Revoking EO 13422: An Important First Step Toward Fixing the Regulatory System

Observers concerned with the current dysfunctional state of the U.S. regulatory system will be letting out a collective sigh of relief following the publication of Executive Order 13497.  Among other things, this Order officially revokes the controversial Executive Order 13422, issued during George W. Bush Administration.

Issued in 2007, Executive Order 13422 amended President Clinton’s September 1993 Executive Order 12866, which established an institutional framework for centralized regulatory review.  Generally speaking, under this framework, the Office of Information and Regulatory Affairs (OIRA)—an obscure but influential bureau in the White House Office of Management and Budget (OMB)—is authorized to review all major federal regulations and to do so through the lens of cost-benefit analysis.

Since its original publication, Executive Order 13422 has been criticized by many environmental, public health, and safety advocates, CPR Member Scholars among them, for creating an unnecessary barrier to the promulgation of new protective regulations.  It deserved the criticism.  Some of its controversial provisions include a requirement mandating that regulatory agencies justify proposed regulations on the basis of some market failure and the extension of OIRA’s centralized review authority to include agency guidance documents (i.e., non-binding policy statements issued by agencies to explain how their regulations should be interpreted).  For more about these controversial provisions, see CPR’s web article on Executive Order 13422.

Executive Order 13497 represents the latest step by the new Obama Administration to reformulate the institution of regulatory review, as conducted by OIRA.  Last Friday, President Obama issued a Memorandum for the Heads of Executive Departments and Agencies on Regulatory Review.  The memorandum directs Peter Orszag, director of OMB, to consult with agency heads to develop a set of recommendations for a new Executive Order on regulatory review, presumably to replace Executive Order 12866.

CPR’s Member Scholars will have more to say on Executive Order 13497 in the days ahead.  For now, it suffices to say that these are welcome indications of an effort to reformulate the U.S. regulatory system, and particularly to reformulate the role of OIRA in the conduct of centralized regulatory review.  That said, it will be especially interesting to see how the new Executive Order on regulatory review is shaped and implemented by Cass Sunstein, who is in line to be the new Administrator of OIRA.  As CPR Member Scholars have discussed at some length, he’s a big fan of centralized review and many of the cost-benefit analysis techniques that have angered advocates of robust protections for health, safety and the environment.

Over the next few months, CPR Member Scholars will publish a white paper detailing their recommendations for replacing cost-benefit analysis with a form of regulatory impact analysis based on the philosophy of pragmatism.  Also, Member Scholars plan a subsequent paper focused on replacing the centralized regulatory review function currently practiced by OIRA with a more limited role of interagency coordination.  So stay tuned for more.