But how does it make those selections? One possibility is that OIRA desk officers routinely poll the EPA staff who report to them asking what projects they are working on. A second is that disgruntled members of regulated industries highlight policies with which they disagree. Whatever the explanation, the practice cannot be interpreted as anything other than chilling by agency officials who are trying to move such decisions along.

We have not yet received a reply to our letter to White House counsel.