Shelanski Said What During the House Small Business Committee?

Earlier this week, Regulatory Czar Howard Shelanski testified before the House Small Business committee to update committee members on the progress the Obama Administration has made with the regulatory look-back process established by Executive Orders 13563 and 13610. In one interesting exchange with Rep. Blaine Luetkemeyer (R-Mo.), Shelanski offered the following perspective on the Office of Information and Regulatory Affairs’ (OIRA) approach to regulatory review:

The interpretation of an agency’s statute and the choice of policy—to the extent there is discretion under that statute—is in the first instance in the province of the department or agency that is issuing the regulations. OIRA doesn’t set policy priorities or do the initial legal interpretations for the agencies. They do that.

(Skip ahead the 20:00-minute mark of the hearing.)

If true, this statement from Shelanski would represent a dramatic shift in how OIRA sees its role in the rulemaking process. For the past 30 years or so, OIRA has never been shy about trumping agencies on their policy priorities or their choices of policy. Indeed, just a few months before Shelanski took the helm there, OIRA blatantly interfered with the EPA’s rulemaking to update the effluent limitation guidelines (ELG) for power plants, as documented in a damning new report by several national environmental groups. The draft proposal that the EPA submitted to OIRA review contained several regulatory “options” for updating the ELG, and among those the EPA identified two of the stronger options—Option 3 and Option 4—as “preferred.” When the proposal emerged from OIRA more than three months later (following several meetings between OIRA and outside groups, including a number with corporate interests opposed to a strong standard), it had been drastically altered. (See the “redline” version showing all the changes that had been made here.)  Among the changes, OIRA forced the EPA to include three new weaker options (Options 4a, 3a, and 3b). OIRA also forced the EPA drop Option 4 as a “preferred” option (this was the stronger of the two options that the EPA had initially preferred) and to instead designate all three of the new weaker options it added as “preferred.”

Contrary to Shelanski’s testimony, this episode clearly demonstrates that OIRA does in fact set “policy priorities.” Not only did OIRA force the EPA to add new policy options, it also forced the EPA to identify those options as “preferred” instead of one of the options that the agency had originally identified as “preferred.” It also shows that while OIRA may recognize that an agency has “province” over “choice of policy” “in the first instance,” OIRA reserves for itself the province of choice of policy in the final, determinative instance.

OIRA’s trumping of agencies’ choice of policy raises serious legal questions, however. Under the law, the agency’s “province” over the “choice of policy” isn’t just limited to “the first instance.” Its province holds in every instance—first, last, and every instance in between. After all, the laws are written to say “the EPA Administrator shall . . .”—not “the OIRA Administrator shall . . .” or even “the President or a duly delegated representative shall . . . .” Nevertheless, OIRA routinely grants itself the final, determinative word over policy choices, as the power plant ELG rule episode demonstrates.

Also as the power plant ELG rule episode illustrates, whenever OIRA trumps the policy priorities and choice of policy of an agency, almost invariably it is done with the effect of watering down regulatory safeguards, often at the behest of the stream of lobbyists that use OIRA as a court of last resort on pending rules.

I hope Shelanski’s statement does in fact represent a change in how OIRA will approach regulatory review under his leadership. Nevertheless, I remain skeptical, because OIRA has operated as a strong antiregulatory force in the government for so long. I will continue to monitor OIRA’s regulatory review activities to see if its actions actually match Shelanski’s words.